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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF NEW YORK
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`ALEKSANDR PALATKEVICH and BPVN
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`TECHNOLOGIES, INC,
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`.
`.
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`Plaintiffs,
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`-against-
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`No. 12 Civ. 1681 (CM)
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`MICHAEL CHOUPAK, ANASTASIA KOROLEVA,
`STANACARD, LLC, INTERMEDIA NET, INC.
`Individually and as the Successor to INTERMEDIA
`NET, LLC and INTERMEDIA, INC, UNISON
`TECHNOLOGIES, INC, Individually and as
`Successor to UNISON TECHNOLOGIES, LLC,
`VICTORIAN MANAGEMENT, LLC, KEKU, INC,
`Individually and as Successor to KEKU, LLC,
`STANACARD, LTD., and EDUARD ROMANOV,
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`Defendants.
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`ARTUR NATAN ZAYTSEV and ANZFS, INC,
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`Plaintiffs,
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`~against—
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`No. 12 Civ. 1682 (CM)
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`MICHAEL CHOUPAK, ANASTASIA KOROLEVA,
`STANACARD, LLC, INTERMEDIA NET, INC,
`UNISON TECHNOLOGIES INC, VICTORIAN
`MANAGEMENT, LLC, KEKU, LLC,
`STANACARD, LTD. and EDUARD ROMANOV,
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`Defendants.
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`x
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`MEMORANDUM DECISION AND ORDER DENYING PLAINTIFFS’ MOTION FOR A
`NEW TRIAL
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`McMahon, J. :
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`The court assumes the reader‘s familiarity with the numerous opinions previously issued
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`in this action that set forth the background of the parties’ dispute. The only relevant new fact is
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`that on May 5, 2016, after a seven day trial, a jury unanimously rejected Plaintiff Palatkevich's
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`breach of contract claim, Plaintiff Zaytsev’s fraud claim, and Defendant Stanacard’s
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`counterclaim against Palatkevich for repayment of a loan.
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`Plaintiffs seek a new trial under rule 59(a)(1) of the Federal Rules of Civil Procedure.
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`(Plaintiffs’ Memorandum of Law in Support of Their Motion for a New Trial, Docket # 207 (“Pl
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`Meta”) at 4.) I note that while this motion is brought on behalf of Plaintiffs (plural) the
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`substance of the arguments is directed entirely to Plaintiff Palatkevich’s case. To the extent that
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`counsel intended to bring this motion on Zaytsev’s behalf as well, that aspect of the motion is
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`denied because Plaintiff Zaytsev has failed to articulate any basis for such relief For the reasons
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`discussed below, Plaintiff Palatkevich’s motion is denied.
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`DISCUSSION
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`I.
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`Rule 59
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`Rule 59(a)(l)(A) provides that the trial court “may, on motion, grant a new trial on all or
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`some of the issues — and to any party — .
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`.
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`. after a jury trial, for any reason for which a new trial
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`has heretofore been granted in an action at law in federal cou1t.” F.R.C.P. 59(a)(1)(A).
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`The Court has significant discretion in deciding whether to grant a Rule 59 motion for a
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`new trial. See, e.g., Amara v. City ofSaratoga Springs, 170 F.3d 311, 314 (2d Cir. 1 999). In
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`determining whether to order a new trial under Rule 59, a district court may independently weigh
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`the evidence. See. e.g., Song 12. Ives Labs, Inc, 957 F.2d 1041, 1047 (2d Cir. 1992); Geressy v.
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`Digital Equip. Corp, 980 F.Supp. 640, 646 (E.D.N.Y.1997). A motion for a new trial “may be
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`granted even if there is substantial evidence to support the jury’s verdict.” Song, 957 F.2d at
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`1047. A jury’s verdict, however, should not be disturbed unless it is seriously erroneous: “The
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`2
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`trial judge, exercising a mature judicial discretion, should View the verdict in the overall setting
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`of the trial; consider the character of the evidence ...; and abstain from interfering with the
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`verdict unless it is quite clear that the jury has reached a seriously erroneous result. The judge’s
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`duty is essentially to see that there is no miscarriage ofjustice.” Bevevino v. Sayajiari, 574 F.2d
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`676, 684 (2d Cir.1978); see also Caruolo v. John Crane, Inc, 226 F.3d 46, 54 (2d Cir.2000)
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`(noting that courts exercise their discretion to grant a new trial if “the jury has reached a
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`seriously erroneous result or
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`the verdict is a miscarriage ofjustice”).
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`I].
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`There is No Basis to Disturb The Jury’s Determination that Stanacard Did Not Act
`in Bad Faith
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`Plaintiffs proffer four reasons that this court should set aside the jury’s determination that
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`Stanacard did not act in bad faith so as to breach its contract with Palatkevich: (1) the evidence
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`demonstrated that Stanacard acted in bad faith with respect to the MFA valuation, (2) Plaintiffs
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`were entitied to an adverse inference instruction to the-jury based on Defendants’ failure to call
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`Anastasia Koroleva and William A. Duratti as witnesses, (3) Defendants’ own evidence a
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`namely, the valuation of Stanacard by Terrence Griswold of Empire Valuation Consultants —
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`demonstrates that Stanacard’s valuation of Palatkevich’s stake was “not proceduraliy or
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`substantively fair or reasonable” (Pl. Mem. at 13), and (4) the jury’s denial of Stanacard’s
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`counterclaim “necessarily means that Stanacard owes Paiatkevich
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`$32,000” and thus cannot
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`be squared with the jury’s verdict that Stanacard did not breach its contract with Palatkevich. (Pl.
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`Mem. at 15.) Plaintiffs also argue that the court’s purported “reversal” of its summary judgment
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`order changed the nature of Palatkevich’s claim and prejudiced hirn, necessitating a new trial.
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`(Pl. Mem. at 17.)
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`A.
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`The Jury’s Verdict Was Not Against the Weight of the Evidence
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`Palatkevich points generally to evidence that Stanacard and Michael Choupak previously
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`claimed that Stanacard was worth tens or hundreds of millions of dollars (Leon Decl. Exs. 4-6),
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`that comparable companies sold for hundreds of millions of dollars, and that both Plaintiffs” and
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`Defendants’ expert valued Palatkevich’s stake in Stanacard at greater than $32,000 as evidence
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`that MFA’s valuation of Palatkevich’s stake was “grossly unreasonable and unfair.” (Pl. Mom. at
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`1—2.) Palatkevich argues that Stanacard’s failure to “defend” the MFA valuation suggests that
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`Stanacard did not comply with its obligations under the Amended LLC Agreement.
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`(Id. at 7.)
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`Finally, Palatkevich contends that “substantial evidence” that Choupak acted in bad faith towards
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`Palatkevich, combined with “serious issues of credibility” with respect to Choupak’s trial
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`testimony compel this court to set aside the jury’s verdict.
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`Palatkevich’s arguments are premised on a misunderstanding of the burden of proof in
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`his case. As this court has repeatedly emphasized, Palatkevich bore the burden of proving his
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`case by a preponderance of the evidence. Defendants were under no obligation to prove that
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`MFA’s valuation of $32,000 was reached in good faith; to the contrary, Defendants were
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`perfectly entitled to sit back and watch Palatkevich struggle to convince a jury otherwise. And
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`struggle he did. Not only was a jury unconvinced by Palatkevich’s case, but so was this court.
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`As this court stated throughout trial, there was absolutely no direct evidence that Choupak or
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`anyone else at Stanacard misled MFA — either by falsifying or withholding relevant information
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`— in order to obtain a low—ball valuation.
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`(See, e.g., Trial Tr. p.754:8-17.) In other words, there
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`was no direct evidence that Defendants breached the implied covenant of good faith and fair
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`dealing by buying Palatkevich out.
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`I nonetheless allowed the breach of contract claim go to the
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`jury because there was sufficient circumstantial evidence 7 namely the evidence of Choupak’s
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`animus towards Palatkevich, along with the enormous differential between MFA’s valuation and
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`4
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`Plaintiff’ s expert’s — such that a reasonable juror could conclude that Stanacard breached its
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`implied contractual obligation to Palatkevich to act in good faith.
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`To say that I was surprised by the verdict would be an understatement. Not only was
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`there no direct evidence to support Palatkevich’s claim, but the circumstantial evidence
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`Palatkevich presented was squarely and convincingly rebutted by the defense. Defendants’
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`expett, Terrence Griswold, eviseerated the valuation by Plaintiffs’ expert, Anthony Fazzone, and
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`cross examination by Defendant’s counsel all but established that the financial assumptions
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`underpinning Fazzone’s analysis were Wildly unrealistic. (See Krol Decl. Exs. B (cross—
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`examination of Fazzone) and C (Griswold testimony)). Whether this court found Choupak’s
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`testimony as to his lack of involvement in Palatkevieh’s buyout credible — and I note that “a
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`court should rarely disturb a jury’s evaluation of a witness’s credibility,” DLC Management
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`Corp. v. Town ofHyde Park, 163 F.3d 124, 133—34 (2d Cir.l998) (internal quotations and
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`citations omitted) m is really of no moment. A finding that Choupak lacked credibility with
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`respect to his involvement in the buyout would not tip the weight of the evidence in
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`Palatkevich’s favor.
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`On motions at the close of evidence, I noted that Palatkevich had put on a “very weak
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`case,” albeit one that would go to the jury. (Trial Tr. p. 758116-17.) Nothing presented in this
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`motion alters my view.
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`B.
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`Plaintiffs were not Entitled to a Missing Witness Charge
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`Palatkevich argues that a “missing witness charge” — by which the jury could draw an
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`adverse inference for Defendants’ failure to call Anastasia Koroleva, CEO of Stanacard at the
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`time of the events in question, and William A. Duratti, Managing Director of MFA — was
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`“imperative to a fair trial.” (P1. Mom. at 9.)
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`“A missing witness charge permitting the jury to infer that the testimony of an
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`unproduced witness would have favored one party is appropriate if production of the witness is
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`‘peculiarly within [the] power’ of the other party.” United States v. Rabbani, 382 Fed.Appx. 39,
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`41 (2d Cir.2010). “Hence, where one party alone could produce a material witness but fails to do
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`so, an inference that the testimony would favor the opposing party may be appropriate.” Chevron
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`Corp. v. Donziger, 974 F. Supp. 2d 362, 700 (S.D.N.Y. 2014), afl’d sub nom. Chevron Corp. v.
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`Donziger, No. 14-0826(L), 2016 WL 4173988 (2d Cir. Aug. 8, 2016). However, “An adverse
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`inference is not warranted, for example, where the controlling or related party makes the missing
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`witness available to its opponent, the party seeking the adverse inference equally could obtain
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`the missing witness’s testimony, or the party seeking the adverse inference made no attempt to
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`obtain the witness’s testimony.” Id. Whether to provide a missing witness charge “is committed
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`to the sound discretion of the trial judge.” United States v. Nichols, 912 F.2d 598, 601 (2d Cir.
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`1990) (internal citation omitted).
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`Ms. Koroleva appeared for deposition in June of 2014 .__ without any need for this court to
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`compel her to do so. Palatkevich was perfectly free to read her deposition testimony into the
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`record; he made no effort to do so.
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`As for Mr. Duratti, Plaintiffs made no effort to depose him or anyone else from MFA — a
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`fact that has confounded the court throughout this entire case. That Duratti was purportedly
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`outside the court’s subpoena power, so he could not be compelled to testify at trial, makes no
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`difference when Plaintiffs never even sought to depose him, which they easily could have done
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`in Massachusetts, where MFA is headquartered. Astoundingly, Plaintiffs argue that the lack of
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`Duratti’s testimony rendered this trial unfair when Plaintififr themselves opposed Defendants’ last
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`minute attempt to add Duratti to their witness list. (See Plaintiffs“ Response in Opposition to
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`Motion for Reconsideration, Docket #197.)
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`It is axiomatic that “A witness is not unavailable to a party that fails to make any effort to
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`seek his or her testimony.” Chevron, 974 F. Supp. 2d at 702. Here, that applies to both
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`Koroleva and Duratti. No adverse inference charge was warranted.
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`C.
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`The Valuation by Defendants’ Experts Does Not Necessitate a New Trial
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`Plaintiffs argue that the disparity between MFA’s valuation of Palatkevich’s stake
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`($32,000) and the valuations by Plaintiffs’ expert ($505,623) and Defendants’ expert (a range of
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`$53,800 to $85,500) establishes that the jury’s verdict denying Palatkevich’s breach of contract
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`claim was against the weight of the evidence. (Pl. Mem at 13-14; Leon Decl. Exs. 13, 16, and
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`20).
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`Plaintiffs misconstrue the nature of Palatkevich’s breach of contract claim. To prove that
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`Stanacard breached its obligations to Palatkevich under the Amended LLC Agreement, Plaintiffs
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`needed to do more than point to a discrepancy in expert valuations. As has been stated time and
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`again in this case, the Amended LLC Agreement gave Stanacard the right to buy back the
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`interests of LLC members who no longer worked for the company and to do so at a “fair market
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`value” to be determined by a third party appraiser of Stanacard’s choosing. (See e.g., Summary
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`Judgment Decision, Docket # 150 at 25-27.) That is precisely what Stanacard did. However, the
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`Court (generously) construed Palatkevich to have pleaded a claim for breach of the implied
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`covenant of good faith and fair dealing (Id. at 25), some evidence ofwhich included the vast
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`discrepancy between MFA’S valuation and Fazzone’s valuation]
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`1 Fazzone’s original valuation, which this court considered as evidence of Palatkevich’s claim at
`the summary judgment stage, calculated the “fair value” of Palatkevich’s stake rather than the
`“fair market value.” This error was pointed out to the court just prior to trial, and Fazzone was
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`7
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`As stated in the April 18, 2016 Order Granting Defendants’ Motion for Reconsideration,
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`Docket # 185 (“Reconsideration Order”), the issue for the jury was: “did Choupak comply with
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`his duty of good faith toward his minority shareholder when he and Stanacard supplied
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`information to the appraiser ... chosen by Stanacard to calculate the fair market value of
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`Paiatkevich’s interest.” (Id. at 2-3.) Pointing to the discrepancy in competing valuations is
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`certainly some evidence of an alleged breach, but it is not dispositive. Nor does the fact that
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`Defendants’ own expert reached a higher valuation than did MFA alter that conclusion.
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`Valuation is not an exact science. That both Plaintiffs’ and Defendants’ experts valued
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`Palatkevich’s 10% stake at more than $32,000 may suggest that $32,000 was indeed too low, but
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`it does not establish by a preponderance of the evidence that MFA’S low valuation was a
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`consequence of a breach of the implied covenant of good faith.
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`I).
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`The Verdicts on Palatkevich’s Breach of Contract Claim and Defendants’
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`Counterclaim for Repayment of a Loan are not Inconsistent
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`Finally, Plaintiffs argue that the jury’s verdict denying Stanacard’s counterclaim for
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`repayment of a loan “necessariiy means that Stanacard owes Palatkevich the $32,000 it never
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`paid him.” (Pl. Mem. at 15.) In other words, Plaintiffs claim that the verdict on Palatkevich’s
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`breach of contract claim and the verdict on Stanacard’s counterclaim are inconsistent.
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`It is a court’s “duty to harmonize inconsistent verdicts, viewing the case in any
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`reasonable way that makes the verdicts consistent.” Anheuser—Busch, Inc. v. John Labott Ltd. , 89
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`F.3d 1339, 1347 (8th Cir. 1996) (citing Gallick v. Baltimore & Ohio RR. C0,, 372 US. 108, 119,
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`(1963)); see also Moore’s Federal Practice - Civil § 59.13 (2015).
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`directed to amend his report, which resulted in a valuation of $505,623 — a significant discount
`from the previousiy calcuiated $805,085 valuation.
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`8
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`E?
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`There were two theories by which Palatkevich could have recovered on his breach of
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`contract claim. First, as discussed in detail above, he could have proved that Stanacard breached
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`the implied covenant of good faith and fair dealing by paying him out at a value of $32,000 for
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`his 10% equity stake. Second, he could have proved that Stanacard never paid him the $32,000
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`it owed him. The iatter formulation of the claim is related to Stanacard’s counterclaim that it
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`paid a certain amount ($58,000 according to Stanacard and $14,000 or $15,000 according to
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`Palatkevich) for Palatkevich’s New York State tax liability — an amount Palatkevich allegedly
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`never repaid —~ and that this amount was greater than the $32,000 Stanacard owed Palatkevich.
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`The verdicts are not necessarily inconsistent. The parties agree that Stanacard owed
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`Palatkevich $32,000 for his equity stake and that Stanacard paid some amount of money for
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`Palatkevich’s tax liability. Indeed, Palatkevich conceded at trial that he owed Stanacard money
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`because Stanacard had, in fact, paid his tax liability. (See Krol Decl. Ex. E at 72.) He also stated
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`that he did not know the precise amount he owed Stanacard, though he thought it was around
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`$14,000. (Li) Based on this evidence, a reasonable juror could easily conclude that Palatkevich
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`failed to carry his burden of proof on the claim that Stanacard breached its contract with him by
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`failing to cut him a check for his $32,000 equity stake. A reasonable juror could simultaneously
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`find that Stanacard failed to carry its burden of proof on the claim that Palatkevich owed it
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`money, by failing to provide sufficient evidence as to the full amount of that tax liability.
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`In
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`other words, the very thin evidence presented at triai on this issue could lead a juror to conclude
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`that neither party had sufficiently carried its burden so as to merit recovery. Since the evidence
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`as to this point consisted only of the fuzzy recollections of the parties to this action, the comt
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`finds such verdicts eminently justified.
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`III.
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`Palatkevieh was Not Prejudiced by the Manner in which this Court Construed His
`Breach of Contract Claim
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`Plaintiffs argue that this court’s clarification of Palatkevich’s breach of contract claim
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`prejudiced Plaintiffs, insofar as they were not previously aware of the significance of the
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`testimony of certain witnesses — namely, Ms. Koreleva and individuals at MFA. (Pl. Mem. at
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`17—21.)
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`At summary judgment, the court stated that there would be a trial as to the “fair value of
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`Palatkevich’s 10% stake.” I readily admit that the court struggled to interpret Plaintiffs’ claims
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`prior to trial, in part because of the substantial effort both the parties and this court directed
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`toward Plaintiffs’ RICO allegations. But after consideration of relevant exhibits at the final pre—
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`trial conference — namely documents that bore on Choupak’s and Stanacard’s good faith, that
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`had previously been “lost” by the parties — I determined that “the issue of Choupak’s good faith
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`was not finally resolved on the motion for summary judgment.” (Reconsideration Order, Docket
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`#135 at 3.) l thus clarified that the fair value of Palatkevich’s 10% stake was relevant insofar as
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`it implicated whether Choupak and Stanacard had deliberately misled Stanacard’s chosen
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`valuation firm, MFA.
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`(Id. at 2-3.) Indeed, since the Amended LLC Agreement permitted
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`Stanacard to buy out Palatkevich at a value determined by an appraiser of Stanacard’s choosing,
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`the only means by which Stanacard could possibly have breached the contract was by violating
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`the implied duty of good faith. By “reviving” this aspect of the breach of contract claim, the
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`court arguably helped Plaintiffs — without it, the “correct” fair market value of Palatkevich’s
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`stake would have been irrelevant.2
`
`2 While Plaintiffs contend that they were unaware of the need to prove Defendants’ breach of the
`duty of good faith until they reviewed the court’s memorandum to the parties dated April 29, the
`Reconsideration Order was docketed on April 18, shortly after the final prentrial conference and
`a week prior to trial. The April 29 memorandum merely reiterates the clarification set forth in
`the Reconsideration Order.
`
`10
`
`
`
`
`
`

`

`
`
`
`
`INDEX NO. 508010/2017
`FILED: KINGS COUNTY CLERK 08/11/2017 02:47 PM
`F:ILED KINGSfieCOUNTY CLERK 08312017 02:47 PM
`INDISX NO 508010/2017
`Case 1:12-cv-01681-CM-GWG Document 226 Filed 08/18/16 Page 11 of 11
`
`NYSCEF DOC. 11..
`"
`Document
`FIe- 8/18/16 Rfieeess steam. 08/11/2017
`
`NYSCEF DOC. NO. 17
`RECEIVED NYSCEF: 08/11/2017
`
`
`
`
`
`The notion that Plaintiffs were not previously aware of the importance of what was and
`
`what was not provided to MFA by Choupak/Koroleva and others, and were thus prejudiced by
`
`the court’s const‘rual of its breach of contract claim, is preposterous. The legitimacy of MFA’s
`
`valuation has been central to this casefrom the very beginning. Palatkevich’s entire breach of
`
`contract claim was — and has always been — premised on the fact that Choupak and Stanacard
`
`sought to “squeeze him out” by forcing a buyback of his shares at an intentionally low valuation.
`
`That Palatkevich’s counsel (and I appreciate the fact that current counsel was not representing
`
`Plaintiff prior to trial) made the choice not to depose anyone from MFA regarding this valuation
`
`was a strategic decision, if a peculiar one. Perhaps prior counsel was concerned that deposing
`
`someone from MFA would damage Plaintiffs’ RICO claims, with which she was so enamored.
`
`In any event, parsing counsel’s strategy is a fool’s errand. The choice not to depose MFA may
`
`have been foolish or clever, but it should come as no surprise to anyone even remotely familiar
`
`with this case that such testimony was ... from the outset — highly relevant.
`
`Thus, this court’s clarification of Palatkevich’s breach of contract claim did not prejudice
`
`Plaintiffs in the least.
`
`CONCLUSION
`
`For the foregoing reasons, Plaintiffs’ motion for a new trial is denied. The Clerk of the
`
`Court is directed to remove Docket No. 206 from the court’s list of pending motions.
`
`Dated: August 18, 2016
`
`BY ECF TO ALL COUNSEL
`
`U.S.D.J.
`
`11
`
`

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