Kenneth S. Rotskoff v. George Tannous

438 F.3d 852
CourtCourt of Appeals for the Eighth Circuit
DecidedFebruary 17, 2006
Docket05-1855
StatusPublished
Cited by1 cases

This text of 438 F.3d 852 (Kenneth S. Rotskoff v. George Tannous) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kenneth S. Rotskoff v. George Tannous, 438 F.3d 852 (8th Cir. 2006).

Opinion

BYE, Circuit Judge.

George Tannous appeals the jury verdict against him on the claims of conspiracy to defraud and violations of the Securities Act. He argues the evidence was insufficient to support the verdict, the district court 1 erred in instructing the jury, and the district court erred in denying his motion for directed verdict. We affirm.

I

Between 1990 and 1993, Tannous, a California resident, was an agent for the Internal Revenue Service. He then started his own business representing taxpayers. By 1999, Tannous’s work load vastly diminished, so he bought the intellectual property to “Bidbay.com,” a company he hoped would compete with eBay.com. He also created the search engine “AskGt” to be used with Bidbay.com. He enlisted the help of clients Wester Cooley, a former *854 Oregon Congressmen, and Don Dayer, a felon convicted of tax fraud, to raise needed capital. Dayer, in turn, recruited John Montgomery, also a felon whose real name was DeElroy Beeler. Cooley, Dayer, and Montgomery are all California residents.

By 2000, Tannous was orchestrating an initial public offering (IPO) for Bid-bay.com. Kenneth Rotskoff, a St. Louis oral surgeon, learned of the investment opportunity from a patient who referred Rotskoff to Montgomery. Montgomery told Rotskoff Bidbay.com stock would be offered in the IPO at $20 per share, but Rotskoff could buy stock early by paying $2 per share. Rotskoff asked for, but never received, either an offering circular or a prospectus. Montgomery sent Rot-skoff two documents appearing to’ be a registration statement filed with the Securities and Exchange Commission (SEC) and an SEC order declaring the registration to be “effective.” Relying on this information, Rotskoff and his wife invested. In exchange, Rotskoff received stock certificates in the companies BidbayEu-rope.com and George Tannous & Affilli-ates. When asked why he did not receive Bidbay.com stock, Montgomery explained he could exchange these shares for Bid-bay.com shares after the completion of the IPO.

In February 2002, Montgomery called Rotskoff from California and told him eBay.com was interested in purchasing Bidbay.com and AskGT.com. He also represented eBay would pay upwards of $20 per share for Bidbay.com and AskGT.com stock. Rotskoff, acting on this information, invested in AskGT.com. At the time, Montgomery represented the IPO was about to be launched, yet in reality, Bid-bay.com’s IPO registration statement had already been withdrawn from further regulatory review and approval by the SEC.

Shortly thereafter, Rotskoff became concerned and asked for his money back. To ease Rotskoff s concerns, Montgomery and Tannous called Rotskoff, and Tannous mentioned eBay.com was interested in buying Bidbay.com. Montgomery interrupted, stating Tannous could not talk about the subject, and the conversation came to a halt shortly thereafter. Montgomery immediately called Rotskoff to assure him the eBay.com acquisition would take place, but he stated Tannous, as an officer of the company, could not speak on the issue. Rotskoff also called Cooley, who also assured him the sale would take place. Ebay.com never did buy Bid-bay.com; however, Rotskoff convinced others to invest in Bidbay.com on the basis of this information. These investors were residents of Missouri, Texas, Pennsylvania, Michigan, Wyoming, and Canada.

Rotskoff and other investors sued Cooley, Tannous, Montgomery, and the corporate entities involved. After the close of the plaintiffs’ evidence, the district court denied Tannous’s motion for a directed verdict, which was not renewed at the close of all evidence. The jury returned a verdict against Tannous, finding him personally liable for approximately $987,000.00 in compensatory damages and $11.00 in punitive damages. Only Tannous appeals.

II

A

As an initial matter, Tannous waived his argument regarding sufficiency of the evidence because the issue was not developed in his briefs as required by Federal Rule of Appellate Procedure 28(a)(9)(A). It is thus considered abandoned for failure “to provide any reasons or arguments” for his contentions. United *855 States v. Zavala, 427 F.3d 562, 564 n. 1 (8th Cir.2005).

Additionally, this argument is without merit because if “a party does not move for judgment as a matter of law at the close of all the evidence, [he] normally cannot later argue that there was insufficient evidence to support the verdict.” BE & K Constr. Co. v. United Broth. of Carpenters & Joiners of Am., AFL-CIO, 90 F.3d 1318, 1325 (8th Cir.1996). There are two exceptions to this rule: (1) if the Rule 50 motion is made close to the end of the presentation of all evidence and the district court indicates the party need not renew the motion at the appropriate subsequent time, or (2) if the failure to allow such a claim would “constitute plain error resulting in a manifest miscarriage of justice.” Id. (citations omitted). Because neither of these exceptions is applicable, sufficient evidence exists supporting the verdict.

B

With respect to the jury instructions, Tannous claims the district court erred in instructing the jury on the burden of proof required for each count. Because he failed to object to the instructions at trial, we review for plain error. Lighting & Power Servs., Inc. v. Roberts, 354 F.3d 817, 820 (8th Cir.2004). We have previously recognized plain error review in the civil context is a “stringently limited standard of review.” Wilson v. Brinker Intern., Inc., 382 F.3d 765, 771 (8th Cir.2004) (citation omitted). To establish plain error, Tannous must show an error which is plain “likely altered the outcome[ ] and ... was sufficiently fundamental to threaten the fairness or integrity or public reputation of the judicial proceeding.” Id. (quoting Gray v. Genlyte Group, Inc., 289 F.3d 128, 134 (1st Cir.2002)).

The instructions required the jury to apply the “preponderance of the evidence” standard on both the civil conspiracy claim and the availability of punitive damages. Tannous claims the court should have instructed the jury to make these determinations based on clear and convincing evidence as required by Missouri law. See Krysa v. Payne, 176 S.W.3d 150, 158 n. 3 (Mo.Ct.App.2005) (punitive damages); Mika v. Central Bank of Kan. City, 112 S.W.3d 82, 93 (Mo.App.Ct.2003) (civil conspiracy). The plaintiffs allege California law applies, and under California law, punitive damages must be awarded on the “clear and convincing” standard, but civil conspiracy may be found based on a preponderance of the evidence. Johnson v. Ford Motor Co.,

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Related

Rotskoff v. Cooley
438 F.3d 852 (Eighth Circuit, 2006)

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438 F.3d 852, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kenneth-s-rotskoff-v-george-tannous-ca8-2006.