Quentin Keefe v. LendUS, LLC

2023 DNH 022P

• Court: District Court, D. New Hampshire
• Decided: March 2, 2023
• Docket: 20-cv-195-JD
• Status: Published

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Quentin Keefe

v. Civil No. 20-cv-195-JL Opinion No. 2023 DNH 022P LendUS, LLC

ORDER ON DEFENDANT’S MOTIONS IN LIMINE

Quentin Keefe is seeking payment of bonuses that he contends LendUS, LLC

owed him after his employment was terminated, and LendUS brings counterclaims

against Keefe arising from the circumstances that lead to his termination. LendUS moves

in limine for evidentiary rulings about testimony and evidence that LendUS expects

Keefe to introduce at trial and about one document that LendUS intends to introduce.

The court addresses each motion in turn.

The court reminds the parties that the rulings herein are made without prejudice to

revisiting particular issues in response to circumstances that might arise during trial.

Furthermore, these rulings are limited to grounds argued in the parties’ filings and raised

at the final pretrial conference. The court reserves the right to assess other factors at trial,

such as authenticity, hearsay, and best evidence, see Fed. R. Evid. 800 et seq., 900 et seq.,

and 1000 et seq., and where appropriate, arguments and grounds not raised by counsel.

I. Testimony and evidence about Regency resignations

LendUS moves to prevent Keefe from testifying about any reasons Regency

employees resigned from LendUS on the grounds that such testimony is inadmissible speculation and hearsay. LendUS also moves to exclude all e-mails and other documents

that include reasons for the employees’ decisions to resign as inadmissible hearsay. In

response, Keefe opposes such a “blanket” exclusion order and contends that admissibility

should be determined at trial. Keefe argues that, because the employees were all LendUS

employees when they communicated their dissatisfaction with LendUS to him both orally

and in writing, their statements are not hearsay under Federal Rule of Evidence

801(d)(2)(D). He also argues that his opinions about the reasons Regency employees left

LendUS are based on his communications with the employees and are not hearsay.

Hearsay is an out-of-court statement that is offered to prove the matter asserted in

the statement and is not admissible. Fed. R. Evid. 801(c) & 802. Under the familiar

“admission of party opponent” rule, however, out-of-court statements offered for their

truth are not hearsay, f they are “offered against an opposing party and: . . . [were] made

by the party’s agent or employee on a matter within the scopfe o that relationship and

while it existed.” A statement is “a person’s oral assertion, written assertion, or nonverbal

conduct, if the person intended it as an assertion.” Fed. R. Evid. 801(a).

No such “blanket” ruling can issue on the admissibility of possible testimony and

evidence about the reasons employees resigned from the Regency division of LendUS.

With a proper foundation, some statements and evidence may be admissible as party-

opponent admissions under Rule 801(d)(2)(D). Some statements may not be offered for

their truth, and LendUS may open the door to allow certain evidence. LendUS has not

presented any particular statement or document that would enable the court to make these

determinations, instead seeking a “blanket” exclusionary ruling. If such evidence is

2 eventually admitted, LendUS may request a limiting instruction if necessary to cabin the

use of evidence within its admissible purpose. See Fed. R. Evid. 105. On the other hand,

evidence may be excluded, even if an exception to the hearsay rule applies, “if its

probative value is substantially outweighed by a danger of . . . unfair prejudice,

confusing the issues, misleading the jury, undue delay, wasting time, or needlessly

presenting cumulative evidence.” Fed. R. Evid. 403. The court will undertake this

analysis in response to proffers of, and objections to, evidence at the appropriate time.

The motion in limine to exclude testimony and evidence of reasons for employee

resignations is denied without prejudice to raise appropriate objections at trial.1

II. Evidence of witnesses’ personal wealth

LendUS moves to exclude any inquiry into and evidence of the personal wealth of

LendUS’s CEO, Robert Hirt, and former CFO, Ava Noack, who will be witnesses at trial.

LendUS contends that such information is irrelevant and is barred under Rule 403

because it would be more unfairly prejudicial than probative. In response, Keefe states

that he intends to introduce evidence of Noack’s financially advantageous relationship

with LendUS after she started her own company to show her testimonial bias in favor of

Hirt and LendUS. Keefe argues that evidence of Hirt’s wealth and compensation is

relevant to his defense against LendUS’s counterclaims that Keefe’s mismanagement

caused the demise of Regency.

1 Document no. 88.

3 Ava Noack. Keefe asserts, supported by Noack’s deposition testimony, that she

left LendUS at the beginning of 2020 and started her own consulting company. Noack

through her new company provides consulting services to LendUS, which are the same or

similar to her work when she was CFO of LendUS. In 2021, the value of Noack’s

consulting contract with LendUS was about a million dollars. Keefe contends that

Noack’s relationship with LendUS is relevant to show that she has a reason, as a witness,

to be biased in favor of LendUS.

“Evidence is relevant if: (a) it has any tendency to make a fact more or less

probable than it would be without the evidence; and (b) the fact is of consequence in

determining the action.” Fed. R. Evid. 401. “Bias is a term used in the ‘common law of

evidence’ to describe the relationship between a party and a witness which might lead the

witness to slant, unconsciously or otherwise, his testimony in favor of or against a party.”

United States v. Abel, 469 U.S. 45, 52 (1984). Evidence of a witness’s bias is relevant

because “[a] successful showing of bias on the part of a witness would have a tendency to

make the facts to which he testified less probable in the eyes of the jury than it would be

without such testimony.” Id. at 51. A relationship between the witness and a party is

probative of the witness's bias in favor of that party. See United States v. Sumlin, 956

F.3d 879, 890-91 (6th Cir. 2020); Abernathy v. E. Ill. Railroad Co., 940 F.3d 982, 992

(7th Cir. 2019); Nadeau v. Hunter Lawn Care, LLC, 585 F. Supp. 3d 158, 160 (D. Mass.

2022).

Evidence of Noack’s employment at LendUS and her subsequent and continuing

contractual relationship with LendUS is relevant to the issue of her potential bias in favor

4 of LendUS. That evidence has not been shown to be unfairly prejudicial, is subject to

cross-examination, and, as evidence admissible for a limited purpose, may warrant a

limiting instruction if requested. See Fed. R. Evid. 105.

Robert Hirt. Keefe represents that he intends to introduce evidence of Hirt’s

compensation at LendUS and his individual wealth to defend against LendUS’s

counterclaims against him that his mismanagement caused the Regency division

employees to resign. Keefe states that he intends to show that Hirt, as CEO of LendUS,

made certain corporate financial managerial decisions that caused dissatisfaction among

Regency division employees, leading (in whole or in part) to their resignations. The

evidence Keefe cites, however, pertains to LendUS’s corporate assets (private jet travel

and a corporate penthouse), but not to Hirt’s personal wealth.

Under most circumstances, evidence of a defendant’s wealth may be relevant only

in limited circumstances that do not apply here. Jones v. Jasper Wyman & Son, 2022

WL 16854267, at *3-*4 (D. Me. Nov. 10, 2022); Curtis Mfg. Co., Inc. v. Plasti-Clip

Corp., 933 F. Supp. 94, 101 (D.N.H 1995). Hirt is a witness, not the defendant. In the

circumstances presented, evidence of Hirt’s compensation and personal wealth might

aggravate the sensibility of, and distract, more modestly compensated or resourced jurors,

and thus be more unfairly prejudicial than probative. Fed. R. Evid. 403. Evidence of

LendUS’s corporate assets, however, may be relevant in the circumstances that Keefe

suggests if properly supported by evidence of employee awareness. See Fed. R. Evid.

104(b) (conditional relevance). The admissibility determination must be made in the

context of trial.

5 LendUS’s motion in limine to exclude all evidence of Noack and Hirt’s

compensation and personal wealth is denied as to evidence of Noack’s relationship with

LendUS, including the compensation paid to her or her company as a consultant, and is

granted as to evidence of Hirt’s personal wealth and compensation but not as to

LendUS’s corporate assets and expenditures.2

III. Evidence of other lawsuits, investigations, and character

LendUS moves to exclude evidence of other lawsuits and disputes by or against

LendUS or any of its officers or managers as irrelevant under Federal Rule of Evidence

404(b). LendUS also seeks to exclude other so-called “character evidence,” such as

evidence it delayed paying the employees who resigned from employment there, under

Rules 404(a) and (b). In response, Keefe contends that LendUS’s motion is overly broad

because it addresses character evidence generally rather than specifically and that

evidence of Hirt’s personal character and credibility is relevant to the reasons Regency

division employees left LendUS, for which LendUS holds Keefe responsible in its

counterclaims.

“Evidence of a person’s character or character trait is not admissible to prove that

on a particular occasion the person acted in accordance with the character or trait.” Fed.

R. Evid. 404(a)(1). Evidence of that a person committed other wrongs or misconduct is

not admissible to prove “a person’s character in order to show that on a particular

2 Document no. 89.

6 occasion the person acted in conformity with the character.” Fed. R. Evid. 404(b)(1).

Evidence of other wrongs or misconduct “may be admissible for another purpose, such as

proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of

mistake, or lack of accident.” Fed. R. Evid. 404(b)(2).

Keefe agrees that he will not introduce evidence of other lawsuits involving Hirt

or his companies. He proffers evidence, however, that Hirt’s personality, demeanor,

dishonesty, and personal conduct caused some Regency division employees to resign,

and notes that LendUS has accused him (Keefe) of causing those resignations in its

defenses and counterclaims. If established by competent evidence and connected to

resignations, evidence of Hirt’s decisions, conduct, and relationships at LendUS and how

those actions affected the Regency division employees may be admissible to show why

the employees resigned. See Fed. R. Evid. 104, 401, 402, & 404. Here again, the court

declines to issue a blanket exclusion. Admissibility will be determined in the context of

trial.

LendUS’s motion to exclude character evidence is granted as to evidence of other

lawsuits and is otherwise denied.3

IV. Hostile witnesses

LendUS asks the court to designate certain witnesses as hostile under Federal Rule

of Evidence 611(c)(2) and to allow leading questions on direct examination at trial. The

3 Document no. 90.

7 identified witnesses are Maureen LeMay, Mark McCauley, Dianne Morrissette, and Joan

Tyrell. LendUS represents that these witnesses were Regency division executives and

that all but LeMay resigned in the fall of 2018 when most of Regency’s employees left to

work at a competitor company, CMG Mortgage, Inc. Keefe responds that LendUS will

improperly use leading questions to tell its story about the resignations of the Regency

division employees, that it is not appropriate to assume these witnesses will be hostile

prior to trial, and that the ruling should instead be based on their demeanor and attitude

during their testimony at trial.

“Leading questions should not be used on direct examination except as necessary

to develop the witness's testimony. Ordinarily, the court should allow leading questions

. . . when a party calls a hostile witness, an adverse party, or a witness identified with an

adverse party.” Fed. R. Evid. 611(c)(2). “‘A ‘hostile’ witness, in the jargon of evidence

law, is not an adverse party but a witness who shows himself or herself so adverse to

answering questions whatever the source of the antagonism, that leading questions may

be used to press the questions home.’” United States v. Greaux-Gomez, 52 F.4th 426,

438 (1st Cir. 2022) (quoting Rodriguez v. Banco Cent. Corp., 990 F.2d 7, 12-13 (1st Cir.

1993)). A witness is identified with an adverse party, for purposes of Rule 611, when the

witness is “an employee, agent, friend, or relative of an adverse party.” Pryor v.

Corrigan, 2023 WL 1100436, at *21 (N.D. Ill. Jan. 30, 2023).

The identified witnesses may or may not be hostile to LendUS within the meaning

of Rule 611(c)(2). The witnesses were deposed, and LendUS does not quote or cite

deposition testimony to show that any of the witnesses did not answer questions directly,

8 or provide any documents or other more concrete bases on which to make a hostility

finding. In these circumstances, LendUS has not established grounds for a pretrial

hostility ruling.

LendUS’s motion to designate certain witnesses as hostile to authorize leading

questions on direct examination at trial4 is denied without prejudice to seeking such

rulings during trial.5

V. LendUS’s Corporate Status

LendUS moves to exclude from the trial all evidence about its acquisition in 2022

by Cross Country Mortgage. In support, LendUS argues that the acquisition is irrelevant

to the issues in the case and that it would take unnecessary time to explain the acquisition

and the resulting changes in structure at LendUS. Keefe states that he only intended to

introduce evidence of the acquisition to show that it is futile for him to exhaust

administrative remedies for purposes of his ERISA claim, Count II.

Count II will be tried to the court, not to the jury. Therefore, evidence of

LendUS’s current corporate status is not relevant to issues at trial. LendUS’s motion in

limine to exclude evidence at trial of its corporate structure is granted.6

4 Document no. 91. 5 If there is sufficiently strong basis for such a request, the court may permit LendUS’s counsel to conduct a voir dire examination – either in or outside the presence of the jury, pending on circumstances – to facilitate this determination. 6 Document no. 92.

9 VI. Memorandum from expert to Keefe

LendUS asks the court to rule that a memorandum sent to Keefe from his expert

witness, Richard Maloney, in September of 2018 is admissible at trial. LendUS contends

that the memorandum is not privileged and that it is relevant to the calculation of the

Bonus Settlement Amount, § 3.1 of the Executive Incentive Bonus Program. Keefe does

not object to LendUS’s proposed use of the memorandum.

Keefe is seeking to enforce the Bonus Settlement Amount in the ERISA claim,

Count II. That claim is being tried to the court and will not be presented to the jury.

Therefore, the memorandum will not be presented during the jury trial. If appropriate,

LendUS may use the memorandum in the bench trial to the court of Count II.7

Conclusion

For the foregoing reasons, LendUS’s motions in limine are resolved as follows:

Doc. no. 88 – denied without prejudice to raising appropriate objections at trial.

Doc. no. 89 – denied as to Ava Noack and granted as to Hirt’s personal compensation and

wealth but not as to LendUS’s corporate assets and expenditures.

Doc. no. 90 – granted as to evidence of other lawsuits and otherwise denied without

prejudice to raising appropriate objections at trial.

Doc. no. 91 – denied without prejudice to raising appropriate objections at trial.

7 The court notes, however, that LendUS represents the memorandum pertains to the interpretation of the provisions describing the agreed-to method of calculating the BSA. The court has interpreted § 3.1 of the Program, the calculation of the BSA, and that ruling is law of the case, not subject to change. See doc. no. 79.

10 Doc. no. 92 – granted.

Doc. no. 93 – granted.

SO ORDERED.

Joseph N. Laplante United States District Judge

Dated: March 2, 2023

cc: James Joseph Armillay, Jr., Esq. William E. Christie, Esq. Timothy John McLaughlin, Esq. Tara E. Lynch, Esq. Stephen Joseph Orlando, I, Esq.