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Park West Galleries, Inc v. Bruce Hochman; Fine Art Registry; Salvador Dali Gallery

September 5, 2012

PARK WEST GALLERIES, INC., PLAINTIFF-APPELLEE,
v.
BRUCE HOCHMAN; FINE ART REGISTRY; SALVADOR DALI GALLERY, INC., DEFENDANTS, THERESA FRANKS; GLOBAL FINE ART REGISTRY, LLC; DAVID CHARLES PHILLIPS, DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the Eastern District of Michigan at Detroit. Nos. 2:08-cv-12274; 2:08-cv-12247--Lawrence P. Zatkoff, District Judge.

The opinion of the court was delivered by: Julia Smith Gibbons, Circuit Judge.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

Before: MOORE, GIBBONS, and ALARCON, Circuit Judges.*fn1

GIBBONS, J., delivered the opinion of the court in which ALARCON, J., joined, and MOORE, J., joined only in the judgment. MOORE, J. (pp. 15-16), delivered a separate opinion concurring in the judgment.

OPINION

Defendants-appellants Theresa Franks, Global Fine Art Registry, LLC, and David Charles Phillips appeal the district court's denial of their motion to reinstate the jury verdict. Defendants-appellants filed the motion after the district court granted the motion for a new trial filed by Park West Galleries, Inc. ("Park West"). In denying the motion, the district court found that it was unclear whether this court's waiver doctrine as enunciated in Jones v. Illinois Central Railroad Co., 617 F.3d 843 (6th Cir. 2010), extended to requests for a new trial brought under Federal Rule of Civil Procedure 59. The district court certified for interlocutory appeal the issue of whether Park West waived its right to a Rule 59(a) motion for a new trial by failing to move for a mistrial, before the case was submitted to the jury, on the basis of the known misconduct in which Franks and counsel for defendants engaged during the course of the entire trial. For the following reasons, we conclude that Park West's failure to move for a mistrial based on misconduct occurring during the trial did not waive its right to seek a new trial under Federal Rule of Civil Procedure 59, and we affirm the district court's order denying the motion to reinstate the jury verdict.

I.

Park West is an independently owned gallery and art dealer headquartered in Southfield, Michigan. Park West sells art from its Southfield gallery, over the internet, through its catalog, and over the phone, and also conducts art auctions in different cities in North America and on cruise ships around the world. Among the works sold by Park West are works by Salvador Dali.

In May 2007, Theresa Franks, who is the CEO of Global Fine Art Registry ("GFAR"), began publishing articles on Fine Art Registry ("FAR"), the website run by GFAR, which alleged that Park West engaged in suspect business practices in running its auctions aboard cruise ships and that Park West sold inauthentic or fake works of art to unsuspecting customers--particularly citing the works by Dali as an example. David Phillips, a FAR employee, authored several of the articles published on the FAR website which described alleged cruise ship art auction scams run by Park West and conducted several interviews with alleged victims, all of which were published on the FAR website. Bruce Hochman, who runs the Salvador Dali Gallery, agreed to be interviewed and quoted by Phillips on behalf of FAR regarding his view that the Dali prints purchased by Park West customers in the auctions at sea did not contain authentic artist signatures.

In April 2008, Park West filed a complaint in Michigan state court against Franks, Hochman, and GFAR alleging defamation, tortious interference, interference with prospective business advantage, and civil conspiracy to destroy Park West's goodwill and reputation. The action was removed to federal court. Park West had also filed a similar defamation case against Phillips, and the cases were consolidated.

The consolidated case was tried before a jury between March 15, 2010 and April 19, 2010. During trial, Park West frequently objected to what it viewed as misconduct on the part of Franks and counsel for the defendants. The district court gave several warnings to defense counsel regarding the misconduct and sanctioned Franks's defense counsel Jonathan Schwartz for his failure to honor the court's rulings regarding improper lines of questioning. Despite the repeated instances of misconduct, Park West did not request a mistrial and the case was submitted to the jury on April 19. On April 21, the jury returned a verdict in favor of defendants Franks, Phillips, Hochman, and GFAR on the defamation, tortious interference with business expectancies, and civil conspiracy claims. However, the jury did not find in favor of the defendants on their counterclaims of defamation, tortious interference with business expectancies, and conspiracy to tortiously interfere with business expectancies. Nonetheless, the jury did find in favor of defendant GFAR on its Lanham Act counterclaim against Park West and awarded $500,000.00 in damages.

On May 11, 2010, Park West filed a motion for judgment as a matter of law and/or for a new trial. Park West's motion requested several forms of post-trial relief, including a new trial under Federal Rule of Civil Procedure 59 on Park West's defamation, tortious interference with business expectancies, and civil conspiracy claims as well as GFAR's counterclaim for a violation of the Lanham Act. Park West argued that the district court should set aside the verdict and grant a new trial in light of the "persistent and insidious misconduct of the defendants and their counsel [which] deprived Park West of a fair trial, and caused the jury to reach a seriously erroneous result that is against the weight of the (admissible) evidence." Park West argued that Franks and defense counsel persistently violated the district court's orders resolving the motions in limine and the district court's evidentiary rulings, and that defense counsel made inappropriate and inflammatory remarks throughout trial, posed improper and objectionable questions to witnesses, and failed to control their clients.

On August 16, 2010, the district court found that Franks and counsel for the defendants engaged in contumacious conduct. After considering the factors enumerated in City of Cleveland v. Peter Kiewet Sons' Co., 624 F.2d 749, 756 (6th Cir. 1980), for determining whether there is a reasonable probability that the jury's verdict was influenced by the improper conduct and a grant of the motion for a new trial is therefore warranted, the district court decided that the misconduct engaged in by Franks and defense counsel was serious enough and permeated the entire trial to such an extent that there was at least a reasonable ...


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