Mary Kochton Appley v. Stuart West, Individually and as Trustee of Trust Agreement 64306

Citations: 929 F.2d 1176; 1991 U.S. App. LEXIS 5877; 1991 WL 50210Docket: 90-1933

Court: Court of Appeals for the Seventh Circuit; April 10, 1991; Federal Appellate Court

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Defendant Stuart West appeals the district court's summary judgment awarding $495,000 to plaintiff Mary Appley. This case follows a previous ruling (Appley I) where remand was necessary due to unresolved fact questions regarding damages. West, who served as Appley’s attorney and trustee, advised her to revoke her trusts and deposit the funds in bank accounts, subsequently converting much of the money for personal use. Appley filed a civil suit against West and two banks, asserting five claims: civil RICO, fraud, negligent misrepresentation, breach of fiduciary duty, and accounting. Concurrently, West faced criminal charges, ultimately pleading guilty to two counts of mail fraud, with an agreement confirming he embezzled at least $495,000 from Appley.

In Appley I, the court initially granted summary judgment in favor of Appley, using West's criminal conviction as a basis for collateral estoppel on liability. However, the court later found that the damages award was incorrectly calculated based on a restitution amount of $957,000 from the criminal case, which was improperly applied under the collateral estoppel doctrine. The Seventh Circuit clarified that while criminal findings can impact civil cases, the specific application in this instance was erroneous. The appeal now focuses on affirming the prior determination that $495,000 is the minimum embezzled amount, which was established during West's plea hearing.

The court determined that the issue of the extent of Ms. Appley's injury from Mr. West's actions was not actually litigated or decided during the plea and sentencing hearings, and the injury amount was not essential to the guilty plea. The sentencing record indicated insufficient incentive to contest the restitution amount, and Ms. Appley failed to prove that the injury amount was established by the plea. Therefore, applying collateral estoppel to grant Ms. Appley summary judgment for $2,871,000 was erroneous, as a material fact concerning the injury amount remained unresolved.

In a separate appeal related to Ms. Appley's motion for summary judgment for $495,000 in compensatory damages based on West's plea admission, West contended that prior rulings barred her from claiming damages due to unresolved factual issues. The district court granted the summary judgment, noting that West did not comply with Local Rule 12(n), which required him to contest the plaintiff's statements with supporting materials. Consequently, the plaintiff's facts were accepted as admitted, leaving no genuine issues of material fact. West's motion for reconsideration was denied, as the court ruled that the earlier opinion addressed only collateral estoppel and not the burdens under the relevant procedural rules. Additionally, West was found ineligible for contribution under Illinois law due to his status as an intentional tortfeasor. The reviewing court's role involves a de novo examination of the summary judgment, affirming it if no genuine material facts exist and the moving party is entitled to judgment as a matter of law.

The Law of the Case Doctrine establishes that issues decided on appeal must be followed in subsequent appeals, barring reargument of those issues. In Appley I, it was determined that the restitution amount was neither agreed upon nor litigated, preventing the application of collateral estoppel against West. Although the court acknowledged a $495,000 figure as the minimum embezzled amount during the plea hearing, only the $957,000 restitution and collateral estoppel were contested in Appley I. Appley is not prohibited from proving the correct damages in later motions, and her second motion for summary judgment relies on West's plea admission of embezzling at least $495,000, a matter not addressed in Appley I.

The district court found that Appley successfully demonstrated no genuine issue of material fact, adhering to Federal Rule of Civil Procedure 56 and Local Rule 12(m). West's failure to file a contradictory statement as required by Local Rule 12(n) resulted in the admission of all facts presented by Appley, justifying the summary judgment in her favor. West's late claim that his plea statements are not admissions was rejected as he did not challenge the factual basis during the summary judgment response period.

West also claimed entitlement to contribution from other tortfeasors under the Illinois Contribution Among Joint Tortfeasors Act. However, he acknowledged that intentional tortfeasors typically cannot seek contribution under Illinois law, yet argued there was no definitive ruling on his status as an intentional tortfeasor. This argument was found to be without merit.

West was found liable for fraud and breach of fiduciary duty in the first motion for summary judgment, which was the basis for the appeal in Appley I; he did not appeal this finding. Under Illinois law, intentional torts such as common law fraud and breach of fiduciary duty do not permit a tortfeasor to seek contribution. The court clarified that Appley's current motion for summary judgment was not precluded by the earlier decision, as it addressed a different matter—specifically, whether West's admission of the embezzled amount constituted a party admission. Since West failed to submit a responsive statement under Local Rule 12(n), he admitted all allegations made by Appley, allowing the district court to grant her motion for summary judgment. Some of West's actions were deemed intentional torts, further solidifying that he could not claim contribution under Illinois law. The district court's decision was affirmed. Additionally, Mary Kochton Appley, who died on May 4, 1989, was properly substituted by her executor, the First National Bank of Chicago. The banks and Appley settled the suit, and the appeal concerning West's liability under RICO was not relevant to the current motion. Local Rule 12 was amended in 1990, but the text remained unchanged; thus, references to the rule were made in its amended form.