throbber
Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 1 of 25
`
`
`
`
`
`
`
` OPINION AND ORDER
`
` 15 Civ. 5514 (ER)
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`JAMES T. EVANS,
`
`Plaintiff,
`
`
` – against –
`
`SSN FUNDING, L.P., EDWIN AVENT, HSE,
`INC., and HSE, LLC,
`
`
`Defendants.
`
`
`
`Ramos, D.J.:
`
`James T. Evans (“Evans”) brings this action in diversity against SSN Funding, L.P.
`
`(“SSN Funding”) for breach of two promissory notes, against Edwin Avent (“Avent”) for breach
`
`of fiduciary duty and negligent misrepresentation, and against Avent, HSE, Inc. and HSE, LLC
`
`(together, “HSE”) (collectively, “Defendants”), for conversion and an accounting, and for fraud
`
`against all Defendants. After a four-day trial before this Court, a jury found that SSN Funding
`
`had procured one of the promissory notes by fraud, and awarded Evans compensatory and
`
`punitive damages. Schoenstein Aff., Doc. 101, Ex. 1, Verdict Sheet, at 4–5. The jury, however,
`
`rejected Evans’ breach of contract claim against SSN Funding, concluding that Evans had
`
`converted the promissory notes into an equity interest in SSN Funding. Id. at 1. The jury found
`
`the remaining Defendants not liable on all claims brought against them. See Verdict Sheet.
`
`Before the Court are Evans and SSN Funding’s post-trial motions: Evans moves the
`
`Court for entry of judgment as a matter of law, or a new trial, pursuant to Federal Rule of Civil
`
`Procedure 50(b) and 59, respectively, Doc. 99, arguing that the jury’s finding of conversion lacks
`
`support in the record. SSN Funding asks the Court to deny Evans’ motion as baseless and
`
`dismiss the case, arguing that the jury’s finding of conversion renders Evans a limited partner of
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 2 of 25
`
`SSN Funding and destroys diversity jurisdiction. Alternatively, SSN Funding moves for
`
`judgment as a matter of law pursuant to Rule 50(b), on the basis that the jury’s finding of fraud
`
`as to SSN Funding is inconsistent with its finding absolving Avent of liability for fraud. Doc.
`
`106. For the reasons set forth below, both parties’ motions are DENIED, and the case is
`
`dismissed for lack of subject matter jurisdiction.
`
`I.
`
`BACKGROUND
`
`
`
`Factual Background
`
`The Court assumes familiarity with the record and its prior summary judgment opinion,
`
`which details the facts and procedural history of this case, and discusses here only those facts
`
`necessary for its disposition of the instant motion. See Evans v. SSN Funding, L.P., No. 15 CIV.
`
`5514 (ER), 2017 WL 3671180 (S.D.N.Y. Aug. 23, 2017) (the “Summary Judgment Opinion”).
`
`As relevant here, this dispute stems from Evans’ $250,000 investment in the Soul of the
`
`South Network (“Soul of the South”), a regional broadcast television network that caters to an
`
`African-American audience, in which SSN Funding holds an indirect interest. Defs.’ 56.1 Stmt.
`
`¶ 5.1
`
`
`
`1.
`
`Promissory Notes
`
`On December 12, 2011, Evans and SSN Media Group, LLC (“SSN Media LLC”),
`
`another entity related to SSN Funding, executed a promissory note pursuant to which Evans lent
`
`
`1 Evans is an attorney residing in New York City. Defs.’ 56.1 ¶¶ 1–2; Pl.’s 56.1 Counterstmt. ¶ 31. SSN Funding is
`an Arkansas limited partnership with its principal place of business in Arkansas, and is the successor-in-interest to
`SSN Media Group, Inc. (“SSN Media”). Defs.’ 56.1 ¶ 4; Pl.’s 56.1 Counterstmt. ¶ 32. Avent, a citizen of the State
`of Maryland, was the Chairman and CEO of SSN Media, SSN Funding, S.O.S. Media Holdings, Inc. (“S.O.S.”), and
`HSE at all relevant times. Pl.’s 56.1 Counterstmt. ¶ 34; LPA at 65. HSE, Inc. was a Maryland corporation with its
`principal place of business in Maryland. Pl.’s 56.1 Counterstmt. ¶ 35.
`
`
`
`
`2
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 3 of 25
`
`SSN Media LLC $150,000 (the “December Note”).2 Schoenstein Aff., Ex. 3, December Note;
`
`Schoenstein Aff., Ex. 4, Tr. 41:11–24. Several months later, on March 20, 2012, Evans and SSN
`
`Media executed a second promissory note for $100,000 (the “March Note”). Schoenstein Aff.,
`
`Ex. 4, March Note; Tr. 43:24–44:2. Both the December and March Notes (together, the
`
`“Promissory Notes”) allowed Evans to elect to cancel the Notes within one year—by March 20,
`
`2013 and March 21, 2013 respectively—and receive “in lieu thereof, such other securities and/or
`
`notes and/or agreements and/or instruments as shall be similar to other securities and/or notes
`
`and/or agreements and/or instruments which may be issued to any other lender [] or investor in
`
`the Borrower.” See December Note at 1; March Note at 1. In other words, the Notes permitted
`
`Evans to convert the loans he made to SSN Media to equity in the company, but only if he
`
`exercised that right within one year.
`
`At trial, Evans testified that before executing the March Note, he spoke to two
`
`representatives of Soul of the South, Frank Mercado-Valdes (“Mercado-Valdes”) and Chris
`
`Clark (“Clark”). Tr. 44:2–16. According to Evans, he “was very hesitant” to lend additional
`
`funds to Soul of the South because “[he] didn’t know” how his initial investment was being used
`
`and was leery of continuing to invest in a startup that had not yet secured sufficient funding to
`
`commence operation. Tr. 45:8–12, 46:1–2. To hedge against this concern, the parties agreed
`
`that the proceeds from the $100,000 March Note would be placed in an escrow account and
`
`would not be utilized for any purpose unless and until a total of $2 million was raised for Soul of
`
`the South. Tr. 124:9–10 (Evans stating that “this second investment was to be in escrow until
`
`SSN reached $2 million in investment”); see also Tr. 35:25–36:2, 39:16–17, 45:21–25, 156:3–5.
`
`Consistent with this understanding, upon wiring the funds, Evans emailed Clark to verify that
`
`
`2 The December Note was amended on March 21, 2012 to assign SSN Media LLC’s rights to SSN Media. See Doc.
`101 Ex. 3 at 1; Tr. 53:20–25.
`
`
`
`3
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 4 of 25
`
`they would be held in an “escrow account and not the checking account . . . . until funds are
`
`collected from other lenders.” Tr. 51:1–6 (quoting Doc. 101, Ex. 5, March 21, 2012 Email Chain
`
`from Evans to Clark). In response, Clark confirmed that that was “[t]he plan.” Tr. 51: 7–18.3
`
`Despite these representations, and unbeknownst to Evans, the funds were never placed in
`
`escrow. Id. 51:19–24. Instead, Avent placed the funds in an HSE operating account where they
`
`were comingled with the funds therein and used to pay for the day-to-day operations of SSN
`
`Media. Tr. 122–123:2; Tr. 263:24–264:13, 277:15–20 (Avent testifying that HSE and SSN
`
`funds were comingled in the same account). At trial, Avent testified that he “only did with
`
`[Evans’] investment as [he] was directed by . . . Clark”, that “[a]n escrow account was never
`
`established, and [that he] was never instructed to transfer [Evans’] money into an escrow
`
`account.” Tr. 277:15–24.
`
`Evans testified that Mercado-Valdes and Clark approached him in June 2012 and asked if
`
`he would authorize the release of the $100,000 from escrow so that SSN Media could purchase
`
`an interest in SSN Media Gateway, LLC (“Gateway”).4 Tr. 59:13–60:14. He agreed to release
`
`the funds, but only for this purpose. Tr. 61:1–18. To memorialize that agreement, Clark sent
`
`Evans a Memorandum of Understanding that was purportedly signed by Avent, among others.
`
`Tr. 64:8–65:14; Memorandum of Understanding, Doc. 101, Ex. 6. SSN Funding, however,
`
`never received an interest in Gateway. Tr. 67:11–12. Instead, Avent acquired a $100,000
`
`interest in Gateway on behalf of HSE. Tr. 67:16–22, 263:6–23. At trial, Avent confirmed that
`
`Evans did not have an interest in Gateway. Tr. 265:16–22. Indeed, Avent asserted that he
`
`
`3 Notably, nothing in the March Note stipulated that the funds would be held in escrow. See March Note; Tr. 157:6–
`10.
`
` 4
`
` Evans testified that Gateway was formed to purchase a mechanism that would allow the Soul of the South network
`to send media feed in a faster and less cost intensive manner. See Tr. 59:25–60:8; Memorandum of Understanding
`at 1 (noting that the funds would be used to “acquire the Central Automated Satellite Hub,” which would be
`“leverage[ed] . . . to operate Soul of the South Network”).
`4
`
`
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 5 of 25
`
`“would have never signed any document that included James Evans having a hundred thousand
`
`dollars in the media Gateway because that was not true,” and that Clark had forged his signature
`
`on the Memorandum of Understanding, which Avent claimed he had not previously seen. Tr.
`
`264:14–265:15. As far as Avent was concerned, Clark “outright lie[d]” to Evans and “forged”
`
`Avent’s signature to give the fraudulent transaction the appearance of validity. Tr. 266:2–16.
`
`Subscription Agreements
`
`2.
`
`In late 2012, Clark approached Evans with the possibility of converting the $250,000 of
`
`debt into an equity interest in SSN Funding. Tr. 68:3–21. Evans testified that he informed Clark
`
`that he was “very uncomfortable” with the idea of converting his Promissory Notes to equity,
`
`because he “just really wanted to get paid.” Tr. 70:10–12. By simply holding on to the
`
`Promissory Notes, which would mature in December 2013, Evans had a low risk way to ensure
`
`he would recover his loan proceeds. December Note ¶ 2; March Note ¶ 2. As such, Evans
`
`informed Clark that “the only way that [he] would” agree to convert his Promissory Notes to
`
`equity was if he could condition the conversion of his notes on SSN Funding raising $4 million.
`
`Tr. 70:14–24. Pursuant to this planned transaction, in March 2013, Clark asked Evans to execute
`
`a subscription agreement (the “March Subscription Agreement”), Tr. 162:8–11, which upon
`
`signature and acceptance by SSN Funding, would convert Evans’ Promissory Notes to an equity
`
`interest in SSN Funding.5 Evans testified that Clark also sent Evans a Limited Partnership
`
`Agreement (“LPA”), which would memorialize Evans’ limited partnership in SSN Funding, and
`
`a side letter. Tr. 165:4–10. On March 18, 2013, Evans signed the March Subscription
`
`Agreement with a commitment of $250,000, described as convertible interests, and emailed the
`
`
`5 The March Subscription Agreement states that upon S.O.S.’ “acceptance of this application,” Evans will become a
`“[l]imited [p]artner [of SSN Funding] under the terms and conditions of the Partnership Agreement.” March
`Subscription Agreement ¶¶ 1-2. Moreover, it states that the commitment will be treated as equity for United States
`federal tax purposes. Id. at ¶ 17(l).
`
`
`
`5
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 6 of 25
`
`agreement to Clark, along with an executed copy of the LPA and an “Acknowledgment” signed
`
`by Evans. See Schoenstein Aff., Doc. 101, Ex. 7, March 18, 2013 Email from Evans to Clark
`
`attaching signed Subscription Agreement, Executed Limited Partnership Agreement, and
`
`Acknowledgment. Evans concedes that at that point it was his “intention to become a limited
`
`partner of SSN,” Tr. 162:20–24, though he asserts that he was never informed that the March
`
`Subscription Agreement was “accepted” by SSN Funding, Tr. 105:1–6.
`
`At trial, Evans insisted that the Acknowledgement that he attached to the March 18 email
`
`was a “side letter” that was drafted by Clark and had been discussed between the parties,
`
`although Evans offered no documentary proof that the Acknowledgment originated with Clark.
`
`Tr. 165:16–18. As relevant here, the Acknowledgment states that SSN Funding would only
`
`convert Evans’ Promissory Notes to equity upon raising and issuing $4.5 million in limited
`
`partner interest. See Acknowledgment, Schoenstein Aff., Doc. 101, Ex. 7, ¶ (g) (providing that
`
`Evans releases SSN Media from any and all claims that he may have upon the issuance to him
`
`“of a Limited Partnership Interest in SSN Funding, L.P. corresponding to a $250,000 capital
`
`contribution . . . and provided that SSN Funding[,] L.P. shall concurrently therewith issue a
`
`minimum of $4,500,000[] in Limited Partnership Interests”). On cross examination, Evans
`
`acknowledged that the “side letter” was “drafted . . . in the first person,” as if it were written by
`
`Evans, was signed only by Evans, and was an offer from Evans to SSN Funding. Tr. 165:19–24,
`
`169:7–13, 170:3–9. Defense counsel also noted that the Paragraph 6 of the March Subscription
`
`Agreement contains an anti-reliance provision, which provides:
`
`“[The subscriber(s)] confirm that our subscription for limited partnership interests
`. . . in, and our Commitment to, the Partnership is made solely on the basis of the
`information contained in a Disclosure Memorandum dated February 25[,] 2013,
`and other ancillary documents relating to the business of the Partnership provided
`by its authorized representatives during the course of meetings in person with the
`undersigned or its authorized representatives, the Partnership Agreement, any side
`
`
`
`6
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 7 of 25
`
`letter we have entered into with the Partnership and the General Partner and this
`Subscription Agreement . . . and not in reliance on any other information,
`representations or warranties, whether oral or written, provided by any Person
`including for the avoidance of doubt[,] the General Partner or any Affiliate thereof
`or any officer, agent, director, member, partner or employee of any such Person.”
`
`
`Tr. 166:22–167:12 (quoting March Subscription Agreement ¶ 6). In effect, Defense counsel
`
`argued that since the “side letter” was not signed by the SSN Funding partnership, it was not the
`
`kind of side letter contemplated by Paragraph 6. Tr. 169:1–170:10. Defense counsel further
`
`noted that the March Subscription Agreement contained a forward looking statement, which
`
`provided in pertinent part:
`
`Any statements made on behalf of the Partnership that are not statements of
`historical fact, should be considered forward looking statements. Such
`statements include, without limitation, those relating to the Partnership’s future
`business prospects, business plans, revenues, expenditures, capital needs, and
`income. [The subscriber(s)] acknowledge that such statements are estimates
`reflecting the best judgment of the Partnership and involve a number of risks
`and uncertainties that could cause actual results to differ materially from those
`suggested
`by
`any
`forward
`looking
`statements.”
`
`Tr. 171:18–172:2 (quoting March Subscription Agreement ¶ 17(o)).
`
`
`
`Relying on that provision, Defense counsel asked Evans whether he ever “raised an
`
`objection about the inherent contradiction” between the Acknowledgment conditioning Evans’
`
`partnership interest on SSN Funding raising $4.5 million and the March Subscription
`
`Agreement’s forward looking statement clause. Tr. 174:11–175:1. Evans responded that he did
`
`not raise an objection because he did not view the statements as contradictory. Tr. 174:18.
`
`Evans thus maintained that he understood the documents he executed would not become final,
`
`and his Promissory Notes would not be converted into equity, until SSN Funding met the $4.5
`
`million capital raise threshold. Tr. 176:1–10, 185:8–20. Two months after Evans executed the
`
`March Subscription Agreement and the LPA, on May 15, 2013, Avent signed the LPA.
`
`Schoenstein Aff., Ex. 8, LPA at 1, 65. Avent testified that when he signed the LPA he had “the
`
`
`
`7
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 8 of 25
`
`authority to bind the company to Evans” and “[a]bsolutely” considered Evans a limited partner
`
`of SSN Funding at that point in time. Tr. 290:16–291:12. On cross examination, Avent
`
`acknowledged that the LPA provided that the limited partners’ names would be listed on an
`
`Annex A, and that the LPA that was provided to Evans did not contain an Annex A. Tr. 395:7–
`
`18. Avent stated that that “probably is the case because Mr. Evans [was] the first limited partner
`
`[and] he would [have been] the only one that would be on the [A]nnex.” Id. No Annex A was
`
`ever entered into evidence.
`
`
`
`Several months later, on September 30, 2013, Evans signed a second subscription
`
`agreement, but this time Evans executed the agreement on behalf of Evans & McConnell, LLC
`
`(“E&M”) as the prospective subscriber with a commitment of $350,000, instead of $250,000
`
`(“September Subscription Agreement”). Schoenstein Aff., Ex. 9, September Subscription
`
`Agreement at 1, 9. As Evans explained at trial, Clark wanted SSN Funding to remain a
`
`“minority-owned business” so that the venture was eligible for additional funding and
`
`programming opportunities that were set aside for such businesses. Tr. 108:18–109:4. Thus,
`
`Clark asked Evans, who is a minority, to combine his equity stake with a non-minority investor
`
`named Peter Moore. The idea was that Evans and Moore could funnel their investments through
`
`an LLC so that SSN Funding could continue to claim minority status. Id. 108:22–109:24. Evans
`
`consented to that arrangement and, in May 2013, filled out the necessary paperwork and “paid to
`
`form” the E&M LLC. Id. 109:25–110:14. Evans conceded that Moore is not in fact a member
`
`of E&M—that Evans is its sole member—and that Moore’s $100,000 investment was only
`
`channeled through E&M. Tr. 113: 4–6. Thus, there is no dispute that $250,000 of the $350,000
`
`commitment was the same $250,000 Evans initially loaned to SSN Media through the
`
`
`
`8
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 9 of 25
`
`Promissory Notes, and that the remaining $100,000 was Moore’s. See Tr. 115:21–23, 183:1–9.
`
`Evans does not know if Moore is even a limited partner of SSN Funding. Tr. 183:12–14.
`
`The September Subscription Agreement provides: “NOTE: This subscription agreement
`
`encompasses Moneys already received and acknowledged by SSN Funding and creates no new
`
`obligations for subscriber herein.” September Subscription Agreement at 1. It otherwise
`
`contains the same provisions as the March Subscription Agreement. See id.
`
`In a September 30, 2013 email exchange in which Clark asked Evans to execute the
`
`September Subscription Agreement, Clark wrote, “it[’]s the same thing you already signed. This
`
`is just a new subscription agreement. I will take care of the rest of the information.” Doc. 63,
`
`Ex. 7 at 3; Tr. 114–115. Likewise, Douglas McHenry, the CEO of SSN Funding, Tr. 417:20–
`
`21, explained that the $250,000 that Evans invested to enter the “original . . . Evans . . . limited
`
`partnership agreement that he signed as a single individual” was “[t]he same $250,000” invested
`
`through E&M. Id. 435:1–15. McHenry expounded: “So we can talk about the sophistry of this
`
`company versus that company. In the end, James Evans whether it is through the [March
`
`Subscription Agreement] or the [September Subscription Agreement], is a limited partner.” Id.
`
`435:16–19.
`
`
`
`3.
`
`Parties’ Course of Conduct
`
`At trial, there was little dispute that Evans was treated as a limited partner for at least
`
`some period of time. Evans conceded that following the execution of the September
`
`Subscription Agreement he was treated as a limited partner of SSN Funding and “conduct[ed]”
`
`himself as such. Tr. 184:6–16. In this regard, Evans acknowledged that he “was invited to
`
`several [limited partner] meetings,” Tr. 184:15–16, and that he attended “[m]aybe seven” of
`
`those limited partner meetings, that he “sent and received” emails in his capacity as a limited
`
`
`
`9
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 10 of 25
`
`partner, Tr. 118:1–14, and that he “raised objections under the ambit of being a limited partner.”
`
`Tr. 119:8–10. According to Evans, however, he only conducted himself as a limited partner on
`
`behalf of E&M, and not in his individual capacity. Tr. 118:10–17. Evans also noted that E&M
`
`received K-1 tax statements, though Evans never filed that form as part of his or E&M’s tax
`
`returns. Tr. 120:9–24. Notwithstanding these admissions, Evans asserts that SSN Funding did
`
`not treat him the same as other limited partners were treated, and that as a result Evans drafted a
`
`shareholder derivative demand letter, but never formally filed a complaint, and never received a
`
`response from SSN Funding. Tr. 119:10–120:8.
`
`Testimony from the other members of SSN Funding indicated that Evans was indeed
`
`treated like a limited partner. Avent specifically testified that, despite his druthers, following
`
`Evans’ execution of the LPA he considered Evans a limited partner and treated him as such. Tr.
`
`290:16–291:12; 391:11–14 (stating that Evans was the “first limited partner to sign the limited
`
`partnership agreement”). William Campbell, an SSN Funding representative, provided
`
`corroborating testimony. At his deposition, which was read into the record at trial, Campbell
`
`asserted that Evans was treated as an SSN Funding limited partner, stating that the limited
`
`partnership held “four or five” telephonic meetings and that Evans “was always invited to
`
`participate . . . and a number of times he did.” Tr. 308:13–18. Similarly, McHenry testified at
`
`trial that “Evans was one of the larger limited partner stakeholders [in SSN Funding].” Tr.
`
`426:10–13. He further testified, ostensibly as proof of Evans’ active role as a limited partner,
`
`that Evans “certainly was aware of, . . . and I believe was ultimately in favor of, [SSN Funding
`
`being acquired by another entity].” Tr. 426:10–15. Finally, McHenry noted that prior to the
`
`lawsuit Evans never claimed that he was owed money on the Promissory Notes, Tr. 424:22–25.
`
`
`
`
`
`10
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 11 of 25
`
`
`
`Procedural History
`
`On February 28, 2017, SSN Funding filed a motion for summary judgment, arguing that
`
`because Evans converted the Promissory Notes into an equity interest in SSN Funding, there was
`
`no diversity of citizenship, and moreover, no contractual debt to enforce. Doc. 61. On August
`
`23, 2017, the Court denied SSN Funding’s summary judgment motion, reasoning that there were
`
`triable issues of fact. Specifically, the Court concluded that there was a triable issue regarding
`
`“whether there was sufficient mutual assent by both parties, causing Evans to become a limited
`
`partner in his individual capacity under the March Subscription Agreement.” Summary
`
`Judgment Opinion at *10. Next, because there was evidence that some portion of the $250,000
`
`loan was diverted by Avent and comingled with an HSE operating account, there was a triable
`
`issue on whether that loan “was ever given to SSN Funding and whether the [March]
`
`[S]ubscription is void ab initio as a result.” Id. Finally, the Court determined that there was a
`
`genuine dispute of material fact as to Evans’ claim that the Subscription Agreements were void
`
`ab initio because they were procured by fraud. Id. at *11.
`
`A four day trial was held from October 23–26, 2017.6 On October 26, the jury rendered
`
`its verdict. Verdict Sheet at 16. The jury concluded that SSN Funding was not liable for breach
`
`of contract, i.e., that Evan was not entitled to the return of his initial $250,000 loan, finding that
`
`Evans had converted his Promissory Notes to equity. Verdict Sheet at 1, No. 1. The jury also
`
`found that SSN Funding was liable for fraud in connection with the March Note and awarded
`
`
`6 During the course of the trial, the parties moved for judgment as a matter of law on a range of claims. Defendants
`sought judgment as a matter of law on Plaintiff’s breach of fiduciary duty, negligent misrepresentation, conversion,
`and fraud claims. Tr. 316–317, 331:17–20. The Court denied those motions on the basis that their resolution turned
`on issues of fact that should be decided by the jury. Tr. 327:16–20, 331:12–15, 334:20–25. Plaintiff also sought
`judgment as a matter of law on their conversion claim, asserting that the witnesses uniformly testified that E&M was
`treated as a limited partner, and not Evans in his individual capacity. Tr. 335–336. The Court likewise denied that
`motion on the grounds that there was “a basis for the jury to determine that by executing [the March Subscription
`Agreement], Mr. Evans became a limited partner.” Tr. 336:24–337:1.
`11
`
`
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 12 of 25
`
`Evans $100,000 plus interest in compensatory damages, and $75,000 in punitive damages.
`
`Verdict Sheet at 4–5, Nos. 12, 17–18. In contrast, the jury absolved Avent and the remaining
`
`Defendants from liability for fraud. Verdict Sheet at 2, 6–8, Nos. 5, 19, 26. The jury returned a
`
`verdict of non-liability on the remaining claims of negligent misrepresentation, breach of
`
`fiduciary duty, and conversion. Verdict Sheet at 10–15.
`
`II.
`
`LEGAL STANDARD
`
`
`
`Judgment as a Matter of Law and New Trial
`
`Judgment as a matter of law may not properly be granted under Federal Rule of Civil
`
`Procedure 50(b) unless the evidence, viewed in the light most favorable to the opposing party, is
`
`insufficient to permit a reasonable juror to find in his favor.” Galdieri-Ambrosini v. Nat’l Realty
`
`& Dev. Corp. 136 F.3d 276, 289 (2d Cir. 1998); see also MacDermid Printing Sols. LLC v.
`
`Cortron Corp., 833 F.3d 172, 180 (2d Cir. 2016) (where a jury has returned a verdict in favor of
`
`the non-movant, a court may grant judgment as a matter of law to the movant “only if the court,
`
`viewing the evidence in the light most favorable to the non-movant, concludes that a reasonable
`
`juror would have been compelled to accept the view of the moving party.”) (quoting Cash v. Cty.
`
`of Erie, 654 F.3d 324, 333 (2d Cir. 2011))); see also Fed. R. Civ. P. 50(a) (A court may grant a
`
`motion as a matter of law “[i]f a party has been fully heard on an issue during a jury trial and the
`
`court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for
`
`the party on that issue.”). A party seeking judgment as a matter of law bears a “‘particularly
`
`heavy’” burden “where, as here, ‘the jury has deliberated in the case and actually returned its
`
`verdict’ in favor of the non-movant.” Cash, 654 F.3d at 333 (quoting Cross v. N.Y.C. Transit
`
`Auth., 417 F.3d 241, 248 (2d Cir. 2005)). A court should accordingly set aside a jury’s verdict
`
`only “where there is such a complete absence of evidence supporting the verdict that the jury’s
`
`
`
`12
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 13 of 25
`
`findings could only have been the result of sheer surmise and conjecture, or there is such an
`
`overwhelming amount of evidence in favor of the movant that reasonable and fair minded
`
`[persons] could not arrive at a verdict against him.” Vangas v. Montefiore Med. Ctr., 823 F.3d
`
`174, 180 (2d Cir. 2016) (alteration in original) (quoting Stampf v. Long Island R.R. Co., 761 F.3d
`
`192, 197 (2d Cir. 2014)). In deciding such a motion, “‘[t]he court cannot assess the weight of
`
`conflicting evidence, pass on the credibility of the witnesses, or substitute its judgment for that of
`
`the jury,’ and ‘must disregard all evidence favorable to the moving party that the jury is not
`
`required to believe.’” ING Glob. v. United Parcel Serv. Oasis Supply Corp., 757 F.3d 92, 97 (2d
`
`Cir. 2014) (quoting Tolbert v. Queens Coll., 242 F.3d 58, 70 (2d Cir. 2001)).
`
`Pursuant to Rule 59(a), a court may grant a new trial “for any reason for which a new
`
`trial has heretofore been granted in an action at law in federal court.” Fed. R. Civ. P. 59(a)(1)(A).
`
`The standard under Rule 59(a) is less stringent than that of Rule 50 in two respects: “(1) a new
`
`trial under Rule 59(a) ‘may be granted even if there is substantial evidence supporting the jury’s
`
`verdict,’ and (2) ‘a trial judge is free to weigh the evidence himself, and need not view it in the
`
`light most favorable to the verdict winner.’” Manley v. AmBase Corp., 337 F.3d 237, 244–45
`
`(2d Cir. 2003) (quoting DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 133–34 (2d Cir.
`
`1998)). “That being said, for a district court to order a new trial under Rule 59(a), it must
`
`conclude that the jury has reached a seriously erroneous result or . . . the verdict is a miscarriage
`
`of justice, i.e., it must view the jury’s verdict as against the weight of the evidence.” Id. (internal
`
`citation and quotation marks omitted).
`
`
`
`
`
`13
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 14 of 25
`
`III. DISCUSSION
`
`
`
`Judgment as a Matter of Law
`
`Evans contends that he is entitled to judgment as a matter of law because the evidence at
`
`trial demonstrates that there was no meeting of the minds sufficient to convert the Promissory
`
`Notes to an equity interest in SSN Funding, Pl.’s Mem., Doc. 100, at 15, and that the jury’s
`
`finding of fraud against SSN Funding renders the conversion void ab initio, id. at 19. By
`
`contrast, SSN Funding asserts that Evans’ motion is meritless because the trial record adequately
`
`supports the jury’s finding of conversion, and that that finding destroys diversity and requires
`
`dismissal of the case for lack of subject matter jurisdiction. Defs.’ Mem., Doc. 107, at 15–18. In
`
`addition, SSN Funding argues that the jury’s finding of fraud does not void the conversion,
`
`because it runs counter to the law of the case. Id. at 15. Alternatively, SSN Funding asks the
`
`Court to grant its motion for judgment as a matter of law on the basis that the jury’s finding of
`
`fraud against SSN Funding is inconsistent with the jury’s finding of non-liability as to Avent, the
`
`only SSN Funding agent named as a defendant in this case. Id. at 20.
`
`
`
`
`
`1.
`
`Mutual Assent
`
`In substance, Evans seeks to undermine the jury’s finding of mutual assent in three ways.
`
`a) The Acknowledgement
`
`First, the core of Evans’ argument turns on the Acknowledgement that he submitted with
`
`the March Subscription Agreement. Evans asserts that although he signed the March
`
`Subscription Agreement, Paragraph (g) of the Acknowledgement conditioned the conversion of
`
`his Promissory Notes on the fulfillment of a condition precedent: that SSN Funding would raise
`
`$4.5 million in capital and issue that equity contemporaneous with the conversion of Evans’
`
`Promissory Notes. See Acknowledgment, Schoenstein Aff., Doc. 101, Ex. 7, ¶ (g) (providing
`
`
`
`14
`
`

`

`Case 1:15-cv-05514-ER Document 117 Filed 08/21/18 Page 15 of 25
`
`that Evans releases SSN Media from any and all claims that he may have upon the issuance to
`
`him “of a Limited Partnership Interest in SSN Funding, L.P. corresponding to a $250,000 capital
`
`contribution . . . and provided that SSN Funding[,] L.P. shall concurrently therewith issue a
`
`minimum of $4,500,000[] in Limited Partnership Interests”). Because that condition was never
`
`satisfied, the logic goes, the March Subscription Agreement was never consummated and the
`
`Promissory Notes were never converted to equity. See Pl.’s Mem. at 18 (“[O]ne of two things is
`
`true. Either the parties agreed to convert Evans’ loans into equity, but only if the predicate
`
`capital raise of $4.5 million was achieved, or Evans and SSN simply failed to achieve a meeting
`
`of the minds on any agreement.”). This argument fails because it is contrary to the settled law of
`
`the case. See Musacchio v. United States, 136 S. Ct. 709, 716 (2016) (“The law-of-the-case
`
`doctrine generally provides that when a court decides upon a rule of law, that decision should
`
`continue to govern the same issues in subsequent stages in the same case.”) (quotation marks and
`
`citation omitted).
`
`Specifically, as SSN Funding notes, Defs.’ Mem. at 16, at summary judgment the Court
`
`rejected this very argument, concluding that, as a legal matter, the “consummation of the March
`
`Subscription Agreement did not depend on

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket