Opinion
NC-2019-0272
03-07-2024
FRANKLYN B. NEVILLE and JEAN NEVILLE Plaintiffs, v. DAVIS R. LOGAN Defendant.
For Plaintiff: Giovanni La Terra Bellina, Esq. Eric D. Correira, Esq. Theodore Orson, Esq. Catherine A. Shaghalian, Esq. For Defendant: Jeremiah C. Lynch, III, Esq.
For Plaintiff: Giovanni La Terra Bellina, Esq. Eric D. Correira, Esq. Theodore Orson, Esq. Catherine A. Shaghalian, Esq.
For Defendant: Jeremiah C. Lynch, III, Esq.
DECISION
LICHT, J.
After a four-day trial, the jury rendered a verdict in favor of Plaintiff Franklyn B. Neville (Franklyn). Pursuant to Rule 50(a) of the Superior Court Rules of Civil Procedure, Defendant Davis R. Logan (Davis) moved at the close of Plaintiffs' case and at the close of his case for judgment as a matter of law. In each case, this Court reserved its decision on the claims related to Franklyn. In a timely manner, as allowed by Rule 59(b) of the Superior Court Rules of Civil Procedure, Davis renewed his motion for judgment as a matter of law and, alternatively, pursuant to Rule 59(e) of the Superior Court Rules of Civil Procedure, filed a motion for a new trial. Franklyn objects to Davis's post-trial motions. For the reasons stated herein, the Motion for Judgment as a Matter of Law and the Motion for a New Trial are GRANTED IN PART and DENIED IN PART.
Because Franklyn B. Neville and Jean Neville are named Plaintiffs and Davis R. Logan is a named Defendant, this Court will refer to them by their first names. No disrespect is intended.
I
Preliminary Facts
In 1997, Franklyn, Davis, Arthur Smith, and Mark DeMello formed Countryview Estates, LLC, (Countryview Estates) located in Tiverton, Rhode Island. See Franklyn Testimony Transcript (Test. Tr.) 12:1-10, Oct. 16, 2023. Countryview Estates was a modular home park. See id. at 12:22-13:2. Countryview Estates owned the land, assembled prefabricated modular homes on site, and sold them to individuals aged fifty-five and older. See id. at 12:14-19, 17:1623, 19:5-8. While retaining ownership of the land on which the modular homes sat, Countryview Estates charged the owners of the homes land rent. See id. at 19:13-19. Countryview Estates also had certain amenities such as a community center, pool, and exercise area which were used in common by the homeowners. See id. at 18:20-19:4.
The transcripts in this matter were not ordered. To the extent this Court refers to the trial transcripts, all references are to the unofficial, rough draft transcript provided by the Court Stenographer. Therefore, any citations and quotations incorporated in this Decision are subject to change, either in substance or to line and page references.
Initially, Franklyn loaned Countryview Estates approximately $160,000 for the purchase of the real estate to be developed. See id. at 21:4-21. As the project became successful, Franklyn continued to loan money to Countryview Estates to help fund subsequent phases of development, pay for professionals, and compensate the members who were working on salaries. See id. at 25:20-26:9. On August 1, 2001, Countryview Estates executed a Promissory Note (2001 Promissory Note) to evidence the funds loaned by Franklyn. See Pls.' Trial Ex. 3 (2001 Promissory Note). The 2001 Promissory Note was signed by Franklyn, Davis, Mark DeMello, and Richard Neville as members of the LLC and, except for Franklyn, they also personally guaranteed it. See id. The amount of the 2001 Promissory Note was $2,589,090.62 with an interest rate of 8.5 percent per annum payable in twenty years. Id. Subsequently, in or about December 2002, Franklyn assigned a one-third interest of the 2001 Promissory Note to his wife, Jean Neville (Jean). (Pls.' Trial Ex. 4 (Assignment of the 2001 Promissory Note).)
Arthur Smith left Countryview Estates shortly before the one-year mark and received a payment of $1,500,000 for his 25 percent membership. See Franklyn Testimony Transcript (Test. Tr.) 28:13-23, Oct. 16, 2023. Subsequently, Richard Neville, one of Franklyn's sons, became a member with a 12 percent stake in Countryview Estates. See id. at 29:23-30:4.
"As of January 1, 2003, [the 2001 Promissory Note] ha[d] a principal balance of Two Million Five Hundred Fourteen Thousand Seven Hundred Sixty Nine and 50/100 ($2,514,769.50) Dollars." (Pls.' Trial Ex. 4 (Assignment of the 2001 Promissory Note).)
On April 30, 2004, Countryview Estates executed a Secured Promissory Note (Jean Note) in favor of Jean for $966,023.51 with an interest at a rate of 7 percent. (Pls.' Trial Ex. 5 (Jean Note).) Countryview Estates secured the Jean Note with a security interest in "all of Borrower's rights, title and interest in the following . . . Countryview Estates, LLC." (Pls.' Trial Ex. 6 (Security Agreement).) Over time, payments were made to Jean on account of the Jean Note; however, it was never paid in full. See Franklyn Test. Tr. 50:1-3.
It is important to note that, despite the Jean Note indicating $966,023.51, the parties admitted uncertainty about the calculation that resulted in that amount. The Assignment of the 2001 Promissory Note displays a handwritten notation of $838,256.33, which accurately represents one-third of $2,514,769.50. See id.
In 2010, Franklyn and Davis orally established that $4,550,000 was the amount that Countryview Estates owed Franklyn. See Franklyn Test. Tr. 24:10-14; see also Davis Test. Tr. 4:23-5:3, Oct. 18, 2023. Franklyn asserts that this amount relates to the outstanding balance of the money loaned to Countryview Estates, whereas Davis contends that it represented the amount required to buy Franklyn's share of Countryview Estates. See Franklyn Test. Tr. 24:10-14; see also Davis Test. Tr. 4:23-5:3. After refinancing Countryview Estates' mortgage with Fall River Five Cent Savings Bank (the Bank) in 2010, Franklyn received $2,000,000, leaving a remaining balance of $2,550,000. Franklyn Test. Tr. 97:3-8. Countryview Estates sought to refinance its mortgage again in 2013. See Davis Test. Tr. 5:22-6:15. On August 30, 2013, Franklyn and Davis, on behalf of Countryview Estates, executed a Promissory Note (Original 2013 Note) in favor of Franklyn for $2,550,000. (Pls.' Trial Ex. 10 (Original 2013 Note).) Davis also personally guaranteed the Original 2013 Note. Id. The Original 2013 Note provided for a payment of $1,200,000 to Franklyn on or before October 1, 2013 and a final payment of $1,350,000 on or before October 1, 2028. Id. Simultaneously, Franklyn signed a document, witnessed by Davis which stated, "I Franklyn B. Neville transfer all rights and ownership of all stock or interests in Countryview Estates, LLC of Tiverton RI to Davis R. Logan for the amount of $1,200,000.00 payable before October 1, 2013." (Pls.' Trial Ex. 19 (Original Transfer of Ownership).)
Subsequently, the Original 2013 Note was edited (Amended 2013 Note) to reflect that the first payment was reduced to $1,000,000 and the final payment was increased to $1,550,000. (Pls.' Trial Ex. 11 (Amended 2013 Note).) Subsequently, Franklyn executed, and Davis witnessed, a new document (Amended Transfer of Ownership) reflecting the changes in the Amended 2013 Note which stated, "I Franklyn B. Neville transfer all rights and ownership of all stock or interests in Countryview Estates LLC 213 Hurst Lane of Tiverton RI to Davis R. Logan for the amount of $1,000,000.00 payable before October 1, 2013." (Pls.' Trial Ex. 20 (Amended Transfer of Ownership).) Two days later, in the presence of Murray Lukoff, an attorney from the Bank, Franklyn signed an Assignment of Membership Interest in Countryview Estates, LLC (Pls.' Trial Ex. 13 (Final Assignment)), a Release of All Demands (Pls.' Trial Ex. 12 (Release)), and was handed a check for $1,000,000. See Franklyn Test. Tr. 65:11-24, 72:13-18. Davis subsequently sold Countryview Estates in 2015, resulting in a gross sale price of approximately $13,000,000. See Davis Test. Tr. 17:23-18:4.
The Second Amended Verified Complaint asserts that Countryview Estates was sold in 2013, yet the testimony of all parties unanimously confirm that Countryview Estates was sold in 2015. See Second Amended Verified Complaint (2d Am. Compl.) ¶ 50.
Franklyn commenced this action on June 21, 2019. He sought to recover damages from two promissory notes: one dated December 29, 1998 with an alleged balance of $23,000 plus interest and the Original 2013 Note with an alleged balance of $1,350,000 due on October 1, 2028. See Verified Complaint (Compl.) ¶¶ 11, 13. On July 15, 2021, Franklyn filed an Amended Verified Complaint seeking Rescission of the Release (Count I), Rescission of the Final Assignment (Count II), Breach of Fiduciary Duty (Count III), Concealment - Fraud (Count IV), Concealment - Negligent Misrepresentation (Count V), and Breach of Promissory Note (Count VI). See Amended Verified Complaint (Am. Compl.) ¶¶ 48-134. On October 13, 2022, Franklyn filed a Second Amended Verified Complaint, which included the same allegations obtained in the Amended Complaint but added Jean as a Plaintiff and created two new counts: Breach of Promissory Note (Count VII) and Breach of Security Agreement (Count VIII). See Second Amended Verified Complaint (2d Am. Compl.) ¶¶ 142-171.
II
Trial
The trial began with jury selection on October 16, 2023. The trial lasted four days. Franklyn and Jean presented three witnesses: Franklyn, Michael Lucas, and Jon Almedia. The Defendant's sole witness was Davis.
A
Witness Testimony
i
Franklyn Neville
During direct examination, Franklyn, at the age of ninety-four, discussed his family, including his wife, Jean, and their six children. See Franklyn Test. Tr. 1-5. Franklyn testified about his educational and professional history, highlighting his diploma from Rogers High School and recounting his initial employment at Acme Neville Company in 1947, which was owned by his father. See id. at 5-7. Following his departure from Acme Neville Company, he ventured into marina construction, specifically overseeing the development of Sakonnet Marina located in Portsmouth, Rhode Island and Goat Island Marina located in Newport, Rhode Island. See id. at 7:5-9:1.
Franklyn discussed the establishment and operation of Countryview Estates, along with the evolution of its membership over the years. See id. at 9-12. He testified that, at the outset, there were four members-Franklyn, Davis, Mark DeMello, and Arthur Smith-each with a 25 percent stake in Countryview Estates and that he was the sole contributor of funds. See id. at 13:9-23. Franklyn explained that shortly before the one-year mark, Arthur Smith left Countryview Estates and received a payment of $1,500,000 for his 25 percent membership. See id. at 28:13-23. Subsequently, Richard Neville became a member with a 12 percent stake in Countryview Estates and Davis was appointed as the General Manager. See id. at 29:18-30:7.
Franklyn testified that one of Davis's duties as the General Manager was to advise the members of Countryview Estates when funds were required for loans and other purposes. See Franklyn Test. Tr. 31:17-22.
He identified the 2001 Promissory Note and explained that the $2,589,090.62 amount encompassed the balance of various individual loans that he made to Countryview Estates over the years. See id. at 35:25-36:14; see also the 2001 Promissory Note. Franklyn went on to explain that he transferred a one-third interest in the 2001 Promissory Note to Jean, secured by the Security Agreement executed by Countryview Estates in her favor. See Franklyn Test. Tr. 39:25-40:3; see also Security Agreement. Franklyn confirmed that Jean received some payments on the Jean Note, but a balance remained outstanding. See id. at 41:6-18.
Franklyn indicated that Countryview Estates' development spanned approximately eighteen to nineteen years, and, to his knowledge, the members did not have an intention to sell. See id. at 52:14-19. Franklyn stated that in 2008 or 2009, Hometown America expressed interest in acquiring Countryview Estates for $10,000,000, but the members of Countryview Estates stood firm on their demand for $13,000,000 and rejected the offer. See id. at 53:14-17, 54:2-18. Franklyn testified that at this time Richard Neville was bought out of Countryview Estates and, subsequently, Mark DeMello was also bought out for $1,600,000 and received a section of land that consisted of fourteen lots. See id. at 55:13-56:15.
Franklyn identified the Original 2013 Note as evidence of money he had loaned to Countryview Estates; however, he did not know who drafted it. See id. at 57:5-25; see also Original 2013 Note. Additionally, he recognized the Amended 2013 Note but could not recall any discussions relating to why the 2013 payment was reduced and the 2028 payment increased. See id. at 63:1-7; see also Amended 2013 Note. He also recognized the two versions of the Transfer of Ownership documents but admitted to not reading either prior to signing. Id. at 63:24-64:22; see the Original Transfer of Ownership; see also the Amended Transfer of Ownership. He contended that he would not have signed the Original Transfer of Ownership if he had known it meant giving up his membership interest. See Franklyn Test. Tr. 64:23-25. Furthermore, he admitted to not knowing who drafted the Original Transfer of Ownership or where he signed it, as documents were frequently placed in front of him, and he signed them without reviewing them. See id. at 65:11-24.
Franklyn also testified that Murray Lukoff visited his house in October 2013 and had him sign the Release and the Final Assignment. Id. at 66:2-19; see Release; see also Final Assignment. Franklyn admitted to not reading the documents before signing and emphasized that it was the first time that he had ever seen them. See Franklyn Test. Tr. 68:7-13. Additionally, he stated that he received a check for $1,000,000 as part of this transaction. See id. at 72:13-18.
On cross-examination, Franklyn expounded on his business experiences. See id. at 81-83. Specifically, he testified that he owned and managed Acme Neville Company from 1950 until 1970 when he sold it to his sons, Richard and Steven. See id. at 81:9-19. He also stated that he was involved in and negotiated the sale of his parents' interest in Globe Manufacturing, which was an entity that owned the Goat Island Marina, for approximately $35,000,000. See id. at 82:1683:20. He was also part owner of a gravel pit located in Tiverton, Rhode Island. See id. at 84:37.
Franklyn affirmed in his testimony that he understands the meaning of a release and defined it as to "give away something." Id. at 114:17-19, 115:2-3. He went on to state that he did not pose any questions to Murray Lukoff concerning the Release and clarified that he was not coerced into signing it. See id. at 115:11-14. Franklyn continued his testimony, explaining that he did not return to Countryview Estates after September 26, 2013 because "[n]obody would talk to [him]." Id. at 118:10-14. Additionally, Franklyn expressed that he was "a little mad" upon discovering that Davis sold Countryview Estates for $13,000,000. Id. at 128:11-16.
During redirect examination, Franklyn reiterated that both the Release and the Final Assignment were signed in his home with only himself and Murray Lukoff present. See id. at 133:6-9. He clarified that he did not realize that it was a release; instead, he perceived the Release and the Final Assignment as documents acknowledging his receipt of the $1,000,000. See id. at 133:24-134:3.
Neither Murray Lukoff nor Ray Dion, the loan officer, nor anyone from the Bank testified. This Court draws no inference from the fact that neither party saw fit to have someone from the Bank testify.
Davis Logan
During direct examination, Davis stated that he recalled signing the 2001 Promissory Note, in favor of Franklyn for $2,500,000, along with a mortgage deed to secure it. See Davis Test. Tr. 2:6-9, 15-17; see also 2001 Promissory Note. Davis testified that it was his understanding that the 2001 Promissory Note was a compilation of all the funds that Franklyn loaned to Countryview Estates up until that year. See id. at 2:18-21. Transitioning to 2008, Davis testified that Countryview Estates faced cash flow issues, which made it difficult to make mortgage payments to Franklyn and Jean. See id. at 3:10-16.
Davis stated that in 2010, Franklyn approached him wanting some money from Countryview Estates. See id. at 3:17-19. He claimed that he and Franklyn reached an oral agreement for Davis to buy Franklyn's membership in Countryview Estates for $4,500,000, a figure suggested by Franklyn. See id. at 4:23-5:5. Davis testified that, subsequently, he and Franklyn went to the Bank, where they spoke with Ray Dion, a loan officer, to refinance Countryview Estates' mortgage. See id. at 3:25-4:12. Ultimately, they successfully secured an additional $2,000,000 loan, which was used to pay Franklyn. See id. at 4:13-15. Davis testified that in 2013 Franklyn approached him again, expressing a need for money.
See id. at 5:22-24. Following this, Davis stated that he, Franklyn, and Ray Dion from the Bank convened in a conference room at Countryview Estates to discuss a potential refinance of its mortgage. See id. at 6:2-15. The closing was scheduled for September 26, 2013. See id. at 9:1719. Davis testified that the Original 2013 Note and the Original Transfer of Ownership were drafted with the aim of obtaining $1,200,000 from the Bank. See id. at 7:8-16. However, the Bank indicated it could only advance an additional $1,000,000 over the amount necessary to refinance the existing mortgage. See id. at 8:18-9:2. Davis testified that despite Franklyn not being happy, he agreed to the new terms proposed by the Bank, and he and Franklyn revised the Original 2013 Note and the Original Transfer of Ownership to reflect the Bank's $1,000,000 limit on the advance. See id. at 9:4-13. Davis further testified that, out of concern that the Bank might cancel the closing without proof of the amendments, he faxed the Amended 2013 Note and the Amended Transfer of Ownership to Ray Dion as evidence of their acceptance to the new terms. See id. at 10:16-11:6. Davis also testified that the Bank required Franklyn to release any debt owed to him by Countryview Estates. See id. at 11:7-10.
Davis stated that on September 26, 2013, the closing took place at Murray Lukoff's office in New Bedford with himself, Franklyn, and Murray Lukoff in attendance. See id. at 11:14-22. Davis testified that Murray Lukoff presented the Release and the Final Assignment to the parties for the first time that day. See id. at 12:20-24. Davis stated that Franklyn did not inquire about either document, and Davis affirmed witnessing Franklyn sign the Release. See id. at 13:14-23, 14:13-20. Additionally, Davis asserted that after September 26, 2013, he did not hear from Franklyn for six years. See id. at 14:24-15:1. His sole interaction with Franklyn after the closing date occurred when Franklyn sent him a demand letter for $200,000 in 2019. See id. at 18:8-14.
On cross-examination, Davis specifically stated that on August 30, 2013, Franklyn told Davis that he wanted to be bought out of Countryview Estates and wanted to be paid what he was owed. See id. at 31:2-16. Davis stated that they found an electronic template for a promissory note and subsequently filled it out together. See id. at 29:15-19. Additionally, Davis testified that he and Franklyn drafted the Original Transfer of Ownership together. See id. at 40:3-20. Davis consistently maintained that he sent over the Amended 2013 Note and the Amended Transfer of Ownership to the Bank. See id. at 32:11-17. He stated that the Bank rejected the proposal to advance an additional $1,200,000. See id. at 33:8-16. Davis testified that the Bank indicated that it could only loan $1,000,000; however, there could be no further debt. See id.
Questions arose about Davis's intent to obtain Franklyn's membership interest in July of 2013. See id. at 44:9-11. Reference was made to the Bank's Commitment Letter dated July 11, 2013, which outlined that the purpose of the loan was to "[r]efinance existing [Fall River Five Cent Savings Bank] mortgage and provide funds to buy out ownership interest of Franklyn Neville and cover closing costs." (Pls.' Trial Ex. 28 (Commitment Letter).) Davis reiterated that every action with the Bank was a shared endeavor with Franklyn. See Davis Test. Tr. 44:12-16. He testified that Franklyn "was always asking to be bought out" and frequently requested money. See id. Davis stressed that his motivation was solely to secure funds for Franklyn. See id. at 45:13-15.
iii Michael Lucas
On direct examination, Michael Lucas (Lucas) testified about his extensive accounting background. See Lucas Test. Tr. 1:2-9. He has been a Certified Public Accountant since 1983 and operates as self-employed in the Town of Bristol. See id. at 1:6-12. He handled the accounting and income tax preparation for Countryview Estates from its inception until it was sold in 2015. See id. at 2:12-18. Additionally, he currently serves as the personal accountant for Franklyn, Jean, and Davis. See id. at 3:24-5:4.
Lucas testified that Countryview Estates no longer exists; it was dissolved around 2015/2016 following its sale, and its charter was later revoked on June 27, 2017. See Lucas Test. Tr. 6:3-7:1.
Concerning the 2001 Promissory Note, Lucas testified that the $2,589,090.62 was related to the $1,900,000 balance owed to Green Tree Financial by Countryview Estates, which Franklyn personally paid. See id. at 14:17-15:8. The remaining $600,000 represented the outstanding balance of additional loans that were made by Franklyn to Countryview Estates over time. See id. at 15:2-8. Additionally, he testified that Franklyn and Davis had mutually agreed that the total amount Countryview Estates owed Franklyn was $4,550,000. See id. at 18:7-16. Lucas stated that Franklyn received $2,000,000 in July of 2010 and an additional $1,000,000 in September of 2013. See id. The remaining balance owed to Franklyn, amounting to $1,550,000, was removed from Countryview Estates' books and transferred to Davis personally. See id.
Lucas also testified regarding the Amended 2013 Note. See id. at 27:13-22. He believed that the changes were implemented because there would not be sufficient proceeds from the Bank's refinancing to cover the $1,200,000. See id. at 28:3-9, 32:1-4. He stated that Countryview Estates faced financial challenges during that period. See id. at 32:19-21. Additionally, Lucas testified that, as stated by Davis, the Bank mandated that there be no debt and no equity position for Franklyn to receive the funds. See id. at 33:3-7. He stated that he never saw any of the documents and indicated that he learned about Franklyn assigning his interest and releasing any debt only after the transaction was completed. See id. at 33:8-18. Lucas was unaware that the Release extended to Davis personally until about a year and a half later. See id. at 36:7-14.
From an accounting perspective, Lucas testified that the 2013 transaction was treated as a loan reduction on Countryview Estates' tax return, not as a membership transfer. See id. at 33:1418. He stated that Franklyn's name did not appear on any of Countryview Estates' tax returns after 2013. See id. at 41:14-17. Lucas also alluded to the tax benefits stemming from the 2013 transaction for Franklyn. See id. at 54:22-55:7. Specifically, he highlighted that had the transaction been treated as a membership transfer, Franklyn would have been taxed on the $1,000,000. See id. Lucas also testified that Franklyn ceased activity in Countryview Estates after September 3, 2013, receiving no K-1s thereafter. See id. at 56:10-16. Furthermore, he stated that in 2010 Franklyn expressed to Lucas his desire to be bought out of Countryview Estates and recover the money he had loaned to it. See id. at 56:20-25.
iv Jon Almeida
On direct examination, Jon Almeida (Almeida) testified as to his qualifications and credentials as a Certified Public Accountant and Certified Fraud Examiner. See Almeida Testimony Transcript (Almeida Test. Tr.) 1-2:15, Oct. 17, 2023. He currently works at Marcum, LLP and is licensed in Rhode Island and Massachusetts. See id. at 1:13-15, 2:8-12. Almeida was qualified to testify as an expert in general accounting. See id. at 7:24-8:4. Almeida testified that he was tasked with reviewing promissory notes and preparing amortization schedules. See id. at 8:17-20.
Most of Almeida's testimony pertained to the Jean Note. However, as will be discussed in Section (B) infra, this Court granted a Rule 50 Motion for Judgment as a Matter of Law regarding the Jean Note; therefore, the Jean Note, and the testimony surrounding it, will not be further discussed as it is not relevant to the matters before this Court.
B
Trial Motions
On October 18, 2023, at the close of Plaintiffs' case, Davis made a Rule 50 Motion for Judgment as a Matter of Law concerning the Jean Note and all of Franklyn's claims. See Rule 50 Trial Transcript (Trial Tr.) 12:17-18. With respect to Franklyn's claims for the rescission of the Release and the Final Assignment, Davis contended that Franklyn could read. See id. at 13:23-25. Emphasizing Franklyn's extensive experience in multimillion-dollar transactions and his status as a sophisticated business owner, Davis argued that Franklyn's testimony claiming that he did not read or understand the documents lacked credibility. See id. at 13:25-14:8. Davis further asserted that Franklyn was aware of the concept of an assignment, referencing Franklyn's knowledge of when he assigned a one-third interest of the 2001 Promissory Note to Jean. See id. at 14:9-14. He further argued that Franklyn understood the consequences of an assignment, evident in his absence from work after September 2013. See id. at 14:15-16.
This Court reserved judgment on the claims related to Franklyn but granted the Rule 50 Motion for Judgment as a Matter of Law regarding Jean's Note on three separate grounds: lack of evidence, lack of consideration, and statute of limitations. See id. at 18:18-19. First, this Court articulated that Jean bore the burden of proving, by a preponderance of the evidence, that she was owed money on the Jean Note. See id. at 20-22. This Court emphasized that, at the time of the assignment, the balance of the 2001 Promissory Note was $2,514,769.50. See id. at 19:1-3. However, this Court was troubled by the absence of evidence or testimony explaining how the principal of the Jean Note was $966,023.51 instead of the accurate calculation of $838,256.33, which was handwritten at the bottom of the Assignment of the 2001 Promissory Note. See id. at 19:8-12. Second, this Court observed that the amortization schedules drafted by Countryview Estates' accountant, Lucas, showed that payments were consistently made from the date of the assignment. See id. at 19:17-20. This Court stressed that there was no evidence whatsoever of consideration for the increase in the amount of $838,256.33 to 966,023.51. See id. at 19:14-15. Based on the evidence presented, this Court pointed out that the balance owed to Jean should have been reduced, not increased. See id. at 19:20-23.
This Court, emphasizing the need for the jury to be able to decide, raised significant concern about the documentary evidence's inability to establish a clear basis for determining the balance due on the Jean Note. See id. at 20:19-22. This concern heightened notably after Countryview Estates' own accountant, Lucas, testified that all of Countryview Estates' loans were treated as "one big pot." See id. at 19:24-25. Lastly, this Court highlighted that the Jean Note required monthly installments of $7,489.57. See id. at 21:1-6. After a calculated analysis, this Court pointed out that paying off the principal balance in approximately 128 payments would result in a final payment on April 30, 2014. See id. at 21:6-17. Although this case was filed in 2019, this Court noted that the claims related to the Jean Note only arose with the Second Amended Verified Complaint on October 13, 2022, well exceeding the six-year statute of limitations. See id. at 21:17-20.
At the close of Defendant's case, Davis renewed his Motion for Judgment as a Matter of Law and incorporated all the aforementioned arguments made previously at the close of Plaintiffs' case. See id. at 82:24-83:6. Plaintiffs objected and, in turn, incorporated their previous arguments. See id. at 83:7-14.
C
The Verdict
The jury commenced deliberations in the afternoon of October 19, 2023, and rendered their verdict at the end of the day. In reaching its verdict, the jury was asked six questions, one question for each of the remaining causes of action:
"Question 1: Do you find that Davis Logan breached his fiduciary duty to Franklyn Neville by failing to explain to Franklyn the consequences of signing the Release?
"Question 2: Do you find that Davis Logan breached his fiduciary duty to Franklyn Neville by failing to explain to Franklyn the consequences of signing the Assignment?
"Question 3: If you find the Release was not supported by sufficient consideration, do you find that the Release is void?
"Question 4: If you find the Assignment was not supported by sufficient consideration, do you find the Assignment is void?
"Question 5: If you found that the Release was obtained by fraud, overreach, or misrepresentation, do you find that the Release from Franklyn Neville shall be rescinded?
"Question 6: If you found that the Assignment was obtained by fraud, overreach, or misrepresentation, do you find that the Assignment from Franklyn Neville shall be rescinded?"
The jury answered "YES" to all six questions and rendered a verdict in favor of Franklyn.
D
Post-Trial
On October 25, 2023, Davis filed two post-trial motions pursuant to the Superior Court Rules of Civil Procedure: (1) Rule 50(b) Renewed Motion for Judgment as a Matter of Law and (2) Rule 59(a) Motion for New Trial. The post-trial motions were addressed by both parties in a single memorandum. This Court heard oral arguments on January 5, 2024.
III
Standard of Review
A
Rule 50(b) Renewed Motion for Judgment as a Matter of Law
Rule 50 of the Rhode Island Superior Court Rules of Civil Procedure governs motions for judgment as a matter of law. It provides in pertinent part:
"If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue." Super. R. Civ. P. 50(a)(1) (emphasis added).
"Whenever a motion for a judgment as a matter of law made at the close of all the evidence is denied or for any [other] reason is not granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion." Super. R. Civ. P. 50(b). This renewed motion for judgment as a matter of law must be filed and served no later than ten days after entry of judgment and may be joined with a Rule 59 motion for a new trial. Id. When addressing a renewed motion for judgment as a matter of law, "[t]he trial justice . . . must examine 'the evidence in the light most favorable to the nonmoving party, without weighing the evidence or evaluating the credibility of witnesses, and draw[] from the record all reasonable inferences that support the position of the nonmoving party.'" Lemont v. Estate of Ventura, 157 A.3d 31, 36 (R.I. 2017) (quoting Roy v. State, 139 A.3d 480, 488 (R.I. 2016)). If, after such review, "there are factual issues upon which reasonable people may have differing conclusions[,]" the motion for judgment as a matter of law must be denied. Broadley v. State, 939 A.2d 1016, 1020 (R.I. 2008).
"However, if the only reasonable conclusion that can be drawn from the evidence is that the plaintiff is not entitled to recover, then the motion must be granted." Kenney Manufacturing Co. v. Starkweather &Shepley, Inc., 643 A.2d 203, 206 (R.I. 1994) (citing Hulton v. Phaneuf, 85 R.I. 406, 410, 132 A.2d 85, 88 (1957)). Thus, "a trial justice should enter judgment as a matter of law 'when the evidence permits only one legitimate conclusion in regard to the outcome.'" Lemont, 157 A.3d at 36 (quoting Roy, 139 A.3d at 488). In other words, for a defendant to prevail on its motion, the court must find that no reasonable jury could have found for plaintiff based on the evidence presented. See McLaughlin v. Moura, 754 A.2d 95, 98 (R.I. 2000).
B
Rule 59(a) Motion for New Trial
After a trial by jury, "[a] new trial may be granted to all or any of the parties and on all or part of the issues for error of law occurring at the trial or for any of the reasons for which new trials have heretofore been granted in the courts of this state." Super. R. Civ. P. 59(a). "In deciding whether or not to grant a motion for a new trial, 'the trial justice acts as a thirteenth juror and exercises independent judgment on the credibility of the witnesses and on the weight of the evidence.'" State v. DiCarlo, 987 A.2d 867, 870 (R.I. 2010) (quoting State v. Banach, 648 A.2d 1363, 1367 (R.I. 1994)). As such, the trial justice is permitted, at his or her discretion, to admit evidence by drawing proper inferences. Barbato v. Epstein, 97 R.I. 191, 193, 196 A.2d 836, 837 (1964).
In this case, the "ninth juror" as eight jurors heard the case and the parties agreed to let all eight deliberate.
In acting as a "superjuror," "[t]he trial justice must carry out at least a three-step analytical process[.]" Bonn v. Pepin, 11 A.3d 76, 78 (R.I. 2011); see DiCarlo, 987 A.2d at 870.
"First, 'the trial justice must consider the evidence in light of the charge to the jury, a charge that is presumably correct and fair to the defendant.' Next, the trial justice should form his or her own opinion of the evidence. In doing so, '[t]he trial justice must *** weigh the credibility of the witnesses and [the] other evidence and choose which conflicting testimony and evidence to accept and which to reject.' Finally, 'the trial justice must determine by an individual assessment of the evidence and in light of the charge to the jury, whether the justice would have reached a different result from that of the jury.'" State v. Salvatore, 763 A.2d 985, 991 (R.I. 2001) (internal citations omitted).
Upon a determination that "'the evidence is evenly balanced or is such that reasonable minds, in considering that same evidence, could come to different conclusions, then the trial justice should allow the verdict to stand,'" even if the trial justice entertains some doubt as to its correctness. Graff v. Motta, 748 A.2d 249, 255 (R.I. 2000) (quoting Morrocco v. Piccardi, 713 A.2d 250, 253 (R.I. 1998)) (per curiam). However, if after making an independent review of the evidence, "'the trial justice finds that the jury's verdict is against the fair preponderance of the evidence'" and fails to do substantial justice, the verdict must be set aside. Reccko v. Criss Cadillac Co., 610 A.2d 542, 545 (R.I. 1992) (quoting Sarkisian v. New Paper, Inc., 512 A.2d 831, 836 (R.I. 1986)). Even though the trial justice "need not perform an exhaustive analysis of the evidence, he or she should refer with some specificity to the facts which prompted him or her to make the decision so that the reviewing court can determine whether error was committed." Reccko, 610 A.2d at 545 (citing Zarrella v. Robinson, 460 A.2d 415, 418 (R.I. 1983)).
IV
Analysis
A
Release
1
Judgment as a Matter of Law
It is Davis's position that there was insufficient evidence to support the jury's finding that the Release was not supported by sufficient consideration. (Def.'s Mem. of Law in Supp. of Mot. for New Trial and Rule 50 Mot. (Def.'s Mem.) 11.) "Consideration consists of 'some legal right acquired by the promisor in consideration of his promise, or forborne by the promisee in consideration of such promise.'" DeAngelis v. DeAngelis, 923 A.2d 1274, 1279 (R.I. 2007) (quoting Darcey v. Darcey, 29 R.I. 384, 388, 71 A. 595, 597 (1909)). When evaluating the sufficiency of contractual consideration, the Rhode Island Supreme Court employs "the bargained-for exchange test; that test provides that something is bargained for, and therefore constitutes consideration, 'if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.'" Id. (quoting Filippi v. Filippi, 818 A.2d 608, 624 (R.I. 2003)).
At trial, the jury was presented with two divergent arguments regarding the adequacy of consideration for the Release. The jury heard Plaintiffs' counsel argue that when Franklyn executed the Release, Davis was already obligated under the Amended 2013 Note. On the other hand, Davis testified that, as a prerequisite to refinance the mortgage, the Bank required Franklyn to release any debt owed to him by either Countryview Estates or Davis. See Davis Test. Tr. 11:710. The jury heard Davis explain the sequence of events that led to the Bank's demand and stressed that it was the Bank, not himself, who asserted that "there was to be no debt whatsoever." Id. at 11:7-10. The jury also heard Davis testify that the issue of the Release was discussed several times between himself and Franklyn before September 26, 2013. See id. at 11:11-13.
Davis contends that the bargained-for exchange analysis follows that, in order for the Bank to facilitate the funds necessary to refinance Countryview Estates' mortgage and compensate Franklyn, the Release was required. Unlike the Original and Amended 2013 Note and the Original and Amended Transfer of Ownership documents, the Release was not presented to Franklyn by Davis. Rather, the Release was prepared and presented by Murray Lukoff, an attorney for the Bank, which lends some credence to Davis's testimony. See Franklyn Test. Tr. 67:14-25. Furthermore, the Bank's Commitment Letter did include a condition that Countryview Estates incur no indebtedness greater than $100,000 without the Bank's written approval. See Commitment Letter. However, the Release goes beyond absolving just Countryview Estates of any debt; it also encompasses the release of Davis personally. Pursuant to the Bank's Commitment Letter, only Countryview Estates had a limit on its borrowing and there were no such restrictions or limitations placed on Davis.
When presented with a motion for judgment as a matter of law, this Court must "consider the evidence in the light most favorable to the nonmovant, absent any questions of credibility, but without benefit of any inferences based on conjecture, speculation, or surmise." Jalowy v. Friendly Home, Inc., No. CA 93-0511, 2001 WL 171918, at *2 (R.I. Super. Feb. 12, 2001), appeal denied, judgment aff'd, 818 A.2d 698 (R.I. 2003). As to Davis, personally, he did not make the $1,000,000 payment, and there was no documentary evidence of the Bank mandating the Release as to Davis. Therefore, looking at the evidence in the light most favorable to Franklyn, this Court cannot conclude that there was legally insufficient competent evidence which would entitle Davis to judgment as a matter of law. This Court also recognizes that the question of whether the $1,000,000 was consideration for releasing Countryview Estates is moot, given Countryview Estates' dissolution, which prevents it from making the payment due in 2028 pursuant to the 2013 Amended Note. As such, the Motion for Judgment as a Matter of Law as to jury question 3 concerning lack of consideration for the Release is DENIED.
In addition, Davis asserts two more arguments concerning the Release. First, Davis contends that, as a matter of law, he did not owe a fiduciary duty to Franklyn to explain the terms and consequences of the Release. Def.'s Mem. at 7-9. Second, he asserts that there was insufficient evidence to support the jury's finding that the Release was obtained by fraud, overreach, or misrepresentation. Id. at 12-13. However, since this Court has denied Davis's Rule 50 Motion for Judgment as a Matter of Law related to the question of consideration, there is no need to analyze or decide the remaining issues related to the Release; thus, the Rule 50 Motion Judgment as a Matter of Law as to jury questions 1 and 5 is DENIED.
2 Motion for a New Trial
A trial justice, in deciding a motion for new trial, sits as a "super" juror, reviews the evidence, and makes one of three choices: (1) he or she disagrees with the verdict because there was insufficient evidence to support the outcome; (2) he or she agrees with the verdict because the "evidence is evenly balanced;" or (3) he or she determines that reasonable minds could have come to different conclusions. Johnston Equities Associates, LP v. Town of Johnston, 277 A.3d 716, 742 (R.I. 2022). If the trial justice finds insufficient evidence to support the verdict, the court must grant a new trial. See id. Alternatively, if the trial justice either finds that the evidence is balanced or that reasonable minds could differ, the motion for a new trial must be denied.
In this matter, the jury returned a verdict in favor of Franklyn on the Rescission of the Release claim. Based on the discussion above concerning consideration, this Court believes that reasonable minds could differ on whether Davis provided consideration for being released personally. As stated above, Countryview Estates is no longer in existence, and the question of whether the $1,000,000 was consideration for the Release is moot. Similarly, as above, having held that the jury could have found no consideration for the Release, this Court need not address the other claims concerning the Release. Consequently, the Motion for New Trial as to jury questions 1, 3, and 5 concerning the Release is DENIED.
B
Final Assignment
1
Judgment as a Matter of Law
Consideration
It is Franklyn's position that there was sufficient evidence for the jury to conclude that the Final Assignment was void due to lack of consideration. (Pl.'s Mem. in Supp. of Obj. to Def.'s Mot. for New Trial and Def.'s Renewed Rule 50 Mot. (Pl.'s Obj.) 11.) Throughout the trial, in closing argument, and in oral argument on these motions, Franklyn's counsel contended that Davis was attempting to count the $1,000,000 as consideration for three separate transactions and that the payment of the $1,000,000 on September 26, 2013 was to fulfill a prior commitment outlined in the Original 2013 Note. Therefore, it could not be consideration for the Final Assignment. However, this Court rejects that argument.
The documentary evidence is uncontradicted. The Bank's Commitment Letter explicitly stated that the purpose of the refinance was to "provide funds to buy out ownership interest of Franklyn Neville . . . ." See Commitment Letter. The Original 2013 Note served as consideration for the Original Transfer of Ownership and they were signed simultaneously. The transaction needed to be amended solely because the Bank would only advance $1,000,000 for the buyout of Franklyn's shares and not the $1,200,000 as expressed in the Original 2013 Note. Franklyn had to have agreed to that change because he signed the Amended Transfer of Ownership. The consideration for the Amended Transfer of Ownership was the promise to pay $1,000,000 on or before October 1, 2013. That promise was fulfilled when Franklyn received $1,000,000 from the Bank at the closing conducted by Murray Lukoff on September 26, 2013. The Final Assignment could not be a new transaction requiring new consideration; rather, it was simply a different form that Murray Lukoff had prepared. The Final Assignment was actually unnecessary because Franklyn had already executed the Amended Transfer of Ownership which meant once he received the $1,000,000 he had nothing left to assign or transfer.
Thus, after thoroughly reviewing the arguments of counsel and the evidence presented at trial in the light most favorable to Franklyn, this Court finds that there was no legally sufficient evidentiary basis for a reasonable jury to find that the Final Assignment was not supported by sufficient consideration. See McLaughlin, 754 A.2d at 98. As a result, this Court GRANTS Defendant's Rule 50 Motion for Judgment as a Matter of Law as to jury question 4 on the question of consideration for the Final Assignment.
ii.
Other Related Claims
Franklyn asserts additional claims pertaining to the Final Assignment. First, Franklyn argues that there was sufficient evidence to support the jury's finding that Davis breached his fiduciary duty to Franklyn by failing to disclose or explain the terms and consequences of signing the Final Assignment. Pl.'s Obj. at 4. Second, Franklyn argues that there was sufficient evidence to support the jury's finding that the Final Assignment was procured by fraud, overreach, and/or misrepresentation. Id. at 13.
It is well established that "[directors of a corporation owe a fiduciary duty of care and loyalty to the corporation and to the corporation's shareholders." Marsh v. Billington Farms, LLC, No. 04-3123, 2006 WL 2555911, *4 (R.I. Super. Aug. 31, 2006) (citing Hendrick v. Hendrick, 755 A.2d 784, 789 (R.I. 2000)). "In a partnership, the partners owe a fiduciary duty not only to the partnership, but to the partners themselves." Id. (citing Sullivan v. Hoey, 102 R.I. 487, 488, 231 A.2d 789, 790 (1967)). "A fiduciary duty is one of trust and confidence and imposes the duty on the fiduciary to act with the utmost good faith." Poletti v. Glynn, 234 A.3d 941, 945 (R.I. 2020) (internal quotation marks omitted). The Rhode Island Supreme Court "has not yet expounded, however, on the quality and scope of the fiduciary duty owed by managers of a limited liability company to its members." Marsh, 2006 WL 2555911, *4 (citing Charles W. Murdock, Limited Liability Companies in the Decade of the 1990s: Legislative and Case Law Developments and Their Implications for the Future, 56 Bus. Law. 499, 499 (2001) (noting that there has been a relative absence of litigation as to the fiduciary duties of LLC members and managers)). However, "[o]ther jurisdictions have noted that a[n] LLC shares characteristics of both corporations and partnerships." Id. (citing Great Lakes Chemical Corp. v. Monsanto Co., 96 F.Supp.2d 376, 383 (D. Del. 2000); see also Ef Atochem North America, Inc. v. Jaffari, 727 A.2d 286, 290 (Del. 1999)).
It is Franklyn's position that Davis had a fiduciary duty to explain the terms and consequences of the documents, which he executed, transferring to Davis Franklyn's ownership interest in Countryview Estates. Pl.'s Obj. at 1. While this Court is familiar with the law surrounding business disputes, it had not encountered any legal precedent explicitly stating that a member holds a fiduciary duty to explain the terms and conditions of a document which another member executes. Hence, this Court requested before trial, during trial, and after trial that Franklyn's counsel provide case law to substantiate their proposition.
On October 17, 2023, Franklyn's counsel submitted a supplemental legal memorandum addressing this matter. (Pl.'s Suppl. Mem. Regarding Def.'s Breach of Fiduciary Duties Owed to Pl. (Pl.'s Suppl. Mem.) 1.) In the supplemental memorandum, Franklyn's counsel agreed that the Rhode Island Supreme Court has not yet elaborated on the extent and nature of the fiduciary duty held by members of a limited liability to its co-members. Id. However, Franklyn's counsel highlighted the very general proposition that "'[t]he fiduciary duty among partners requires that each partner make full disclosure at the appropriate time of all material facts within his or her knowledge in any way relating to the partnership affairs.'" Id. at 2 (quoting Friedman v. Kelly &Picerne, Inc., No. PB-05-1193, 2010 WL 5042896, *19 (R.I. Super. Dec. 6, 2010)). On January 5, 2023, during oral argument, Franklyn's counsel referenced a 2017 North Carolina Supreme Court case, King v. Bryant, 795 S.E.2d 340 (N.C. 2017), in support of their argument.
Although an important case, Franklyn's counsel misses the point. This case supports the known proposition that partners owe a fiduciary duty not only to the partnership, but also to the partners themselves. However, this case does not explore whether a member's fiduciary duty within a limited liability company extends to explaining the terms and consequences of documents executed by a co-member. Friedman v. Kelly & Picerne, Inc., No. PB-05-1193, 2010 WL 5042896 (R.I. Super. Dec. 6, 2010).
In King v. Bryant, the plaintiff was scheduled to undergo a bilateral inguinal hernia repair performed by the defendant at the Fayetteville Ambulatory Surgery Center. Id. at 342. At his initial appointment, a front desk employee at Village Surgical Associates provided the plaintiff with several intake forms to complete and sign. Id. The intake forms asked the plaintiff to provide personal and medical history information; however, unbeknownst to the plaintiff, an arbitration agreement was included in the pile of intake forms. Id. The plaintiff stated in his affidavit that he did not read any of the documents that he signed and believed them to be "just a formality." Id. at 343. The plaintiff denied having received a copy of the arbitration agreement on the day that it was signed, asserted that the contents of the agreement were not clear to him even after he had read it, and that "[i]f the agreement had been brought to [his] attention and [he] had been told signing it was optional, [he] would have not signed it." Id.
After a complicated series of appeals and remands, the King case went before the North Carolina Supreme Court. The court held that a fiduciary duty existed between the plaintiff, as a prospective patient, and the defendant, a physician, as the plaintiff had reposed confidence and trust in the defendant. Id. at 350. Furthermore, the court held that the defendant "violated [his] fiduciary duty to [the plaintiff] by failing to make full disclosure of the nature and import of the arbitration agreement to him at or before the time that it was presented for his signature." Id. The court further elaborated:
"Instead of specifically bringing this agreement, which substantially affected his legal rights in the event that an untoward event occurred during the course of the treatment that he received from [the defendant], to [the plaintiff's] attention and explaining it to him, [the defendant] presented [the plaintiff] with the arbitration agreement . . . in a collection of documents, thereby creating the
understandable impression that the arbitration agreement was simply another routine document that [the plaintiff] needed to sign in order to become a patient." Id.
Nonetheless, the distinctions in this case are significant. Notably, King did not involve partners, shareholders, or members of a business. In King, there was a question of bargaining power between the parties, as one was a doctor and the other a patient. King, 795 S.E.2d at 342. In order to obtain the medical treatment he required, the plaintiff needed to sign the intake forms. In this case, there is no disparity of bargaining power between the parties, as both parties share equivalent educational backgrounds, and both had extensive business experience. See Franklyn Test. Tr. 5:4-5; see also Davis Test. Tr. 1:4-11. Arguably, Franklyn possessed even more business expertise than Davis, having been involved as the manager of several businesses and having dealt with an intricate and complex multimillion-dollar business sale of the Goat Island Marina. See Franklyn Test. Tr. 82:19-83:20. Second, unlike in the King case where the doctor's office prepared and presented the documents to the plaintiff, as to the Final Assignment, it was prepared by Murray Lukoff, an attorney on behalf of a third-party, the Bank. See King, 795 S.E.2d at 342; see also Franklyn Test. Tr. 67:4-5. Lastly, in King, the plaintiff was presented with a "collection of documents," whereas here, Franklyn attested to signing only two documents, which were only three pages in total. See King, 795 S.E.2d at 350; see also Franklyn Test. Tr. 70:6-8 ("I think there was two papers he had me sign."). Moreover, of a total of six documents which Franklyn signed on those three occasions, five were less than one page and the Final Assignment consisted of two pages, the second being just for signatures.
In summary, this Court is aware of no law which requires one member of a limited liability company to explain to another member what he is signing. Furthermore, this Court must emphasize that both the Original and Amended Transfer of Ownership documents consisted of three lines which Franklyn was more than capable of reading and he certainly looked at those documents because he signed them.
Franklyn also asserts the following claims: Concealment - Fraud (Count IV) and Concealment - Negligent Misrepresentation (Count V). It is Franklyn's position that "[Davis] committed fraud by omission: by failing to disclose material facts to Franklyn about the effect of signing the Release and [Final] Assignment." Pl.'s Obj. 14. Specifically, Franklyn argues that the fiduciary duty Davis owed to Franklyn necessitated the disclosure of material facts and information prior to consummating the transaction. Id. However, this Court has established that the fiduciary duty does not extend to advising co-members of a limited liability company the terms and consequences of a document to be signed. Even so, Davis did not conceal or misrepresent the terms of the Final Assignment.
Both parties had different recollections of the execution of the Final Assignment on September 26, 2013. Franklyn testified that Murray Lukoff came to his house alone with the documents and that Davis was not there. See Franklyn Test. Tr. 66:20-24, 67:4-5. Davis testified that the closing took place at Murray Lukoff's office in New Bedford with himself, Franklyn, and Murray Lukoff in attendance. See Davis Test. Tr. 11:14-22. However, both Franklyn and Davis agreed that they first encountered the Release and Final Assignment on September 26, 2013. See Franklyn Test. Tr. 68:4-6 ("Q: So the first time you saw [the document] was in your kitchen, correct? A: Yep."); see also Davis Test. Tr. 12:20-24: ("Q: Now, did you see those documents prior to closing? A: No, I did not" "Q: So . . . September 26 was the first date you saw everything? A: Yes."). Even further, Franklyn acknowledged he had the chance to ask questions when he was presented with the Release and Final Assignment but opted not to do so. See Franklyn Test. Tr. 115:11-12; see also Davis Test. Tr. 13:18-23.
There is no evidence that Davis ever affirmatively made any representation about the documents, but Franklyn argues that his silence constituted fraud, overreach, or misrepresentation. Pl.'s Obj. at 13. Yet, this Court finds no legal precedent that imposes that requirement to speak.
When addressing a renewed motion for judgment as a matter of law, this Court "must examine 'the evidence in the light most favorable to the nonmoving party. . . .'" Roy, 139 A.3d at 488 (internal quotation omitted). In sum, Franklyn testified that Murray Lukoff visited his home, presented the Release and the Final Assignment for signing, and issued Franklyn a $1,000,000 check. See Franklyn's Test. Tr. 66:15-19, 70:6-8. When asked "[w]ho else was in attendance at that meeting at your house?" Franklyn mentioned only himself, Murray Lukoff, and his wife in the front room. Id. at 66:20-24. If this Court accepts Franklyn's version, which it must for this purpose, how could Davis explain anything to Franklyn about the Final Assignment when, according to Franklyn, he was not present when it was signed?
Accordingly, there was no legally sufficient evidentiary basis for a reasonable jury to find in favor of Franklyn on the remaining counts: Breach of Fiduciary Duty (Count III), Concealment - Fraud (Count IV), and Concealment - Negligent Misrepresentation (Count V). Consequently, this Court GRANTS the Rule 50 Motion for Judgment as a Matter of Law as to jury questions 2 and 6.
2 Motion for New Trial
"If a renewed motion for judgment as a matter of law is granted, the court shall also rule on the motion for a new trial, if any, by determining whether it should be granted if the judgment is thereafter vacated or reversed, and shall specify the grounds for granting or denying the motion for the new trial." Super. R. Civ. P. 50(c)(1). In this matter, as it pertains to the Final Assignment, the jury returned a verdict in favor of Franklyn on the following counts: Rescission of the Assignment, Breach of Fiduciary Duty, Concealment - Fraud, and Concealment - Negligent Misrepresentation. Therefore, this Court will examine the evidence with respect to the jury's findings. This Court need not conduct an exhaustive review of the evidence; however, it will refer with some specificity what leads it to conclude that the jury's verdict is against the fair preponderance of the evidence and fails to do substantial justice.
Credibility
All three witnesses, Franklyn, Davis, and Lucas had some inconsistencies in their testimony and lapses in memory which this Court attributes to the fact that more than ten years had passed since the events had taken place. This Court believes they all testified in good faith. However, while Franklyn presented as a sympathetic gentleman, this Court does not afford much credence or reliability to his testimony. This Court finds the testimony of the other witnesses, Davis and Lucas, to be much more credible.
At trial, Franklyn, who was ninety-four years old, repeatedly mentioned that his memory was not very good. Franklyn Test. Tr. 49:22-23 ("Memory is not very good but I will try it.); id. at 85:7 ("Gee, I don't remember any of it."); id. at 89:12 ("I don't remember that far back. I don't know."). Franklyn also stated that he could not recall certain events from 2010 and considered some incidents as "too long ago" to remember. Id. at 101:2 ("A: Do you remember what you did in [2010]? I don't remember."); id. at 96:16 ("Too long ago for me to remember that."). When asked if he has a problem with his memory, Franklyn responded, "I sure do. Well, I did have." Id. at 106:6-7. Furthermore, he repeatedly attested that he was in a bad state of affairs mentally in 2012 or 2013. Id. at 77:6-7 ("Well, during the period of about 2012 or '13 and just lately I was in a bad state of affairs mentally.").
In addressing the circumstances surrounding the execution of the Final Assignment, Franklyn testified that Murray Lukoff went to his home, pushed both the Release and Assignment in front of him, and had him sign it. See id. at 65:16-21, 66:10-21. Franklyn stated that he did not have a chance to read the Final Assignment nor did he understand the terms of the Final Assignment before he signed it. See id. at 68:7-13. Franklyn reiterated a lack of understanding in response to counsel's questions and expressed confusion throughout the trial. See id. at 61:6 ("A: I still don't understand."); id. at 65:3 ("A: I don't understand it ...."); id. at 87:22-23 ("A: I don't know what you're getting at. I don't understand what you're . . . getting at."); id. at 97:11 ("A: You're getting me confused with all these numbers."). Franklyn also claimed he did not realize that he assigned his interest in Countryview Estates. See id. at 116:8-10.
Given Franklyn's age and the passage of time since these events occurred, it is normal, and quite frankly understandable, that he may encounter challenges in recalling specific details from over a decade ago. However, an examination of the documentary evidence and Franklyn's contemporaneous action, not his faulty memory, lead this Court to find that he lacked credibility.
Prior to September 26, 2013, Franklyn went to Countryview Estates almost daily and would work approximately six to seven hours each day. See id. at 15:15-25. He would perform various chores from changing doorknobs to riding the backhoe. See Davis Test. Tr. 15:7-10. Yet, after September 26, 2013, he never again appeared at Countryview Estates. See Franklyn Test. Tr. 118:10-14. Moreover, Lucas testified that after 2013, Franklyn was not included in Countryview Estates' tax returns. See Lucas Test. Tr. 41:14-17. He further said that after 2013, Franklyn never again discussed Countryview Estates' business affairs with him. See id. at 55:24-56:1. This Court believes that these are not the actions of someone who still believes he is an owner of Countryview Estates. It is inconceivable, implausible, and incredible that someone who believed he owned 50 percent of a very valuable business and who previously had visited it daily would not appear for more than six years and would never ask his accountant how the business was doing.
This Court also has trouble believing that as he signed the Original and Amended Transfer of Ownership documents, he failed to read the three lines of each document or at least the first line which uses the word "transfer." See Original Transfer of Ownership; see also Amended Transfer of Ownership. Similarly, this Court cannot believe that he did not look at the title of the Final Assignment which in all capitals says, "ASSIGNMENT OF MEMBERSHIP INTEREST IN COUNTRYVIEW ESTATES, LLC." See Final Assignment.
Davis presented an alternative account of events surrounding the Final Assignment. According to Davis, it was Franklyn that initiated this transaction and wanted to be bought out of Countryview Estates since 2010. See Davis Test. Tr. 3:17-19, 5-22:24. Davis testified that he and Franklyn worked collaboratively to refinance Countryview Estates' mortgage and to disburse the funds to Franklyn. See id. at 44:12-16. Davis claimed that he engaged in discussions with Franklyn regarding the mortgage refinance about four or five times before the closing date. See id. at 6:24-7:1. He explained that on September 26, 2013, the parties met at Murray Lukoff's office to close on the refinancing. See id. at 11:14-18. He even recalled sitting at the same table and in the same room as Franklyn. See id. at 11:23-12:1. Considering the documentary evidence showing Davis's signature on the Final Assignment, it is more plausible that he was in the room with Murray Lukoff when Franklyn executed the document.
Franklyn's counsel argued that Davis was not credible when he indicated that he discussed Countryview Estates' mortgage refinance with the Bank in August 2013, while the Bank's Commitment Letter was dated in July 2013. Pl.'s Obj. at 10. Bearing in mind that this event transpired over a decade ago, a one-month discrepancy does not significantly diminish Davis's credibility. While Davis's memory was sometimes hazy, his testimony was more plausible and is supported by the documentary evidence.
ii.
Documentary Evidence
This Court recognizes that there are two competing narratives preceding the September 26, 2013 transaction. On one side, Franklyn portrays a lack of awareness, claiming that he did not know what an assignment was and being unaware that he signed away his 50 percent membership interest. See Franklyn Test. Tr. 68:10-11. On the contrary, Davis steadfastly maintains that the purpose of the Final Assignment was solely to secure funds for Franklyn, as per his request in 2010 and 2013. See Davis Test. Tr. 3:17-19, 5:22-24. Upon examining the documentary evidence and the chronological order of events, this Court reaches a different conclusion from that of the jury.
Davis asserts that Franklyn approached him, expressing a need for money and to be bought out of Countryview Estates. See id. In response, Davis testified that they went to the Bank and inquired about refinancing Countryview Estates' mortgage to secure funds for Franklyn. See id. at 3:25-4:12. This testimony is supported by documentary evidence, particularly the Bank's Commitment Letter dated July 11, 2013. See Commitment Letter. The Commitment Letter articulates that the purpose of the loan was to "[Refinance existing [Fall River Five Cent Savings Bank] mortgage and provide funds to buy out ownership interest of Franklyn Neville and cover closing costs." Id. Moreover, the Bank's Commitment Letter indicates that Davis was the sole guarantor. Id. If this Court were to entertain Franklyn's rendition of facts, asserting that he did not wish to be bought out of Countryview Estates, it raises the question of why he was not also listed on the Bank's Commitment Letter as a guarantor?
This Court also observed that during arguments and testimony, Franklyn's counsel exclusively referenced the Final Assignment signed on September 26, 2013. Specifically, that "[t]he August 2013 Note predated the Assignment by almost a month." (Pl.'s Suppl. Mem. in Supp. of Obj. to Def.'s Renewed Rule 50 Mot. and Mot. for New Trial (Pl.'s Suppl. Obj.) 3.) However, as discussed above, there were three versions of the Final Assignment. First, there was a Transfer of Ownership Interest dated August 30, 2013 that was contemporaneously signed with the Original 2013 Note. See Original Transfer of Ownership. Although this document does not have a title, it is a three-lined, one-page document that states, "I Franklyn B Neville transfer all rights and ownership of all stock or interests in Countryview Estates LLC of Tiverton RI to Davis R Logan for the amount of $1,200,000.00 payable before October 1 2013." Id. Second, there was an Amended Transfer of Ownership Interest executed on September 24, 2013. See Amended Transfer of Ownership. This document titled "Transfer of Stock and/or Ownership Interest" has bolded lettering that states "I Franklyn B Neville transfer all rights and ownership of all stock or interests in Countryview Estates LLC 213 Hurst Lane of Tiverton RI to Davis R Logan for the amount of $1,000,000.00 payable before October 1, 2013." Id. Third, the last version, known as the Final Assignment, is a one-page document (the second page for signatures only) with a capitalized and bolded title that states, "ASSIGNMENT OF MEMBERSHIP INTEREST IN COUNTRYVIEW ESTATES, LLC." See Final Assignment. This Court believes that the three versions were clear and straightforward. Given Franklyn's business expertise, this Court may infer that he would not need any clarification. Nevertheless, Franklyn had the opportunity to seek clarification by asking Murray Lukoff questions, which he opted not to do. See Davis Test. Tr. 13:18-23.
Franklyn's conduct also adds weight to Davis's testimony that Franklyn was aware of being bought out of Countryview Estates for two compelling reasons. First, Franklyn's extensive business experience, including selling his parents' interest in Globe Manufacturing and dealing with complex business matters, underscores his knowledge of the consequences of assignments. See Franklyn Test. Tr. 81:9-19, 82:16-83:20. Additionally, Franklyn assigned one-third of his interest in the 2001 Promissory Note to Jean, further demonstrating his familiarity and understanding of such transactions. See id. at 39:25-40:3. When asked "[do] [y]ou understand what an assignment of membership interest is?" Franklyn answered "[y]es." See id. at 116:11-13. Second, Franklyn's behavior and affiliation with Countryview Estates after 2013 also sheds light on the matter. Following 2013, Franklyn ceased returning to work and claimed that "[n]obody would talk to [him]." See id. at 118:10-14. However, Lucas' testimony goes beyond Franklyn just not showing up for work. Lucas testified that in 2010, Franklyn expressed "he wanted to get cashed out of Countryview Estates ...." See Lucas Test. Tr. 56:20-22. As Countryview Estates' accountant, Lucas testified that Franklyn's name was absent from Countryview Estates' tax returns as a member from 2014 onward. See id. at 41:14-17. Even further, Franklyn never had any business-related conversations with Lucas after 2013. See id. at 55:24-56:1. Moreover, as Franklyn's personal accountant, Lucas testified that after September 3, 2013, Franklyn "didn't take an active business after September 3, 2013 . . ." and stopped receiving a K-1 for tax reporting services. See id. at 56:2-9.
Lastly, this Court takes note that the initial complaint filed in 2019 made no mention of a Rescission of an Assignment claim; its sole purpose was to seek payment on the Original 2013
Note. It was only upon the arrival of current counsel in 2021, eight years after the transaction, that Franklyn suddenly recalled transferring his membership interest in Countryview Estates.
Accordingly, by weighing the credibility of the witnesses and examining the documentary evidence, this Court finds that reasonable minds, in considering the same evidence, could not come to different conclusions. In short, this Court finds that the jury's verdict was reached based on sympathy and not the evidence. Therefore, "a new trial may be warranted where the jury is prejudiced against a party through 'exaggerated sympathy or passion or prejudice[.]'" Baker v. Women &Infants Hospital of Rhode Island, 268 A.3d 1165, 1169 (R.I. 2022) (quoting Yammerino v. Cranston Tennis Club, Inc., 416 A.2d 698, 701 (R.I. 1980)).
Given that the verdicts as to the Final Assignment are against the fair preponderance of the evidence and fail to do substantial justice, the Motion for a New Trial with respect to the Final Assignment is GRANTED.
V
Conclusion
For the reasons stated herein, the Motions for Judgment as a Matter of Law and New Trial are DENIED as to jury questions 1, 3, and 5 and GRANTED as to jury questions 2, 4, and 6. Counsel shall confer and present an order and judgment.