Opinion ID: 2686105
Heading Depth: 3
Heading Rank: 2

Heading: The settlement agreement recital

Text: TD Bank’s main defense at trial was that Coquina had waived its claims because its investors had actual or constructive knowledge that Rothstein’s venture was fraudulent and yet continued to invest. Rothstein’s “investments” promised returns of, for example, 37.5 percent in three months and 50 percent in four months 23 Case: 12-11161 Date Filed: 07/29/2014 Page: 24 of 41 with little risk.14 TD Bank argued to the jury that Coquina’s investors were sophisticated investors who should have known that the investment terms were simply “too good to be true.” Over TD Bank’s objection, the district court admitted into evidence the settlement agreement between Coquina and the Trustee. The agreement stated in pertinent part: [A]s a material inducement to entering into this Settlement, Coquina and its counsel have represented to the Trustee and his counsel that neither Coquina, nor its partners, [nor] investors . . . had any knowledge of the Rothstein Ponzi scheme . . . and that, as of the date of this Settlement Agreement, the Trustee has no knowledge to the contrary nor any indication of Coquina’s knowledge of or complicity in or with the Rothstein Ponzi scheme. TD Bank asked the district court to redact this recital from the copy of the settlement agreement shown to the jury, arguing that it constituted inadmissible hearsay and was unfairly prejudicial, but the district court declined. Coquina does not dispute on appeal that the recital was inadmissible hearsay but contends that its admission was harmless. We do not doubt that the recital had some prejudicial effect on TD Bank’s defense. At the end of its rebuttal at closing, Coquina’s counsel stated that TD Bank was asking the jury to believe that Coquina should have known about Rothstein’s scheme. Coquina’s counsel then said: 14 According to TD Bank, the annualized rate of return for these “investments” ranged from 93.8 to 600 percent. 24 Case: 12-11161 Date Filed: 07/29/2014 Page: 25 of 41 [I]f you look at the settlement agreement, you will see that . . . there is a denial that we had any knowledge of the Ponzi scheme in that document[,] and the settlement agreement that was entered into with the [T]rustee and approved by the bankruptcy court says that the [T]rustee had no knowledge or any indication of Coquina’s knowledge of or complicity in or with the Rothstein Ponzi scheme. This remark was one of the last things the jury heard before deliberating and called to the jury’s attention the fact that, as part of the settlement with the Trustee, Coquina denied knowledge of the Ponzi scheme and the Trustee professed no knowledge or indication that Coquina’s denial was untrue. Some prejudice alone, however, does not require a new trial; “a new trial is warranted only where the [evidentiary] error has caused substantial prejudice to the affected party.” Peat, 378 F.3d at 1162. To determine if improperly admitted evidence has caused “substantial prejudice,” we look to, inter alia, the persuasive weight of the inadmissible evidence and the overall strength of the other evidence on the issues affected. See id. Several reasons persuade us in this case that this error did not cause substantial prejudice to TD Bank. First, the recital contained merely an inference of innocence. The recital simply stated what Coquina had “represented to” the Trustee and what the Trustee professed to know at the time of the settlement agreement. It was only sparsely mentioned during the trial—just an isolated, albeit well-timed, reference toward the end of a two-hour closing argument. And it was patently self-serving on the part of both Coquina and the Trustee. We therefore do not believe that the recital 25 Case: 12-11161 Date Filed: 07/29/2014 Page: 26 of 41 was likely to carry great weight with the jury, which heard mountains of evidence over a two-month period. Second, the jury was expressly charged that argument of counsel is not evidence. The district court instructed the jury that “anything the lawyers say is not evidence in th[is] case” and that it is the jury’s “own recollection and interpretation of the evidence that controls.” Finally, and most significantly, Coquina presented considerable other evidence that countered TD Bank’s “too good to be true” defense. Coquina established that Rothstein’s Ponzi scheme involved hundreds of victim investors, and it argued to the jury that “[y]ou can’t have a fraud of that scope . . . and in the same breath call [the fraud] obvious.” Coquina also introduced evidence showing that TD Bank knew about the terms of the “investments” that Rothstein offered, including annualized returns ranging from 200 to 500 percent. Coquina insisted to the jury that TD Bank could not have it both ways—it could not simultaneously argue that Coquina should have known the investment terms were “too good to be true” and that TD Bank had no reason to be suspicious of the same investments. Furthermore, Coquina introduced evidence demonstrating that it diligently investigated Rothstein’s venture before investing. Coquina’s investors testified that they sought confirmation from TD Bank on multiple occasions about the settlement money that Rothstein claimed was in a TD Bank trust account and about 26 Case: 12-11161 Date Filed: 07/29/2014 Page: 27 of 41 the restrictions placed on Rothstein’s ability to transfer money out of that account. Coquina presented evidence and argued to the jury that its investors had no reason to believe that the TD Bank employee with whom they spoke, Spinosa, was not telling the truth. Spinosa was, after all, TD Bank’s regional vice president. Thus, after hearing Spinosa’s assurances, the investors had no reason to be suspicious about the investments that Rothstein offered. In light of the foregoing, we find that sufficient evidence untainted by any error supports the verdict and that the error therefore did not substantially influence the outcome of the case. Cf. Sovereign Military Hospitaller Order of Saint John of Jerusalem of Rhodes & of Malta v. Fla. Priory of the Knights Hospitallers of the Sovereign Order of Saint John of Jerusalem, Knights of Malta, the Ecumenical Order, 702 F.3d 1279, 1295–96 (11th Cir. 2012). We therefore conclude that, while the district court erred, such error does not warrant a new trial.