539 B.R. 31
S.D.N.Y.2015Background
- This case arose from MagCorp and Renco Metals bankruptcies, with Buchwald as estate trustee pursuing fraudulent transfer and related claims against The Renco Group and Rennert Trusts.
- Jury trial (Feb 2–27, 2015) resulted in a unanimous verdict in plaintiff’s favor on fraudulent conveyance, aiding and abetting, breach of fiduciary duty, aiding and abetting fiduciary duty, and unjust enrichment, with specified damages.
- Judgment entered March 23, 2015, prejudgment interest set at six percent per year beginning August 2, 2001.
- Post-judgment motions were filed: Rule 50/59 by Renco entities and Rennert, Rule 50 by several individual defendants if new trial granted, and motion to amend prejudgment interest by plaintiff.
- Court granted in part and denied in part; JMOL granted as to unjust enrichment and punitive damages against Rennert group, and denied otherwise; new trial denied; damages against Rennert Trusts reduced to zero for unjust enrichment; punitive damages removed.
- Other defendants’ Rule 50(moot) and related rulings left undisturbed; Clerk instructed to amend judgment accordingly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility and reliability of insolvency testimony | Frank’s solvency analysis support admissible, reliable testing under Daubert. | Frank’s company-specific risk premium and methods are unreliable and should be excluded. | Frank's testimony upheld; sufficient insolvency evidence supported verdict. |
| Use of market approach vs. company-specific risk | Market approach should be considered; Frank’s rejection unjustified. | Frank properly rejected market approach; jury could evaluate solvency using CAD/CSRP. | Court discounted need to apply market approach; rejection did not undermine verdict. |
| Unjust enrichment—direct benefit and damages | Rennert and trustees received a direct benefit via Blue Turtles and rent-free use; damages supported by evidence. | No direct benefit traceable; damages not supported by evidence of direct transfer. | JMOL granted for unjust enrichment against Rennert and Trustees; damages for Trustees set to zero. |
| Punitive damages on breach of fiduciary duty | Delaware law permits punitive damages for fiduciary breaches. | Delaware law prohibits punitive damages in fiduciary-duty actions in Chancery; federal court should not diverge. | Punitive damages vacated; no punitive damages awarded. |
| Prejudgment interest rate and start date | Interest should begin earlier and reflect higher yield. | Rate and start date should not be altered post-judgment; six percent appropriate; start date tied to bankruptcy claims. | Rate remains six percent; start date maintained; no modification to prejudgment interest. |
Key Cases Cited
- Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (Supreme Court 1993) (gatekeeping reliability for expert testimony)
- Amorgianos v. National R.R. Passenger Corp., 303 F.3d 256 (2d Cir. 2002) (flexible Daubert factors for expert reliability)
- In re Joint E. & S. Dist. Asbestos Litig., 52 F.3d 1124 (2d Cir. 1995) (standard for overturning jury verdict on evidentiary grounds)
- Zellner v. Summerlin, 494 F.3d 344 (2d Cir. 2007) (standard for reviewing Rule 50 motions post-trial)
- Raedle v. Credit Agricole Indosuez, 670 F.3d 411 (2d Cir. 2012) (credibility and weight given to expert testimony on appeal)