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

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FI LED 

United Stitt8 C9un of Appoals Tenth C1rcuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

ua , 3 1gao 

&OBERT L. HOECKER 

Clerk 

G.J.B. & ASSOCIATES, INC., 

a Florida Corporation; ALBERTO. 

ROY; MARK V. BERLAND; ROBERT J. 

QUINN; WINSTON CHURCHILL; W.B. 

PEARSON; ANN L. GIORDANO; HARLAN 

L. BERLAND; DARRELL J. LUNDGREN; 

and c.c. POLLEN COMPANY, 

Plaintiffs, 

and 

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GLENN J. BEADLE; and RUTH BEADLE, ) 

on their own behalf, and as to the) 

causes of action asserted on ) 

behalf of Brown Educational ) 

Corporation, for its use and 

benefit on a derivative basis, 

Plaintiffs-Appellants, 

vs. 

JOHN D. SINGLETON; KENNETH H. 

REISERER; BECKETT PARTNERSHIP; 

JOHNNY BROWN; BROWN EDUCATIONAL 

CORPORATION; RICHARD BROOKE; 

JOHN DOES 1 THROUGH 20; BETTY 

BROWN, also known as "Boots"; 

ANN MARGOLIS, Special Administrator of the Estate of Harry 

Margolis; and JOHN D. SINGLETON, 

doing business as Singleton and 

Reiserer, 

Defendants-Appellees. 

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No. 88-2571 

(D.C. No. Civ-84-1829-P) 

(W.D. Okla.) 

Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 1 
G.J.B. & ASSOCIATES, INC., 

a Florida Corporation; ALBERT o. 

ROY; MARK V. BERLAND; ROBERT J. 

QUINNJ WINSTON CHURCHILL; W.B. 

PEARSON; ANN L. GIORDANO; HARLAN 

L. BERLAND; DARRELL J. LUNDGREN; 

and c.c. POLLEN COMPANY, 

Plaintiffs, 

and 

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GLENN J. BEADLE; and RUTH BEADLE, ) 

on their own behalf, and as to the) 

causes of action asserted on ) 

behalf of Brown Educational ) 

Corporation, for its use and ) 

benefit on a derivative basis, ) 

Plaintiffs-Appellees, 

vs. 

KENNETH H. REISERER; and JOHN D. 

SINGLETON, 

Defendants-Appellants, 

and 

BECKETT PARTNERSHIP; JOHNNY BROWN; 

BROWN EDUCATIONAL CORPORATION; 

RICHARD BROOKE; JOHN DOES 

1 THROUGH 20; BETTY BROWN, also 

known as "Boots"; and ANN 

MARGOLIS, Special Administrator 

of the Estate of Harry Margolis, 

Defendants. 

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No. 88-2640 

(D.C. No. Civ-84-1829-P) 

(W.D. Okla.) 

ORDER AND JUDGMENT * 

* 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. 

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Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 2 
Before LOGAN, SETH and BALDOCK, Circuit Judges. 

Plaintiffs, Glenn and Ruth Beadle, instituted this diversity 

action, 28 U.S.C. § 1332, in the Oklahoma federal district court 

against defendant attorneys, John Singleton and Kenneth Reiserer, 

1 alleging legal malpractice for tax planning gone awry. Applying 

2 Oklahoma law, a jury assessed the Beadles' damages at 

$335,120.50, but found them 37.5% contributorily negligent, Okla. 

Stat. Ann. tit. 23, §§ 13 & 14 (West 1987), thus reducing their 

award to $209,450.31. In appeal no. 88-2571, the Beadles 

challenge the district court's denial of their motion for judgment 

notwithstanding the verdict, Fed. R. Civ. P. 50(b), asserting that 

the evidence was insufficient to support the jury's finding that 

they were contributorily negligent. They ask us to reinstate the 

1 On May 4, 1989, defendant Reiserer filed a chapter eleven 

bankruptcy petition which remains pending. In re Reiserer, No. 

589-02130 (Bankr. N.D. Cal. May 4, 1989). Accordingly, the 

automatic stay provision, 11 u.s.c. § 362, which stays judicial 

actions "against the debtor" prohibits us from adjudicating the 

Beadles' malpractice claim against Reiserer. Ellis v. 

Consolidated Diesel Elec. Corp., 894 F.2d 371, 373 (10th Cir. 

1990) (inception of case determines applicability of automatic 

stay). We are not enjoined, however, from proceeding with this 

matter as to Reiserer's presumably solvent co-defendant, 

Singleton. Otoe County Nat'l Bank v. W & P Trucking Inc., 754 

F.2d 881, 882-83 (10th Cir. 1985); Fortier v. Dona Anna Plaza 

Partners, 747 F.2d 1324, 1329-31 (10th Cir. 1984). 

2 In this diversity action, we must apply the substantive law 

that the Oklahoma state courts would apply, including Oklahoma's 

choice of law rules. Robert A. Wachsler, Inc. v. Florafax Int'l, 

Inc., 778 F.2d 547, 549 (10th Cir. 1985). Because both parties 

proceed on the assumption that Oklahoma law controls, we shall 

apply, as did the district court, the substantive law of Oklahoma 

without further analysis. See Leader Clothing Co. v. Fidelity and 

Casualty Co., 237 F.2d 7, 12 (10th Cir. 1956); Connolly v. 

Samuelson, 671 F. Supp. 1312, 1315 (D. Kan. 1987). 

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Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 3 
jury's damage award in its entirety. In cross-appeal no. 88-2640, 

Singleton asserts the district court erred in (1) admitting into 

evidence an IRS audit report which concluded that the tax plan was 

a sham, (2) submitting special interrogatories to the jury which 

concerned alleged oral agreements between the parties, (3) 

harmonizing inconsistent jury responses to a special interrogatory 

and verdict form which addressed the defenses of contributory 

negligence and assumption of the risk, and (4) sustaining the 

jury's verdict which assessed his liability as 62.5% of the 

Beadles' total damages. Singleton asks us to set aside the jury's 

verdict and direct the entry of judgment in his favor, Fed. R. 

Civ. P. S0(b), or in the alternative, grant him a new trial, Fed. 

R. Civ. P. 59(a). Our jurisdiction to consider these appeals 

arises under 28 u.s.c. § 1291. For the reasons set forth herein, 

we reject the parties' numerous contentions and affirm. 

Background 

In 1979, Glenn Beadle became the general manager of the Ampro 

Corporation. Ampro was engaged in purchasing fuel additives from 

Bell Laboratories and distributing them throughout the country via 

a network of independent sales representatives. In exchange for 

his services, Beadle received a salary plus 10% of Ampro's 

outstanding stock. Ampro's president, Johnny Brown, owned 80% of 

the corporation's stock while a group of individual investors 

owned the remaining 10%. 

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Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 4 
Increasing profitability eventually led Brown and Beadle to 

attorney Singleton for tax planning advice. Singleton advised 

Brown and Beadle to create and finance "satellite companies" to do 

business with Ampro, and consequently reduce Ampro's tax 

liability. The satellite companies consisted of Bear Prints which 

did printing for Ampro, B & B Investments which purchased real 

property and leased it to Ampro, B & B Computers which served 

Ampro's data processing needs, J & G Leasing which purchased 

automobiles and leased them to Ampro, and Athletic Club which 

provided recreational opportunities for Ampro's employees. 

In 1980, Singleton introduced Beadle to tax attorneys Kenneth 

Reiserer and Harry Margolis. The three attorneys recommended that 

Beadle establish foreign entities for the purpose of buying the 

fuel additives from Bell Labs. These foreign entities would then 

resell the additives to Ampro at higher prices so that Ampro would 

realize less profit on its sales, thus further reducing its 

domestic tax burden. The plan, in essence, provided for the 

deferral of income to Beadle and Brown by placing overseas much of 

what otherwise would have been taxable profit. In April 1981, 

Beadle and Brown agreed, among other things, to pay the attorneys 

20% of the net tax savings which resulted from the attorneys' tax 

planning advice. 

After settling a state court lawsuit by some minority 

investors' angered over Ampro's recent management strategy, 

attorneys Singleton and Reiserer reorganized Ampro and its 

satellite companies in 1981. At the attorneys' direction, Beadle 

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Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 5 
and Brown sold their interests in the satellite companies to Ampro 

at cost, and then sold their interests in Ampro to Sineuri, a 

corporation controlled by Margolis. Sineuri next sold Ampro to 

Dover Development, a corporation controlled by Singleton and 

Reiserer. Dover sold Ampro's operational assets to a new company, 

Brown Educational Corporation (BEC), but retained the satellite 

companies. The original Ampro was then liquidated and a new 

Ampro, controlled by BEC, received its operating assets. After 

the reorganization, Beadle, Brown, and six other investors each 

owned 12.5% of BEC. 

When Beadle finally sought to disassociate himself from 

Ampro, he requested that the attorneys return to him his accrued 

deferred income held overseas as well as his personal interest in 

the satellite companies he previously had sold to Dover at cost. 

Needless to say, Beadle recovered neither his interest in the 

satellite companies nor any income from overseas; and this lawsuit 

ensued. 

Appeal No. 88-2640 

At trial, the district court admitted into evidence pursuant 

to Fed. R. Evid. 803(8) portions of an IRS agent's revenue report 

which concluded that Ampro's tax planning scheme was a sham. Rule 

803(8) exempts from hearsay exclusion: 

Records, reports, statements, or data compilations, 

in any form, of public offices or agencies, setting 

forth ... (C) in civil actions and proceedings ... 

factual findings resulting from an investigation made 

pursuant to authority granted by law, unless the sources 

of information or other circumstances indicate a lack of 

trustworthiness. 

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Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 6 
Singleton complains that the report lacked trustworthiness because 

the reporting IRS agent was a low level official and thus the 

report did not necessarily reflect the views of the IRS. Maybe 

so; but this possibility alone is not enough for us to hold that 

the admission of the report into evidence was reversible error. 

Rule 803(8) "assumes admissibility in the first instance but with 

ample provision for escape if sufficient negative factors are 

present." Fed. R. Evid. 803(8) (28 App., Notes of Advisory 

Committee on Rules). Certainly the nature of the report is a 

factor to be considered in determining its admissibility. Id. 

Without more to indicate a complete lack of trustworthiness, 

however, we conclude that Singleton's argument was better 

addressed at trial to the weight rather than the admissibility of 

the report. We do not believe the district court abused its 

discretion in admitting the report. See Perrin v. Anderson, 784 

F.2d 1040, 1047 (10th Cir. 1986). 

Singleton next assigns error to the district court's 

submission of special interrogatories one and two to the jury as 

violative of the Oklahoma parol evidence rule and statute of 

frauds. Those interrogatories provided: 

Have plaintiffs established by a preponderance of the 

evidence that an oral agreement existed with the 

defendants concerning the return of deferred 

compensation monies allegedly placed in foreign bank 

accounts? 

Have plaintiffs established by a preponderance of the 

evidence that an oral agreement existed with the 

defendants concerning the return of plaintiffs' interest 

in the, quote-unquote, side or related entities? 

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Appellate Case: 88-2571 Document: 010110039605 Date Filed: 08/03/1990 Page: 7 
Rec. vol. VI at 150. We decline to address the substance of 

Singleton's second contention, however, because no timely 

objection to the interrogatories was interposed at trial. Id. at 

132, 139. That a litigant who agreed to the submission of a 

special interrogatory will not be heard to complain after the fact 

is well settled. ~-, Anderson v. Cryovac, Inc., 862 F.2d 910, 

918 (1st Cir. 1988). Our discussion of this principle in Wyoming 

Constr. v. Western Casualty and Sur., 275 F.2d 97 (10th Cir.), 

cert. denied, 362 U.S. 976 (1960), is applicable here: 

Error is predicated on the submission of two 

interrogatories to the jury in accordance with Rule 

49(b), F. R. Civ. P. The court advised the parties well 

in advance that it would submit these interrogatories. 

No objection was made. The verdict was consistent with 

the answers to the interrogatories. By failure to 

object, the parties have waived the right to protest 

now. 

Id. at 104. Accordingly, we reject Singleton's second contention. 

Singleton next complaint pertains to special interrogatory 

four which provided: "Did the plaintiffs assume the risk of going 

forward with the tax planning advice provided by defendants?" 

Rec. vol. VI at 151. The jury initially answered the fourth 

interrogatory "yes," but returned a verdict apportioning fault 

between the plaintiffs and defendants at 37.5% and 62.5% 

respectively. These responses occurred despite instruction 

nineteen which defined assumption of the risk and instructed the 

jury: "[I]f you find that the defendants have proven that the 

plaintiffs assumed the risk of injury then your verdict must be in 

favor of the defendants on plaintiffs' claim of negligence." 

Appellants/Cross-Appellees Answer/Reply Brief at exh. E. Upon 

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viewing the jury's responses to the special interrogatory and 

verdict form, the district court sent the following note to the 

jury: 

The Court has detected an inconsistency between your 

Verdict Form #3 and your answer to Special Interrogatory 

#4 regarding Assumption of Risk. My question is this: 

Since your answer to interrogatory #4 concerning 

assumption of risk was YES, why did you return a verdict 

in favor of plaintiffs? (See instruction #19) 

Id. at exh. B (emphasis in original). After deliberating a second 

time, the jury responded: "We the Jury were considering degree of 

risks of the parties involved and the answer to interrogatory #4 

should be no, based upon the answers that were given on Verdict 

Form #3." Id. Singleton objected to the jury's redeliberation 

arguing that because no inconsistency between the interrogatory 

and verdict form existed, he was entitled to judgment as a matter 

of law. Rec. vol. VI at 166. 

We believe the district court acted quite properly in finding 

a conflict between special interrogatory four and verdict form 

three. In view of instruction nineteen, the two were clearly 

inconsistent. See C. Wright & A. Miller, Federal Practice and 

Procedure§ 2510 at 516 (1971) (pleadings, instructions and issues 

submitted must all be considered in determining whether jury's 

findings are inconsistent). The district court had a duty to 

reconcile the inconsistent answers in order to preserve judicial 

resources and prevent a retrial. Fed. R. Civ. P. 49(b); Harvey v. 

General Motors Corp., 873 F.2d 1343, 1346-47 (10th Cir. 1989). We 

find no error in it so doing. 

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Finally, Singleton claims that the evidence of the Beadles' 

actual damages was insufficient to sustain the jury's award and he 

is entitled to judgment notwithstanding the jury's verdict. Fed. 

R. Civ. P. S0(b). While acknowledging that the Beadles' proof of 

damages was not overwhelming, we believe the evidence presented 

was sufficient for a reasonable jury to find by a preponderance of 

the evidence the damages assessed in favor of the Beadles. Glenn 

Beadle testified as to the amount of deferred compensation due him 

and his wife, rec. vol. IX at 160-61, and offered an exhibit in 

support thereof, Appellants/Cross-Appellees Answer/Reply Brief at 

exh. M. Accountant Steve Steakely and attorney Malcolm Hall each 

testified as to the value of the satellite companies which Beadle 

and Brown sold to Ampro at cost on the advice of their attorneys. 

Rec. vol. IV at 103-108; rec. vol.Vat 4-28. Reviewing the 

evidence and all reasonable inferences to be drawn from it in the 

light most favorable to the Beadles, Suggs v. State Farm Fire & 

Casualty Co., 833 F.2d 883, 887 (10th Cir. 1987), cert. denied, 

486 U.S. 1007 (1988), we hold that the district court properly 

denied Singleton's motion for judgment notwithstanding the 

verdict. 

Appeal No. 88-2571 

The Beadles likewise contest the district court's denial of 

their motion for judgment notwithstanding the verdict, arguing 

that the evidence does not support the jury's finding that they 

were 37.5% contributorily negligent. Okla. Stat. Ann. tit. 23, 

§§ 13 & 14 (West 1987) read: 

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S 13. Comparative negligence 

In all actions ... for ••. injury to property, 

contributory negligence shall not bar a recovery, unless 

any negligence of the person so injured ... is of 

greater degree than any negligence of the person ... 

causing such damage, or unless any negligence of the 

person so injured ... is of greater degree than the 

combined negligence of any persons . causing such 

damage. 

S 14. Damages diminished in proportion to 

contributory negligence 

Where such contributory negligence is shown on the 

part of the person injured ... the amount of the 

recovery shall be diminished in proportion to such 

person's contributory negligence. 

According to the Beadles, the defense of contributory negligence 

is unavailable as a matter of law in an Oklahoma legal malpractice 

action where a client does no more than follow the advice of an 

attorney. We reject this proposition outright 

At trial, Glenn Beadle testified that he had a degree in 

petroleum engineering from Texas A&M and a degree in business 

management from Lamar College. In addition to his education, 

Beadle had spent six years in the Air Force flying combat in 

Korea. After leaving the employ of Sun Oil Company in 1968, 

Beadle went to work for an international direct sales company, 

eventually heading the company's Australian operations. Rec. vol. 

VIII at 35-36. With his credentials and experience, Beadle was in 

no need of special protection when he undertook the management of 

Ampro in 1979. No client may play ostrich, hiding his head in the 

sand oblivious to the advice of his attorney no matter how 

erroneous that advice might be. The test for contributory 

negligence is not whether an individual blindly follows the advice 

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of an attorney, but "whether the [client's] conduct conforms to 

that of a reasonably prudent man in the protection of himself and, 

if not, whether it is a contributing cause to the injury." Thomas 

v. Holliday, 764 P.2d 165, 171 (Okla. 1988). 

In addition to Beadle's experience and credentials, evidence 

at trial revealed that before the tax plan was implemented, 

Beadle's attorney, John Claro, advised him to secure a second 

legal opinion on Singleton's proposal. Rec. vol. X at 38. The 

letter, received into evidence as Defendants' Exhibit 501 

concluded: "[Y]ou will not want to rely on the opinion given to 

you by Mr. Singleton and Reiserer as proof of your good 

intention. 113 Moreover, both Mr. & Mrs. Beadle and Johnny Brown at 

3 Beadle's assertion that Clara's letter was protected by the 

attorney-client privilege and thus improperly admitted into 

evidence is unpersuasive. In denying a motion for a protective 

order, the district court concluded: 

I find that ... [the letter] has not been 

maintained in a confidential fashion; it has been 

disclosed to an expert; it has been disclosed to another 

attorney; and indeed, it has been disclosed to the 

attorney who preceded Mr. Bourk [attorney for Kenneth 

Reiserer] as counsel of record in the related .Ampro 

case. 

I find that those actions, in and of themselves, 

voided the attorney/client relationship with regard to 

that communication. 

Rec. vol. II at 15. We agree with the district court. "A mere 

showing that the communication was from client to attorney does 

not suffice, but the circumstances indicating the intention of 

secrecy must appear." E. Cleary, McCormick on Evidence§ 91 at 

217 (3d ed. 1984). The Oklahoma Supreme Court has stated: 

Whether a communication is privileged from disclosure is 

for the trial judge to decide in light of a preliminary 

inquiry into the existence and validity of the 

privilege. The burden to establish the privileged 

status of testimony sought to be excluded rests on the 

party asserting it. The trial judge's ruling is 

conclusive in the absence of an abused discretion. 

(footnote continued on next page) 

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times expressed their reservation about the plan. Rec. vol. III 

at 9; rec. vol. VIII at 84. Given this evidence, we are not 

inclined to set aside the jury's finding that Beadle's actions 

were unreasonable and contributed to the injury. 

AFFIRMED. 

Entered for the Court 

Bobby R. Baldock 

Circuit Judge 

(footnote continued from previous page) 

Chandler v. Denton, 741 P.2d 855, 865 (Okla. 1987). In this 

instance, Beadle waived the privilege by permitting Claro to 

circulate the letter to third parties and the district court did 

not abuse its discretion in so holding. 

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