Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-01328/USCOURTS-ca10-88-01328-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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PIL 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

United St11tc5 Court of Appeals 

Tenth Cirf"l•;t 

JAN 2 - 1990 

ROBERT L. HOECKER 

ALBERT Clerk 0. ROY; MARK V. BERLAND; 

ROBERT J. QUINN; WINSTON CHURCHILL; 

W. B. PEARSON; ANN L. GIORDANO; 

HARLAN L. BERLAND; DARREL J. LUNDGREN, 

v. 

Plaintiffs-AppellantsCross-Appellees, 

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KENNETH H. REISERER, P.C., a } 

Professional Corp.; JOHN D. SINGLETON, } 

P.C., a Professional Corp.; KENNETH H. } 

REISERER, an individual; JOHN D. } 

SINGLETON, an individual; AMERICAN } 

PROFESSIONAL MARKETING, INC., formerly } 

known as Am-Pro Marketing, Inc., } 

an Oklahoma corporation; DOVER } 

DEVELOPMENT, INC., a Nevada corporation} 

domesticated in Oklahoma under the name } 

of Doverland, Inc., } 

and 

Defendants-AppelleesCross-Appellants, 

JOHNNY BROWN; THE BECKET PARTNERSHIP; 

SINEURI, S. A., a Panamanian 

corporation, 

Defendants-Appellees, 

GLENN J. BEADLE, individually and as 

General Partner of an Oklahoma General 

Partnership known as The Becket 

Partnership, 

Defendant-CounterPlaintiff-Appellee. 

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Nos. 88-1328 

& 

88-1331 

(D.C. No. 84-305-P} 

(W.D. Okla.} 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 1 
ORDER AND JUDGMENT* 

Before TACHA, EBEL, Circuit Judges, and KANE,**District Judge 

**Honorable John L. Kane, District Judge, United States District 

Court for the District of Colorado, sitting by designation 

There are three issues presented by this appeal and 

cross-appeal. Both appellants and cross-appellants request review 

of the inconsistent verdict returned by the jury, with each side 

suggesting different appellate remedies. In addition, 

cross-appellants question certain jury instructions concerning 

civil conspiracy under Oklahoma law and question the introduction 

of certain evidence under Fed. R. Evid. 803(8). We affirm the 

district court's decisions as to the jury instructions and the 

admission of evidence. However, we reverse and remand for new 

trial as to four of the defendants, due to the irreconcilable 

inconsistency of the jury's verdict. 

This lawsuit was brought by eight individuals who had been 

minority shareholders of American Professional Marketing, Inc. 

(ArnPro), a corporation which marketed fuel additives. In late 

1981, these minority shareholders entered into a settlement 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

2 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 2 
agreement in resolution of a dispute with the two 

shareholders, Mr. Johnny Brown and Mr. Glenn J. Beadle. 

majority 

Under the 

agreement, the minority shareholders tendered their shares to the 

corporation in consideration for a series of annual payments 

totalling $4,500,000. 

Approximately six weeks after the settlement agreement was 

executed, all of the corporation's stock, as well as all of its 

assets and liabilities, were assigned to Sineuri, S.A., a 

Panamanian corporation with ties to one of AmPro's attorneys, Mr. 

Kenneth H. Reiserer. Two days later, the stock, but not the 

responsibility for payments under the settlement agreement, was 

assigned by Sineuri to Dover Development, Inc. (Dover), a Nevada 

corporation controlled by Mr. Brown, Mr. Beadle, Mr. Reiserer, and 

another of AmPro's attorneys, Mr. John D. Singleton. AmPro's 

operating assets were transferred, through various transfers, to 

Brown Educational Corporation (BEC), an entity controlled by Mr. 

Brown individually, and comprised of entities controlled by Mr. 

Brown, Mr. Beadle, and six regional sales vice-presidents of the 

old AmPro. The accuracy of the valuation of the various assets 

for these transactions was hotly contested at trial. Several 

interrelated Dutch and Panamanian lenders with ties to Mr. 

Reiserer were 

transfers. In 

involved with 

the meantime, 

the financing of 

defendants and 

some of the 

related entities 

formed a new corporation with the same name as the old AmPro 

(AMPI), with operating assets contributed by BEC. The old AmPro 

was dissolved. 

3 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 3 
Two payments were made to the minority shareholders under the 

terms of the settlement agreement, one immediately after the 

agreement was executed and one a year later. No further payments 

were made, Sineuri claiming that AmPro had breached its 

obligations under the assignment of stock, thereby relieving 

Sineuri of its obligation to the minority shareholders. The 

minority shareholders then brought the instant lawsuit, claiming 

breach of contract, breach of third-party contract, fraud, 

conspiracy 

corporation. 

to defraud, 

Defendants in 

and 

the 

wrongful dissolution of the 

action included the following: 

AmPro; AMPI; Sineuri; Dover; John D. Singleton, P.C., a 

professional corporation, formed under the Oklahoma Professional 

Corporation Act, consisting of John D. Singleton as a sole 

practitioner, which acted as attorney and legal advisor for 

defendants at the time the settlement agreement was executed and 

thereafter; Kenneth H. Reiserer, P.C., a professional 

corporation, formed under the Oklahoma Professional Corporation 

Statute, consisting of Kenneth H. Reiserer as a sole practitioner, 

also acting as an attorney and legal advisor for defendants at the 

time the settlement agreement was executed and 

Singleton in his individual capacity; Mr. 

individual capacity; the Becket Partnership, 

thereafter; Mr. 

Reiserer in his 

a tax shelter 

comprised of many entities, partnerships and individuals otherwise 

involved with defendants, which served as a conduit for real 

property associated with the old AmPro; and Mr. Johnny Brown and 

Mr. Glenn J. Beadle, individually, majority shareholders in AmPro, 

who were active in the reorganization of AmPro's stock, assets, 

4 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 4 
and liabilities during the weeks and months following execution of 

the settlement agreement. 

After the commencement of trial, AmPro and Dover stipulated 

to a directed verdict on the breach of contract claim, resulting 

in a judgment of $3,000,000 against them. Following presentation 

of the minority shareholders' case, the district court granted 

defendants' motion for directed verdict on the fraud claim, later 

stating that the claim was not supported by sufficient evidence 

under the requisite clear and convincing standard for submission 

to the jury. R. Vol. VIII at 24. The jury returned a verdict of 

$100,000 for wrongful corporate dissolution against Mr. Brown and 

Mr. Beadle, individually, and against AmPro and AMP!. It also 

returned a verdict of $3,000,000 for breach of third-party 

contract against Sineuri. In addition, the jury returned a 

verdict of $3,000,000 for conspiracy to defraud and $500,000 in 

punitive damages on the conspiracy claim against AmPro and AMP!, 

Dover, Sineuri, John D. Singleton, P.C., and Kenneth H. Reiserer, 

P.C. The jury exonerated both Mr. Singleton and Mr. Reiserer in 

their individual capacities. 

Counsel for the minority shareholders submitted a post-trial 

motion for judgment notwithstanding the verdict, motion to alter 

or amend judgment, or, in the alternative, motion for new trial, 

on the issue of the inconsistent verdicts as to the attorneys in 

their individual capacities and their corporate capacities. 

Counsel for Mr. Reiserer and Mr. Singleton also submitted a motion 

for j.n.o.v. on the issue of the inconsistent verdict. None of 

the trial counsel had requested that a special interrogatory be 

5 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 5 
submitted to the jury before it was dismissed. After a hearing, 

the district court denied the post-trial motions for two reasons. 

First, the court stated that the minority shareholders had waived 

objection to any inconsistencies in the verdict by not submitting 

further special interrogatories while the jury was still impaneled 

which could have helped the jury resolve the inconsistency. 

R. Vol. VIII at 35. Second, the court found that the 

inconsistencies could be harmonized by rationalizing that the jury 

had found Mr. Singleton and Mr. Reiserer free of liability in 

their individual capacities as officers, directors, and 

shareholders of the various entities which were involved in the 

reorganization of AmPro's business affairs after the settlement 

agreement was signed, while at the same time finding Mr. 

Singleton's and Mr. Reiserer's professional corporations culpable 

in their capacity as attorneys and legal advisors to these 

entities. Id. at 35-36. 

The minority shareholders appealed the district court's 

decision, requesting that this court either impose liability on 

Mr. Singleton and Mr. Reiserer in their individual capacities or 

that the case be remanded for new trial on the issue of conspiracy 

to defraud as to John D. Singleton, P.C., Kenneth H. Reiserer, 

P.C., John D. Singleton, individually, and Kenneth H. Reiserer, 

individually. Mr. Singleton and Mr. Reiserer cross-appealed, 

requesting that this panel reconcile the inconsistency in the 

verdict by relieving John D. Singleton, P.C. and Kenneth H. 

Reiserer, P.C. of professional corporate liability. 

6 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 6 
While mindful of the rule that inconsistent verdicts be 

harmonized whenever possible, Atlantic & Gulf Stevedores, Inc. v. 

Ellerman Lines, Ltd., 369 U.S. 355, 364 (1962); Harvey ex rel. 

Harvey v. General Motors Corp., 873 F.2d 1343, 1347 (10th Cir. 

1989), under the circumstances presented in this case, no such 

reconciliation is possible. Pursuant to the Oklahoma statute 

under which the professional corporations were formed, John D. 

Singleton, P.C., and Kenneth H. Reiserer, P.C. could only act by 

and through the individual attorneys, John Singleton and Kenneth 

Reiserer. The Oklahoma Professional Corporations Act provides: 

This act shall be so construed as to effectuate its 

general purpose of making available to professional 

persons the benefits of the corporate form for the 

business aspects of their practices while preserving the 

established professional aspects of the personal 

relationship between the professional person and those 

he serves. 

The act does not alter any law applicable to the 

relationship between a person rendering professional 

services and a person receiving such services, including 

liability arising out of such professional services. 

No professional corporation may do any act which is 

prohibited to be done by individual persons licensed to 

practice a profession which the professional corporation 

is organized to render. 

Okla. Stat. (1988) tit. 18, §§ 802, 812, 814 (respectively). See 

also American Nat'l Bank & Trust Co. of Shawnee v. Clarke & Van 

Wagner, Inc., P.C., 692 P.2d 61, 66-67 (Okla. App.), cert. denied, 

(1984)(individual attorneys held liable for repayment of excessive 

fee which was paid to their professional corporation)(citing Okla. 

7 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 7 
Stat. (1981) tit. 18, §§ 802, 812, 813, 814; Deaton, Gassaway & 

Davison, Inc. v. Thomas, 564 P.2d 236, 239-40 (Okla. 1977)). 

Mr. Singleton and Mr. Reiserer each individually participated 

in the circumstances which culminated in this lawsuit, both as 

attorneys individually liable pursuant to Oklahoma's professional 

corporation statute, as quoted above, and as private businessmen 

who were participants in the entities involved in the 

redistribution of old ArnPro's assets. Because the liability of 

the professional corporations is completely derivative of that of 

Mr. Singleton and Mr. Reiserer in their individual professional 

capacities, it is impossible that the individuals could be found 

less culpable than their professional corporations. Thus, this 

verdict cannot be reconciled by inferring that the jury exonerated 

the individuals in their individual business capacities. Such 

result ignores professional corporate liability under Oklahoma 

law, coupled with Mr. Singleton's and Mr. Reiserer's multiple 

roles as individuals in this matter. 

While judicial economy would have been preserved had the 

minority shareholders' objection to the inconsistent verdict been 

brought to the attention of the district court while the jury was 

still impaneled, the lack of such objection does not constitute 

waiver of that objection for a post-trial motion. This circuit 

has recognized that under Fed. R. Civ. P. 50(b) 1 the trial court 

1 Fed. R. Civ. P. 50(b) provides in pertinent part: 

If a verdict was returned the court may allow the 

judgment to stand or may reopen the judgment and either 

order a new trial or direct the entry of judgment as if 

the requested verdict had been directed. 

8 

, 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 8 
may sua sponte grant a new trial. Diamond Shamrock Corp. v. Zinke 

& Trumbo, Ltd., 791 F.2d 1416, 1423 (10th Cir.), cert. denied, 479 

U.S. 1007 (1986). Although in Diamond Shamrock we held that an 

objection was waived when not voiced prior to dismissal of jury 

under the special circumstances presented by inconsistency in the 

jury's response to factual interrogatories submitted to the jury 

under Fed. R. Civ. P. 49(b), id. at 1422, we went on to clarify 

that "[submission of the matter for new trial] is required if a 

verdict reflects inconsistencies on its face indicating either 

that the jury was in a state of confusion or abused its power. 

Under such circumstances a new trial must be granted." Id. 

at 1423 (emphasis added). See also Global Van Lines, Inc. v. 

Nebeker, 541 F.2d 865, 868 (10th Cir. 1976); Cheney v. Moler, 285 

F.2d 116, 118 (10th Cir. 1960)(refusing to invoke the rule of 

waiver). As we stated in Cheney: 

[w]hile it is the duty of counsel to point out the 

existence of informality in a verdict while it still may 

be corrected and the duty may extend to the timely 

disclosure of misconduct upon the part of the jury 

members still the primary duty to control the actions of 

the jury during the course of their deliberations and to 

see that a verdict is returned capable of supporting a 

judgment rests with the trial court. 

Cheney, 285 F.2d at 118-19. Thus, this matter, which was not 

submitted to the jury under Fed. R. Civ. P. 49(b) interrogatories, 

must be remanded for a new trial on the issue of conspiracy to 

defraud as to Mr. Singleton, individually, Mr. Reiserer, 

individually, John D. Singleton, P.C., and Kenneth H. Reiserer, 

P.C. 

We review that portion of cross-appellants' appeal concerning 

the admission of the factual portions of the IRS audit report, 

9 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 9 
which were read but not submitted to the jury, under an abuse of 

discretion standard. See Perrin v. Anderson, 784 F.2d 1040, 1047 

(10th Cir. 1986). We find no abuse of discretion here. The 

material was admissible under Fed. R. Evid. 803(8). 2 Even if it 

were error, the error would have been harmless due to the weight 

of other evidence in support of the judgment. 

In addition, cross-appellants argue that the jury should have 

been instructed that to find liability under the conspiracy to 

defraud claim, all the elements of fraud must be proven. 3 We find 

no error in the jury instructions. 

2 

When examining a challenge to jury instructions, we 

review the record as a whole to determine whether the 

instructions "state the law which governs and provided 

the jury with an ample understanding of the issues and 

the standards applicable." We thus "consider all that 

the jury heard and, from the standpoint of the jury, 

decide 'not whether the charge was faultless in every 

particular but whether the jury was misled in any way 

and whether it had understanding of the issues and its 

duty to determine these issues.'" 

Fed. R. Evid. 803 provides in pertinent part: 

The following are not excluded by the hearsay rule, 

even though the declarant is available as a witness: 

(8) Public records and reports. Records, reports, 

statements, or data compilations, in any form, of public 

offices or agencies, setting forth •.. (C) in civil 

action ., factual findings resulting from an 

investigation made pursuant to authority granted by law, 

unless the sources of information or other circumstances 

indicate lack of trustworthiness. 

3 There is some confusion in the briefs and record whether 

cross-appellants preserved their complaint of ecror regarding 

their requested directed verdict on the conspiracy charge. Our 

review of Oklahoma law concerning conspiracy, set forth in the 

body of this order and judgment, renders such confusion moot. 

10 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 10 
Big Horn Coal Co. v. Commonwealth Edison Co., 852 F.2d 1259, 1271 

(10th Cir. 1988)(citations omitted). 

Under Oklahoma law, a claimant for conspiracy to defraud need 

not prove all the elements of fraud as a threshold for the 

conspiracy claim: 

A conspiracy is a combination of two or more persons 

to accomplish, by concerted action, some unlawful 

objective by either lawful or unlawful means. The gist 

of a civil conspiracy is damage. And its existence may 

be inferred from pertinent circumstances. 

A party may join a conspiracy in progress and become 

liable for all acts done in its furtherance. 

Wright v. Cies, 648 P.2d 51, 53 n.2 (Okla. App.), cert. denied, 

(1982)(citations omitted). 

Cross-Appellants cite Holland v. Perrault Brothers, Inc., 311 

P.2d 795 (Okla. 1957), for the proposition that the elements of 

fraud must be found to support a claim of conspiracy to defraud. 

However, the Holland court stated: 

We are here concerned with subsequent acts relied 

upon to establish a conspiracy, and such acts, if 

sufficient, must clearly indicate the prior combination 

and fraudulent purpose, and warrant the conclusion that 

said subsequent acts were done in furtherance of the 

unlawful combination and in pursuance of the fraudulent 

scheme. 

Id. at 800. The language upon which cross-appellants rely, 

Appellee's Opening Brief in Support of Cross Appeal at 20, is in 

support of the Holland court's contention that mere proof of 

breach of contract does not prove intent to defraud. The Holland 

court ordered a directed verdict because the defendants' actions 

were as consistent with lawful as with unlawful actions. Id. at 

801. We find no Oklahoma case 

cross-appellant's position on this issue. 

11 

law which supports 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 11 
In addition, cross-appellants received exactly what they 

requested in the jury instruction conference, a definition of 

fraud and a listing of the elements of fraud. R. Vol. VII at 15. 

See R. Vol. I, tab 317, jury instruction 14G. They did not 

request that the jury be instructed that plaintiffs must prove the 

elements of fraud, nor were they entitled to such instruction. 

The judgment of the United States District Court for the 

Western District of Oklahoma is AFFIRMED in part and REVERSED and 

REMANDED in part for new trial on the issue of conspiracy to 

defraud as to John D. Singleton, P.C., Kenneth H. Reiserer, P.C., 

John D. Singleton, individually, and Kenneth 

individually. 

ENTERED FOR THE COURT 

PER CURIAM 

12 

H. Reiserer, 

Appellate Case: 88-1328 Document: 01019958593 Date Filed: 01/02/1990 Page: 12