AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION March 17, 1998
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
------------------
Date of Report (Date of earliest event reported): March 10, 1998
CHANDLER INSURANCE COMPANY, LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or jurisdiction of incorporation)
0-15286 N/A
(Commission File Number) (IRS Employer Identification No.)
5th Floor Anderson Square
Grand Cayman, Cayman Islands, B.W.I. N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (345) 949-8177
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<PAGE>
Page 2
ITEM 5. OTHER EVENTS
------------
In the Company's quarterly report on Form 10-Q for the period ended
September 30, 1997, it reported under Part I - Item 2. "CenTra
Litigation-Oklahoma" that a United States District Court sitting in
Oklahoma (Oklahoma Federal Court) had certain post-trial motions
under advisement at that time.
On March 10, 1998 United States District Court Judge Vicki Miles-
LaGrange issued an order disposing of all pending post-trial motions
in that litigation. The litigation involved Chandler Insurance
Company, Ltd. (Chandler or the Company) and its affiliates and
CenTra, Inc. (CenTra) and certain of its affiliates (the CenTra
Group).
The Judge's ruling:
* Let stand a $5,099,133 judgment in favor of CenTra and against
Chandler conditioned upon CenTra's return of 517,500 shares of
Chandler common stock and denied CenTra's motion for prejudgment
interest.
* At Chandler's request, modified the judgment entered in April
1997 against Chandler and its wholly owned subsidiary, Chandler
Insurance (Barbados), Ltd., in the amount of $6,882,500 so as to
require CenTra and certain affiliates to deliver 1,142,625 shares
of common stock to Chandler on payment of the judgment and denied
CenTra's request for prejudgment interest.
* Affirmed a judgment in favor of Chandler and against CenTra and
its affiliates determining that neither CenTra nor its affiliates
may vote any shares of Chandler.
* Affirmed judgments on three derivative claims totaling $736,629
against various Chandler officers and directors and in favor of
Chandler (U.S.A.), Inc. (Chandler USA), a wholly owned subsidiary
of Chandler, and let stand seven judgments on derivative claims
in favor of various officers and directors of Chandler USA.
* Let stand judgments totaling $1 each against certain Chandler
officers and directors and in favor of CenTra arising from an
alleged failure to include a statement in certain securities
documents indicating that ownership of Chandler shares may be
subject to regulation by the Nebraska Insurance Department under
a provision of Nebraska law regulating Nebraska domiciled
insurance companies.
* Let stand judgments against various Chandler officers and
directors for $1 each based upon breach of fiduciary duties.
* Affirmed judgments in favor of directors of Chandler who are
affiliated with CenTra on Chandler's counterclaim based upon
alleged breaches of fiduciary duty to Chandler, violations of
securities laws, and breach of a stock purchase agreement with
Chandler.
* Affirmed a judgment for $788,625 in favor of National American
Insurance Company (NAICO), a wholly owned subsidiary of Chandler,
and related entities and against CenTra for its failure to pay
insurance premiums. The Oklahoma Federal Court denied NAICO's
request for prejudgment interest.
In October 1997, CenTra had filed a request for costs and attorneys'
fees on the judgments in the approximate amount of $4.7 million. The
Oklahoma Federal Court struck that motion in an order entered March
9, 1998 but stated that all parties could file motions to tax costs
and attorneys' fees following entry of the Oklahoma Federal Court
order on March 10, 1998. Chandler disputes CenTra's right to costs
and attorneys' fees but based upon applicable accounting standards,
Chandler had already recorded a liability for such costs and expenses
of approximately $4.6 million during the first quarter of 1997.
<PAGE>
Page 3
In its September 30, 1997 report on Form 10-Q under Part I - Item 2.
"CenTra Litigation-Nebraska", the Company reported that the CenTra
Group had been ordered to deliver all of its Chandler shares into the
registry of the United States District Court for the District of
Nebraska ("Nebraska Federal Court"). Following an unsuccessful
request for a stay of that order, the CenTra Group deposited, on
February 9, 1998, 1,691,750 shares in addition to the 1,441,700
shares
which it had previously deposited into the registry of the Nebraska
Federal Court. Therefore, the stock which CenTra and certain
affiliates must return to Chandler upon payment of the judgments in
the Oklahoma Federal Court is currently held in the registry of the
Nebraska Federal Court. As previously reported, Judge Urbom of that
court entered an order requiring CenTra to divest itself of its
shares
and directing the parties to that litigation to submit divestiture
plans. CenTra appealed the order of divestiture to the Eighth
Circuit
United States Court of Appeals and such appeal is currently pending
with oral arguments scheduled for April 1998. Because of the
uncertainty of the outcome of CenTra's appeal, and until final
divestiture plan proposals are submitted and accepted, the Company is
unable to predict the effect of the divestiture order on the rights,
limitations, or other regulation on ownership of the stock of any
existing or prospective holders of the Company's stock or the effect
on the market price of the Company's stock. It is unclear what
impact
the Nebraska Federal Court's possession of the shares will have upon
Chandler's obligation to pay the judgments.
CenTra has not indicated whether or not it will request the Nebraska
Federal Court to release the 1,660,125 shares which are the subject
of the Oklahoma Federal Court decision or whether or not it intends
to
appeal the decision of the Oklahoma Federal Court.
Chandler has not decided whether or not it will appeal any or all of
the orders of the Oklahoma Federal Court. All implications of the
Oklahoma Federal Court's ruling have not been fully evaluated by the
Company. These issues are being studied by the Company's management
and by a special litigation committee composed of independent
directors who are not parties to the litigation. In the event the
Company decides to appeal, it may be required to post a supersedeas
bond or bonds to suspend execution of any judgments against it.
The Company believes that if it elects to pay the judgments, the
shares owned by CenTra or its affiliates which are the subject of the
judgment must be returned to the Company unless CenTra appeals and
takes appropriate action to supercede the judgments or the Nebraska
Federal Court does not release the shares. The Company believes that
adequate financial resources are available to post a supersedeas bond
or to pay the judgments.
Chandler USA is the judgment creditor in connection with derivative
claim judgments against certain Chandler officers and directors.
Chandler USA's Special Litigation Committee is considering the course
of action Chandler USA should take with regard to collection of those
judgments.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(a) Not applicable.
(b) Not applicable.
(c) The following exhibit is furnished in accordance with the
provisions of Item 601 of Regulation S-K:
99.1 Order Resolving Post-Trial Motions filed March 10, 1998
in the United States District Court for the Western
District of Oklahoma
<PAGE>
Page 4
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned.
<TABLE>
<CAPTION>
CHANDLER INSURANCE COMPANY, LTD.
<S> <C>
Date: March 17, 1998 By: /s/ W. Brent LaGere
- -------------------------------------
W. Brent LaGere
Chairman of the Board of Directors,
Chief Executive Officer and
President (Principal Executive
Officer)
</TABLE>
EXHIBIT
99.1
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
CENTRA, INC., et. al., )
)
Plaintiffs, )
vs. ) No. CIV-92-1301-M
)
CHANDLER INSURANCE COMPANY, )
LTD., et al., )
)
Defendants. )
ORDER RESOLVING POST-TRIAL MOTIONS
I. INTRODUCTION
This jury trial lasted about seven weeks, from February 13, 1997 through
April 2, 1997. The jury deliberated five days, from April 3, 1997 through
April 9, 1997. The Court entered judgment on the jury verdict April 22, 1997.
Thereafter, the parties filed their post-trial motions. This order resolves
all of the post-trial motions except motions for attorneys' fees and costs.
In essence, this case is about Manuel J. Moroun ("Moroun") and W. Brent
LaGere ("LaGere"). Moroun is in the trucking business. LaGere is in the
insurance business. Although Moroun and LaGere worked together closely,
symbiotically and successfully for several years as their respective multi-
national, multi-company empires grew, the time inevitably came when they had a
falling out. Since then, they have spent approximately six years in
litigation around the country, including multiple lawsuits in state and
federal
courts in at least four states: Michigan, Nebraska, Texas and Oklahoma. They
appear to have the resources and the will to continue their disputes in the
courts indefinitely.
II. THE PARTIES
The parties who have filed post-trial motions include most, but not all,
of the parties to the lawsuit. The parties listed here are those who have
filed post-trial motions.
The plaintiffs include CenTra, Inc. ("CenTra"); Can-Am Investments, Ltd.
("CanAm"); Moroun; Norman E. Harned ("Harned") and Ronald W. Lech ("Lech").
In this order, these five plaintiffs are referred to collectively as the
"plaintiffs." They are represented by David A. Domina and Gina L. Schaecher
of Domina & Copple, P.C., Omaha, Nebraska, and by local counsel J. Edward
Barth
of Andrews, Davis, Legg, Bixler, Milsten & Price, Oklahoma City, Oklahoma.
<PAGE>
Page 2
In pretrial matters, at trial and in their post-trial briefing, the
defendants grouped themselves into the following three groups: (1) the
"Chandler companies" (also sometimes referred to as the "Chandler
defendants");
(2) the "individual defendants"; and (3) "Rice and Price".
The Chandler companies' group includes Chandler Insurance Company, Ltd.
("Chandler"); Chandler Insurance (Barbados), Ltd. ("Chandler Barbados");
Chandler (USA), Inc. ("Chandler USA"); National Insurance Company ("NAICO");
NAICO Indemnity (Cayman), Ltd. ("NAICO Cayman"); Windsor Acquisitions
Corp. ("Windsor"); and Chandler Aviation, Inc. ("Chandler Aviation"). The
Chandler companies are represented by Kenneth N. McKinney, Robert L. Roark and
Mary E. Nelson of McKinney, Stringer & Webster, P.C., Oklahoma City, Oklahoma.
The individual defendants' group includes LaGere; Benjamin T.
Walkingstick ("Walkingstick"); Brenda B. Watson f/k/a Brenda B. Pair
("Pair-Watson"); Richard L. Evans ("Evans") and Mark T. Paden ("Paden"). The
individual defendants are represented by James A. Kirk, James M. Chaney and
Allen Campbell of Kirk & Chaney, Oklahoma City, Oklahoma.
The Rice & Price group includes Robert L. Rice ("Rice") and Gregory K.
Price as Personal Representative of the Estate of L. Keith Price ("Price").
Rice & Price are represented by Robert H. Gilliland, Jr. and Joseph Walters,
of McAfee & Taft, Oklahoma City, Oklahoma.
III. THE POST-TRIAL MOTIONS
The following is a list of the post-trial motions resolved in this order,
together with the titles, filing dates and docket numbers of all the related
briefs and appendices.
<TABLE>
<CAPTION>
A. PLAINTIFFS' POST-TRIAL MOTION AND RELATED BRIEFS
<S> <C> <C>
1. May 6, 1997 Doc. 637 Plaintiffs' Rule 59 Motion for (1) New
Trial and (2) Prejudgment Interest and
Request for Oral Argument
2. May 6, 1997 Doc. 638 Plaintiffs' Brief in Support of Rule
59 Motions for (1) New Trial and (2)
Prejudgment Interest
3. May 6, 1997 Doc. 639 Affidavit and Index of Exhibits in
Support of Plaintiffs' Rule 59 Motions
for New Trial and Prejudgment Interest
4. May 21, 1997 Doc. 651 Chandler Companies' Response to
Plaintiffs' Motion for New Trial and
Prejudgment Interest
5. May 22, 1997 Doc. 654 Chandler Companies' Submission of
Errata Page to Response to Plaintiffs'
Motion for New Trial
<PAGE>
Page 3
6. May 21, 1997 Doc. 653 Individual Defendants' Response in
Opposition to Plaintiffs' Rule 59
Motions for (1) New Trial and (2)
Prejudgment Interest
7. May 21, 1997 Doc. 652 Response and Opposition to Plaintiffs'
Rule 59 Motions for New Trial and
Prejudgment Interest by Defendants
Robert L. Rice and Gregory K. Price as
Personal Representative of the Estate
of L. Keith Price.
<CAPTION>
B. CHANDLER COMPANIES' POST-TRIAL MOTION AND RELATED BRIEFS
<S> <C> <C>
8. May 6, 1997 Doc. 645 Chandler Companies' Motion and Brief
for Judgment as a Matter of Law, to
Amend the Judgment, or in the
Alternative for New Trial
9. May 20, 1997 Doc. 647 [Plaintiffs'] Brief in Response to
Chandler Parties
10. May 20, 1997 Doc. 650 [Plaintiffs'] Evidence Index in
Opposition to Post-Trial Motions of
Defendant Chandler Insurance Co., Ltd.
11. June 6, 1997 Doc. 662 Chandler Companies' Reply to
Plaintiffs' Response Brief on Motions
for Judgment as a Matter of Law, to
Amend the Judgment or for New Trial
<CAPTION>
C. INDIVIDUAL DEFENDANTS' POST-TRIAL MOTION AND RELATED BRIEFS
<S> <C> <C>
12. May 6, 1997 Doc. 640 [Individual Defendants'] Renewed
Motion for Judgment as a Matter of Law
or, Alternatively, Motion for New
Trial; and Motion for Correction of
Clerical Error
13. May 6, 1997 Doc. 646 Appendix to [Individual Defendants']
Renewed Motion for Judgment as a
Matter of Law or, Alternatively,
Motion
for New Trial; and Motion for
Correction of Clerical Error
14. May 20, 1997 Doc. 649 Plaintiffs' [Response] Brief in
Opposition to the Motions of the
Individual Defendants for Judgment as
a Matter of Law, New Trial, and for
Correction of Clerical Error
15. June 9, 1997 Doc. 663 Individual Defendants' Reply to
Plaintiffs' Brief in Opposition to the
Motions of the Individual Defendants
for Judgment as a Matter of Law, New
Trial, and for Correction of Clerical
Error
<CAPTION>
D. RICE AND PRICE'S POST-TRIAL MOTION AND RELATED BRIEFS
<S> <C> <C>
16. May 6, 1997 Doc. 641 Defendants Robert L. Rice and Gregory
K. Price, as Personal Representative
of
the Estate of L. Keith Price's Motion
for Judgment as a Matter of Law
17. May 6, 1997 Doc. 642 Brief of defendants Robert L. Rice and
Gregory K. Price as Personal
Representative of the Estate of L.
Keith Price in Support of their Motion
for Judgment as a Matter of Law
18. May 6, 1997 Doc. 643 Appendix of Exhibits of defendants
Robert L. Rice and Gregory K. Price,
as Personal Representative of the
Estate of L. Keith Price in Support of
their Motion for Judgment as a Matter
of Law
<PAGE>
Page 4
19. May 20, 1997 Doc. 648 Plaintiffs' Responsive Brief
Responding to Defendants Robert L.
Rice
and Gregory K. Price's Motion for
Judgment as a Matter of Law
20. June 5, 1997 Doc. 661 Reply of defendants Robert L. Rice and
Gregory K. Price, as Personal
Representative of the Estate of L.
Keith Price in Support of their Motion
for Judgment as a Matter of Law
</TABLE>
IV. THE CLAIMS AND THE JURY'S VERDICT
The left side of the following chart identifies (in a shorthand way) the
claims that were submitted to the jury. The right side of the chart
identifies the jury's verdict on each claim.
<TABLE>
<CAPTION>
A. DIRECT CLAIMS
<S> <C>
1. 1990 Public Offering In favor of plaintiff CenTra, Inc. and
Section 11(a) against defendants LaGere,
Walkingstick, Pair-Watson, Evans,
Paden, Rice & Price, in the amount of
$7.00.
2. 1990 Public Offering In favor of CenTra, Inc. and against
Section 12(2) defendant Chandler Insurance Company,
Ltd., in the amount of
$5,099,133.37.
3. 1990 Public Offering In favor of plaintiff CenTra, Inc. and
Section 10(b) against defendants LaGere,
Walkingstick, Pair-Watson, Evans,
Paden, Rice & Price, in the amount of
$7.00.
4. 1988 Stock Purchase In favor of plaintiffs CenTra, Inc.
Agmt and 1988 and AMMEX, Inc., and against
defendants
Stock Exchange Chandler Insurance Company, Ltd. and
Agmt Chandler Insurance (Barbados), Ltd.,
in the amount of $6,882,500.00.
5. Article XI claim Advisory verdict in favor of all
Validity of Aug. 19, Defendants and against all Plaintiffs.
1992 Board Resolution
<CAPTION>
B. DERIVATIVE CLAIMS
GOING PRIVATE TRANSACTION
<S> <C>
6. Breach of fiduciary In favor of LaGere, Walkingstick,
duties Pair-Watson, Evans, Paden, Rice &
Price, David McLane and R. Patrick
Gilmore, against all Plaintiffs.
7. Unjust enrichment In favor of LaGere, Walkingstick,
Pair-Watson, Evans, Paden, David
McLane, R. Patrick Gilmore and Marvel
List, and against all Plaintiffs.
<CAPTION>
1988 AND 1989 BONUSES
<S> <C>
8. Breach of fiduciary In favor of all plaintiffs and against
duties LaGere, Walkingstick, Pair-Watson,
Evans, Paden, in the amount of
$711,629.00.
<PAGE>
Page 5
9. Breach of employment In favor of LaGere, Walkingstick,
contracts Pair-Watson, Evans, Paden, and against
all plaintiffs.
10. Unjust enrichment In favor of LaGere, Walkingstick,
Pair-Watson, Evans, Paden, and against
all plaintiffs.
<CAPTION>
USE OF COMPANY AIRCRAFT AND RECEIPT OF PERSONAL BENEFITS
<S> <C>
11. Fraud In favor of LaGere, Walkingstick,
Pair-Watson, Evans, Paden, and against
all plaintiffs.
12. Breach of fiduciary In favor of all Plaintiffs and against
duties LaGere, Walkingstick, Pair-Watson,
Evans and Paden, in the amount of
$25,000.00.
13. Unjust enrichment In favor of LaGere, Walkingstick,
Pair-Watson, Evans, Paden, and against
all plaintiffs.
<CAPTION>
ACQUISITION OF INSURANCE AGENCIES
<S> <C>
14. Breach of fiduciary In favor of all Plaintiffs and against
duties LaGere, Walkingstick, Pair-Watson,
Evans and Paden, in the amount of
$6.00.
15. Fraud In favor of LaGere, Walkingstick,
Pair-Watson, Evans, Rice and Price,
and
against all plaintiffs.
<CAPTION>
C. COUNTERCLAIMS
<S> <C>
1. Short swing profits In favor of counterclaim defendant
Section 16(b) Manuel J. Moroun and against
counterclaim plaintiff Chandler
Insurance Company, Ltd.
2. Failure to pay In favor of counterclaim plaintiffs
insurance premiums Chandler Insurance Company, Ltd.;
NAICO; and NAICO Cayman, and against
counter claim defendant CenTra, Inc.,
in the amount of $788,624.94.
3. Breach of fiduciary In favor of counterclaim defendants
duties CenTra, Inc.; DuraRock Underwriters,
Ltd.; AMMEX, Inc.; Moroun, Lech and
Harned, against counterclaim plaintiff
Chandler Insurance Company, Ltd.
4. Breach of 1988 Stock In favor of counterclaim defendant
Purchase Agreement CenTra, Inc. and against counterclaim
plaintiffs Chandler Insurance
Company, Ltd.
</TABLE>
At the close of all evidence on April 2, 1997, the Court granted judgment
as a matter of law in favor of defendants on the following claims, known as
the "insurance cancellation claims."
16. Breach of contract
17. Tortious interference with business contract
<PAGE>
Page 6
18. Tortious interference with business expectancies.
These are the claims that were formerly asserted in CIV-93-437-M, which
case was subsequently consolidated with CIV-92-1301-M. (These claims, number
16, 17 and 18, are numbered in the same manner as the claims were numbered in
"Plaintiffs and Defendants' Second Joint Jury Instructions," filed March 25,
1997, in the instruction titled "Summary of Plaintiffs' Claims").
V. THE PARTIES' ARGUMENTS
As might be expected after a lengthy and complex trial such as this, in
which plaintiffs won on some claims and defendants won on other claims, the
parties now find themselves in the position of attempting to support the
jury's verdict on the claims for which the jury found in their favor and
attacking the jury's verdict on the claims for which the jury found against
them. On the one hand, each party says (in essence) the jury did a great job
when it found in my favor and did a horrible job when it found against me. In
the same vein, each party also says (in essence) the Court was right when its
legal rulings were in my favor and the Court was wrong when its rulings went
against me.
A. PLAINTIFFS' MOTION
1. SUMMARY OF VERDICT AND JUDGMENT UNFAVORABLE TO PLAINTIFFS
The advisory verdict and the Court's judgment were against
plaintiffs on claim 5, concerning Article XI of Chandler's Articles of
Association. In addition, prior to submission of the case to the jury, the
Court granted judgment as a matter of law in favor of defendants on
plaintiffs' claims 16, 17 and 18, the insurance cancellation claims. The
verdict and judgment were against plaintiffs on counterclaim 2.
2. SUMMARY OF RELIEF REQUESTED BY PLAINTIFFS
Plaintiffs seek a new trial on claims 5, 16, 17 and 18. In
addition, plaintiffs seek $4,522,555.00 in prejudgment interest on
$5,099,133.37 awarded to them on claim 2, and $8,072,705.00 in prejudgment
interest on $6,882,500.00 awarded to them on claim 4.
3. PLAINTIFFS' ARGUMENT ON CLAIM 5 (ARTICLE XI CLAIM)
With respect to claim 5, plaintiffs argue they are entitled to
a new trial because Article XI does not apply to stock purchased on the open
market, because the Chandler board of directors waived application of Article
XI to CenTra, Inc.'s 1988 stock purchase, and because that waiver also
precluded application of Article XI to CenTra, Inc.'s subsequent stock
purchase.
<PAGE>
Page 7
4. PLAINTIFFS' ARGUMENT ON CLAIMS 16, 17 AND 18
(INSURANCE CANCELLATION CLAIMS)
With respect to claims 16, 17 and 18, plaintiffs argue they are
entitled to a new trial because the Court should not have excluded evidence of
an assignment of claims between CenTra and the operating companies and should
not have excluded testimony of Van E. Conway and Harned on this issue.
B. CHANDLER COMPANIES' MOTION
1. SUMMARY OF VERDICT AND JUDGMENT UNFAVORABLE TO CHANDLER
COMPANIES
The verdict and judgment on the verdict were against the
Chandler companies on claim 2 (in the amount of $5,099,133.37) and claim 4 (in
the amount of $6,882,500.00). The verdict and judgment were in favor of the
Chandler companies on counterclaim 2 (in the amount of $788,624.94) but the
Chandler companies believe this award is too low.
2. SUMMARY OF RELIEF REQUESTED BY CHANDLER COMPANIES
The Chandler companies seek judgment as a matter of law("jmol")
or alternatively a new trial on claims 2 and 4. Alternatively, they request
the Court to amend the judgment with respect to claims 2 and 4 to include
setoff, to increase their damages award on counterclaim 2, and to award
prejudgment interest on their award on counterclaim 2.
3. CHANDLER COMPANIES' REQUEST FOR JMOL ON CLAIM 2
(FEDERAL SECURITIES LAW)
With respect to claim 2, the Chandler companies seek judgment
as a matter of law because plaintiffs had actual or inquiry notice of Nebraska
law and therefore that "fact" could not have been misrepresented or concealed
from them, because they had not duty to disclose the "fact" of Nebraska law,
and because the statute of limitations bars the claim since plaintiffs had
actual or inquiry notice of Nebraska law more than one year before plaintiffs
filed their lawsuit.
4. CHANDLER COMPANIES' REQUEST FOR JMOL ON CLAIM 4 (BREACH OF
CONTRACT)
With respect to claim 4, the Chandler companies seek judgment
as a matter of law because the subject contracts were not ambiguous and the
breach of contract claim should not have been submitted to the jury, because
plaintiffs failed to prove causation, because plaintiffs failed to prove
damages, and because the jury in effect granted recission when that was not a
permitted form of relief in the instructions of verdict form.
<PAGE>
Page 8
5. CHANDLER COMPANIES' REQUEST FOR NEW TRIAL ON CLAIMS 2 AND 4
In the further alternative, the Chandler companies seek a new
trial on claims 2 and 4 because the verdict is against the weight of the
evidence and because the Court failed to give their requested instruction
numbers 7 and 8 concerning breach of contract and damages. The Chandler
companies also argue they are entitled to a new trial on claims 2 and 4
because the Court should not have granted plaintiffs' motion for jury trial,
should not have consolidated the cases, should have allowed additional
peremptory challenges, should not have excluded certain "evidence"
(specifically, three legal opinions -- one from the District Court of
Lancaster
County, Nebraska; one from the Nebraska Supreme Court; and the March 25, 1997
order from the U.S. District Court for Nebraska), and should have excluded
certain other evidence (specifically, evidence of pheasant hunts, exotic
dancers and other "vice" activities).
6. CHANDLER COMPANIES' REQUEST TO AMEND THE JUDGMENT ON CLAIMS 2
AND 4
Alternatively, with respect to claim 2, they request the Court
to amend the judgment to reduce the amount of damages award by the amount of
money and/or benefits CenTra will receive from Chandler when CenTra divests
<F1>
itself of Chandler stock pursuant to the Nebraska federal court's order and to
delete that portion of the judgment which requires CenTra to return the
Chandler stock upon payment of the damages award. With respect to claim 4,
they request the Court to amend the judgment to either (a) reduce the damages
award by the amount of money and/or benefits CenTra will receive from Chandler
when CenTra divests itself of Chandler stock upon payment of the damages
award,
or (b) order CenTra to return the Chandler stock upon payment of the damages
award.
7. CHANDLER COMPANIES' REQUEST FOR JMOL AND PREJUDGMENT INTEREST
ON COUNTERCLAIM 2
Finally, the Chandler companies request that the Court amend
the judgment with respect to counterclaim 2 -- failure to pay insurance
premiums. The jury found in favor of the Chandler companies on counterclaim 2
and awarded the Chandler companies $788,624.94, but the Chandler companies
argue they are entitled to $6,894,524.89 on the claim. In addition, the
Chandler companies argue they are entitled to prejudgment interest on either
$6,894,524.89 (if the Court amends the judgment to increase the amount of
damages) or, alternatively, on $788,624.94 (if the Court allows the jury's
award to stand).
- -------------------------
<F1> The parties have not advised the Court as to the current status of
the Nebraska federal court's order of divestiture.
<PAGE>
Page 9
C. INDIVIDUAL DEFENDANTS' MOTION
1. SUMMARY OF VERDICT AND JUDGMENT UNFAVORABLE TO INDIVIDUAL
DEFENDANTS
The verdict and judgment on the verdict were against all the
individual defendants on claim 1 (in the amount of $7.00), claim 3 (in the
amount of $7.00), claim 8 (in the amount of $711,629.00), claim 12 (in the
amount of $25,000.00) and claim 14 (in the amount of $6.00).
2. SUMMARY OF RELIEF REQUESTED BY INDIVIDUAL DEFENDANTS
The individual defendants seek judgment as a matter of law or,
alternatively, a new trial, on claims 1, 3, 8, 12 and 14. In addition, they
request that the Court amend the judgment with respect to each of these
claims, to change the judgment from joint and several liability to several
liability only.
3. INDIVIDUAL DEFENDANTS' REQUEST FOR JMOL ON CLAIMS 1, 3, 8, 12
AND 14
First, the individual defendants argue they are entitled to
judgment as a matter of law on claims 1, 3, 8, 12 and 14.
A. CLAIMS 1 AND 3 (FEDERAL SECURITIES LAW CLAIMS)
With respect to claims 1 and 3, the federal securities law
claims relating to the 1990 public offering, the individual defendants argue
they are entitled to judgment as a matter of law because plaintiffs failed to
present evidence of the proper measure of damages, because plaintiffs had
actual or at least inquiry notice of applicable Nebraska law and therefore
that
"fact" could not have been misrepresented or concealed from them, and because
the statute of limitations bars the claims since plaintiffs had actual or
least
inquiry notice of applicable Nebraska law more than one year before they filed
their lawsuit.
B. CLAIMS 8, 12 AND 14 (BREACH OF FIDUCIARY DUTIES)
With respect to claims 8, 12 and 14, the individual
defendants argue they are entitled to judgment as a matter of law because of
the business judgment rule. With respect to claim 8, they argue they are
entitled to judgment as a matter of law for the additional reason that
recovery
is precluded by the existence of express contracts. With respect to claim 12,
they argue they are entitled to judgment as a matter of law for the additional
reason that plaintiffs failed to prove damages. With respect to claim 14,
they
argue they are entitled to judgment as a matter of law for the additional
reason that they statute of limitations bars the claim.
<PAGE>
Page 10
4. INDIVIDUAL DEFENDANTS' REQUEST FOR NEW TRIAL ON CLAIMS 1, 3, 8,
12 AND 14
In the alternative, the individual defendants argue they are
entitled to a new trial on claims 1, 3, 8, 12 and 14.
a. CLAIMS 1, 3, 8, 12 AND 14
With respect to claims 1, 3, 8, 12 and 14, they argue
they are entitled to a new trial because the verdict was against the weight of
the evidence, because the Court should not have granted plaintiffs' motion for
jury trial, because the Court should not have consolidated the cases, and
because the Court did not give them additional peremptory challenges.
b. CLAIMS 1 AND 3 (FEDERAL SECURITIES LAW CLAIMS)
With respect to claims 1 and 3, the individual defendants
argue they are entitled to a new trial for the additional reasons that the
jury failed to follow the Court's instructions requiring plaintiffs to prove
damages and requiring the jury to consider defendants' affirmative defenses,
and the Court failed to give the individual defendants' requested instruction
numbers 18, 19, 24, 25, 30, 31, 36 and 37, dealing with plaintiffs' actual
knowledge of Nebraska law and the absence of defendants' duty to disclose that
"fact."
c. CLAIM 8, 12 AND 14 (BREACH OF FIDUCIARY DUTIES)
With respect to claims 8, 12 and 14, the individual
defendants argue they are entitled to a new trial for the additional reasons
that the jury failed to follow the Court's instructions requiring the jury to
consider their affirmative defenses, that the jury resorted to speculation to
decide the amount of damages, that the Court failed to give their requested
instruction number 66 and their revised additional instruction number 4, both
dealing with the business judgment rule, that the Court excluded evidence of
the March 25, 1997 order by the United States District Court for Nebraska, and
that the Court withheld evidence of plaintiffs' past misconduct and violations
of law. With respect to claim 8, the individual defendants argue they are
entitled to a new trial for the additional reason that the verdict on claim 8
is inconsistent with the verdicts on claims 9 and 10.
5. INDIVIDUAL DEFENDANTS' REQUEST TO AMEND JUDGMENT TO "SEVERAL"
LIABILITY
Finally, the individual defendants argue that the jury could
not have intended liability to be joint and several and must have intended
liability to be several only. Thus, they argue, the Court should amend the
judgment to properly reflect the jury's intent.
<PAGE>
Page 11
D. RICE AND PRICE'S MOTION
1. SUMMARY OF VERDICT AND JUDGMENT UNFAVORABLE TO RICE AND PRICE
The verdict and the judgment on the verdict were against Rice
and Price on claim 1 (in the amount of $7.00), claim 3 (in the amount of
$7.00)
and claim 14 (in the amount of $6.00).
2. SUMMARY OF RELIEF REQUESTED BY RICE AND PRICE
Rice and Price seek judgment as a matter of law on each of
these claims because the verdict is not supported by the evidence and is
contrary to law.
3. RICE AND PRICE'S REQUEST FOR JMOL ON CLAIMS 1, 3, AND 14
Rice and Price argue they are entitled to judgment as a matter
of law because they were entitled to rely on the fairness opinion of Smith
Barney with respect to claim 14, and on the legal work of Gardere & Wynne with
respect to claims 1 and 3. In addition, they argue the statute of limitations
bars all three claims, that the business judgment rule bars claim 14, that
plaintiffs' actual or inquiry notice of Nebraska law precludes recovery on
claims 1 and 3, that plaintiffs failed to prove scienter and reliance with
respect to claim 3, and that plaintiffs Moroun, Harned and Lacca were IN PARI
DELICTO with them with respect to claim 1.
VI. STANDARD FOR DETERMINING MOTIONS
The Supreme Court has long held that "'[a litigant] is entitled to a fair
trial but not a perfect one, 'for there are no perfect trials.'" MCDONOUGH
POWER EQUIPMENT, INC. V. GREENWOOD, 464 U.S. 548, 553 (1984) (quoting BROWN V.
UNITED STATES, 411 U.S. 223, 231-232 (1973) (quoting BRUTON V. UNITED STATES,
391 U.S. 123, 135 (1968) and LUTWAK V. UNITED STATES, 344 U.S. 604, 619
(1953))). "Trials are costly, not only for the parties, but also for the
jurors performing their civic duty and for society which pays the judges and
support personnel who manage the trials. It seems doubtful that our judicial
system would have the resources to provide litigants with perfect trials, were
they possible, and still keep abreast of its constantly increasing case
load."
ID. at 553. The Supreme Court continued: "We have also come a long way from
the time when all trial error was presumed prejudicial and reviewing courts
were considered 'citadels of technicality.'"ID. (quoting KOTTEAKOS V. UNITED
STATES, 328 U.S. 750, 759 (1946) (quoting KAVANAGH IMPROVEMENT OF
ADMINISTRATION OF CRIMINAL JUSTICE BY EXERCISE OF JUDICIAL POWER, 11 A.B.A.J.
217, 222 (1925))). "The harmless error rules adopted by this Court and
Congress embody the principle that courts should exercise judgment in
preference to the automatic reversal for error and ignore errors that do not
affect the essential fairness of the trial. For example, the general rule
<PAGE>
Page 12
governing motions for a new trial in the district courts is contained in
Federal Rule Civil Procedure 61, which provides: 'No error ... or defect in
any
ruling or order or in anything done or omitted by the court or by any of the
parties is ground for granting a new trial or for setting aside a verdict ...
unless refusal to take such action appears to the court inconsistent with
substantial justice. The court at every stage of the proceeding must
disregard
any error or defect in the proceeding which does not affect the substantial
rights of the parties.'" ID. at 553 (quoting Rule 61, Fed. R. Civ. P.).
In considering a Rule 50(b) motion for judgment as a matter of law, the
Court must determine whether the evidence presented at trial is sufficient to
create an issue of fact for the jury. MOTIVE PARTS WAREHOUSE V. FACET
ENTERPRISES, 774 F.2d 380 (10th Cir.1985). A Rule 50(b) motion should be
sustained only if the inferences to be drawn from the evidence are so in favor
of the moving party that reasonable persons could not differ in their
conclusions. MCKINNEY V. GANNETT CO., INC., 817 F.2d 659 (10th Cir.1987);
FEDERAL DEPOSIT INS. CORP. V. PALERMO, 815 F.2d 1329 (10th Cir.1987), and
SIMBLEST V. MAYNARD, 427 F.2d 1 (2nd Cir.1970).
A motion for judgment notwithstanding the verdict should be cautiously
and sparingly granted. JOYCE V. ATLANTIC RICHFIELD CO., 651 F.2d 676 (10th
Cir.1981). In determining whether to grant a judgment notwithstanding the
verdict, the Court must view the evidence most favorably to the party against
whom the motion is made and give that party the benefit of all reasonable
inferences from the evidence. YAZZIE V. SULLIVENT, 561 F.2d 183 (10th
Cir.1977) The Court may not weigh the evidence, pass on the credibility of
witnesses, or substitute its judgment for that of the jury. ID. at 188.
In ruling on a motion for new trial, the Court may only set aside the
jury's verdict when it concludes the verdict to be against the great weight of
the evidence or when prejudicial error has entered into the record. MCHARGUE
V. STOKES DIV. OF PENNWALT CORP., 912 F.2d 394, 396 (10th Cir.1990). A "jury
verdict must not be preempted unless it has no basis in fact." UNITED STATES
V. FENIX & SCISSON, INC., 360 F.2d 260, 262 (10th Cir.1966), CERT. DENIED, 386
U.S. 1036 (1967). Moreover, merely because the jury could have drawn
different inferences or conclusions or because the Court believes that another
result is more reasonable is no basis for granting a new trail. FIREMAN'S
FUND
INS. CO. V. AALCO WRECKING CO., 466 F.2d 179, 186 (8th Cir.1972) (citing
TENNANT V. PEORIA & PEKIN UNION RV., 321 U.S. 29, 35 (1944)), CERT. DENIED,
410
U.S. 930 (1973).
<PAGE>
Page 13
The district court's ruling on a motion for judgment as a matter of law
is reviewed DE NOVO by the Tenth Circuit, applying the same standard as that
used by the district court. BROWN V. MCGRAW-EDISON CO., 736 F.2d 609 (10th
Cir.1984). The district court's ruling on a motion for new trial is reviewed
for manifest abuse of discretion. ID.
VII. RULINGS
A. PLAINTIFFS' MOTION
Having considered the parties' submissions in support of and in
opposition to plaintiffs' post-trial motion, the Court finds and concludes the
motion should be denied in its entirety.
Plaintiffs are not entitled to a new trial on the Article XI claim
or to a trial on the insurance cancellation claims, for the reasons stated by
the Court during trial and for the additional reasons stated by defendants in
their response briefs.
With respect to plaintiffs' request for prejudgment interest on
claim 2, the parties agree that an award of prejudgment interest under federal
law is governed by a two-step analysis: whether an award of prejudgment
interest will serve to compensate the injured party and if so, whether the
equities preclude an award of prejudgment interest. U.S. INDUS., INC. V.
TOUCHE, ROSS & CO., 854 F.2d 1223, 1257 (10th Cir.1988). Having carefully
considered the matter, the Court finds the equities preclude an award of
prejudgment interest on claim 2. For the reasons stated in Chandler
companies'
brief (Doc. 651), the Court finds that an award of prejudgment interest on
claim 2 would constitute an inequitable windfall to plaintiffs.
With respect to plaintiffs' request for prejudgment interest on claim 4,
<F2>
the matter is governed by Oklahoma law. Under Oklahoma law, prejudgment
interest may be allowed as damages where the demand, although unliquidated, is
of such a nature that the amount is capable of ascertainment by mere
computation, or can be established with reasonable certainty, or determined by
reference to well-established market values. COOK V. OKLAHOMA BD. OF PUBLIC
AFFAIRS, 736 P.2d 140 (Okla. 1987). Having carefully considered the matter,
the Court finds that plaintiffs' demand in its breach of warranty claim is not
- -------------------------
<F2> Although the Stock Purchase Agreement and the Stock Exchange
Agreement provide for the application of Cayman and Barbados law respectively,
the Court ruled that it would apply Oklahoma law (which is similar) to this
claim unless the parties advised the Court that Cayman and/or Barbados law was
different. The parties did not make any such advisement.
<PAGE>
Page 14
one in which the amount is capable of ascertainment by mere computation, or
can
be established with reasonable certainty, or determined by reference to well-
established market values. For the reasons stated in Chandler companies'
brief (Doc. 651), the Court finds that plaintiffs are not entitled to an award
of prejudgment interest on claim 4.
B. CHANDLER COMPANIES' MOTION
Having considered the parties' submissions in support of and in
opposition to the Chandler companies' post-trial motion, the Court finds and
concludes the motion should be granted in part and denied in part.
With respect to claim 2, the Chandler companies' motion is denied.
With respect to claim 4, the Court agrees with the Chandler companies that the
judgment should be amended to avoid a double recovery to plaintiffs. Unless
the judgment is amended, plaintiffs would receive monetary damages
approximately equivalent to the amount they paid for the Chandler Stock, but
would also be allowed to retain the stock. Accordingly, under the Court's
legal and equitable authority, the Court finds and concludes the judgment
should be amended to require plaintiffs to return the stock that is the
subject
<F3>
of claim 4, upon payment of the damages award.
With respect to counterclaim 2, the Court denies the Chandler
companies' motion to the extent they argue they are entitled as a matter of
law to an award of $6,897,524.89, rather than the jury's award of $788,624.94.
With respect to the Chandler companies' request for prejudgment
interest on their award on counterclaim 2, the Court finds and concludes the
<F4>
request should be denied. Oklahoma law governs this claim. Although the jury
found in favor of the Chandler companies on this claim and awarded
$788,624.94, the Chandler companies argue that the jury should have awarded
$6,894,524.89, and further argue that since they sought this "sum certain" and
- -------------------------
<F3> In their opening brief, the Chandler companies state that CenTra
should return 1,142,625 shares of stock. SEE Chandler companies' brief at p.
15. In their response brief, plaintiffs state that CenTra need only return
874,100 shares of stock. SEE Plaintiff's response brief at p. 7. In the
Chandler companies' reply brief, they explain how they arrived at the number
1,142,625. SEE Chandler companies' reply brief at p. 8, n.8. The Court
finds
and concludes the Chandler companies' calculation is the correct one.
<F4> SEE footnote 2, SUPRA.
<PAGE>
Page 15
made specific demand" for this amount when they filed their counterclaims,
they
are further entitled to prejudgment interest on $6,894,524.89 at 6% per annum
from September 5, 1992 through the date of the Court's order granting their
request. In the alternative, the Chandler companies argue that if the Court
does not amend the judgment to increase their award from $788,624.94 to
$6,894,524.89, then they are entitled to prejudgment interest on $788,624.94
at
<F5>
the same rate. Having carefully considered the matter, and having reviewed
the
record, the Court finds that counterclaim 2 is not one in which the amount is
capable of ascertainment by mere computation, or can be established with
reasonable certainty or determined by reference to well-established market
values. In fact, the parties continue to disagree as to the proper amount of
the award. Thus, the Court finds the Chandler companies are not entitled to
an
award of prejudgment interest on counterclaim 2.
C. INDIVIDUAL DEFENDANTS' MOTION
Having considered the parties' submissions in support of and in
opposition to the individual defendants' post-trial motion, the Court finds
and concludes the motion should be denied in its entirety.
The individual defendants are not entitled to judgment as a matter
or law or a new trial on the federal securities law claims (claims 1 and 3),
for the reasons stated in plaintiffs' response brief. The individual
defendants are not entitled to judgment as a matter or law or a new trial on
the breach of fiduciary duties claims (claims 8, 12 and 14), for the reasons
stated in plaintiffs' response brief.
Finally, the individual defendants request that the VERDICT be
"corrected" to "provide that the plaintiffs' recovery against the individual
defendants [on claims 1, 3, 8, 12 and 14] is 'several', and 'joint and
several.'" Individual Defendants' Renewed Motion for Judgment as a Matter of
Law or Alternatively, Motion for New Trial; and Motion for Correction of
Clerical Error, at p. 25 (May 6, 1997).
Having considered the matter, the Court declines to alter the jury's
VERDICT in any way. However, the Court entered judgment against the
individual defendants on claims 1, 3, 8, 12 and 14 "severally." SEE Judgment
(April 22, 1997).
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<F5> Although plaintiffs, in their response brief (Doc. 647), argued
that the jury's award on counterclaim 2 should not be increased, they did not
respond to the Chandler companies' argument concerning prejudgment interest.
<PAGE>
Page 16
D. RICE AND PRICE'S MOTION
Having considered the parties' submissions in support of and in
opposition to Rice and Price's post-trial motion, the Court finds and
concludes the motion should be denied in its entirety, for the reasons stated
in plaintiffs' response brief.
VII. CONCLUSION
1. Plaintiffs' post-trial motion (Doc. 637) is DENIED in its entirety.
2. The Chandler companies' post-trial motion (Doc. 645) is GRANTED IN
PART an DENIED IN PART as set forth in this order. The motion is
granted such that the judgment will be amended to require plaintiffs
to return the stock that is the subject of claim 4. The motion is
denied in all other respects.
3. The individual defendants' post-trial motion (Doc. 640) is DENIED in
its entirety.
4. Rice and Price's post-trial motion (Doc. 641) is DENIED in its
entirety.
An Amendment to the April 22, 1997 Judgment shall issue forthwith.
IT IS SO ORDERED this 10th day of March, 1998.
/s/ Vicki Miles-LaGrange
------------------------------------------
VICKI MILES-LaGRANGE
UNITED STATES DISTRICT JUDGE
