Thank you for sharing!

Your article was successfully shared with the contacts you provided.
KYLE, District Judge. George T. Qualley (“Qualley”) brought suit in the United States DistrictCourt for the Northern District of Iowa alleging that Clo-Tex International, Inc.(“Clo-Tex”) and John T. Cross, Sr., (“Cross”) participated with as many as fiftyother persons in a scheme to defraud Qualley’s corporation, American AfricanTrading Co., through the fictitious sale of Nigerian crude oil. Qualley assertedclaims against Clo-Tex and Cross under the Racketeering Influenced and CorruptOrganizations Act (“RICO”), 18 U.S.C. �� 1962(c) and (d), and Iowa common lawfor conspiracy to defraud. The jury returned a verdict in Qualley’s favor, findingthat Clo-Tex conspired to defraud Qualley’s company, that Cross both conspired toviolate and did violate RICO, that Cross and Clo-Tex were each liable to Qualleyfor actual damages, and that Clo-Tex was liable to Qualley for one million dollars in punitive damages. Cross and Clo-Tex appeal, arguing that the district court erred in makingseveral evidentiary rulings, in declining to give a requested jury instruction, and insustaining the actual and punitive damages awarded by the jury. Cross and Clo-Texalso appeal from the district court’s denial of their motion for judgment as a matterof law. For the reasons discussed below, we reverse and remand. I. George Qualley was a practicing attorney in Sioux City, Iowa from 1960 untilhis retirement in the mid 1990s. (Trial Tr. at 67.) Qualley specialized in tax lawand commercial law. (Id.) By the 1970s and 1980s, Qualley had nine offices of hisown in the United States, approximately 30 affiliated offices in the United States,and 15 or 16 affiliated offices in various parts of the world, including Nigeria. (Id.)The Nigerian law firm of Onyeukwu & Onyeukwu had been affiliated withQualley’s firm on certain international business transactions since the mid-1980s.(Id. at 68.)The negotiations leading up to the fateful oil transaction by Qualley’scompany are long and involved. In summary, on or about November 14, 1994,Qualley received a letter from Maxwell Onyeukwu, a Nigerian barrister at the firmof Onyeukwu & Onyeukwu. [FOOTNOTE 2] Onyeukwu, apparently a delegate to Nigeria’sConstitutional Conference, sought Qualley’s help in arranging a meeting with “someleading Congressmen to exchange ideas on matters of ideological interest” in orderto help his political bid for the Governorship of the Imo State. (Appellants’ App. at111.) Qualley responded that he was unable to put Onyeukwu in touch withAmerican politicians; Qualley proposed instead that he and Onyeukwu work todevelop trade relations between the United States and Nigeria as to certainproducts, including oil, gold, and shrimp. (Id. at 115-16, 118.)On January 21, 1995, Onyeukwu stated that he had spoken to representativesof the Nigerian National Petroleum Corporation (“NNPC”). Onyeukwu reportedthat the NNPC was willing to sell 200,000 barrels of crude oil upon receipt up frontof one-fourth the total cost, the balance being due upon receipt of the oil. (Id. at119.) Qualley responded that he would not pay in advance for anything fromNigeria due to the political situation there, but could promise payment in full ondelivery. (Id. at 120.) Onyeukwu asked Qualley for a name to be used for incorporation in Nigeriaso that they could enter into a joint venture with the NNPC for the “exporation [sic],sales and marketing of Nigerian crude oil.” (Id. at 122.) Onyeukwu offered toincorporate the business for Qualley in Nigeria, but advised Qualley that the feesand taxes would be $39,300. (Id. at 124-25.) By a facsimile letter dated January27, 1995, Qualley reiterated that he was unwilling to pay out any money prior toreceiving earnings from the sale of the oil, but stated that he, together with his wifeand his thirteen-year old son, would be the directors of the Nigerian corporation.(Id. at 127.) Qualley also told Onyeukwu that he had an order in hand for 2,000,000barrels of oil and again promised payment in full for the oil upon delivery. (Id.)Sometime between January 31 and February 16, 1995, Onyeukwu sent Qualley afax stating that the African Trading Company, Inc., had been incorporated in Nigeriaon Qualley’s behalf and asking Qualley to prepare letterhead stationery identifyingthe officers of the corporation. [FOOTNOTE 3] (Id. at 133.) On or about February 16, 1995, Qualley signed a letter addressed to NNPCon African Trading Company letterhead applying for a three-year contract to “spotlift” between two and ten million barrels of crude oil “for Shell International inLondon.” [FOOTNOTE 4] (Id. at 136; Trial Tr. at 332.) On or about March 8, 1995, Qualley traveled to Nigeria to meet with members of the NNPC and sign contracts for thepurchase of 2,000,000 barrels of crude oil. (Trial Tr. at 125.) Qualley testified thathe hired his friend, Leo Eriksen, an engineer, to travel with him and advise him.(Trial Tr. at 115.) On or about March 15, 1995, Qualley signed a contract topurchase the crude oil on behalf of American African Trading Company.(Appellants’ App. at 141-50.) Eriksen signed as a witness. (Id. at 150.) Qualleytestified that a “John West” signed the contract as a director of the NNPC. (TrialTr. at 125-127.) While Qualley was in Nigeria, Eriksen caused three wire transfers to be madeto account number 17692470 at First National Bank of Maryland (“FNBMaryland”). [FOOTNOTE 5] Qualley testified that John West provided the wiring instructions forthe three transfers. (Trial Tr. at 134.) At this time, Clo-Tex, a Maryland corporationwith its principal place of business in Baltimore, had account number 17692470with FNB Maryland. (Trial Tr. at 65). All three wire transfers were made to theattention of John Cross, who was, at all material times, a stockholder, president andmanaging executive of Clo-Tex. (Id.) Cross testified that all three payments werecredited to the account of a “Soci�t� James Mercantile,” a company located inBenin that purchases used clothing from Clo-Tex. (Id. at 503-05, 604-08.) Theowner of Soci�t� James Mercantile is a Nigerian named James Kalu who alsoapparently was known by the name James Kelly. (Id. at 505.) On March 20, 1995, Qualley signed agreements relating to the shipment ofthe oil to the United States. (Appellants App. at 163-77.) The oil was to arrive inHouston. (Trial Tr. at 203.) Qualley returned to Iowa and, several days later, flewto Houston to meet John West and watch the oil arrive. (Trial Tr. at 203-06.) Westnever flew to Houston and the oil shipments never arrived. (Id.)In August of 1995, the American African Trading Company assigned toQualley whatever claims it had against Clo-Tex, Cross and the others. (Trial Tr. at185-86.) Qualley filed his Complaint on August 29, 1995, naming 51 defendantsincluding appellants Cross and Clo-Tex. Qualley obtained service of process onlyon Cross and Clo-Tex. [FOOTNOTE 6] After a four-day trial, the jury returned a verdict by special interrogatories infavor of Qualley. The jury found that both Cross and Clo-Tex were liable toQualley for actual damages totaling $41,282.00. [FOOTNOTE 7] The jury also awarded Qualleyone million dollars in punitive damages against Clo-Tex. However, the jurydetermined that Clo-Tex’s wrongful conduct was not directed primarily at Qualley;therefore, under Iowa law Qualley was entitled to receive only twenty-five percentof the punitive damage award, the remainder to be paid into Iowa’s CivilReparations Fund. (Amended J.) Following trial, Qualley moved for and was awarded treble damages against Cross pursuant to 18 U.S.C. � 1964. Cross andClo-Tex filed a motion for judgment as a matter of law or, in the alternative, for anew trial. That motion was based on the same evidentiary issues asserted now onappeal and also challenged the punitive damages award as excessive. The trialcourt denied Appellants’ motions. II. On appeal, Cross and Clo-Tex raise seven issues: (1) whether the trial courtimproperly admitted deposition testimony of Rudolph Datcher that containedinadmissible hearsay; (2) whether the trial court improperly admitted depositiontestimony of Nathaniel Spinner that contained inadmissible hearsay; (3) whether thetrial court improperly took judicial notice of the perpetration of Nigerian fraudschemes on Americans; (4) whether the trial court erred in refusing to instruct thejury on an “in pari delicto” defense; (5) whether the punitive damage award againstClo-Tex is excessive; (6) whether the jury erred in including the $24,000.00 in wiretransfers in its compensatory damages award; and (7) whether the trial court erred indenying their motion for judgment as a matter of law. We begin with theevidentiary issues.A trial court’s evidentiary rulings are reviewed under an abuse of discretionstandard. See United HealthCare Corp. v. American Trade Ins. Co., Ltd., 88 F.3d563, 573 (8th Cir. 1996); Maddox v. Patterson, 905 F.2d 1178, 1179 (8th Cir.1990); Adams v. Fuqua Indus., 820 F.2d 271, 273 (8th Cir. 1987). With respect toa trial court’s ruling that admits evidence, error may not be predicated on such aruling unless a substantial right of the party is affected and a timely objection or motion to strike appears of record stating the specific ground for objection. Fed. R.Evid. 103(a). Furthermore,No error in either the admission or the exclusion of evidence and noerror or defect in any ruling or order or in anything done or omitted bythe court or by any of the parties is ground for granting a new trial orfor setting aside a verdict or for vacating modifying or otherwisedisturbing a judgment or order, unless refusal to take such actionappears to the court inconsistent with substantial justice. The court atevery stage of the proceeding must disregard any error or defect in theproceeding which does not affect the substantial rights of the parties.Fed. R. Civ. P. 61. Thus, “[w]here the district court errs in admitting evidence, wewill only grant a new trial or set aside a verdict if there is a clear and prejudicialabuse of discretion.” Lovett ex rel. Lovett v. Union Pac. R.R. Co., 201 F.3d 1074,1080 (8th Cir. 2000). An abuse of discretion occurs when the error prejudiciallyinfluences the outcome of the case, see id., and the burden of showing prejudicerests on the party asserting it. See Tyler v. White, 811 F.2d 1204, 1207 (8thCir.1987). A. Judicial Notice of Nigerian Fraud ScamsCross and Clo-Tex assert that the trial court erred in taking judicial notice ofthe following facts pursuant to Rule 201 of the Federal Rules of Evidence:One, that at all times pertinent to this lawsuit, there were Nigerianfraud scams perpetrated on people in the United States and othercountries in the world;Two, the fraud scams involved, among other things, oil deals that nevermaterialized.(Trial Tr. at 483; see also id. at 444-45.) In deciding whether to take judicial noticeof these facts, the trial court examined a Congressional report dated December 12,1995, a Senate committee report, at least two newspaper articles, a videotape fromthe television news magazine “20/20,” a videotape from the television newsmagazine “60 Minutes,” and a videotape from the British Broadcasting Corporation.(Addendum to Appellants’ Br. at 12.)Rule 201 governs only the judicial notice of “adjudicative facts.” Fed. R.Evid. 201(a). The advisory committee notes to Rule 201 distinguish between”adjudicative facts” and “legislative facts.” See id., adv. ctte. notes (citing 2Kenneth Davis, Administrative Law Treatise at 353 (1958)). Adjudicative facts are”facts that normally go to the jury in a jury case. They relate to the parties, theiractivities, their properties, their businesses.” Id.; see also U.S. v Gould, 536 F.2d216, 219 (8th Cir. 1976) (stating that adjudicative facts concern “who did what,where, when, how and with what motive or intent.”) (quoting 2 Kenneth Davis,Administrative Law Treatise � 15.03 at 353 (1958)). By contrast, “[l]egislativefacts do not relate specifically to the activities or characteristics of the litigants. Acourt generally relies upon legislative facts when it purports to develop a particularlaw or policy and thus considers material wholly unrelated to the activities of theparties.” Gould, 536 F.2d at 220.The facts of which the trial court took judicial notice did not specificallyconcern the parties before the court. The trial court acknowledged that the evidenceunderlying the noticed facts “[had] to do with the pretty much universal publicitythat was out about what Nigeria was doing, Nigerian people.” (Trial Tr. at 445.) The videotapes contained nothing involving anyone with whom Qualley hadcommunicated. (Trial Tr. at 12.) Nor were the other exhibits the trial courtconsidered “specific to Mr. Cross or even to Maxwell [Onyeukwu] and others[involved in the scheme Qualley alleged].” (Id. at 445.) Indeed, two of thedocuments, Exhibits 109 and 110, were legislative reports. Thus, the trial courterred in using Federal Rule of Evidence 201 to take judicial notice of facts that were”legislative” rather than “adjudicative,” and were therefore outside the scope of therule. We address whether this error is harmless, in section C, infra.B. Admission of Deposition TestimonyCross and Clo-Tex contend that several portions of the deposition testimonyof Rudolph Datcher and Nathaniel Spinner were inadmissible, either as hearsay oras testimony lacking foundation. In 1994, Datcher and Spinner each lost money inconnection with shipments of crude oil purportedly sent to the United States fromNigeria. Both Datcher and Spinner met in Maryland on one or more occasions withJames Cooper, Allen Cassidy, Joyce Cassidy, and Prince Zankli about oilshipments. [FOOTNOTE 8] Both Spinner and Datcher were told that the oil belonged to theCassidys’ company, American Business International (“ABI”); both were showndocuments relating to the oil shipments. (Trial Tr. at 421, 482.) Spinner providedthe Cassidys with two $25,000 checks made payable to ABI. (Trial Tr. at 378-79.)Datcher endorsed over to ABI a cashiers check payable to himself; in return he received a promissory note signed by Prince Zankli on behalf of ABI andMetropolitan Mortgage Corporation. [FOOTNOTE 9] 1. Datcher Testimony After Datcher had turned over the cashiers check to ABI, he heard nothingfurther about the oil shipment and could not reach the Cassidys or Prince Zankli.He then called the First National Bank of Maryland and spoke with a bankemployee. Datcher testified that this employee told him that Account No. 17692470was open and that the names of John Cross, Joyce Cassidy and Prince Zankli wereon the account. (Trial Tr. at 476.) Appellants contends that Datcher’s testimonyabout the bank employee’s statements contained hearsay and was not admissible. Inresponse, Qualley made only a bald assertion that the bank employee’s statementswere not hearsay.We agree with the Appellants. Hearsay includes any oral or written assertion,other than one made by the declarant while testifying at the trial or hearing, offeredto prove the truth of the matter asserted. Fed. R. Evid. 801(a), (c). The bankemployee’s oral assertion that the names of Cross, Zankli and Joyce Cassidyappeared on account number 17692470 was not made while the employee wastestifying at trial or a deposition. Furthermore, the bank employee’s assertion wasoffered for the truth of the matter asserted; i.e., it was offered to prove that thenames of John Cross, Prince Zankli and Joyce Cassidy all were in fact on that specific account. The trial court clearly erred, therefore, in admitting Datcher’stestimony repeating those statements.Qualley argues that any error in admitting the testimony was harmlessbecause it was cumulative of other testimony from Datcher about the names on theaccount. Elsewhere in Datcher’s deposition, Datcher stated that the account at FNBMaryland belonged to John Cross, Joyce Cassidy and Prince Zankli and that it was”their” account. (Trial Tr. at 473-74.) Qualley contends that this other testimonywas based on Datcher’s personal knowledge and argues that, because Appellantsdid not object to this other testimony as hearsay, they cannot challenge the bankemployee’s “confirming” statements as hearsay. We disagree. Appellants did object to Datcher’s other testimony as beingwithout foundation. (App. of Appellants at 37.) The record contains no evidencefrom which one could infer that Datcher had any independent personal knowledgeabout whose names appeared on the account. Therefore, Datcher’s testimony aboutthe bank employee’s statements is not merely “confirming” or “cumulative” and thetrial court’s error cannot be excused as “harmless” on that account. We willevaluate whether Appellants have established prejudice arising from this error insection C, infra. 2. Spinner Testimony Among the excerpts from Spinner’s deposition that were read to the jury arepassages in which Spinner testified that (a) on several occasions, Prince Zanklianswered the telephone at the Cassidys’ office by saying “Clo-Tex”; (b) Prince Zankli told Spinner that “We deal with Clo-Tex”; (c) one of the Cassidys said toSpinner “We need to wire the money to Clo-Tex so they can get the money toRotterdam to release the oil”; and (d) Prince Zankli said that Clo-Tex shared anoffice with American Business International in Gaithersburg, Maryland. Appellantsobjected to these statements as hearsay. (Appellants’ App. at 42-43, 49-51; Defs.’Mot. in Limine to Exclude Testimony of Rudolph Datcher & Nathaniel Spinner.)The trial court reserved ruling on Appellants motion in limine and made no expressdetermination during trial as to whether the above statements were hearsay. Inconnection with Cross and Clo-Tex’s post-trial motions, however, the trial courtmade a finding that “the plaintiff has shown by a preponderance of the evidence thata conspiracy existed and that the alleged hearsay statements offered throughSpinner’s . . . deposition testimony were made during the course of the conspiracyand in furtherance of it.” [FOOTNOTE 10] (Addendum to Appellants’ Br. at 12.) Appellants contend that the trial court erred in finding that there wassufficient evidence to establish the factual prerequisite for admitting the statementsof Cassidys and Prince Zankli as co-conspirator admissions. Specifically,Appellants argue that the only evidence linking Cross and Clo-Tex to the Cassidysand Prince Zankli, aside from the statements themselves, were the payments fromDatcher and Qualley deposited into Clo-Tex’s account at FNB Maryland. In response, Qualley contends that there was enough evidence in the record to supportthe trial court’s finding of a conspiracy. [FOOTNOTE 11] “To the extent that the admissibility of evidence is conditioned on theresolution of a second question . . . it is the function of the court to determinewhether or not the condition has been fulfilled.” Fed. R. Evid. 104(a), adv. ctte.notes. Rule 801(d)(2)(E) provides that a statement is not hearsay if “[t]he statementis offered against a party and is . . . (E) a statement by a co-conspirator of a partyduring the course and in furtherance of the conspiracy.” [FOOTNOTE 12] Fed. R. Evid.801(d)(2)(E). In deciding whether a declarant’s statements are the admissions ofthe party-opponent under the co-conspirator rule, the court must determine that therewas a conspiracy and the statements were made while both the declarant and theperson against whom the statement is offered were part of the conspiracy. [FOOTNOTE 13] We have reviewed the entire trial record and conclude that the trial court’sfinding of a conspiracy between Zankli, the Cassidys, Cross and Clo-Tex inFebruary and March of 1994 was clearly erroneous. “The contents of the statementshall be considered but are not alone sufficient to establish . . . the existence ofthe conspiracy and the participation therein of the declarant and the partyagainst whom the statement is offered under subdivision (E).” Fed. R. Evid.801(d)(2)(E) (emphasis added). Aside from the statements by Zankli and theCassidys, there is no testimony tending to establish Cross and Clo-Tex’s knowledgeof and participation in the activities of Zankli and the Cassidys. [FOOTNOTE 14] The onlydocument linking Cross and Clo-Tex (on the one hand) with Zankli and theCassidys (on the other hand) is a letter dated May 3, 1994, apparently from the person at NNPC whom Qualley identified as “John West.” [FOOTNOTE 15] This letter instructedAllen Cassidy and “Prince” to wire transfer $21,000 to account number 17692470at FNB Maryland to the attention of “John Cross for the order of Chief Kelly of AbaNigeria.” [FOOTNOTE 16] (Ex. 107.) One month later, Datcher’s check for $21,000 was depositedinto account number 17692470 at FNB Maryland.Even when considered together with the contents of the statementsthemselves, this evidence is not sufficient to establish, by a preponderance of theevidence, that Prince Zankli and the Cassidys were participants in a conspiracy withCross and Clo-Tex and that the statements made to Spinner were made as part ofand in furtherance of the conspiracy. Accordingly, the statements are not admissibleunder the co-conspirator provision of the rule on admissions of party opponents.We address the prejudice arising from the erroneous admission of the Spinnertestimony below. C. Harmless errorTo determine whether the evidentiary errors discussed above prejudiciallyinfluenced the outcome of the case, we look to the jury’s verdict. See Lovett, 201F.3d at 1080. The parties have a right to untainted jury deliberations and a verdictwhich is based upon admissible evidence. See Nichols v. American Nat’l Ins. Co.,154 F.3d 875, 890 (8th Cir. 1998) (citing Crane v. Crest Tankers, Inc., 47 F.3d 292,296(8th Cir.1995)); see also Drabik v. Stanley-Bostitch, Inc., 997 F.2d 496 (8th Cir.1993); Hale v. Firestone Tire & Rubber Co., 756 F.2d 1322, 1333 (8th Cir. 1985).Here, the jury awarded Qualley one million dollars in punitive damages, yet alsofound that Clo-Tex’s wrongdoing was not directed specifically at Qualley.(Addendum to Appellants’ Br. at 4.) To make such a finding, the jury had to lookbeyond the events as to which Qualley himself testified, to the judicially noticedfacts and to the Datcher and Spinner hearsay which purported to linked Zankli andthe Cassidys to Clo-Tex and Cross.This evidence, which was erroneously submitted to the jury, had a prejudicialimpact upon the jury’s consideration of this case. “Legislative facts,” such as thosejudicially noticed in this case, are “[i]n the great mass of cases decided by courts . .. either absent or unimportant or interstitial, because in most cases, the applicable law and policy have been previously established.” Gould, 536 F.2d at 220 (quoting2 Kenneth Davis, Administrative Law Treatise � 15.03 (1958)). The law and policyin this case are established. However, both during the trial and in the finalinstructions, the trial court instructed the jury pursuant to Federal Rule of Evidence201(g) that it must accept the judicially noticed facts as proven. [FOOTNOTE 17] (Trial Tr. at 483;Final Jury Instruction No. 6). Thus, the trial court interjected legislative facts not within the jury’s fact-finding province — into the jury’s deliberations bytelling the jury that they must treat those facts as conclusively proven. Furthermore,the inadmissible hearsay from Datcher was the subject of a question from the juryseeking to confirm that Cross, Zankli and Cassidy’s names were on the account intowhich Datcher’s funds and the Eriksen wire transfers were deposited. (Appendix of Appellants at 62.) Datcher’s testimony, together with the challenged Spinnertestimony, constituted the bulk of the evidence offered to support Qualley’s claimthat Clo-Tex and Cross knew of and/or participated in the fraudulent behavior ofothers. Qualley bears the ultimate burden of persuasion as to his claims under RICOand the common law. Appellants are entitled to have the jury evaluate those claimsby the greater weight of the admissible evidence. A substantial right of theAppellants was affected by the trial court’s evidentiary errors. Those errorsconstituted an abuse of discretion and were not harmless. III. Based upon the foregoing and our review of the record in this case, wereverse the trial court’s rulings on the evidentiary issues raised on appeal.Furthermore, in light of this Court’s resolution of the evidentiary issues raised onappeal, we cannot say that there is sufficient evidence to support an award ofpunitive damages in the amount of $1,000,000.00. See Economy Roofing &Insulating Co. v. Zumaris, 538 N.W.2d 641, 653-55 (Iowa 1995) and Wilson v.IBP, Inc., 558 N.W.2d 132, 144-48 (Iowa 1996), cert. denied sub nom. IBP, Inc. v.Wilson, 522 U.S. 810 (1997). Accordingly, we vacate the judgment, including the award of punitive damages, and remand this case to the district court for a new trial,consistent with this Court’s rulings, on all of the issues. [FOOTNOTE 18] A true copy. Attest: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT. :::FOOTNOTES::: FN1 The HONORABLE RICHARD H. KYLE, United States District Judge forthe District of Minnesota, sitting by designation. FN2 Qualley had known Onyeukwu for about ten years, working on someprojects together including an agricultural development program in Nigeria. (TrialTr. at 85.) FN3 Qualley testified that he and Onyeukwu also organized an Americancounterpart corporation called the American African Trading Company, and that thetwo entities were “really one in the same. One is incorporated in Nigeria, and theother is in the United States.” (Trial Tr. at 101.) FN4 At trial, Qualley offered into evidence a March 17, 1995 IrrevocableCorporate Purchase Order from the Marathon Holding Group Company(“Marathon”) for two million barrels of crude oil, and an April 3, 1995 contract forthe sale by the American African Trading Company of approximately two millionbarrels of Nigerian crude oil to Marathon. (Appellants App. at 151-158.) FN5 On or about March 13, 1995, the sum of $5,000.00 was wired to the accountby “American Rawhide, Donald Sukach.” (Trial Tr. at 65) On or about March 17,1995, Eriksen wired $5,000.00 to the account, and on or about March 24, 1995,Eriksen wired $14,000.00 to the account. (Id.) FN6 Qualley amended his complaint three times, adding a total of five moredefendants. Of the 56 defendants, 40 allegedly resided in Nigeria and/or wereNigerian citizens. FN7 That sum consisted of $24,000 for money wired to Clo-Tex’s account and$17,282.00 in expenses. FN8 Spinner also met with a Dr. Tony Alike, a man named Victor, and a mannamed John. FN9 Spinner testified that he met with the Cassidys and the others at officesbearing the title of “Metropolitan Mortgage Corporation.” FN10 The trial court also stated that the alleged hearsay statements offeredthrough Datcher’s testimony were made during the course of the conspiracy.However, we find no evidence in the record to support a finding that the bankemployee, whose statements are discussed above in section B.1., was a participantwith the Cassidys, Prince Zankli, and the others in the alleged conspiracy. FN11 Qualley also argues in passing that the statements are admissions of theparties opponent because they were made by Cross and Clo-Tex’s agents, asprovided for in Federal Rule of Evidence 801(d)(2)(D), or “that the other exceptionsof Rule 803 of the Federal Rules of Evidence apply.” We decline to address theseconclusory arguments. FN12 The co-conspirator statement rule is not an “exception” to the hearsay rule,as the parties on appeal have stated in their briefs. Rather, it excludes certainstatements from the definition of hearsay because they are deemed to be theadmissions of a party opponent. FN13 Appellants also object that the trial court erred in failing to expresslyaddress the admissibility of the challenged statements on the record beforesubmitting the case to the jury. In United States v. Bell, 573 F.2d 1040 (8th Cir.1978), this Court set out a series of steps to guide trial courts in evaluating whetherstatements are within the co-conspirator rule. Where a hearsay objection has beenmade and the proponent contends that it is admissible under the co-conspirator rule,that statement may be conditionally admitted into evidence. However, at theconclusion of all the evidence, a trial court shall “make an explicit determination forthe record regarding the admissibility of the statement.” 573 F.2d at 1044. Weagree with Appellants that the procedures set forth in Bell should have beenfollowed so that, had the proponent of the statement failed to prove a conspiracyinvolving the declarant and the parties opponent, the trial court could have given acurative instruction. See id. FN14 Qualley points to several statements by Spinner (purportedly based uponSpinner’s personal knowledge) to the effect that Cross and Clo-Tex were “in on thescam.” From the record it appears that the only basis for Spinner’s assertions is thehearsay to which Appellants objected. We agree with Appellants that Spinner’sstatements about whom Spinner believed to be involved in the scheme to defraudhim lack independent foundation. FN15 Exhibit 103, a document the Cassidys provided to Spinner, appears to be aportion of a 1991 contract between the Cassidys’ company — ABI — and the NNPC.It contains no reference to Cross or Clo-Tex. FN16 Exhibit 107 is a collection of letters dating from between April 14, 1993and May 31, 1994, which were given to Datcher’s attorney. FN17 Qualley argues that the judicially noticed facts were relevant to (a) Cross’credibility in claiming that he and Clo-Tex did not know the funds from Qualleywere obtained by fraudulent means; and (b) the propriety and amount of the punitivedamages. Because we conclude that the existence of Nigerian fraud schemes and,in some, the use of phony oil shipments, are not “adjudicative facts,” we do notaddress the relevancy of the exhibits that underlie those findings.The evidence that supported the judicially noticed facts has the potential tolead to stereotyping based on national origin. Obviously, not all persons of Siciliandescent are involved in the Mafia; nor are all Irish immigrants who solicit funds for”children’s relief efforts” raising money for terrorist activities in Northern Ireland.If the trial court is asked on remand to consider the admissibility of the news articlesand other exhibits, we assume that it will carefully weigh both the probative value ofthose exhibits and the potential for jury confusion or other prejudice arising fromthat evidence. FN18 In light of our decision to remand the case, we decline to address whether ajury instruction on the doctrine of in pari delicto should be given in the new trial –that determination must be made in light of all of the admissible evidence submittedto the district court on retrial. Similarly, we decline to address whether there will besufficient evidence to substantiate the inclusion of the Eriksen wire transfers in ajury’s actual damage award.
Qualley v. Clo-Tex International, Inc. United States Court of Appeals For The Eighth Circuit No. 99-1572 George T. Qualley, Appellee, v. Clo-Tex International, Inc., and John T. Cross, Sr., Appellants. Appeal from the United States District Court for the Northern District of Iowa Submitted: December 15, 1999 Filed: May 25, 2000 Before BEAM and HEANEY, Circuit Judges, and KYLE, District Judge. [FOOTNOTE 1]
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

New England Legal Awards (NELA) 2023

September 21, 2023
Boston, MA

Celebrating professional excellence in law in Connecticut, Maine, Vermont, New Hampshire, Massachusetts and Rhode Island.

Learn More

General Counsel Conference Southwest 2023

September 20, 2023 - September 21, 2023
Dallas, TX

Join General Counsel and Senior Legal Leaders at the Premier Forum Designed For and by General Counsel from Fortune 1000 Companies

Learn More

New Jersey Legal Awards (NJLA) 2023

September 27, 2023
East Brunswick, NJ

New Jersey Law Journal honors lawyers leaving a mark on the legal community in New Jersey with their dedication to the profession.

Learn More

CSE - Special Education Unit Attorney (Level 3) 12309

CSE - Special Education Unit Attorney (Level 3) 12309AMENDED Position Summary: Under the supervision of the Director of the Special Educa...

Apply Now ›

Administrative Trials Attorney (Level 3) 14405

Administrative Trials Attorney (Level 3) - 14405AMENDED Position Summary: Under the direction of the Director of the Administrative Trials ...

Apply Now ›

CSE - Special Education Unit Attorney (Level 3) 14901

CSE - Special Education Unit Attorney (Level 3) 14901AMENDED Position Summary: Under the supervision of the Special Education Appeals Uni...

Apply Now ›


New Jersey Law Journal

Riker Danzig deeply mourns the passing of our esteemed partner, dear friend and beloved colleague, Marc D'Angiolillo.

View Announcement ›

Eisenberg, Rothweiler, et.al


Eisenberg Rothweiler

View Announcement ›

Anselmi & Carvelli, LLP

New Jersey Law Journal

IN MEMORIAM OUR FRIEND, MENTOR, AND COLLEAGUE It is with profound sadness that we announce the passing of our partner, friend, mentor, and colleague Bruce I. Goldstein, on September 2, 2023. The prominent New Jersey trial attorney was 80. In a legal career spanning more than five decades, Bruce was regarded as one of the most talented and sought after litigators in New Jersey. His love for the legal profession was contagious. Bruce will be greatly missed, as will his signature greeting, How you be? and the outsized smile that accompanied it.

View Announcement ›