PATRICIA A. SULLIVAN, Magistrate Judge.
The latest skirmish in this longstanding dispute
As Defendants are pro se, and therefore entitled to the Court's interpretive lenience,
The Hekking clan's conflict has occupied this Court for several years. In brief, Defendant Craig and Plaintiffs Darren and Shaun are the three adult sons of Laurie Hekking. On June 1, 2010, Renate Hekking, Laurie's wife (and the step-mother of Craig, Darren and Shaun), died, leaving her estate to Laurie, who followed her to the grave eight days later. The estate was to be divided equally amongst the three brothers, with Craig serving as executor and trustee of a foundation to provide for Laurie's grandchildren's education. Four years later, Darren and Shaun, acting on his own behalf and for his minor children, sued Craig and his wife, Molly, accusing them of concealing and misappropriating estate and trust assets that rightfully belonged to, or were intended to benefit, all three brothers, as well as Craig and Shaun's minor children.
Activity during the pretrial phase of the case was extensive and acrimonious. Based on Defendants' failure to respond to the Complaint, default entered, ECF No. 18, which they sought to have set aside, arguing that they had not been served. Following an evidentiary hearing, Judge Lisi set aside the default based on the absence of prejudice to Plaintiffs, but also concluded that "Craig H.'s testimony regarding service of process was a complete fabrication"; both his testimony at the evidentiary hearing and his affidavits were found to constitute "blatant perjurious conduct." ECF No. 28 at 14-15, 18. Because of the expense caused by the perjury, monetary sanctions were imposed. ECF No. 28 at 18. Next, Craig and Molly failed to respond to discovery and Craig refused to provide any information based on the Fifth Amendment. That, coupled with evidence uncovered through third party subpoenas establishing that Defendants had continued to withdraw and spend money in blatant contravention of the Court's orders, triggered this writer's recommendation that the default be reinstated against Craig. 2014 WL 9887272, at *13. This recommendation was adopted based on "Craig's . . . deliberate and repeated violations of Court orders . . . while continuing to dissipate the assets of the Estate and spending money on non-essential items." 2016 WL 3093448, at *4. The Court enjoined Craig from continuing to act as executor or trustee.
On the eve of the bench trial, making arguments that are strikingly similar to those made in the present Motion, Defendants filed a Motion for Sanctions of Dismissal with Prejudice and Award of Attorney's Fees and Costs against Plaintiff's and their Counsel for Fraud on the Court. ECF No. 144. In it, they alleged they had been the victims of "false claims and vexatious litigation stemming from a family dispute," arguing, for example, that a valuable ring that Molly was seen wearing was really a gift from Craig and not stolen from Renate's estate after her death.
In the Trial Decision, the Court specifically evaluated the credibility of each witness. Those who testified for Plaintiffs, including Shaun, Alexandra (Shaun's wife of twenty years), and Darren, were found to be credible.
In contrast, the scathing findings regarding Craig and Molly include:
Regarding Craig, the Court concluded that he obfuscated and lied, while depleting the estate:
To calculate the value of missing estate assets, the Court relied on Shaun and Darren's detailed recollections of their parents' property, and on testimony from Plaintiffs' expert, who then evaluated the described property based on comparisons with similar items.
In addition to compensatory damages, the Court awarded Darren and Shaun punitive damages of $300,000: "[i]n this case, which encompassed the betrayal of family trust; the conversion of assets earmarked for the education of six minor children, including the Defendants' own; as well as the Defendants' reprehensible, perjurious, and contemptuous conduct throughout these proceedings, the Court finds the imposition of punitive damages is appropriate."
As of this writing, Craig and Molly have made no payments towards the judgment. In December 2016, acting pursuant to Fed. R. Civ. P. 69 and R.I. Gen. Laws § 9-25-7, Darren and Shaun filed, and, on January 4, 2017, the Court granted, an ex parte motion for issuance of writs of attachment.
The Motion has placed in issue the Court's February 15, 2017, disposition of Molly's entitlement to retain jewelry up to the total value of $2000 pursuant to the jewelry exemption in R.I. Gen. Laws § 9-26-4(14), which allows a judgment debtor to retain jewelry cumulatively worth less than $2000. Accordingly, a deeper explication of the facts pertinent to the jewelry exemption is in order. During the evidentiary hearing, Molly testified that the seizure had left her with nothing but the earrings and pearl necklace she wore to the hearing, as to which she testified, "I actually don't even think the necklace is real, so I can't even give it a value," and a brown necklace with plastic flowers, which she said was costume jewelry.
On cross examination, Plaintiffs elicited the admission, based on Defendants' filing just before trial (ECF No. 125), that Molly had then had a 14K yellow gold ring with a one carat solitaire diamond. She admitted this, but claimed that she no longer had that ring because it had been sold, though she could not recall when. Tr. at 55-56. Molly also admitted to having had a 14K white gold ring with a European cut 3.5 carat diamond. Tr. at 57. Somewhat bizarrely, she testified that she left this valuable ring in her Land Rover, from which it was stolen in 2013. Tr. at 59-61. She admitted that no insurance claim was ever made in connection with the theft and she did not produce a police report, though she claimed one had been made after the robbery. Tr. 56-58. None of Molly's testimony about what happened to these valuable diamond rings was found to be credible.
To rebut Molly's claim that the Raymond Weil Watch was hers and that she has owned it since "2003 or 2004," Plaintiffs called Shaun who testified that he recalled seeing the Raymond Weil Watch worn by Renate before her death in June 2010. Tr. at 65. Craig's cross examination of his brother focused on whether the Raymond Weil Watch had been listed as an estate asset during the trial, which Shaun could not recall. Tr. at 65-70. Shaun's testimony is consistent with the bench trial findings that Molly participated in the theft of Renate's luxury jewelry items, including a Cartier watch, and was seen wearing items that had belonged to Renate after her death. 2016 WL 3063448, at *28-31 (references to Molly seen wearing Renate's engagement ring and Cartier watch).
Based on this evidence, the Court ruled from the bench on Molly's jewelry exemption. Tr. 70. Focusing on the "evaluation of the credibility of the witnesses and the testimony," the Court found that Molly had failed to sustain her burden of proving that her retained jewelry and the Raymond Weil Watch together were worth less than $2000 (the amount of jewelry that a judgment debtor may retain as exempt from execution under Rhode Island law).
With all challenges to the attachment resolved, in May 2017, Plaintiffs sought instructions from the Court on how to proceed to sell the attached property. ECF No. 231. In order to provide Defendants with ample time to respond to Plaintiffs' motion for instructions, the Court set down the motion for instructions for hearing on July 6, 2017. Craig and Molly waited until the late afternoon of the day before the hearing. Filed at almost 4:00 p.m. on July 5, 2017, the Motion is largely focused on the Raymond Weil Watch. It seeks not only to recover possession of the Watch, but also to stop the sale, vacate the attachment, reclaim all seized property, and vacate the entire judgment. ECF No. 232. In reliance on Fed. R. Civ. P. 60(c)(2), which provides that a motion for relief from judgment under Rule 60(b) "does not affect the judgment's finality or suspend its operation," as well as on the representation of Plaintiffs' counsel that the Raymond Weil Watch would be set to one side and not sold until the Motion is resolved,
First and primarily, the Motion focuses on Shaun's testimony at the February 15, 2017, hearing that he recalled seeing the Raymond Weil Watch on Renate's wrist before her death. Craig and Molly challenge the credibility of that testimony with an out-of-time proffer of new and unauthenticated evidence that was not even mentioned during the February 15, 2017, hearing. Specifically, attached to the Motion are eight photographs purportedly of Molly on New Year's Day in 2006 at Mohegan Sun, just before Christmas 2006 in Newport, and on New Year's Eve 2006 in London. ECF No. 232-1 at 4-19. In each, she is wearing a watch with a light colored strap. In addition, Defendants present copies of an email dated March 8, 2017, purporting to be from a friend of Craig employed by Overstock.com; attached is what Defendants contend is a copy of an almost twelve-year-old invoice (from December 20, 2005), reflecting the sale to Craig of a "Raymond Weil Women's Silver Strap Diamond Watch" for $899.99. ECF No. 232-1 at 1-3. Finally, Defendants have produced two photographs of what they claim is Molly's wrist wearing the Raymond Weil Watch (with a black leather strap), ostensibly taken in November 2010. ECF No. 232-1 at 20-23. Defendants argue that these photographs prove that Shaun lied when he testified that he remembered seeing Renate wearing the Watch prior to her death in June 2010. Plaintiffs object to the authenticity of all of them, as well as to timing of the proffer.
The other focus of the Motion is on trial evidence presented by Plaintiffs. Seeking to relitigate matters resolved in the Trial Decision, Craig and Molly ask the Court to focus on the testimony of Plaintiffs' trial expert, who corrected his estimate of the size of a wine cooler (from twenty feet to ten feet) in one of the Swiss apartments of Renate and Laurie. The Motion also vaguely (without any reference to where this testimony may be found in the transcript) accuses Shaun of lying at trial because he gave what Craig and Molly claim was inconsistent testimony about the sale of Renate's rings.
Based on this proffer, Defendants argue that Shaun's testimony at the February 15, 2017, hearing and at the bench trial amounts to a pervasive fraud on the Court and that "the `wine cooler example' demonstrates how far and wide the plaintiffs have ventured with their fabrications, which have been taken, to-date, at face value by the Court." ECF No. 232 at 3. Craig and Molly conclude:
ECF No. 232 at 8. As relief, Defendants ask the Court to vacate both the original judgment and the order of attachment, reclaim their property, impose sanctions and costs against Plaintiffs and find Shaun guilty of contempt.
A motion under Fed. R. Civ. P. 60(b) to set aside a final judgment or order for fraud, misrepresentation or misconduct must be made no more than a year after entry of the challenged judgment or order. Fed. R. Civ. P. 60(c)(1). Relief under Fed. R. Civ. P. 60(b) is "extraordinary in nature" and must "be granted sparingly."
On timing, Defendants' prayer for relief from the judgment and post-attachment orders squeaks under the wire in that judgment entered on July 11, 2016, and the Motion was filed on July 5, 2017. Otherwise, analyzed from the perspective of Fed. R. Civ. P. 60(b), Defendants fall woefully short of sustaining their burden of demonstrating by clear and convincing evidence that Shaun's testimony — either during trial or at the February 15, 2017, hearing — amounted to fraud, misrepresentation or misconduct.
Beginning with Defendants' proffer of photographs and the copy of what purports to be an almost twelve-year-old invoice relating to the Raymond Weil Watch, there is no need for the Court to get to the bottom of the untimeliness of the proffer, whether these documents are authentic and what they really depict. Assuming, without deciding, that this proffer amounts to what Craig and Molly claim it represents, the photographs prove nothing that would affect the Court's ruling on the jewelry exemption nor do they cast any shadow on Shaun's testimony. For starters, the Court's February 15, 2017, ruling on the jewelry exemption focused on the threshold issue of whether Molly had sustained her burden of proving that she retained less than $2000 in jewelry; at the hearing, the Court made no finding regarding whether the seized Raymond Weil Watch has always belonged to Molly, or whether it belonged to Renate and was stolen by Molly. It is also worth noting that the watch that Craig now claims he purchased for Molly in 2005 and the watch that Molly appears to be wearing in 2006 all have a silver or light colored strap. By contrast, the Raymond Weil Watch supposedly worn by Molly in November 2010 has a black strap, consistent with Molly's testimony that "mine had a black leather band." Tr. at 53. Put differently, taken at face value, the new evidence is equally consistent with the inference that Molly began wearing Renate's Raymond Weil Watch with the black leather band in 2010 after Renate died. The fact that Renate's Raymond Weil Watch was not remembered during Shaun's "painstakingly detailed" trial testimony about Renate's jewelry does not prove that Shaun lied when he testified at the February 15, 2017, hearing that he remembered seeing Renate wearing it before her death.
Equally unavailing is Defendants' redux of their earlier attacks on Shaun's trial testimony, which they now underscore with the liberal use of hyperbolic adjectives ("insidious," "unpardonable," "fantastical"). With no citation to the trial transcript, Defendants hurl the conclusory accusation that Shaun lied when he first admitted under cross examination that he sold Renate's diamond rings, but later recanted. The Court's review of the trial transcript does not turn up any such testimony — rather, the trial transcript reflects that Shaun said that he took the rings to an appraiser in New York, then gave them to Craig who said he could sell them for more in Newport. Shaun never saw them again, except for seeing Molly wearing one of the rings on two occasions. ECF No. 157 at 104-11. The Motion's only allegation that is based on what actually happened during trial relates to the testimony of Plaintiffs' expert witness who admitted he was momentarily confused about what his notes reflected about the size of a wine cooler in the Swiss apartment. ECF No. 153 at 49, 140-41. Defendants seize on this minor (and corrected) discrepancy and label it as one of the "wild claims" that have "gone wholly unchecked throughout this matter." ECF No. 232 at 3.
None of this conceivably amounts to actionable fraud, misrepresentation or misconduct. Craig and Molly are really asking the Court for a do-over of the weighing of the trial evidence. In her lengthy and detailed decision, Judge Lisi expressly addressed the problems with Plaintiffs' proof of damages, including their need to rely on the memory of family members regarding what Laurie and Renate owned before their deaths, as well as the second hand nature of the valuation expert's testimony. 2016 WL 3093448, at *21-24. And, as noted above, Shaun's failure to remember the Raymond Weill Watch during trial proves nothing beyond the frailty of human memory, particularly where there is no suggestion that Shaun or any witness called by Plaintiffs provided testimony ruling out the possibility that Renate owned the Raymond Weill Watch with a black leather strap.
To summarize, Defendants' proffer does not approach or even hint of fraud, never mind hit the "clear and convincing evidence" standard required to tip over the judgment pursuant to Fed. R. Civ. P. 60(b).
An alternative path for Defendants is Fed. R. Civ. P. 60(d)(3), which states that the provisions of Fed. R. Civ. P. 60 as a whole should not be construed to limit the court's power to "set aside a judgment for fraud on the court." To succeed at overturning a judgment under Fed. R. Civ. P. 60(d)(3) requires a showing of fraudulent misconduct that is even more comprehensive or reprehensible than what is enough to demonstrate common law fraud or misconduct under Fed. R. Civ. P. 60(b).
There is no need to linger on this analysis. Even if the Court agreed, which I do not, that the Plaintiffs' expert and Shaun both perjured themselves, these misdeeds would not rise (or sink) to the level of fraud on the Court, during either the bench trial or during the post-attachment evidentiary hearing. Consequently, reexamined through the lens of Fed. R. Civ. P. 60(d)(3), Defendants' Motion to overturn the judgments and orders resulting from those proceedings should be denied.
Defendants invest significant energy on the equitable doctrine of unclean hands, arguing it may be invoked to dismiss claims or defenses of litigants who use underhanded means to advance their cause. Specifically, Craig and Molly characterize Shaun as having "very unclean hands" when he undertook to "deceive the court for his own remunerative benefit. . . ." Based on Shaun's supposed unclean hands, Craig and Molly ask the Court to impose sanctions on Plaintiffs, including to dismiss the case, to find that Shaun is guilty of contempt, and to award Defendants attorneys' fees
Generally, a defense based upon "unclean hands" is used in the course of litigation and is directly related to the merits of the controversy.
While that resolves Defendants' unclean hands argument, the Court is compelled to go one step further and observe that the fraudulent — indeed criminal — conduct of Craig and Molly is well established in the Trial Decision; my findings that Defendants' testimony and post-hearing proffer in connection with the February 15, 2017, evidentiary hearing utterly lacked credibility are consistent with Judge Lisi's trial findings. By contrast, Judge Lisi found Shaun to be credible and I found no basis to question the veracity of his testimony during his brief appearance at the February 15, 2017, hearing. Thus, the unclean-hands doctrine is also inapt because Defendants have made no plausible showing that Plaintiffs have engaged in any misconduct.
Because Defendants have failed to present any evidence that Plaintiffs committed fraud, misconduct, misrepresentation or fraud on the Court or failed to comply with any order or directive of the Court, I do not recommend the assessment of any sanctions against them or a finding of contempt by Shaun; nor do I recommend that the Court award attorneys' fees or costs to Defendants.
For the foregoing reasons, to the extent that the Motion seeks to overturn the judgment or impose a finding of contempt by Shaun or an award of sanctions, attorney's fees or costs, I recommend that Defendants' Motion to Find Plaintiff's Liable for Fraud on the Court and Application of Sanctions for Plaintiff's Misconduct (ECF No. 232) be denied. Any objection to this report and recommendation must be specific and must be served and filed with the Clerk of the Court within fourteen (14) days after its service on the objecting party.
To the extent that the Motion seeks to vacate my January 4, 2017, order of seizure and the orders entered during and following the evidentiary hearing of February 15, 2017, it is denied. Accordingly, Plaintiffs are released from that part of the Court's order preventing the sale of the Raymond Weil Watch. Based on this order, Plaintiffs are now free to sell the Raymond Weil Watch in accordance with the Order on Instructions Regarding Sale of Attached Property. ECF No. 241.