United States District Court, D. Connecticut
RICHARD M. COAN, Plaintiff-Trustee,
v.
SEAN DUNNE et al., Defendants.
ORDER DENYING TRUSTEE'S MOTIONS RE FOREIGN
JUDGMENTS
Jeffrey Alker Meyer United States District Judge
This is
an action by Bankruptcy Trustee Richard M. Coan principally
alleging fraudulent transfers of money and property by Sean
Dunne to his wife Gayle Killilea and others. See Coan v.
Dunne, 2019 WL 302674, at *1-*2 (D. Conn. 2019)
(generally describing the history of this case). The Trustee
has now moved to give preclusive effect as to certain
findings made by an Irish court in parallel Irish bankruptcy
proceedings (Doc. #471), and in the alternative to introduce
the Irish court's ruling into evidence (Doc. #461). For
the reasons stated herein, I will deny both of the
Trustee's motions but allow for limited cross-examination
of Dunne about the Irish court's finding that he failed
to cooperate with the Official Assignee in the realization of
assets and hid from or failed to disclose assets of which
could be realized for the benefit of his creditors.
Background
This
case arises from the parallel bankruptcies of Sean Dunne in
the United States and in the Republic of Ireland. See In
re Dunne, 13-50484 (Bankr. D. Conn. filed Mar. 29,
2013); In re Dunne (A Bankrupt) 2013 Bankr. No. 2478
(H. Ct.) (Ir.). For the past several years the cases have
progressed in tandem both here and in Ireland. On October 2,
2018, the High Court of Ireland issued a 97-page ruling that
postponed Dunne's automatic discharge from bankruptcy and
ordered certain bankruptcy payments. See Doc. #471-1
at 1 (¶ 1). In doing so, the High Court
(Costello, J.) concluded in relevant part
that Dunne had failed to cooperate with and hidden from or
failed to disclose to the Irish Official Assignee income or
assets which could be realized for the benefit of his
creditors. Id. at 79 (¶ 188).
The
Trustee initially moved to introduce the whole judgment of
the High Court into evidence. Doc. #461 at 1. After further
briefing and discussion with the Court and opposing counsel
at trial, the Trustee has since moved to give preclusive
effect to certain of the High Court's findings, Doc. #471
at 6-8, while maintaining that this Court may still admit the
judgment into evidence, Doc. #480 at 4 n.1. In particular,
the Trustee requests that the Court instruct the jury as to
the High Court's findings regarding various factual
particulars of Dunne's noncooperation with the Official
Assignee. These include the High Court's conclusions
(relying on those made by the U.S. Bankruptcy Court for the
District of Connecticut) that Dunne had withheld his
residential address, Doc. #471 at 7 (citing Doc. #471-1 at 84
(¶ 192(3))), been uncooperative with the Trustee in the
United States and provided inaccurate statements at creditor
meetings, ibid. (citing Doc. #471-1 at 84-86 (¶
192(4))), made dishonest statements to the Official Assignee,
id. at 8 (citing Doc. #471-1 at 87-88 (¶
192(6))), and that Dunne had only selectively chosen to
comply with the law, ibid. (citing Doc. #471-1 at 88
(¶ 192(7))). Defendants have objected to both motions.
Discussion
The
doctrine of offensive collateral estoppel allows a plaintiff
to preclude a defendant from relitigating an issue that has
been previously decided against the same defendant. See
Parklane v. Hosiery Co. v. Shore, 439 U.S. 322, 329
(1979). For a plaintiff like the Trustee to apply collateral
estoppel offensively against a defendant, “(1) the
issues in both proceedings must be identical, (2) the issue
in the prior proceeding must have been actually litigated and
actually decided, (3) there must have been a full and fair
opportunity for litigation in the prior proceeding, and (4)
the issue previously litigated must have been necessary to
support a valid and final judgment on the merits.”
Flood v. Just Energy Marketing Grp., 904 F.3d 219,
236 (2d Cir. 2018). In addition to these four factors,
“a court must also satisfy itself that application of
offensive collateral estoppel is fair.” Ibid.
The trial court “is generally accorded broad discretion
in determining whether or not collateral estoppel should
apply in a given case.” Ibid.[1]
I
decline to apply collateral estoppel to give
preclusive effect to the High Court's findings.
As an initial matter, I am not convinced that the issues in
both proceedings are identical. The facts found by the High
Court relating to Dunne's post-petition failure to
cooperate and failure to be truthful are relevant to the
trial in this action, but they are not factual determinations
that the jury will be required to determine as a part of this
trial. The factual findings made by the High Court do not
establish any element of the alleged fraudulent transfers at
issue in this case or elements of any other cause of action
now before this Court for trial.
Nor am
I convinced that it would be fair for me to instruct the jury
that the High Court's factual findings are conclusive in
this case. First, Dunne has appealed the High Court's
judgment, and the appeal remains pending.[2] Although a
judgment is typically final for purposes of preclusion
notwithstanding appeal, see Coleman v. Tollefson,
135 S.Ct. 1759, 1764 (2015), the pendency of an appeal may
nonetheless make it unfair to apply collateral estoppel
offensively against a party. See Flood, 904 F.3d at
237.
In
addition, because of the categorically preclusive nature of a
collateral estoppel finding, a finding of collateral estoppel
would apply not only to Dunne but also to all other
defendants in this action and who were not themselves parties
to the Irish bankruptcy proceedings. This raises additional
fairness concerns. See In re Vivendi Universal, S.A.
Secs. Litig., 910 F.Supp.2d 500, 506 (S.D.N.Y. 2012)
(noting unfair prejudice to co-defendants at joint trial if
jury is instructed by means of collateral estoppel finding
that another defendant engaged in dozens of prior false
statements); cf. Stichting Ter Behartiging Van de
Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt
Int'l B.V. v. Schreiber, 327 F.3d 173, 184-85 (2d
Cir. 2003) (“a determination in a prior judicial
proceeding collaterally estops a claim by a nonparty only if
that nonparty was represented by a party to the prior
proceeding, or exercised some degree of actual control over
the presentation on behalf of a party to that
proceeding”).
I am
also persuaded that Rule 403 warrants precluding the Trustee
from introducing the entire 97-page ruling of the
High Court into evidence. I share the concerns of the
district court in Moore v. Hartman, 102 F.Supp.3d
35, 143-44 (D.D.C. 2015), about the possibility for unfair
prejudice whenever a jury is apprised of adverse findings
against a party by a judge in another related case,
especially where-as here-the judge's findings are
expressed at times by way of highly caustic commentary. My
concerns are heightened as well by the sheer length of the
High Court's ruling and the burden it would place on the
jury to review it in its entirety.
The
next consideration is whether the Trustee may refer at all to
the High Court's findings in the course of his
cross-examination of Dunne. I conclude that he may do so but
subject to the limitations I will describe that are intended
to prevent undue prejudice.[3]
It is
well-established that “a witness can be cross-examined
based on prior occasions when his testimony in other cases
had been criticized by a court as unworthy of belief.”
United States v. White, 692 F.3d 235, 248 (2d Cir.
2012) (cleaned up). When a court is deciding whether to
permit such cross-examination, a court should consider the
following factors: “(1) whether the prior judicial
finding addressed the witness's veracity in that specific
case or generally; (2) whether the two sets of testimony
involved similar subject matter; (3) whether the lie was
under oath in a judicial proceeding or was made in a less
formal context; (4) whether the lie was about a matter that
was significant; (5) how much time had elapsed since the lie
was told and whether there had been any intervening
credibility determination regarding the witness; (6) the
apparent motive for the lie and whether a similar motive
existed in the current proceeding; and (7) whether the
witness offered an explanation for the lie and, if so,
whether the explanation was plausible.” Id. at
249 (internal quotation marks omitted).
In
light of my consideration of these several factors, I
conclude it is appropriate for the Trustee to cross-examine
Dunne as to limited aspects of the High Court's specific
findings that he was untruthful and uncooperative. First, the
Trustee's cross-examination may reference the fact that
there was a ruling by a justice of the High Court of Ireland
in Dunne's Irish bankruptcy proceeding on October 2,
2018. Second, the Trustee may ask Dunne if it is true that
the High Court made a factual finding that during the course
of the Irish bankruptcy proceedings Dunne “failed to
cooperate with the Official Assignee in the realization of
assets of [his] and ...