Buchwald v. Renco Group, Inc. (In the Re Magnesium Corp. of America)
682 F. App'x 24
2d Cir.2017Background
- Trustee Lee E. Buchwald sued Renco Group and Ira Rennert in an adversary bankruptcy proceeding, alleging fraudulent conveyance, breach of fiduciary duty, and unjust enrichment based on late-1990s dividends paid by Magnesium Corporation of America and Renco Metals.
- Parties consented to transfer the adversary proceeding to the district court "in order for a jury trial to be held." Defendants later sought to withdraw consent shortly before trial.
- A jury found defendants liable and the district court entered a judgment for $213,199,093.70. Defendants appealed; Trustee cross‑appealed the prejudgment‑interest determination.
- On appeal, defendants challenged: (1) the availability of a jury trial and the denial of their withdrawal of consent; (2) several evidentiary and curative‑instruction rulings; (3) that the verdict was an impermissible compromise requiring a new trial.
- Trustee challenged only New York law being used to compute prejudgment interest, arguing Delaware law should apply (raised on cross‑appeal but not at the prejudgment‑interest motion).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Right to jury trial / withdrawal of consent | Trustee relied on defendants’ prior consent to a jury trial and transfer to district court | Defendants argued they were entitled to withdraw consent and thus no jury trial should have been held | Court affirmed denial of withdrawal; even if error, harmless because defendants never withdrew consent as to aiding‑and‑abetting claims that produced identical damages and thus no prejudice |
| Exclusion of evidence re: Utah EPA litigation and settlement talks | Trustee opposed admission as confusing, speculative, and barred by Rule 408 | Defendants sought to show value of Utah claims and contingent liabilities bearing on insolvency | District court’s exclusion affirmed as within Rule 403/408 discretion; no manifest error |
| Curative instruction and summation comments | Trustee’s summation statements did not prejudice jury; court promptly cured where needed | Defendants sought broader curative instruction for alleged prejudicial remarks | Denial of proposed instruction affirmed; immediate admonition and context sufficed |
| Compromise verdict / new trial | Trustee argued jury conduct was proper; inconsistencies were waived or harmless | Defendants claimed verdict was inconsistent/compromised (different results on federal vs. state claims) | New‑trial motion denied: inconsistent‑verdict objection was waived; claim recast as compromise verdict fails because evidence supported state claims and no classic indicia of compromise |
| Prejudgment interest choice of law (cross‑appeal) | Trustee argued Delaware law yields greater prejudgment interest and should apply | District court applied New York law because Trustee’s motion requested New York interest, effectively waiving Delaware claim | Affirmed: Trustee waived the Delaware‑law argument by requesting New York law only and not contesting waiver on reconsideration |
Key Cases Cited
- Abou‑Khadra v. Mahshie, 4 F.3d 1071 (2d Cir.) (harmless‑error principle for jury inconsistencies)
- Lore v. City of Syracuse, 670 F.3d 127 (2d Cir.) (harmless error in civil judgments)
- United States v. Al Kassar, 660 F.3d 108 (2d Cir.) (abuse‑of‑discretion review for evidentiary rulings)
- Trebor Sportswear Co. v. The Ltd. Stores, Inc., 865 F.2d 506 (2d Cir.) (Rule 408 exclusion of settlement evidence where intertwined with liability)
- Maher v. Isthmian Steamship Co., 253 F.2d 414 (2d Cir.) (definition/examples of impermissible compromise verdict)
- Anderson Grp., LLC v. City of Saratoga Springs, 805 F.3d 34 (2d Cir.) (timeliness/waiver rule for inconsistent‑verdict challenges)
- Olin Corp. v. Am. Home Assur. Co., 704 F.3d 89 (2d Cir.) (waiver reviewed for abuse of discretion)