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A jury’s damages award of more than $3 million against a financial firm involved in a lengthy legal battle with the city of Marion was not excessive and a trial court did not abuse its discretion in denying the firm’s motions for directed verdict, the Court of Appeals of Indiana affirmed Tuesday.
According to court records, financial advising group London Witte Group LLC and the city of Marion have been engaged in litigation relating to the financing of a construction project in downtown Marion since Sept. 29, 2017.
London Witte served as an adviser to the city’s former mayor, Wayne Seybold.
The matter came before the Court of Appeals and the Indiana Supreme Court in 2020 and 2021, respectively.
The Court of Appeals found that the city’s negligence and breach of contract claims were barred by the applicable two-year statute of limitations and that neither the continuous-representation doctrine, the doctrine of fraudulent concealment, nor the adverse-domination doctrine applied to toll the statute of limitations period.
The appellate court also concluded that the trial court had erred in applying a six-year statute of limitations to the city’s constructive fraud/unjust enrichment count, concluding that a two-year statute of limitations governed the claim.
The Court of Appeals affirmed the portion of trial court’s order relating to the negligence and breach-of-contract claims, reversed the portion relating to the constructive fraud/unjust-enrichment count, and “remanded with instructions to enter summary judgment in LWG’s favor on the City’s claim for constructive fraud/unjust enrichment.”
The Indiana Supreme Court granted transfer and reversed the award in 2021 of summary judgment for London Witte and remanded the matter to the Grant Superior Court for further proceedings.
On remand, the case proceeded to trial.
At the conclusion of the city’s case-in-chief, London Witte moved for directed verdict on the issues of whether the adverse-domination doctrine applied and whether the city had presented sufficient evidence to support its negligence, fiduciary duty and damages claims.
In denying London Witte’s motion for a directed verdict on adverse-domination grounds, the trial court found that, to avoid a directed verdict on its adverse-domination defense, the city must have introduced evidence supporting a conclusion that Seybold engaged in intentional wrongdoing, that London Witte was complicit in the wrongdoing, and that no one else had the knowledge, capability and motivation to bring suit.
“The City’s evidence provides a basis for reasonable inferences that: The Mayor formed a personal relationship with Michael An, and thereafter directed $2.5 million of public money toward An’s YMCA project without objectively establishing An’s credentials as a developer. Members of the Mayor’s administration who served at the pleasure of the Mayor facilitated the financing of the $2.5 million. Disbursements of the $2.5 million were made without An having to meet the conditions precedent set out within the bond indenture,” the trial court stated in its denial of the motion.
The trial court denied London Witte’s motions for directed verdict “but in the interest of the jury’s time, reserved the Court’s explanation of the ruling to be made by” a written order, which was issued on May 23, 2022.
The trial continued, after which the jury returned a general verdict for the city, in which it found the city’s total damages were $3,285,920 and that London Witte was 95% responsible for the city’s damages.
The jury entered a verdict against London Witte in the amount of $3,121,624.
London Witte filed a motion to correct error, which was denied by the trial court on Aug. 1, 2022.
At the conclusion of the city’s case-in-chief, London Witte filed two motions for a directed verdict, which were also denied.
London Witte appealed the trial court’s denial of both motions, which followed the denial of London Witte’s motion to correct error.
It also claimed the jury’s damages award was excessive.
The Court of Appeals affirmed, finding the trial court acted within its discretion in denying London Witte’s motions for a directed verdict and to correct error and that the jury’s verdict was supported by the evidence.
Judge Cale Bradford wrote the opinion for the appellate court.
According to Bradford, the parties disputed whether London Witte renewed its motions for a directed verdict at the close of evidence.
While the city claimed that London Witte made only a general request for the trial court to enter judgment in its favor, London Witte claimed that it effectively renewed its motions for a directed verdict, mentioning the issues included in its motions for a directed verdict and specifically mentioning the words “directed verdict.”
London Witte challenged the trial court’s determination that the city presented sufficient evidence of both intentional wrongdoing and domination by Seybold to survive its directed verdict motions.
Bradford wrote that despite London Witte’s assertion, with respect to the alleged intentional wrongdoing by Seybold, the city’s case-in-chief contained evidence indicating that Seybold had received improper financial benefits from An in the form of cash payments to his wife and political campaign and premium payments on a life insurance policy with these benefits being financed solely or at least in part from bond proceeds.
“Specifically, the City presented evidence that showed that An had made cash payments to Mayor Seybold’s wife (Jennifer) and his political campaign as well as had made premium payments on a life insurance policy taken out for Mayor Seybold’s benefit,” Bradford wrote.
In denying London Witte’s motion for a directed verdict, the trial court also cited evidence indicating that disbursements of the $2.5 million bond proceeds were made without An having to meet the conditions set out in the bond indenture, Bradford noted.
The trial court also cited evidence that Seybold did not objectively establish An’s credentials as a developer before directing $2.5 million of public money toward the YMCA project, with the city presenting the expert testimony of Robert Doty, a financial advisor in the municipal bond market who was hired to review the circumstances relating to the YMCA project, Bradford wrote.
“The trial court considered all of the above-discussed evidence, which again was presented during the City’s case-in-chief, and determined that a directed verdict was improper because there was sufficient evidence to support a reasonable inference of wrongdoing, or at least that would allow reasonable persons to differ as to the result,” Bradford wrote.
To London Witte’s assertion that the city failed to present sufficient evidence to defeat its motion for a directed verdict on the question of whether Seybold had exercised domination over the city attorney or the city’s redevelopment commission, Bradford wrote that three of the commission’s five members were appointed by Seybold and any or all of those members could have been removed by him without cause.
Bradford added that Indiana Code section 36-7-14-12.2(a)(11) does not explicitly grant the redevelopment commission the statutory power to investigate alleged wrongdoing by the city’s executive.
“In addition, Tom Hunt, who became corporate counsel for the City on September 1, 2014, testified that neither he nor his predecessor could have filed a lawsuit relating to the YMCA project without Mayor Seybold’s approval. Specifically, Hunt testified that both he and his predecessor ‘served at the pleasure of the mayor, took directions from the mayor, and did projects as the mayor directed,’” Bradford wrote.
According to Bradford, upon review, like the trial court, the Court of Appeals concluded that the evidence presented in the city’s case-in-chief was such that reasonable persons could differ as to the result.
“As such, we agree with the trial court’s determination that it would have been improper for the trial court to have entered a directed verdict in favor of LWG on the question of whether Mayor Seybold dominated the City during the relevant time period,” Bradford wrote.
As to London Witte’s claim that the jury’s damages award was excessive, Bradford wrote that, although the company claims that its involvement with the YMCA project and the bond financing was limited, the jury found otherwise, concluding that London Witte had played an active role, or at least had been complicit, in the wrongdoing of others.
Bradford stressed that London Witte had owed a duty to the city, not Seybold.
“The jury determined that LWG had breached that duty and, as a result, the City had suffered damages. The jury’s award of damages was consistent with the damages that it found the City had incurred in connection to the YMCA project. As such, the jury’s award of damages was not excessive,” Bradford wrote.
Judges Patricia Riley and Leanna Weissmann concurred.
The case is London Witte Group, LLC v. City of Marion, 22A-MI-2060.
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