Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-00761/USCOURTS-azd-2_14-cv-00761-11/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Western Alliance Bank, )

)

Plaintiff, ) 2:14-cv-0761 JWS

)

vs. ) ORDER AND OPINION

)

Richard Jefferson, ) [Re: Motion at docket 291] 

)

Defendant. )

)

)

Richard Jefferson, )

)

Counter-claimant, )

)

vs. )

)

Western Alliance Bank, )

)

Counter-defendant. )

)

)

Richard Jefferson, )

)

Third-party plaintiff, )

)

vs. )

)

Theodore Kritza & Michelle Lee )

Kritza, )

)

Third-party defendants. )

)

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 1 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. MOTION PRESENTED

At docket 291 Kritza moves for reconsideration of the court’s order at

docket 286, which resolved his motion in limine at docket 270. In pertinent part, Kritza’s

motion at docket 270 seeks an order pursuant to Fed. R. Evid. 402 and 403 barring

Jefferson from introducing evidence of certain damages that are listed in his

January 11, 2016 disclosure statement, and from introducing the schedules he attached

to his disclosure statement. Jefferson responds at docket 279, arguing that all of his

damages are relevant because they can be traced back to the LOC and that his

schedules are summary charts, admissible under Fed. R. Evid. 1006. At docket 286

the court ruled that it could not resolve these disputes because the copy of the

schedules then before the court was illegible.

Kritza submits a legible copy of the schedules with his motion for reconsideration

and asks the court to reach the merits of his arguments. The court reviewed these new

schedules and found them to be incomplete. At docket 298 the court ordered Kritza to

submit a complete, legible copy of the schedules. Kritza did so at docket 299. Oral

argument was requested, but would not assist the court.

II. STANDARD OF REVIEW

Under LRCiv 7.2(g), motions for reconsideration are usually denied “absent a

showing of manifest error or a showing of new facts or legal authority that could not

have been brought to [the court’s] attention earlier with reasonable diligence.” Courts in

this district grant such motions for various reasons, including that the moving party

made a convincing showing that the court failed to consider material facts that were

before the court at the time of the initial decision.1

 

1See, e.g., Best W. Int’l, Inc. v. AV Inn Associates 1, LLC, No. CV-08-2274-PHX-DGC,

2010 WL 2789895, at *1 (D. Ariz. July 14, 2010).

-2-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 2 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

III. DISCUSSION

Because the schedules contain material facts that were technically before the

court when it reached its previous decision, yet the court did not consider because they

were illegible, Kritza’s motion for reconsideration will be granted. The court will

reconsider, in turn, Kritza’s arguments to exclude (A) Jefferson’s evidence regarding

transfers from his personal bank accounts into two Stratosphere accounts; (B) evidence

of principal and interest payments made on the LOC from Jefferson’s personal bank

accounts; and (C) the schedules that Jefferson submitted with his disclosure statement.

A. Evidence Regarding the Transfers from Jefferson’s Personal Accounts Into

the Stratosphere Accounts Is Inadmissible

Jefferson’s damages disclosure states that Kritza has misappropriated

$9,881,404.83 in transfers from Jefferson’s four bank accounts (Nos. 0230, 2220, 2972,

and 4655) into two Stratosphere accounts (Nos. 1497 and 5451). 2 Kritza’s motion

seeks to preclude Jefferson from mentioning or pursuing these damages at trial

because they are not relevant to any claims alleged in this case and, alternatively, they

are unfairly prejudicial and would mislead and confuse the jury.

3

 

Although Jefferson responds that these $9.8 million in transfers are relevant

because they “relate to” the LOC, he fails to back this up with reliable evidence.4

 First,

Jefferson notes that Alliance’s responses to Kritza’s first set of non-uniform

interrogatories5 show that “Jefferson’s accounts ending in -0230, 2220, 2972 and 4655

2Doc. 270-3 at 3-4 ($4,424,000 from Account No. 0230 + $1,865,054.83 from Account

No. 4655 + $2,580,250 from Account No. 2972 + $1,012,100 from Account No. 2220 =

$9,881,404.83).

3Doc. 270 at 8-9 n.1.

4Doc. 279 at 8. See also Jefferson’s Supplemental Responses to Kritza’s Non-Uniform

Interrogatories, doc. 270-2 at 4-5, 14; Jefferson’s Supplemental Rule 26(a)(1) disclosure,

doc. 270-3 at 3-4.

5Doc. 279-7 at 5-7.

-3-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 3 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

were all utilized by Kritza to transfer amounts relating the to the subject lines of credit.”6

This evidence is weak because it merely shows that LOC funds were transferred into

Jefferson’s personal accounts. Based on this evidence, it is possible that the funds

transferred from Jefferson’s accounts contained LOC funds, but it is equally possible

that the transfers came from other sources, such as Jefferson’s salary. 

Second, Jefferson cites the schedules he attached to his disclosure statement,

but they suffer the same defect. The schedules merely list the disputed transfers

alongside contemporaneous LOC activity. It appears that the only thing that connects

the transfers to the LOC is the fact that they occurred at the same time that the LOC

was open.7

 Jefferson cannot explain how this evidence might lead a jury to reasonably

conclude that the transfers contained LOC funds.

Jefferson’s argument is made even less tenable by the fact that the transfers

certainly contain non-LOC funds. His schedules8 and Alliance’s responses to Kritza’s

first set of non-uniform interrogatories9 show that only $2,596.683.16 were advanced

from the LOC in total. Jefferson is claiming that Kritza stole $9.8 million from a funding

stream that contained, at most, $2.5 million. This is not mathematically possible.

In this action Jefferson made the strategic choice to allege that Kritza

misappropriated the LOC funds, but no others. This limits the damages that Jefferson

can recover to those that can be traced back to the LOC. And it is f atal to his attempt to

recover damages for funds that were transferred from his four personal bank accounts

because he lacks reliable evidence that traces those funds back to the LOC. 

6Doc. 279 at 8.

7See, e.g., doc. 270-2 at 14 (stating that the transfers listed occurred “during [the] period

of” the LOC account).

8Doc. 299-1 at 13.

9Doc. 279-7 at 5-7.

-4-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 4 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The court recognizes the difficulties inherent in tracing commingled funds to their

sources. If Jefferson had expert opinion evidence from a forensic accountant, he might

be able to establish the necessary link with respect to some (but not all) of the disputed

transfers. But without such evidence, Jefferson can only establish that the disputed

transfers occurred “during the period of” the LOC.10

 This would be an extremely thin

reed upon which to base a finding that any of the transfers included LOC funds. The

slight probative value of Jefferson’s evidence is substantially outweighed by the risk of

confusing the issues, wasting time, and misleading the jury.

11

 Kritza’s motion will be

granted, and Jefferson’s evidence regarding the transfers will be excluded.

B. Interest Payments Are Relevant, Principal Payments Are Not

Kritza next attacks Jefferson’s attempt to recover the principal and interest

payments that were made on the LOC from Jefferson’s personal accounts. Kritza

argues broadly that Jefferson should be barred from introducing any “evidence or

argument at trial related to monies allegedly taken from accounts other than the

Alliance LOC.”12 In response, Jefferson does not offer any explanation as to why the

principal and interest payments qualify as damages.13

Despite Jefferson’s lackluster defense of his claimed damages, the court finds

that Kritza goes too far in asserting that Jefferson’s damages are limited to the funds

advanced from the LOC. Under Jefferson’s theory of the case, Kritza extended the

LOC without Jefferson’s authorization. If the jury accepts this theory, it could

reasonably include in Jefferson’s damages calculation the interest charges he incurred

as a result. 

10Doc. 270-2 at 4.

11Fed. R. Evid. 403.

12Doc. 270 at 8-9.

13See doc. 279 at 8.

-5-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 5 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Principal payments are different. Debits made for principal payments are offset

by corresponding credits. The net result is a wash. For example, if Kritza causes the

bank to lend Jefferson $1 million and Kritza then uses Jefferson’s funds to repay that

$1 million to the bank, plus interest, the $1 million principal payment would not qualify

as damages because it corresponded with an earlier $1 million credit. Because

Jefferson has not offered any explanation for why the principal payments are relevant to

his damages, Jefferson’s evidence of those payments will be excluded at trial. 

C. Jefferson’s Schedules

Finally, Kritza seeks to preclude Jefferson from using his schedules at trial

because it is unclear who created them, and laying a foundation for their admission will

require expert witness testimony that Jefferson cannot provide.14 Jefferson responds

that his schedules qualify as “summary charts” under Fed. R. Evid. 1006. This rule

allows the proponent to use a chart at trial to prove the content of voluminous writings

that cannot be conveniently examined in court.15

Jefferson does not identify the individual or individuals who prepared the

schedules. But he does argue that the schedules can be authenticated by “multiple lay

witnesses, including Alliance Bank employees, Kritza, Keyser, Tucciarone, and

Jefferson himself” because they did not require specialized knowledge to create.16

Jefferson is wrong. His schedules cannot be authenticated by anyone who knows how

to read bank statements. They must be authenticated by the person who created them,

or at least someone with firsthand knowledge of how they were created.17 Without such

14Kritza also argues that the schedules should be precluded because they were not

timely disclosed. The court’s previous order rejected this argument.

15Fed. R. Evid. 1006.

16Doc. 279 at 9.

17See 31 VICTOR JAMES GOLD, FED. PRAC. & PROC. EVID. § 8043 (1st ed. 2016)

(“Testimony from the person who prepared the summary evidence usually is required to

establish [the] foundational facts necessary to relevance and authentication. But in some

-6-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 6 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

testimony, it would be impossible for Jefferson to prove that the schedules summarize

what he says they do.

Kritza argues that expert witness testimony is required to authenticate the

schedules because “[s]omeone will need to explain why there these [sic] $9 million in

transactions were picked out of the supposed $40 million in income that ran through

Jefferson’s accounts.”18 Kritza asserts that “[l]aying this foundation requires specialized

testimony—specifically, an explanation of how Jefferson’s damages were calculated.”19

This argument regarding the transfers discussed above is moot in light of the court’s

ruling today. The remainder of the schedules appears to be a summary of LOC

account activity compiled from bank statements. Kritza has not shown that it would

require specialized knowledge to compile such a summary.

Provided that Jefferson can authenticate the schedules at trial using lay witness

testimony, the schedules may be admissible under Rule 1006 as summary charts. 

However, Jefferson must redact from the schedules any reference to the inadmissible

transfers discussed in this order and any data generated by expert analysis. Thus, the

schedules may summarize voluminous bank statements, but may not contain expert

conclusions about the data.

IV. CONCLUSION

Based on the preceding discussion, Kritza’s motion at docket 291 is granted in

part and denied in part. Upon reconsideration of the court’s order at docket 286, the

court grants Kritza’s motion at docket 270 as to Jefferson’s evidence regarding funds

that were transferred from four of his bank accounts into two Stratosphere accounts, his

evidence regarding funds that were used to make principal payments on the LOC, and

instances other witnesses also may have sufficient personal knowledge to testify to these

facts.”).

18Doc. 270 at 14.

19

Id.

-7-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 7 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the schedules that he attached to his January 11 disclosure statement. If Jefferson

wishes to use charts at trial to summarize voluminous bank records, the charts must

comply with the limitations discussed above and must be served on Kritza within 21

days. Kritza’s motion is denied in all other respects. 

DATED this 30th day of August 2016.

/s/ JOHN W. SEDWICK

SENIOR JUDGE, UNITED STATES DISTRICT COURT

-8-

Case 2:14-cv-00761-JWS Document 307 Filed 08/30/16 Page 8 of 8