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HAYMOND v. LUNDY

January 2, 2002

JOHN HAYMOND HAYMOND NAPOLI DIAMOND, P.C.
V.
MARVIN LUNDY V. JOHN HAYMOND, ROBERT HOCHBERG, HAYMOND NAPOLI DIAMOND, P.C.



The opinion of the court was delivered by: Norma L. Shapiro, S.J.

  MEMORANDUM AND ORDER

In this action arising out of the dissolution of the law partnership of Haymond and Lundy, LLP, ("H&L"), judgment was entered on a jury verdict for John Haymond ("Haymond") and against Marvin Lundy ("Lundy"), on August 31, 2001.*fn1 The court also issued a permanent injunction prohibiting Robert Hochberg ("Hochberg") from practicing, or holding himself out to practice law, in this Commonwealth.*fn2

Timely post-trial motions followed: Lundy's Motion for a New Trial, Mistrial, or Modification (#310) of the Judgment Opinion; Lundy's Motion for "Specification" (#326) of the Injunction; and Hochberg's Motion for Post-Trial Relief from the Injunction (#308). The court held oral argument on November 16, 2001, and now denies each of these post-trial motions. The court also resolves a motion to intervene filed by Don Manchel ("Manchel"), a former partner of Lundy. There are other pending motions to be addressed by the court after the filing of this opinion and order.*fn3

I. Background

The facts and procedural history of this action are comprehensively set forth in three of the court's previous opinions: Judgment Opinion, 1-8; the Injunction Opinion, 1-13; Haymond v. Lundy, No. 99-5015 & 99-5048, 2000 WL 804432, *1-4 (E.D.Pa. June 22, 2000).

II. Discussion

A. Lundy's Omnibus Post-Trial Motions #310-1, -2, and -3

Lundy cites to neither authority nor federal rule in his Omnibus Post Trial Motions.*fn4 The court has construed these motions as having two grounds. First, Lundy seeks a new trial under F.R.C.P. 59(a).*fn5 Second, Lundy seeks a modification of judgment under F.R.C.P. 59(e).

1. F.R.C.P. 59(a) Motion for a New Trial

Lundy's F.R.C.P. 59(a) motion argues the trial was flawed because Haymond's counsel argued to the jury that his client wished to enforce the Partnership Agreement ("Agreement"), but after trial argued to the court that the firm's resources should be distributed under the Uniform Partnership Act ("UPA") instead. Lundy alleges that had his counsel known of Haymond's real demand, the trial strategy and the outcome would have been different, because Haymond concealed this strategic decision to portray himself to the jury in a more favorable light than was warranted by the facts.

Lundy does not attack the sufficiency of the evidence. Cf. Blum v. Witco Chemical Corp., 829 F.2d 367, 372 (3d Cir. 1987) (jury verdict upheld when reasonable basis exists for verdict). Rather, he cites to what he perceives to be misconduct by Haymond and his counsel. In these circumstances, a new trial is warranted under F.R.C.P. 59 only when "improper assertions have made it `reasonably probable' that the verdict was influenced by prejudicial statements." Fineman v. Armstrong Indus., Inc., 980 F.2d 171, 207 (3d Cir. 1992) (citations omitted), cert. denied, 507 U.S. 921 (1993). Lundy has the burden of meeting this test.

Here, Lundy can establish neither misconduct nor prejudice. The purported misconduct was Haymond's argument to the jury that the partnership should be dissolved according to the Agreement, but later arguing to the court that dissolution should occur under the UPA. Utilizing the UPA would have provided Haymond with a significantly greater share of partnership assets than he will receive under the Agreement.

Lundy's argument that had the jury known of Haymond's later contention it would not rendered judgment against Lundy is frivolous. First, the jury was exposed to Lundy's argument that Haymond wanted more than his share of the partnership assets, even though this argument was irrelevant to the issues before the jury. See Tr., January 25, 2001, at 164, 175 (Lundy's closing argument to the jury). Second, the court bifurcated the liability and damage phases of the action: at no time was the jury deciding to award damages for any party. It was contemplated that after the jury verdict the parties would argue to the court its effect on damages. Third, Haymond did argue to the court that Lundy's material breach made the Agreement a nullity, see Tr., January 25, 2001, at 192-194, so Lundy did have notice of Haymond's intention to seek an equitable division of the partnership assets among the parties. Lundy has cited no authority in his post-judgment motions, and no relevant authority in the earlier Motion for Mistrial,*fn6 to establish misconduct in these circumstances.

Even if there were misconduct, Lundy suffered no prejudice. In the Judgment Opinion, the court rejected Haymond's argument that the partnership should be liquidated according to the UPA. See Judgment, at 9-15. The relief awarded was then "determined by examining dissolution under the Partnership Agreement and addressing each breach found by the jury and how it effects those terms." Judgment at 14-15.

Because Haymond's post-trial strategy won him nothing, Lundy suffered no prejudice under F.R.C.P 59(a). See F.R.C.P. 61 ("The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties."); see also 11 Charles Alan Wright & Arthur R. Miller et al., Federal Practice and Procedure 2d § 2805 ("[I]t is only those errors that have caused substantial harm to the losing party that justify a new trial. Those errors that are not prejudicial do not call for relief under Rule 59"). This is a case of, at best, harmless error. See McQueeney v. Wilmington Trust Co., 779 F.2d 916, 917 (3d Cir. 1985) (holding error is harmless when there is a "high probability" it did not affect the outcome of the action).

Finally, it is not "reasonably probable" Haymond's allegedly duplicitous trial strategy led to the jury's verdict in his favor. Lundy's claim the jury would have found for him had it known of Haymond's true demands is fanciful speculation in view of the evidence at trial. There was substantial evidence, credited by the jury, supporting Haymond's assertion Lundy was the first to breach the Agreement. See, e.g., Judgment, at 6-8, 19-23. To the extent there was a "reasonable basis" for the jury verdict, it must be upheld. See Blum, 829 F.2d at 372. The verdict does not shock the conscience of the court and a new trial on liability will not be granted.

2. Rule 59(e) Reconsideration

Lundy petitions the court, in the alternative, to amend the judgment to: (1) require Haymond to "zero out" his Capital Account; and (2) transfer to Lundy all fees from ML&L cases handled by Haymond post-dissolution.

Because Lundy asks the court to amend its judgment, in part, see Judgment, at 18, 30-35, F.R.C.P. 59(e), and not F.R.C.P. 59(a), applies. A motion for reconsideration will be granted if: (1) new evidence becomes available; (2) there has been an intervening change in controlling law; or (3) a clear error of law or manifest injustice must be corrected. See NL Indus. v. Commercial Union Ins. Co., 65 F.3d 314, 324 n. 8 (3d Cir. 1995); Jubilee v. Horn, 959 F. Supp. 276, 278 (E.D.Pa. 1997; Smith v. City of Chester, 155 F.R.D. 95, 96-97 (E.D.Pa. 1994). Motions for reconsideration are not to be used to reargue or relitigate matters already decided. See Waye v. First Citizen's Nat'l Bank, 846 F. Supp. 310, 314 n. 3 (M.D.Pa.), aff'd, 31 F.3d 1175 (3d Cir. 1994). Lundy does not meet this burden.

Lundy first argues that Haymond must "zero out" his Capital Account rather than have its balance credited to him. Cf. Judgment, at 18 (requiring Haymond to be paid the balance of his account, if any, at liquidation). Whether Haymond's Capital Account contains a positive balance, requiring repayment under the Judgment, or a negative one, as presumed by Lundy, is yet to be determined by the Receiver and approved by the court on a final accounting of former partnership debts and liabilities. This issue is not ripe until the Receiver presents a supplemental report, objections have been heard and ruled on, and a final judgment entered.

Second, Lundy reargues a matter decided by the court in paragraph 3[F] of its order, and in its Judgment at page 30-32. There, the court held that:

Net fees received by Haymond, or his new firm, from ML&L [Manchel, Levin and Lundy] cases settled or litigated to verdict shall be placed in escrow. These fees shall be distributed 80% to Haymond, or his new law firm, and 20% to Lundy, or his new law firm . . ..
Lundy believes that this ruling transfers to Haymond fees the Agreement reserves for Lundy. However, he provides no new evidence for interpretation of the Agreement or new authority resulting in a conclusion different from that reached by the court: he articulates no reason why the court's judgment results in manifest injustice. Lundy's position, if accepted, would allow him to recover all fees from cases litigated by Haymond after dissolution, even though former H&L clients chose Haymond personnel as their lawyers. Cf. Kenis v. Perini Corp., 682 A.2d 845, 849 (Pa.Super.Ct. 1996) (clients have absolute right to terminate attorney-client relationship in Pennsylvania).

Lundy also argues that because Haymond is not now practicing law in Pennsylvania, he is prohibited under § 9.02(e)(I)(B) of the Agreement from recovering fees on the ML&L cases. This argument was not made during or after the trial, and may not be raised on post-trial motions. See Federal Deposit Ins. Corp. v. World University, Inc., 978 F.2d 10, 16 (1st Cir. 1992) ("Rule 59(e) motions are ...


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