830 F.3d 18
1st Cir.2016Background
- Patricia Cornwell, her spouse Staci Gruber, and Cornwell Entertainment, Inc. (plaintiffs) sued former business managers Anchin, Block & Anchin, LLP and Evan Snapper (defendants) in Massachusetts federal court under New York law for professional negligence, breach of contract, and breach of fiduciary duty arising from financial, investment, real-estate, tax, and NetJets fractional-ownership dealings and alleged reporting to the DOJ about campaign contributions.
- Trial lasted 26 days; the jury returned a general verdict for plaintiffs awarding about $28.6 million in compensatory damages and $22.4 million in punitive damages (total ≈ $51 million) on all three claims.
- After judgment, defendants renewed a Rule 50(b) motion. The district court granted it in part: it found some liability theories time-barred (including Renaissance condo and Fifth Avenue apartment issues), held statements to the DOJ were privileged (for those not made in response to subpoena), and found NetJets damages speculative; because the verdict form was general, the court ordered a new trial on remaining theories and later entered judgment for defendants on those remaining theories when plaintiffs declined retrial.
- Plaintiffs appealed the Rule 50(b) rulings, the district court’s denial of Chapter 93A fees and equitable forfeiture, the handling of juror testimony about the damage tally, and other district-court rulings.
- The First Circuit (Barron, J.) affirmed in part, reversed in part, and remanded: it reversed the district court’s acceptance of a qualified-privilege defense raised for the first time in Rule 50(b), affirmed the three-year limitations period for monetary fiduciary claims and the rejection of continuous-representation tolling for the disputed theories, and affirmed that NetJets damages were speculative; because multiple theories were encompassed in a single verdict question and several theories were defective, the court ordered a new trial rather than reinstating the verdict.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants waived qualified-privilege defense by not raising it in Rule 50(a) | Defendants failed to preserve the privilege; new defense in Rule 50(b) is waived | Qualified-privilege defense is subsumed in Rule 50(a) motion and may be considered in Rule 50(b) | Waiver; district court erred to decide privilege raised only in Rule 50(b); reversed on this point |
| Applicable statute of limitations for breach of fiduciary duty under NY law | Six-year limitations (or tolling) applies because of contractual/fiduciary relationship and equitable remedies | Three-year limitations applies to monetary fiduciary claims; six years only for equitable relief | Affirmed three-year limitations for monetary fiduciary claims per IDT Corp.; district court correct |
| Whether continuous-representation doctrine tolled claims tied to earlier real-estate transactions (Renaissance condo, Fifth Ave.) | Doctrine tolls limitations for ongoing relationship and thus renders those theories timely | Doctrine tolls only with respect to the particular transaction; these real-estate claims are time-barred | Affirmed: doctrine applies only to ongoing services as to the particular transaction; plaintiffs’ real-estate theories not timely |
| Sufficiency of evidence for NetJets damages | Gruber’s later savings/perks ($532,000) shows recoverable damages from Snapper’s mismanagement | Later deal conditions differ (recession, smaller plane); comparison is speculative | Affirmed: plaintiff’s NetJets damages are speculative and cannot support verdict |
Key Cases Cited
- Parker v. Gerrish, 547 F.3d 1 (1st Cir.) (Rule 50(b) is bounded by issues raised in Rule 50(a))
- Correa v. Hosp. S.F., 69 F.3d 1184 (1st Cir.) (same preservation principle for Rule 50 motions)
- IDT Corp. v. Morgan Stanley Dean Witter & Co., 907 N.E.2d 268 (N.Y. 2009) (statute of limitations for fiduciary-duty claims depends on relief sought; monetary claims three years)
- Gillespie v. Sears, Roebuck & Co., 386 F.3d 21 (1st Cir.) (when a general verdict encompasses multiple theories one defective, new trial is usually required)
- Siedle v. Putnam Invests., Inc., 147 F.3d 7 (1st Cir.) (presumption of public access to judicial records; standard for sealing jury materials)