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26 ORDER DENYING MOTION FOR JUDGMENT

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

MIKE KREIDLER, 

Plaintiff,

v.

DANNY L. PIXLER, et al.,

Defendants.

Case No. C06-0697RSL

ORDER DENYING MOTION FOR

JUDGMENT AS A MATTER OF

LAW OR FOR A NEW TRIAL

I. INTRODUCTION

This matter comes before the Court on a motion for judgment as a matter of law or,

alternatively, for a new trial filed by defendants Anthony Huff, Sheri Huff, and Midwest

Merger Management, LLC (collectively, “defendants”). For the reasons set forth below,

the Court denies defendants’ motion.

II. DISCUSSION

On May 3, 2010, a jury trial commenced in this matter. On May 21, 2010,

following deliberations, the jury rendered its verdict. (Dkt. #348). The jury found that

defendant Midwest Merger Management, LLC (“Midwest”) breached a contract with

plaintiff and awarded $3,348,140 in damages on that claim. 

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The jury found defendants Anthony Huff and Danny Pixler liable for negligent

misrepresentation and for fraud and awarded damages of $19,310,744 on those claims. 

The jury awarded the same amount of damages for plaintiff’s civil conspiracy and

Consumer Protection Act (“CPA”) claims, for which it found all defendants liable. The

jury further found that Anthony and Sheri Huff and Midwest were liable for violations of

the Criminal Profiteering Act and awarded plaintiff damages of $820,900 for that claim. 

The jury also found that Danny Pixler, Anthony Huff, and Midwest were liable for

misappropriation and awarded plaintiff $3,348,140 in damages on that claim. 

During the trial, the moving defendants orally moved for judgment as a matter of

law and for a directed verdict. The Court denied the motion. Although defendant Danny

Pixler also moved for judgment as a matter of law during the trial, he has not joined in

this motion, nor has he filed a renewed motion.

A. Judgment As a Matter of Law.

The Court may enter judgment as a matter of law under Federal Rule of Civil

Procedure 50 “[i]f a party has been fully heard on an issue during a jury trial and the

Court finds that a reasonable jury would not have a legally sufficient evidentiary basis to

find for the party on that issue . . . .” Fed. R. Civ. P. 50(a)(1). As in this case, when the

Court denies the motion during trial, a party may renew the motion after trial. In ruling

on the renewed motion, the Court may “(1) allow judgment on the verdict, if the jury

returned a verdict, (2) order a new trial, or (3) direct the entry of judgment as a matter of

law.” Fed. R. Civ. P. 50(b).

“‘Judgment as a matter of law is proper if the evidence, construed in the light most

favorable to the nonmoving party, permits only one reasonable conclusion, and that

conclusion is contrary to the jury’s.’” McEuin v. Crown Equip. Corp., 328 F.3d 1028,

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1036 (9th Cir. 2003) (quoting Scott v. Ross, 140 F.3d 1275, 1281 (9th Cir. 1998)). “A

motion for judgment as a matter of law should be granted only if the verdict is “‘against

the great weight of the evidence, or it is quite clear that the jury has reached a seriously

erroneous result.’” Id. (quoting EEOC v. Pape Lift, Inc., 115 F.3d 676, 680 (9th Cir.

1997)).

1. Alleged Inconsistency in the Verdict Regarding Sheri Huff.

The moving defendants argue that a new trial is warranted because the jury’s

responses to questions in the special verdict form were inconsistent. Specifically, they

argue that there is a “fatal inconsistency between the jury’s exoneration of Sheri Huff for

misappropriation or diversion of any of Cascade’s funds on the one hand and the jury’s

finding of liability against Sheri Huff for civil conspiracy and violation of Washington’s

Criminal Profiteering Act . . . on the other.” Motion at p. 2. Although a new trial must be

granted if a jury’s answers to special interrogatories cannot be reconciled, courts “do not

find inconsistency lightly.” Norris v. Sysco Corp., 191 F.3d 1043, 1048 (9th Cir. 1999). 

Rather,

We are bound to find the special verdicts consistent if we can do so under a fair

reading of them. When faced with a claim that verdicts are inconsistent, the court

must search for a reasonable way to read the verdicts as expressing a coherent

view of the case, and must exhaust this effort before it is free to disregard the

jury’s verdict and remand the case for a new trial.

Id. (quoting Toner v. Lederle Labs., 828 F.2d 510, 512 (9th Cir. 1987)). Defendants

contend that the jury did not find Sheri Huff liable for misappropriation of funds

belonging to Cascade, which is inconsistent with the finding that she engaged in civil

conspiracy and criminal profiteering. However, plaintiff asserted that Sheri Huff engaged

in the conspiracy in numerous ways, including enabling and assisting Anthony Huff in

participating in the business of insurance in violation of federal law, an allegation which

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did not require any evidence of misappropriation. Although the criminal profiteering

claim was premised on theft, the jury’s findings were not inconsistent. In answering the

special verdict form, the jury found Danny Pixler, Anthony Huff, and Midwest liable for

misappropriation of premiums in the amount of $3,348,140, which is the exact amount

due as the “Deductible Premium” as reflected in one of plaintiff’s exhibits. Therefore, the

jury could have, and apparently did, find that Sheri Huff did not misappropriate the

deductible premium, but engaged in theft regarding other sums belonging to Cascade. In

fact, the jury awarded plaintiff over $19 million in damages, so it found that Cascade was

damaged in excess of the misappropriation damages. The jury also awarded $820,900

against Anthony Huff, Sheri Huff, and Midwest for the criminal profiteering claim,

highlighting that they believed that those damages were distinct from the

misappropriation damages. The jury’s findings can be reconciled and are therefore not

inconsistent.

2. Sufficiency of the Evidence Against Sheri Huff.

Defendants contend that there was insufficient evidence presented for the jury to

find against Sheri Huff on any of plaintiff’s claims against her. However, there was

sufficient evidence adduced at trial to support the allegation that Sheri Huff engaged in

criminal profiteering. Specifically, there was credible testimony from Michelle Brown, as

well as documentary evidence, that Ms. Huff took substantial funds from Midwest for her

own personal use. Plaintiff’s expert Paul Sutphen testified that funds due to Cascade

were diverted and used for personal purposes. That evidence also supports the civil

conspiracy and CPA claims. Those claims are further supported by the evidence

presented that Sheri Huff participated in concealing Anthony Huff’s ownership and

control of Midwest, which facilitated Midwest’s participation in an insurance matter and

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1

 It was undisputed that Anthony Huff could not participate in the insurance matter

because of his prior felony conviction.

ORDER DENYING MOTION FOR JUDGMENT

AS A MATTER OF LAW OR FOR A NEW TRIAL - 5

led to Cascade’s losses.1 Ms. Huff permitted Mr. Huff to use her name as a substantial

owner of Midwest, even though she had no knowledge of or real responsibility for its

business affairs, for her own financial gain. That evidence provided a legally sufficient

basis for the jury to find in plaintiff’s failure and against Sheri Huff.

3. Sufficiency of the Evidence Against Anthony Huff and Midwest.

The moving defendants contend that judgment as a matter of law in their favor is

warranted because of a lack of proof to support plaintiff’s claims against Anthony Huff

and Midwest. Defendants contend that there is no evidence that their actions damaged

plaintiff to support the CPA claim. However, the jury found Anthony Huff and Midwest

liable for misappropriation of premiums due to Cascade. Because the misappropriation

occurred in the context of an insurance matter, that finding is sufficient to show that

defendants’ actions damaged Cascade for purposes of the CPA claim.

Regarding plaintiff’s claims for fraud and negligent misrepresentation, defendants

argue that Cascade and Anderson knew about Huff’s involvement before consummating

the workers’ compensation transaction. The evidence on which defendants rely shows

that John Ference, the Chief Underwriting Officer at Cascade, was aware that Huff had a

“proceeding” against him a month or two prior to the inception of the program. Trial

Transcript at pp. 77-78. When he learned that information, he reported it to Anderson,

who believed that Huff had not been convicted. Id. at p. 78. That testimony, however,

does not show that Cascade was aware of the extent of Huff’s involvement. Defendants

also argue that they had no duty to disclose the extent of Huff’s involvement, that Huff

had been charged and convicted of diversion of insurance premiums, and that he had his

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insurance license revoked for misconduct. They further contend that Cascade could have

learned of those facts. However, in ruling on the parties’ cross motions for summary

judgment, the Court held that defendants had a duty to disclose Huff’s involvement in the

transaction. (Dkt. #196 at p. 12). That ruling is the law of the case. It is undisputed that

defendants did not disclose Huff’s involvement or his criminal conviction before the

workers’ compensation program began. During trial, there was ample evidence that

Anthony Huff and Midwest actively concealed Huff’s role in the transaction, including

placing ownership of Midwest in Ms. Huff’s, Ms. Pixler’s, and Ms. Brown’s names. 

Rather than disclosing his conviction, Huff told Anderson that his criminal charges would

be expunged by the end of the year. Anderson Trial Testimony at p. 46; Trial Exhibit 59

(guilty plea). Based on that evidence, the jury was entitled to conclude that Huff failed to

disclose and concealed his involvement and conviction to induce Cascade into the

workers’ compensation transaction. See Restatement (Second) of Torts, § 551. 

In addition to the failure to disclose and concealment, the jury was entitled to find

that Huff affirmatively misrepresented that Cascade would continue to receive all funds

due. When Anderson expressed concern about the payments, Huff reassured him that he

had “funds available” and would “stand behind our obligations.” Anderson Trial

Testimony at p. 49. Huff reiterated his assurances in October 2004 when Anderson

expressed concern that the reserves were not being paid on time. Id. at p. 55. Although

defendants contend that there is no evidence that Anderson relied on Huff’s assurances,

Anderson testified that he believed Huff. Id. at pp. 47, 123. Therefore, there was

sufficient evidence to support the jury’s findings.

Defendants also contend that plaintiff failed to present sufficient evidence

regarding his claims for civil conspiracy, misappropriation, and criminal profiteering

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26 ORDER DENYING MOTION FOR JUDGMENT

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against Anthony Huff and Midwest. As set forth above, plaintiff’s expert Paul Sutphen

testified, unrebutted, that funds meant for Cascade were diverted. The moving defendants

attempt to discredit his testimony by arguing that Mr. Sutphen was unable to opine

regarding the exact amount of funds diverted. That inability, however, was solely due to

the co-mingling of funds and the improper manner defendants used to maintain their

business records. They should not be permitted to escape liability because they made it

impossible to trace every dollar. Moreover, plaintiff ample presented testimony and

documents to show the amount of damages. 

The moving defendants also attempt to discredit Mr. Sutphen’s testimony by

arguing that he did not review ASRC’s records. They did not present their own expert,

however, to rebut or discredit Mr. Sutphen’s testimony. Moreover, the evidence showed

that all of the workers’ compensation payments, including those from ASRC, were paid

over to Midwest. Trial Testimony of Thomas Cunningham at pp. 59 (explaining that “all

the dollars were paid to Midwest”), 60-61, 64, 101 (stating, “all of the workers’ comp

dollars were . . . sent over to Midwest.”), 128-130, 133, 136, 144; see also Trial Exhibit

100; Trial Testimony of Thomas Bean at pp. 69-70, 144-45. In light of that unrebutted

testimony, there was no need for Mr. Sutphen to review ASRC’s records to further

confirm that all monies were paid over to Midwest. Therefore, there was ample evidence

of the diversion of funds to support the claims for criminal profiteering, civil conspiracy,

violation of the CPA, and misappropriation.

4. The Risk Allocation Agreement.

Defendants contend that the judgment against Midwest for breach of the risk

allocation agreement must be reversed as a matter of law because the jury’s finding was

unsupported and because the issue was one for the Court, not the jury. Even if the Court

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26 ORDER DENYING MOTION FOR JUDGMENT

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were required to decide the issue, it would have found, as the jury did, that Cascade was a

third party beneficiary of the risk allocation agreement. The RAA provides,

Midwest shall assume all responsibility for workplace accidents that occur during

the term of this Agreement. Specifically, Midwest shall (i) utilize its more stable

and established business assets to retain and service such Workers Compensation

Insurance coverage as Midwest deems reasonable and prudent at its sole cost and

expense . . . .

The parties agreed that the RAA would be construed pursuant to the laws of New York. 

Pursuant to the RAA, Midwest was responsible for providing a workers’ compensation

program and making payments thereunder. The employers/clients made their workers’

compensation payments to ASRC. The premiums were deposited into a consolidated

bank account of Certified and were all paid to Midwest. Midwest was responsible for

making payments directly to Cascade and did so to some extent.

New York has adopted the Restatement (Second) of Contracts, Section 302,

approach to determine whether an entity is a third-party beneficiary. Section 302

distinguishes between an “intended” and an “incidental” beneficiary as follows:

(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a

promise is an intended beneficiary if recognition of a right to performance in the

beneficiary is appropriate to effectuate the intention of the parties and either 

(a) the performance of the promise will satisfy an obligation of the promisee to pay

money to the beneficiary; or 

(b) the circumstances indicate that the promisee intends to give the beneficiary the

benefit of the promised performance. 

(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.

Septemberide Publ’g, B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989)

(quoting Section 302). Plaintiff argues that the parties intended for the RAA to benefit

Cascade because Midwest was required to pay for workers’ compensation coverage and

Cascade ultimately provided that coverage. Under New York law, “[w]here performance

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is to be rendered directly to a third party under the terms of an agreement, that party must

be considered an intended beneficiary.” Cauble v. Mabon Nugent & Co., 594 F. Supp.

985, 991 (S.D.N.Y. 1984). In this case, although the RAA states that it is “binding upon

and shall inure to the benefit of the Parties hereto and their respective successors and

assigns,” RAA at § 13, it does not disclaim an intent to benefit third parties. Instead, it

states that Midwest would be responsible for paying for the coverage, and Cascade was

the intended recipient of those payments. The fact that Cascade was not named in the

agreement is not dispositive. See, e.g., Flickinger v. Harold C. Brown & Co., Inc., 947

F.2d 595, 600 (2d Cir. 1991) (finding that a client was a third party beneficiary of an

agreement to provide services for unnamed clients). In fact, in Newman & Schwartz v.

Asplundh Tree Expert Co., Inc., 102 F.3d 660, 662-663 (2d Cir. 1996), the court found

that a law firm, though unnamed in the relevant contract, was a third party beneficiary of

an agreement to pay for legal services. Similarly, in this case, Cascade is a third party

beneficiary of the agreement to pay the workers’ compensation premiums. Therefore,

even if the issue was one for the Court, the Court finds, as the jury correctly did, that

Cascade was a third party beneficiary of the RAA.

B. New Trial Under Rule 59.

Pursuant to Federal Rule of Civil Procedure 59, “The court may, on motion, grant

a new trial on all or some of the issues – and to any party . . . after a jury trial, for any

reason for which a new trial has heretofore been granted in an action at law in federal

court.” Fed. R. Civ. P. 59(a)(1)(A). Following the rule, a trial court “is bound by those

grounds that have been historically recognized. Historically recognized grounds include,

but are not limited to, claims that the verdict is against the weight of the evidence, that the

damages are excessive, or that, for other reasons, the trial was not fair to the moving

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party.” Molski v. M.F. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (internal citation

and quotation omitted). “The trial court may grant a new trial only if the verdict is

contrary to the clear weight of the evidence, is based upon false or perjurious evidence, or

to prevent a miscarriage of justice.” Passantino v. Johnson & Johnson Consumer Prods.,

212 F.3d 493, 510 n.15 (9th Cir. 2000). 

The moving defendants contend that a new trial is warranted because the

instructions and verdict form produced an inconsistent verdict as to Sheri Huff. As set

forth above, the findings were not inconsistent, so that issue does not support a new trial. 

The moving defendants also contend that a new trial is warranted because the

instructions regarding civil conspiracy and criminal profiteering improperly failed to

instruct the jury as to the underlying acts of the conspiracy and to request a finding as to

whether defendants committed those acts. The Court, however, gave instructions and a

special verdict form that were substantively identical to those proposed by defendants. 

Defendants never requested or proposed an instruction or a verdict form that included a

request for a specific finding regarding the predicate acts. Moreover, the instructions

accurately stated the law, included the required elements, and where necessary, provided

definitions of key terms such as “criminal profiteering.” See Instruction Nos. 26, 27

(Criminal Profiteering) and Instruction No. 31 (Civil Conspiracy). The instructions also

stated that a civil conspiracy requires proof “that two or more people or entities conspired

to accomplish an unlawful purpose, or to accomplish a lawful purpose by unlawful

means.” The instructions also defined “theft” and participating in the business of

insurance, unlawful acts that were consistent with plaintiff’s theory of the case. Based on

those clear instructions and unlike in the case on which defendants rely, the jury was not

free to find a conspiracy based “on acts with which they disagreed, whether unlawful or

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26 ORDER DENYING MOTION FOR JUDGMENT

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not.” Banc One Capital Partners Corp., 67 F.3d 1187, 1196 (5th Cir. 1995) (cited in

Defendants’ Motion at p. 26). 

Defendants also argue that the instructions and special verdict form “simply asked

the jury to find whether or not Cascade is entitled to damages for breach of the [RAA]

without requesting that the jury first find that Cascade was indeed a third-party

beneficiary of the RAA under New York law.” Motion at p. 28. Contrary to defendants’

assertion, the instructions and verdict form did not simply assume that Cascade was a

third party beneficiary. Rather, Instruction No. 18 specifically stated that plaintiff must

prove “each of the following propositions,” which included that Cascade was a third party

beneficiary as defined in Instruction No. 19 on the following page. Therefore, the jury

was explicitly instructed to consider whether Cascade was a third party beneficiary.

Finally, the moving defendants contend that Instruction No. 30 (“Participating in

the Business of Insurance”) “lead the jury to base its verdict on passion and prejudice –

particularly as to Anthony Huff, who was found liable in this case solely due to his status

as a previously convicted felon – rather than the facts of this case . . . .” Motion at p. 4. 

Defendants have not presented any evidence, and there is none, to show that the jury

based its verdict on passion and prejudice rather than on the evidence presented as they

were instructed. Although defendants contend that the instruction improperly references

“the law” but fails to cite it, they have not shown that such a citation is required. More

fundamentally, they successfully argued for the removal of the applicable law from the

instruction, so they cannot now claim prejudice based on their own decision. 

Accordingly, a new trial is not warranted.

III. CONCLUSION

For all of the reasons set forth above, defendants’ motion for judgment as a matter

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of law or for a new trial (Dkt. #388) is DENIED.

DATED this 3rd day of January, 2011.

A

Robert S. Lasnik

United States District Judge

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