Hiern v. Sarpy

161 F.R.D. 332, 32 Fed. R. Serv. 3d 1161, 1995 U.S. Dist. LEXIS 6373, 1995 WL 289650
CourtDistrict Court, E.D. Louisiana
DecidedMay 3, 1995
DocketCiv. A. No. 94-835
StatusPublished
Cited by1 cases

This text of 161 F.R.D. 332 (Hiern v. Sarpy) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hiern v. Sarpy, 161 F.R.D. 332, 32 Fed. R. Serv. 3d 1161, 1995 U.S. Dist. LEXIS 6373, 1995 WL 289650 (E.D. La. 1995).

Opinion

ORDER AND REASONS

JONES, District Judge.

Pending before the Court is defendants’ motion for appointment of a special master, or, alternatively, for appointment of an expert. Having reviewed the memoranda of the parties, the record and the applicable law, the Court DENIES the motion.

Background

This litigation arises from a long-term business relationship between plaintiff Livingston S. Hiern and defendant A. Lester Sarpy. Hiern and Housemaster Corp. filed this lawsuit in March 1994 alleging violations of RICO, legal malpractice, breach of fiduciary duty, securities violations and other state law claims in regard to transactions between Hiern and Sarpy and their related businesses. (R.Doc. 1.) Allegedly the illegal transactions occurred between the mid-1970s and the early 1990s. During the 1960s and 1970s, according to the defendants’ initial memorandum in support of this motion (R.Doc. 45), Housemaster, which was solely owned by Hiern, and another entity named Northern Homes, Inc., purchased tracts of land in St. Tammany Parish. Id. at 1-2. Sarpy or one of his entities provided the financing, with Housemaster or Northern Homes granting a collateral mortgage on the real estate with the debt guaranteed by Hiern individually. Id. at 2. The loans from the Sarpy entity to the Hiern entity “typically carried an interest rate of 24 percent to 30 percent per annum.” Id.

Defendants contend that not only did Sar-py cause his entities to provide the financing but also Sarpy caused his entities to provide “special advances” to or on behalf of Hiern personally or one of his entities for real estate taxes, living expenses or payments for Hiern’s debts. Id.

According to plaintiffs’ initial memorandum in opposition (R.Doc. 64, p. 4), Housemaster, of which Hiern was sole owner and stockholder, sold numerous tracts of land in St. Tammany Parish from 1975 to 1981, and in a typical transaction Housemaster would finance part of this purchase. The purchaser would give Housemaster a mortgage note, usually with a 15-year payment, and House[334]*334master would sell the notes to Sarpy’s mortgage companies at a discount of about 50 percent. Id. Plaintiffs allege that the proceeds from the sale of these mortgage notes were never actually received by Hiern, who endorsed the checks back to Sarpy for application against existing loan balances. Id.

Defendants dispute this, arguing that payment of the purchase price varied from case to case depending on Hiern’s need for cash. (Defendants’ initial memorandum in support, R.Doc. 45, p. 3.) In some cases Hiern received a check; in some eases the Sarpy entity issued a check for less than the purchase price and made an entry in its books to give credit to a Heirn entity against the “special advances,” against interest, principal or a combination of these. Id. The defendants agree that in some cases Hiern endorsed the check back to the Sarpy entity. Id.

The dispute revolves around whether these loans from defendants to plaintiffs were ever paid off, whether defendants ever gave plaintiffs a proper accounting, and whether subsequent transactions after the loans were allegedly paid off inured to the benefit of defendants instead of plaintiffs. Defendants also allege that various compromise agreements between the parties occurred due to the difficulty of keeping track of the balances due. (Defendants’ initial memorandum in support, R.Doc. 45, p. 3.)

Both parties contend that since the lawsuit was filed they have worked to exchange documents to try to narrow the issues and the amounts allegedly due from one party to the other. Needless to say, they still disagree.

Defendants move for an appointment of a special master pursuant to Fed.R.Civ.P. 53(b), or, alternatively, for appointment of an expert pursuant to Fed.R.Evid. 706.1 Defendants desire the appointment of a special master to unravel the alleged mystery of the complex real estate and loan transactions. In their amended motion defendants deleted their request that the special master determine if fraud occurred, conceding that this is a jury question. (R.Doc. 73.) However, defendants contend that, because each side’s expert will put his own gloss on the issues at trial, a special master is needed to evaluate the documents and testimony of each party and present an independent opinion. Otherwise, the jury will be hopelessly confused at trial.

Alternatively, defendants seek appointment of an expert pursuant to Fed.R.Evid. 706. Defendants argue that an objective expert would be able to examine the accounting, real estate and loan documents at issue and provide findings and opinions that would better aid the jury in reaching a conclusion because each side’s hired experts are only interested in helping his own clients.

Plaintiffs counter that, under Rule 53(b), appointment of a special master is appropriate in only the most exceptional of cases involving intrinsically complex issues. The commercial real estate transactions at issue are not so complicated or technical that the jury can not comprehend these issues without a special master. In fact, the number of disputed transactions has actually been narrowed from “many hundreds to about forty.” (Plaintiffs’ initial memorandum in opposition, R.Doc. 64, p. 7. See also Plaintiffs’ supplemental memorandum, R.Doc. 77, p. 2-3.)

In regard to the appointment of an expert, plaintiffs argue that this should occur only in the most compelling of circumstances, which has not been shown here. According to plaintiffs, defendants have failed to show exactly how each of the experts disagree such that a jury will not comprehend the information.

Further, plaintiffs contend that they cannot afford to pay for either a special master or another expert.

Law and Application

A. Appointment of Special Master

According to Rule 53(b), as a general proposition the reference to a special master is the exception rather than the rule. In a jury trial the reference should be made only when the issues are “complicated.” Id. “The minimum required is a demonstration [335]*335that over and beyond a mere numerical quantitative analysis, the ease is intrinsically complex.” In re Tom Watkins, 271 F.2d 771, 774 (5th Cir.1959). Citing Watkins, the Supreme Court has stated: “Even this limited inroad upon the right to trial by jury ‘should seldom be made, and if at all only when unusual circumstances exist.’ ” Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478, n. 18, 82 S.Ct. 894, 900, n. 18, 8 L.Ed.2d 44 (1962), quoting La Buy v. Howes Leather Co., 352 U.S. 249, 258, 77 S.Ct. 309, 314, 1 L.Ed.2d 290 (1957).

In Watkins the issue on a writ of mandamus was whether a reference to a special master in a jury trial was proper. Watkins, 271 F.2d at 772.

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Bluebook (online)
161 F.R.D. 332, 32 Fed. R. Serv. 3d 1161, 1995 U.S. Dist. LEXIS 6373, 1995 WL 289650, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hiern-v-sarpy-laed-1995.