Opinion
C. A. PC-2017-5227
02-13-2020
ROBERT ESTRELLA, as the Executor of the Estate of Armando Damiani and the Executor of the Estate of Lillian Estrella, Plaintiff, v. MICHAEL DAMIANI; NAVIGANT CREDIT UNION; STEVEN DAMIANI; RICHARD A. RANONE; and JANNEY MONTGOMERY SCOTT LLC, Defendants.
For Plaintiff: Thomas L. Mirza, Esq. For Defendant: Michael Marino, Esq.; Melissa L. Curley, Esq.; Richard G. Fallago, Esq.; Lauren E. Jones, Esq.; Paul D. Ragosta, Esq. For Interested Party: Kristin B. Pettey, Esq., Tanya M. Gravel, Esq.
For Plaintiff: Thomas L. Mirza, Esq.
For Defendant: Michael Marino, Esq.; Melissa L. Curley, Esq.; Richard G. Fallago, Esq.; Lauren E. Jones, Esq.; Paul D. Ragosta, Esq.
For Interested Party: Kristin B. Pettey, Esq., Tanya M. Gravel, Esq.
DECISION
STERN, J.
Before the Court are various post-trial motions: Defendants Janney Montgomery Scott LLC (Janney) and Richard A. Ranone's (Ranone) (collectively, Defendants) Motion to Alter or Amend Judgment pursuant to Super. R. Civ. P. 59(e) (Rule 59(e)), Motion for a New Trial and Alternative Request for Remittitur pursuant to Super. R. Civ. P. 59(a) (Rule 59(a)), and Motion for Judgment as a Matter of Law pursuant to Super. R. Civ. P. 50(b) (Rule 50(b)); Defendant Steven Damiani's (Steven) Motion to Alter or Amend Judgment pursuant to Rule 59(e), Motion for a New Trial pursuant to Rule 59(a), and Motion for Judgment as a Matter of Law pursuant to Rule 50(b); and Plaintiff Robert Estrella's (Plaintiff), as the Executor of the Estate of Armando Damiani (Mandy) and the Executor of the Estate of Lillian Estrella (Lillian), Motion to Alter or Amend Judgment pursuant to Rule 59(e) and Motion for Attorney's Fees and Costs pursuant to G.L. 1956 § 6-13.1-5.2(d). The Court exercises jurisdiction pursuant to G.L. 1956 §§ 9-30-1, 8-2-13, and 8-2-14.
I
Facts and Travel
The facts of this case are fully set forth in this Court's January 9, 2019 decision and incorporated by reference herein. See Estrella v. Damiani, et al., No. PC-2017-5227, Jan. 9, 2019, Stern J. (TRO Dec.). Accordingly, the facts of this case will be set forth only to the extent necessary to resolve the present motions.
Following a five-day jury trial, a verdict returned for the Plaintiff on March 12, 2019, finding that 1) Mandy intended to open an account with Janney, Am. Verdict Form (question 1); 2) Mandy did not intend to designate Steven as the transfer-on-death (TOD) beneficiary on the TOD-1 or the TOD-2, Am. Verdict Form (question 2); and 3) awarding compensatory and punitive damages to Mandy's Estate and Lillian's Estate on various claims, Am. Verdict Form (questions 3-10). Thereafter, on June 7, 2019, this Court entered a declaratory judgment finding that Mandy properly opened a TOD account with Janney (the Janney Account), that both TODs designating Steven as the beneficiary were invalid and unenforceable, and that therefore certain disputed funds (Disputed Funds) belonged to Mandy's Estate (the Declaratory Judgment). See Estrella v. Damiani, et al., No. PC-2017-5227, June 7, 2019, Stern, J. (Decl. J. Dec.). On July 17, 2019, judgment entered, awarding $2,241,909.46 in compensatory damages and $2,241,909.46 in punitive damages to the Plaintiff, along with statutory interest (the Judgment).
The parties timely filed post-trial motions which were accompanied by memoranda. The parties also filed objections and reply memoranda. On December 16, 2019, the Court heard from both parties. After considering the written and oral arguments, the Court now decides the post-trial motions.
II
Analysis
A
Motion to Alter or Amend Judgment
1
Standard of Review
It is well settled that "[a] trial justice may review his or her own decision after a nonjury trial in a civil matter 'only if [he or she] found a manifest error of law in the judgment entered or if there was newly discovered evidence but unavailable at the original trial and sufficiently important to warrant a new trial.'" Bogosian v. Bederman, 823 A.2d 1117, 1119 (R.I. 2003) (quoting American Federation of Teachers Local 2012 v. Rhode Island Board of Regents for Education, 477 A.2d 104, 105-06 (R.I. 1984)). "[A] manifest error of law in a judgment would be one that is apparent, blatant, conspicuous, clearly evident, and easily discernible from a reading of the judgment document itself." American Federation of Teachers Local 2012, 477 A.2d at 106. In this case, the Judgment was entered based on the jury's Amended Verdict Form and the Court's Declaratory Judgment. Accordingly, this Court can consider the cross-motions to alter or amend the Judgment based on its Declaratory Judgment, which was rendered without the jury.
2
Plaintiff's Motion to Alter or Amend Judgment
Plaintiff moves to alter or amend the Declaratory Judgment, arguing that it is inconsistent with the evidence and fails to do substantial justice between the parties. Specifically, Plaintiff asserts the jury necessarily concluded that Lillian was Mandy's intended beneficiary and that but for the Defendants' wrongdoing, Lillian would have been designated as the TOD beneficiary on the Janney Account. Accordingly, Plaintiff seeks amendment of the Judgment to find that the Disputed Funds belong to Lillian's Estate. Defendants object, arguing that the jury did not make a finding that the Disputed Funds belonged to Lillian's Estate and that the Plaintiff improperly speculates what the jury may have found on questions it was not asked.
This Court's Declaratory Judgment finding that the Disputed Funds were part of Mandy's Estate was informed by the jury's findings that Mandy intended to open the Janney Account and did not intend to designate Steven as the TOD beneficiary. See Am. Verdict Form (questions 1-2). The jury was not asked whether Lillian was the intended TOD beneficiary, and this Court will not infer jury findings where none were made. See Jolicoeur Furniture Co., Inc. v. Baldelli, 653 A.2d 740, 754 (R.I. 1995) (reversing trial justice's decision to amend judgment where trial justice assumed the jury made certain conclusions, but those conclusions were not discernable from the verdict). Accordingly, the Court finds that there is no manifest error that would warrant alteration or amendment of the Judgment, and Plaintiff's Motion to Alter or Amend Judgment is denied.
3
Defendants' Motions to Alter or Amend Judgment
Defendants also move to alter or amend the Judgment, arguing that the compensatory damages awarded by the jury are not based on the evidence; the damages awarded to Lillian must be vacated because the Court adjudged that the Disputed Funds were not assets of Lillian's Estate; and the punitive damages awarded in the absence of compensatory damages are not supported by evidence and/or are patently excessive. Plaintiff objects, arguing that the jury's findings as to liability should not be disturbed because the jury scrutinized each claim and was not confused as to liability.
Plaintiff also objects based on his own Motion to Alter or Amend Judgment to reflect that the Disputed Funds belong to Lillian's Estate. However, the Court has already found against Plaintiff on his motion and therefore need not address this argument as part of Plaintiff's objection.
a
Conversion
Defendants first argue that neither Lillian's Estate nor Mandy's Estate had a claim for conversion. First, Defendants assert that Lillian's Estate could not meet the element of conversion requiring Lillian to be in possession or entitled to possession of the Disputed Funds because the Disputed Funds were not part of Lillian's Estate. To prevail on a claim for conversion, a plaintiff "must establish that [he or] she was in possession of the personalty, or entitled to possession of the personalty, at the time of the conversion." Montecalvo v. Mandarelli, 682 A.2d 918, 928 (R.I. 1996). Here, the Judgment states that "the Disputed Funds are an asset of Mandy's estate." J. 2. Accordingly, the jury's finding for Lillian's Estate on the conversion claim is clearly erroneous from the face of the Judgment because Lillian's Estate was never in possession of, or entitled to possession of, the Disputed Funds.
Defendants next assert that Mandy's Estate could not meet the element of conversion requiring that another exercised dominion and control inconsistent with Mandy's right to possession because Ranone held the funds as an agent of Mandy and did not have possession of the Disputed Funds without Mandy's consent. While it is true that "the gravamen of an action for conversion lies in the defendant's taking the plaintiff's personalty without consent and exercising dominion over it inconsistent with the plaintiff's right to possession," Narragansett Electric Co. v. Carbone, 898 A.2d 87, 97 (R.I. 2006), nothing in the Judgment reflects that Ranone was an agent of Mandy's and held the Disputed Funds with Mandy's consent.
Moreover, the Court's Declaratory Judgment specifically found that both the TOD-1 and the TOD-2 were void. As to the TOD-1, the Court found that Ranone's testimony of an alleged phone call with Mandy on February 1, 2016-"whereby Mandy instructed Ranone to insert Steven's name into the blank space on the TOD-1," Decl. J. Dec. at 9-was not credible and that Ranone violated Janney policy by allowing Mandy to sign the blank TOD-1 without a notary present. Id. at 10. Furthermore, the Court relied on the jury's finding that Mandy did not intend to designate Steven as his TOD-1 beneficiary. Id. (citing Am. Verdict Form (question 2)). As to the TOD-2, the Court found it to be void and unenforceable due to undue influence. See id. at 10-15. The Court based this finding on the relationship of trust and confidence between Mandy and Ranone, Mandy's reduced physical and mental state which rendered him susceptible to undue influence, and circumstantial evidence of Ranone pressuring Mandy to sign the TOD-2. See id. Because the Court found that both the TOD-1 and the TOD-2 were void, the March 2016 statement of Steven's Janney account-showing that Steven received $1,566,909.46-supports a finding that Steven and Ranone converted an asset of Mandy's Estate. See Pl.'s Ex. 49; see also J. 2.
Based on the foregoing, the Court alters the Judgment to vacate the finding for Lillian's Estate on the claim of conversion. The finding for Mandy's Estate on the claim of conversion shall stand against Steven and Ranone, and Mandy's Estate shall be awarded compensatory damages in the amount of $1,566,909.46 from Steven and Ranone. The jury was given the opportunity to award Mandy's Estate punitive damages on the conversion claim, but explicitly chose not to do so by awarding $0 in punitive damages against both Steven and Ranone, see Am. Verdict Form (question 10), and accordingly, no punitive damages are awarded to Mandy's Estate on the conversion claim. The Court strikes from the Judgment the punitive damages award for Lillian's Estate against Steven because punitive damages are appropriate only when a party has been awarded compensatory damages. See Cady v. IMC Mortgage Co., 862 A.2d 202, 220 (R.I. 2004) (affirming the trial justice's decision to strike punitive damages where no compensatory damages were awarded because "punitive damages should be awarded only where 'defendant's conduct requires deterrence and punishment over and above that provided in an award of compensatory damages'" (quoting Palmisano v. Toth, 624 A.2d 314, 318 (R.I. 1993))). Here, based on the Court's amendment to the Judgment, Lillian's Estate has been awarded no compensatory damages and is therefore not entitled to punitive damages.
Many other jurisdictions have also recognized that an award of punitive damages may not be made in the absence of an award of actual damages. See Kforce, Inc. v. Surrex Solutions Corp., 436 F.3d 981, 985 n.3 (8th Cir. 2006) (noting that "'Missouri follows the general rule that no punitive damages can be awarded absent an award of actual or nominal damages"' (quoting Williams v. Williams, 99 S.W.3d 552, 556 (Mo.Ct.App. 2003))); Gillogly v. General Electric Capital Assurance Co., 430 F.3d 1284, 1293-94 (10th Cir. 2005) (finding that as a matter of law because insured could not prove insurer was liable for acting in bad faith, insured could not show actual damages and, therefore, was not entitled to punitive damages) (applying Oklahoma law); Harley-Davidson Motor Co., Inc. v. PowerSports, Inc., 319 F.3d 973, 988 (7th Cir. 2003) (finding that a plaintiff seeking rescission and restitution would not be entitled to punitive damages because actual damages are required to recover punitive damages); Medical Laboratory Management Consultants v. American Broadcasting Companies, Inc., 306 F.3d 806, 826 (9th Cir. 2002) (affirming summary judgment on plaintiff's punitive damages claims where plaintiff was not entitled to actual damages because a plaintiff "'must be entitled to actual damages before being entitled to punitive damages'" (quoting Wyatt v. Wehmueller, 806 P.2d 870, 874 (Ariz. 1991))) (applying Arizona law); Vescio v. Merchants Bank, 272 B.R. 413, 440 (D. Vt. 2001) (finding that plaintiffs' failure to show actual damages precluded an award of punitive damages because "[a]ctual damages . . . are required for the imposition of punitive damages") (applying Vermont law); Carter v. Progressive Mountain Insurance, 761 S.E.2d 261, 264 (Ga. 2014) (finding that "punitive damages must arise from and be based upon a compensable injury," must attach to a valid claim and, therefore, "[p]unitive damages may not be recovered where there is no entitlement to compensatory damages"); Zemero Corp. v. Hall, 831 A.2d 413, 416 (Me. 2003) (vacating judgment for punitive damages because compensatory damages were not awarded and-despite there being evidence to support a punitive damages award-"punitive damages are impermissible absent an award of compensatory damages"); Wendt v. University of Kansas Medical Center, 59 P.3d 325, 335-36 (Kan. 2002) (affirming trial court's post-trial ruling that actual damages are essential to the recovery of punitive damages, and therefore, a plaintiff was not entitled to punitive damages because the jury rejected all of his claims and he was awarded no actual damages). Moreover, the United States Supreme Court has heavily relied on the existence and amount of a compensatory damages award to determine the constitutionality of a punitive damages award. See BMW of North America, Inc. v. Gore, 517 U.S. 559, 580-83 (1996) (analyzing whether an award of punitive damages violated constitutional due process and relying on the imposition of compensatory damages as a predicate for the evaluation of the constitutionality of punitive damages).
b
Tortious Interference with Inheritance
Defendants next argue that the judgment for Lillian's Estate on the claim for tortious interference with inheritance must be altered or amended because the Court decided that the Disputed Funds were not assets of Lillian's Estate. Plaintiff-in his Omnibus Opposition to Defendants' Post-Judgment Motions-properly concedes that the viability of the claim of Lillian's Estate for tortious interference with inheritance turns on whether the Disputed Funds were an asset of Lillian's Estate. Having already concluded that the Court's Declaratory Judgment determination regarding ownership of the Disputed Funds is not subject to alteration or amendment, the Court alters the Judgment to vacate the finding for Lillian's Estate on the claim of tortious interference with inheritance because the Disputed Funds are not an asset of Lillian's Estate. The Court strikes from the Judgment the punitive damages award against Ranone and Janney because punitive damages are appropriate only when a party has been awarded compensatory damages. See Cady, 862 A.2d at 220. Here, based on the Court's amendment to the Judgment, Lillian's Estate has been awarded no compensatory damages and is therefore not entitled to punitive damages.
Tortious interference with inheritance under Rhode Island law was first recognized in Americans United for Life v. The Legion of Christ of North America, Inc., No. PC-2016-2900, 2017 WL 119569, at *7 (R.I. Super. Jan. 4, 2017) and requires the plaintiff to establish that he or she would otherwise have received the inheritance or gift.
c
Exploitation of Elder
Defendants assert that Lillian's Estate could not meet the elements of the claim for exploitation of elder because the Disputed Funds are not an asset of Lillian's Estate and therefore Lillian's Estate could not prove that the Defendants obtained or used an elder person's assets. Plaintiff argues that ownership is not an element of the claim for exploitation of elder and therefore the judgment in favor of Lillian's Estate should stand.
Section 11-68-2(a)(2) of the Rhode Island General Laws prohibits the exploitation of elders and imposes liability where one "[k]nowingly, by deception or intimidation, obtains or uses, endeavors to obtain or use, or conspires with another to obtain or use an elder person's funds, assets, or property with the intent to temporarily or permanently deprive the elder person of the use, benefit, or possession of the funds . . . ." Accordingly, the Court instructed the jury that to prevail, the Plaintiff must prove that the Defendant(s) knowingly obtains or uses, or endeavors to obtain or use, an elder person's funds, assets, or property. See Jury Instr. 21. This instruction necessarily indicates that the Plaintiff must have proven an ownership-or future interest in-the Disputed Funds to prevail on the claim for exploitation of elder. Although Plaintiff attempts to construe this Court's previous holding-"that the commission of the crime of exploitation cannot possibl[y] turn on when a property interest transfers[, ]" TRO Dec. at 17- as support for the contention that ownership is not an element of the claim for exploitation of elder, this argument is of no moment. The TRO Decision found that § 11-68-2(a)(2) can be violated even when the elder person's interest in the assets will not ripen until some future time. See id. However, the elder person must still prove that he or she has or had an interest that was presently viable or capable of perfection upon some future event. Here, the Court found that Lillian's Estate had no interest in the Disputed Funds and that those assets belong to Mandy's Estate. See Decl. J. Dec. at 15.
Accordingly, the Court alters the Judgment to vacate the finding for Lillian's Estate on the claim of exploitation of elder because the Disputed Funds are not an asset of Lillian's Estate. The Court strikes from the Judgment the punitive damages award against Ranone and Janney because punitive damages are appropriate only when a party has been awarded compensatory damages. See Cady, 862 A.2d at 220. Here, based on the Court's amendment to the Judgment, Lillian's Estate has been awarded no compensatory damages and is therefore not entitled to punitive damages.
Defendants further argue that the finding for Mandy's Estate on the claim of exploitation of elder must also be vacated because the verdict was in favor of both Lillian's Estate and Mandy's Estate without differentiation, and the compensatory damages awarded are not supported by legally competent evidence. The Plaintiff concedes that he is only seeking $1,566,909.46 in compensatory damages, which the Court finds was properly awarded on the conversion count and is supported by the March 2016 statement of Steven's Janney account after it received the transfer of the Disputed Funds from Mandy's Janney Account. Accordingly, this Court amends the Judgment to find for Mandy against Ranone on the exploitation of elder count, and no compensatory damages are awarded.
d
Obtaining Money Under False Pretenses
As with the preceding claims, Defendants assert that the Judgment must be altered or amended to vacate the finding for Lillian's Estate on the claim of obtaining money under false pretenses because Lillian's Estate did not have any present right to the Disputed Funds, and therefore, no property of Lillian's Estate could have been obtained by false pretenses. Plaintiff argues that to prevail on the claim of obtaining money under false pretenses, Lillian's Estate need not have an interest in the Disputed Funds.
The crime of obtaining money under false pretenses "'is complete when the defendant intentionally uses false pretenses to induce another to alter or terminate any of that person's rights or powers concerning the money or property with the intent to cheat or defraud that person.'" State v. Letts, 986 A.2d 1006, 1011 (R.I. 2010) (quoting State v. Fiorenzano, 690 A.2d 857, 859 (R.I. 1997) (emphasis added)). As such, in order to prevail, Lillian's Estate must have proved it had an ownership right to the Disputed Funds. Because the Court found that Lillian's Estate had no interest in the Disputed Funds and that those assets belong to Mandy's Estate, the portion of the Judgment finding for Lillian's Estate on the claim of obtaining money under false pretenses is vacated. Moreover, the Court strikes from the Judgment the punitive damages award against Ranone and Janney because punitive damages are appropriate only when a party has been awarded compensatory damages. See Cady, 862 A.2d at 220. Here, based on the Court's amendment to the Judgment, Lillian's Estate has been awarded no compensatory damages and is therefore not entitled to punitive damages.
Also, as with the preceding claim, Defendants argue that the finding for Mandy's Estate on the claim of obtaining money under false pretenses must be vacated because the verdict was in favor of both Lillian's Estate and Mandy's Estate without differentiation, and the compensatory damages awarded are not supported by legally competent evidence. The Plaintiff concedes that he is seeking only $1,566,909.46 in compensatory damages, which the Court finds was properly awarded on the conversion count and is supported by the March 2016 statement of Steven's Janney account after it received the transfer of the Disputed Funds from Mandy's Janney Account. Accordingly, the Judgment is amended to find for Mandy against Steven and Ranone on the count of obtaining money under false pretenses, and no compensatory damages are awarded.
e
Breach of Fiduciary Duty
Defendants argue that the jury's award of $50,000 in compensatory damages for Mandy against Ranone for breach of fiduciary duty is not supported by legally competent evidence. The Plaintiff concedes that he is seeking only $1,566,909.46 in compensatory damages, which the Court finds was properly awarded on the conversion count and is supported by the March 2016 statement of Steven's Janney account after it received the transfer of the Disputed Funds from Mandy's Janney Account. Accordingly, the Court alters the Judgment to delete the $50,000 in compensatory damages. Moreover, the Court strikes from the Judgment the punitive damages award against Ranone because punitive damages are appropriate only when a party has been awarded compensatory damages. See Cady, 862 A.2d at 220. Here, based on the Court's amendment to the Judgment, Mandy's Estate has been awarded no compensatory damages on this count and is therefore not entitled to punitive damages.
f
Deceptive Trade Practices
Lastly, Defendants argue that the jury's award of $50,000 in compensatory damages to Mandy on the Deceptive Trade Practices Act (DTPA) count is not supported by legally competent evidence. Defendants contend that the Judgment must be amended to award Mandy only the statutorily prescribed minimum damages-two hundred dollars. Plaintiff concedes that the total compensatory damages amount he seeks was properly awarded on the conversion count, and accordingly, the Court alters the Judgment to award Mandy two hundred dollars in compensatory damages. See § 6-13.1-5.2(a) (providing that under the DTPA the minimum recovery-in the absence of actual damages-is two hundred dollars).
Defendants further argue that the amount of punitive damages awarded must be reduced because $50,000 in punitive damages is excessive where compensatory damages are two hundred dollars. Plaintiff argues that the punitive damages award should stand because the amount of punitive damages was left to the jury's discretion, and the Court should not amend the amount of punitive damages based on its ratio to compensatory damages.
Our Supreme Court has "reduced punitive damages found to be excessive in light of the amount awarded in compensatory damages." Cady, 862 A.2d at 220. In Reccko v. Criss Cadillac Co., Inc., the plaintiff brought a deceit action against a car dealership alleging the dealership falsely represented the condition of the car. 610 A.2d 542, 544 (R.I. 1992). The plaintiff was awarded $261.35 in compensatory damages and $50,000 in punitive damages. Id. In reducing the punitive damages award to $25,000, our Supreme Court found that the $50,000 punitive damages award was grossly excessive. Id. at 546. Here too, the Court finds that a punitive damages award of $50,000 when only two hundred dollars was awarded in compensatory damages is grossly excessive. Accordingly, the punitive damages award for Mandy against Ranone shall be reduced to $25,000.
B
Motion for Judgment as a Matter of Law
1
Standard of Review
Pursuant to Rule 50(b), "when a motion for judgment as a matter of law is made at the close of all evidence and is denied, '[s]uch a motion may be renewed by service and filing not later than 10 days after entry of judgment."' Skaling v. Aetna Insurance Co., 742 A.2d 282, 287 (R.I. 1999) (quoting Rule 50(b)). In passing on a renewed motion for judgment as matter of law
"the trial court 'must consider the evidence in the light most favorable to the party against whom the motion is made without weighing the evidence or considering the credibility of the witnesses and extract from that record only those reasonable inferences that support the position of the party opposing the motion."' Grant v. Briskin, 603 A.2d 324, 327 (R.I. 1992) (quoting Evans v. Liguori, 118 R.I. 389, 394, 374 A.2d 774, 776 (1977)).
The rule also provides that if the jury returned a verdict, "the court may, in disposing of the renewed motion, allow the judgment to stand or may reopen the judgment and either order a new trial or direct the entry of judgment as a matter of law." Rule 50(b)
2
FINRA Arbitration
Defendants Ranone and Janney move for judgment as a matter of law that the claims of Mandy's Estate against Ranone must be compelled to the Financial Industry Regulatory Authority's (FINRA) arbitration forum. In support, Defendants assert that because the Court found that Mandy properly opened the Janney Account, see Decl. J. Dec. at 7-8, Mandy agreed to and is bound by the terms of the 2016 Janney Client Agreement (2016 Agreement), which compels the parties to pre-dispute arbitration. See Pl.'s Ex. 5. Defendants argue that Mandy, Ranone, and Janney are all parties to the 2016 Agreement, and that the claims advanced by Mandy's Estate are covered by the arbitration clause because they stem from account activity.
Specifically, the 2016 Agreement provides that "[a]ny controversy between Janney and you arising out of Janney's business, the Agreement or any of your accounts with Janney, shall be submitted to arbitration conducted under the terms of the Code of Arbitration Procedure of FINRA."
Plaintiff objects, arguing that only the claims against Janney are arbitrable because the language of the 2016 Agreement does not compel arbitration of claims against Janney's financial advisor employees such as Ranone. In support, Plaintiff relies on a decision issued by Justice Silverstein on May 1, 2018, denying the Defendants' motion to compel arbitration under the 2009 Janney Client Agreement (2009 Agreement). Plaintiff argues that this earlier ruling constitutes the law of the case because the language of the 2009 and 2016 Agreements are nearly identical. Accordingly, Plaintiff argues that Justice Silverstein's prior ruling precludes the Defendants from now seeking to compel the claims to arbitration under the 2016 Agreement. Plaintiff also argues that the Defendants cannot seek to compel arbitration under the 2016 Agreement because they waived the issue by abandoning their first motion to compel arbitration.
i
Law of the Case
"'The law of the case doctrine provides that, after a judge has decided an interlocutory matter in a pending suit, a second judge, confronted at a later stage of the suit with the same question in the identical manner, should refrain from disturbing the first ruling.'" Felkner v. Rhode Island College., 203 A.3d 433, 445 (R.I. 2019) (quoting Quillen v. Macera, 160 A.3d 1006, 1012-13 (R.I. 2017)). However, "[a]ctual decision of an issue is required to establish law of the case." 18B Wright & Miller, Federal Practice and Procedure: Juris. § 4478 at 678 (2019). Here, Justice Silverstein's ruling on the motion to compel arbitration under the 2009 Agreement does not constitute law of the case regarding the availability of compelling arbitration under the 2016 Agreement because the motion to compel arbitration under the 2016 Agreement was never actually ruled on. See Lindquist v. City of Pasadena Texas, 669 F.3d 225, 238-39 (5th Cir. 2012) (describing the law of the case doctrine as applying "only to [those] issues that were actually decided, rather than all questions in the case that might have been decided, but were not").
ii
Waiver
Although the law of the case doctrine does not foreclose the Defendants from seeking to compel the claims against Ranone to arbitration under the 2016 Agreement, a related doctrine does bar consideration of this claim. "'[W]aiver is the voluntary, intentional relinquishment of a known right. It results from action or nonaction . . . .'" Sturbridge Home Builders, Inc. v. Downing Seaport, Inc., 890 A.2d 58, 65 (R.I. 2005) (quoting Lajayi v. Fafiyebi, 860 A.2d 680, 687 (R.I. 2004)). Here, the Court finds-based on an exhaustive review of the record and case events-that the Defendants waived the issue of arbitration under the 2016 Agreement based on 1) the raise-or-waive rule; and 2) waiver of arbitration.
For purposes of reference, the Court has numbered the docket sheet, which is attached hereto as Exhibit A. All citations to the docket are styled as: "Docket # ___."
a
Review of Record and Case Events
On December 21, 2017, Defendants Ranone and Janney filed motions to dismiss and compel Plaintiff's claims to arbitration under the 2016 Agreement. Docket # 178-179. A month later, an omnibus form was filed for a "Motion to Dismiss under Rule 12," and the court scheduled a hearing for February 8, 2018 on the arbitrability of the claims under the 2016 Agreement. Id. at 155; see also id. at 258. Thereafter, Plaintiff filed its opposition to the motion to compel arbitration under the 2016 Agreement and requested discovery and an evidentiary hearing. Id. at 153. The court heard the Defendants' motion to compel arbitration under the 2016 Agreement on February 8, 2018, id. at 258, and scheduled evidentiary hearings on the motion for April 25, 2018 through May 1, 2018. See id. at 251-252; 254-256.
Plaintiff based this request on Baker v. Pawtucket Skilled Nursing and Rehabilitation, LLC, C. A. No. PC-2015-0181, 2016 WL 4410002 (R.I. Super. Aug. 16, 2016), asserting that there was substantial evidence that the 2016 Agreement was procured by unconscionable means, and accordingly, an evidentiary hearing was required to determine how it was procured.
Meanwhile, while the parties were engaged in discovery and preparation for the evidentiary hearings, the 2009 Agreement was found, and on April 2, 2018, the Defendants filed a second motion to compel arbitration under the 2009 Agreement. Id. at 147-148. Approximately one week later, Plaintiff filed an objection and memorandum in opposition, requesting that the court deny the second motion to compel and/or schedule an evidentiary hearing and proceed with the previously scheduled evidentiary hearing on the 2016 Agreement. Id. at 146. The Defendants filed a reply memorandum arguing that the Plaintiff was not entitled to an evidentiary hearing on the 2009 Agreement. Id. at 143. The court heard the motion to compel arbitration under the 2009 Agreement on April 17, 2018. Id. at 257. The evidentiary hearings on the 2016 Agreement scheduled for April 25, 2018 through May 1, 2018 were passed by agreement of the parties. See id. at 251-252; 254-256. On May 14, 2018, an order entered on the second motion to compel arbitration under the 2009 Agreement, which granted the motion to compel with respect to claims against Janney but denied the motion to compel with respect to claims against Ranone. See id. at 138. The first motion to compel arbitration under the 2016 Agreement was never brought forward again; no omnibus form was filed, and no hearing was ever scheduled. See generally id.
b
Raise-or-Waive Rule
"The raise-or-waive rule is a fundamental rule in this state that is 'staunchly adhered to' by [our Supreme] Court." Gallop v. Adult Correctional Institutions, 218 A.3d 543, 550 (R.I. 2019) (quoting Cusick v. Cusick, 210 A.3d 1199, 1203 (R.I. 2019)). The raise-or-waive rule precludes a litigant from raising an objection or advancing a new theory if it was not first properly raised. See Cusick, 210 A.3d at 1203. Here, the issue of arbitration under the 2016 Agreement was waived by the Defendants because the evidentiary hearing on the motion was passed by agreement of the parties, never rescheduled, and the issue was never raised again until the instant post-trial motion. As such, the Defendants' motion was waived. See Trojan v. Trojan, 208 A.3d 221, 231-32 (R.I. 2019) (applying the raise-or-waive rule where the trial justice declined to rule on motion for temporary allowances and retroactive child support, and the defendant failed to raise the issue again at subsequent hearings); see also Heneault v. Lantini, 213 A.3d 410, 415-16 (R.I. 2019) (applying the raise-or-waive rule where the trial justice correctly denied defendants' motion to dismiss based on the economic loss doctrine as untimely and the defendants failed to raise the economic loss doctrine argument again until the post-trial hearings).
The Court also finds that the Defendants do not meet the exception to the raise-or-waive rule where basic constitutional rights are involved. See In re Miguel A., 990 A.2d 1216, 1223 (R.I. 2010).
c
Waiver of Arbitration
The Court also finds that the Defendants waived their right to arbitration under the 2016 Agreement. Arbitration "can be waived when a party 'manifest[s] a willingness, if not a desire, to have the courts resolve the controversy.'" See Newman v. Valleywood Associates, Inc., 874 A.2d 1286, 1289 (R.I. 2005) (quoting North Smithfield Teachers Association v. North Smithfield School Committee, 461 A.2d 930, 934 (R.I. 1983)). Here, the Defendants willingly proceeded to a trial on the merits and accordingly waived the issue of whether the 2016 Agreement compels the claims against Ranone to FINRA arbitration. See id.; see also Caribbean Insurance Services, Inc. v. American Bankers Life Assurance Co. of Florida, 715 F.2d 17, 20 (1st Cir. 1983) (finding arbitration waived where a party willingly submitted the dispute to a trial on the merits).
3
Standing
Defendants Janney and Ranone also renew their motion for judgment as a matter of law that all the claims of Lillian's Estate must be dismissed because the Disputed Funds were found to be the assets of Mandy's Estate. The Court has already addressed this argument through its decision on the Defendants' Motion to Alter or Amend Judgment and has vacated the Judgments in favor of Lillian's Estate.
4
Conversion
Steven also argues that his liability for conversion of the Disputed Funds must fail because the Plaintiff failed to demonstrate that Ranone possessed the Disputed Funds inconsistent with Mandy's rights. Steven argues that Ranone took possession of the Disputed Funds pursuant to the 2016 Agreement and Steven then took possession pursuant to the TODs. Accordingly, Steven contends that, under Rhode Island law, no cause of action for conversion exists if the parties enter into an agreement whereby one takes possession of the property of another.
Our Supreme Court has recognized a distinction between contract and tort actions and has held that if a plaintiff cannot "demonstrate an ownership or possessory interest in the property at the time of the conversion," its only remedy may be in contract. See DeChristofaro v. Machala, 685 A.2d 258, 263 (R.I. 1996) (holding that owners of home failed to establish that they had ownership interest in the building materials and hardware and accordingly could not establish a conversion claim). Here, Plaintiff has not attempted "to characterize a mere breach of contract as a conversion." Id. at 264. Rather, the Plaintiff has demonstrated that Mandy's Estate was the owner of the Disputed Funds at the time it was converted, and therefore, Plaintiff's claim for conversion is not barred.
Based on the foregoing, Ranone and Janney's renewed motion for judgment as a matter of law is denied. Furthermore, Steven's renewed motion for judgment as a matter of law is likewise denied.
C
Motion for New Trial
Defendants also move for a new trial arguing jury confusion, prejudice, speculation, and/or that the amount of damages awarded is not supported by the evidence. Defendants also argue that the Court committed an error of law in prohibiting the Defendants from examining Plaintiff's distributions from Lillian's Estate.
1
Standard of Review
Pursuant to Rule 59(a), "[a] new trial may be granted to all or any of the parties and on all or part of the issues for error of law occurring at the trial or for any of the reasons for which new trials have heretofore been granted in the courts of this state." Our Supreme Court has explained that
"[i]n considering a motion for a new trial, the trial justice sits as a super juror and is required to make an independent appraisal of the evidence in light of his or her charge to the jury. If, after conducting this analysis, the trial justice concludes that the evidence is evenly balanced or that reasonable minds could differ on the verdict, she or he should not disturb the jury's decision." Letizio v. Ritacco, 204 A.3d 597, 602 (R.I. 2019) (internal citations and quotation marks omitted).
When passing on a new trial motion, "the trial justice need not perform an exhaustive analysis of the evidence . . . ." Reccko, 610 A.2d at 545. Rather, the trial justice must "refer with some specificity to the facts which prompted him or her to make the decision," id., and our Supreme Court will afford great weight to that decision. See Oliveira v. Jacobson, 846 A.2d 822, 826 (R.I. 2004) (holding that a trial justice's decision on a new trial motion will not be disturbed unless it is clearly wrong, overlooks, or misconceives material and relevant evidence).
2
Review of the Evidence
The Court finds that there was sufficient evidence to sustain the jury's verdict in favor of Mandy for his claims of conversion, exploitation of an elder, obtaining money under false pretenses, breach of fiduciary duty, and deceptive trade practices. The jury's finding-that Mandy intended to open the Janney Account but did not intend to designate Steven as the TOD beneficiary on either TOD-supports the jury's finding for Mandy on every count as well as this Court's Declaratory Judgment that the Disputed Funds belong to Mandy's Estate.
i
The TOD-1
As this Court has already explained in its Declaratory Judgment Decision,
"The only evidence presented at trial respecting Mandy's naming of a beneficiary came from Ranone's testimony of a phone call he claims to have had with Mandy on February 1, 2016, whereby Mandy instructed Ranone to insert Steven's name into the blank space on the TOD-1. Trial Tr. 81:6-12, Day 1. However, Ranone admitted he did not contemporaneously note contents of the alleged conversation, presenting a reliability issue. Id. at 83:17-19. Ranone testified that he did not feel "comfortable" filling in the TOD-1 himself, indicating he "felt it was a mistake." Id. at 95:16-18. Further, the evidence demonstrates an inconsistency between Ranone's trial testimony concerning the date on which this pivotal phone call occurred and whether Ranone or Mandy himself initiated contact. Id. at 82:2-9." Decl. J. Dec. at 9.
Moreover, Steven Pitassi (Pitassi), a Senior Vice-President and manager at Janney, testified regarding the policies and procedures at Janney and his conversation(s) with Ranone regarding the TOD-1 designation. Pitassi testified that it is not proper to give a client a blank TOD form to sign without the beneficiary designation completed. Tr. 271:23-272:6, Mar. 7, 2019. Accordingly, the jury's finding that Mandy did not intend to designate Steven as his TOD-1 beneficiary is supported by the evidence. See Branson v. Louttit, 213 A.3d 417, 431 (R.I. 2019) (according great weight to the trial justice's assessment of the credibility of witnesses when passing on a motion for new trial).
ii
The TOD-2
The Court also finds that the evidence adduced at trial supports the jury's finding that Mandy did not intend to designate Steven as his TOD-2 beneficiary. First, expert medical testimony from Dr. Srdjan S. Nedeljkovic (Dr. Nedeljkovic), an expert in the area of pain management and anesthesiology, demonstrated Mandy's medical condition and cognitive ability while in the Intensive Care Unit (ICU) in February of 2016. Tr. 142:14-18; 143:24-144:3, Mar. 6, 2019. Dr. Nedeljkovic testified that Mandy was admitted to the hospital on February 3, 2016 for reversal of an ileostomy and thereafter underwent two surgeries: the first surgery was to reverse the ileostomy and the second surgery-on February 10, 2016-was to treat a serious infection. See id. at 145:11-21; 146:11-22; 147:20-148:5. After the second surgery, Dr. Nedeljkovic testified that Mandy went directly to the ICU and remained there until his death. Id. at 148:9-13. At various times in the ICU, Mandy was sedated, intubated, and/or taking medications that slowed and diminished his mental functioning. Id. at 148:20-23; 150:1-4. Dr. Nedeljkovic also testified that a stay in the ICU causes significant deterioration in mental status, including disorientation, delirium, and loss of memory. Id. at 163:12-24.
On February 13, 2016-the day Mandy signed the TOD-2-Dr. Nedeljkovic testified that Mandy was experiencing sepsis, which causes acute brain dysfunction and a significant alteration in cognitive ability. Id. at 151:7-18. Dr. Nedeljkovic concluded that on February 13, 2016, Mandy was experiencing moderate to severe pain which can cause disorganized thinking, inattentiveness, and affect rational decision making. Id. at 154:13-14; 159:7-17. Moreover, Dr. Nedeljkovic testified that Mandy was experiencing fluctuating levels of mental status and was, at times, drowsy and confused. Id. at 154:16-20. Based on Dr. Nedeljkovic's review of Mandy's medical records, he concluded that Mandy was very ill, his cognitive status was very low, and that he was not capable of executing any complicated decision making on February 13, 2016. Id. at 165:11-14. Dr. Nedeljkovic also concluded that Mandy's signature on the second TOD "was clearly that of an impaired individual . . . ." Id. at 166:8-10.
While the Defendants presented competing testimony from Dr. Edward Feldmann (Dr. Feldmann)-an expert in neurology-Dr. Feldmann's testimony accorded with Dr. Nedeljkovic's in many regards, including that sepsis is a serious infection, id. at 590:5-7, that the amount of pain Mandy was in could affect his mental condition and ability to think, id. at 591:7-20, and that the ICU can be disorienting to a patient. Id. at 591:21-24. Although Dr. Feldmann reached the opinion that Mandy was thinking clearly on February 13, 2016-based in part on the description of Mandy's condition given by Ranone and Michael Damiani, id. at 592:21-593:7- the Court will not disturb the jury's verdict that Mandy did not intend to open either TOD account because reasonable minds could differ as to whether Mandy lacked the capacity to execute complicated decision making based on the medical testimony presented. See Zarembka v. Whelan, 176 A.3d 485, 488 (R.I. 2018) (affirming the trial justice's decision to deny motion for a new trial; witnesses without credibility issues gave conflicting and incompatible testimony but the evidence did not support one version of facts over the other and therefore reasonable minds could reach different conclusions).
Additional testimony regarding what transpired on February 13, 2016 also supports the jury's findings. Although Ranone testified that Mandy looked "like he normally did" on February 13, 2016, Tr. 119:3-5, Mar. 6, 2019, Ranone also testified that he never checked with anyone at the ICU regarding Mandy's condition or mental capacity, id. at 118:18-22, and that Mandy's signature on the second TOD did not look normal compared to Mandy's signature on the first TOD. Id. at 121:21-23. Ranone also testified that he could not recall whether he reviewed the complete document with Mandy, id. at 115:10-13, but that Mandy did not read whatever Ranone showed him. Id. at 117:13-15. Moreover, Christine Damiani, who visited Mandy nightly while he was in the hospital, Tr. 265:21-24, Mar. 7, 2019, testified that during one of her visits, she saw Ranone at the hospital, but that he stayed outside the room in the hallway and never came in the room. Id. at 267:6-18. From Ms. Damiani's testimony, the jury could have reasonably concluded that Ranone purposefully visited with Mandy outside the presence of others.
Furthermore, the testimony elicited from Janney's own employees shows that Ranone violated Janney policies in his dealing with Mandy. Pitassi testified to Janney's policies and best practices when dealing with seniors or an individual with diminished capacity, including persons diagnosed with physical illness or with difficulty communicating. Id. at 287:1-288:7. Those practices included advising the account owner it was in his or her best interests to consult with an attorney, id. at 284:5-14, and inquiring as to whether the account owner had a power of attorney or other trusted person who could be contacted if the account owner was diminished. Id. at 286:17-25. Pitassi confirmed that in the ICU on February 13, 2016, Ranone did not bring anyone Mandy trusted, did not bring a notary, and did not bring any witnesses. Id. at 291:20-292:1. This testimony accords with Ranone's own testimony wherein he admitted that there were no witnesses and no notary present when Mandy signed the TOD-2. Tr. 113:22-25, Mar. 6, 2019. Ranone's failure to bring a notary not only violated Janney's policies, Tr. 274:25-275:19, Mar. 7, 2019, but also directly conflicted with Pitassi's testimony that he told and texted Ranone to take an office notary with him to the ICU. Id. at 276:8-21.
Moreover, Jennifer Burgio (Burgio)-an operations manager at Janney's Providence office and a private client assistant, id. at 316:4-13-testified that the TOD-2 form came from Ranone with Mandy's signature, Steven's name typed in, and that it was notarized. Id. at 323:2-324:25. Based on Ranone's testimony that no notary was present, it follows from Burgio's testimony that Mandy's signature was notarized outside his presence.
In addition, based on the testimony presented at trial, the jury could conclude that Steven and Ranone took Mandy's personalty without his consent, that Ranone used deceptive practices, that Ranone knew or reasonably should have known that Mandy lacked capacity, and that Ranone owed Mandy a duty of confidence and trust and breached that duty. The Court also finds that the jury could reasonably conclude that Ranone and Steven conspired to convert Mandy's Janney Account based on Steven's testimony that he would normally speak with Ranone three or four times a year, id. at 361:8-10, but the conflicting evidence presented at trial which showed that during the month of February 2016, Steven and Ranone had eight telephone exchanges. Steven also gave conflicting testimony about whether Mandy or Ranone informed him he was the TOD beneficiary. Id. at 370:20-371:6.
Accordingly, sitting as a "super juror," the Court cannot say that based on the evidence presented at trial, there is only one possible conclusion regarding the Defendants' liability. The jury determined that Mandy intended to open the Janney Account and did not intend to designate Steven as the TOD beneficiary. The jury reasonably could so determine based on the substantial testimony presented at trial, including but not limited to the testimony cited above, and therefore, Defendants' motion for a new trial is denied.
3
Evidentiary Ruling
Moreover, there was no error of law warranting a new trial in not allowing the Defendants to examine distributions from Lillian's Estate. During trial, the Court ruled that evidence of distributions made from Lillian's Estate was irrelevant because it had no bearing on Mandy's intent regarding his assets. Our Supreme Court has recognized that the scope of relevancy of evidence adduced at trial is narrower than the scope of relevancy in discovery proceedings, see DeCarvalho v. Gonsalves, 106 R.I. 620, 627, 262 A.2d 630, 634 (1970), and that questions of relevancy "are left to the sound discretion of the trial justice." Minutelli v. Boranian, 668 A.2d 317, 319 (R.I. 1995); see also Souza v. Souza, No. 2016-310-A, slip op. at 9 (R.I. filed Dec. 12, 2019) (declining to overturn the trial justice's decision on the admissibility of evidence because the trial justice "was in the best position to discern [] admissibility"). Accordingly, Defendants' motion for a new trial on this ground is also denied.
D
Motion for Attorney's Fees and Costs
1
Standard of Review
Rhode Island steadfastly adheres to "the American Rule" of attorney's fees. Under this regime, each party must generally pay its own attorney's fees "even if the party prevails in the lawsuit." Blue Cross & Blue Shield of R.I. v. Najarian, 911 A.2d 706, 711 n.5 (R.I. 2006). However, a prevailing party must be allowed to recover attorney's fees if authorized by statute. See Insurance Company of North America v. Kayser-Roth Corp., 770 A.2d 403, 419 (R.I. 2001).
2
Plaintiff's Revised Motion for Attorney's Fees and Costs
Plaintiff's Revised Motion for Attorney's Fees and Costs pursuant to § 6-13.1-5.2(d) requests $107,496.50 in fees and $3303.05 in costs. The DTPA provides, "[i]n any action brought by a person under this section, the court may award, in addition to the relief provided in this section, reasonable attorney's fees and costs." Section 6-13.1-5.2(d). This Court has broad discretion to determine what constitutes reasonable attorney's fees. See Karousos v. Pardee, 992 A.2d 263, 272 (R.I. 2010).
As this Court has already found, "the DTPA does not extend its attorneys' fees provision to any other cause of action[;] it must be strictly construed to authorize attorneys' fees attributable only to those fees incurred in relation to the DTPA." See Estrella v. Damiani, et al., No. PC-2017-5227, June 7, 2019, Stern, J. (Atty's Fees Dec.). Plaintiff's motion for attorney's fees and costs was previously denied without prejudice because this Court found that the affidavits and billing records provided in support of that motion failed to distinguish work performed and time spent on the DTPA claim. Atty's Fees Dec. at 11.
In the present motion before the Court, Plaintiff argues he is entitled to recovery of attorney's fees because the complaint was drafted with the DTPA claim included, the Plaintiff prepared for and took the depositions of witnesses who provided evidence to prove Ranone engaged in unfair and deceptive trade practices in dealing with Mandy, the Plaintiff tried the case to a successful jury verdict on the DTPA claim, and the Plaintiff opposed motions regarding the arbitrability of the case, which included the DTPA claim. However, the billing records relied on by the Plaintiff are identical to those submitted for the prior motion. While Plaintiff's motion memorandum attempts to expound how portions of the previously submitted billing records relate to the DTPA claim, it is well settled that "[a]rguments of counsel are not evidence." Martin v. Howard, 784 A.2d 291, 298-99 (R.I. 2001). Accordingly, as the Court has been presented with no new evidence to distinguish between work performed on the DTPA claim and time dedicated to other matters, Plaintiff's Motion for Attorney's Fees and Costs is denied.
III
Conclusion
Based on the foregoing, the Court denies Plaintiff's Motion to Alter or Amend Judgment; grants in part and denies in part Defendants Janney and Ranone's Motion to Alter or Amend Judgment; grants in part and denies in part Defendant Steven's Motion to Alter or Amend Judgment; denies Defendants Janney and Ranone's and Defendant Steven's Motions for Judgment as a Matter of Law; denies Defendants Janney and Ranone's and Defendant Steven's Motions for New Trial; and denies Plaintiff's Revised Motion for Attorney's Fees and Costs. Counsel shall prepare and submit an order and amended judgment consistent with this Decision.
(Exhibit Omitted)