Court Opinion

ID: 27816
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:15:08+00
Date Added: 2024-06-11T15:38:56.152288
License: Public Domain

UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit

                          No. 00-10947

         STEWART RAHR, in his own right and in the right
             and on behalf of Continental Investment,

                                              Plaintiff-Appellee,

                             VERSUS

               RESCUE CAPITAL CORPORATION, ET AL.,

                                                      Defendants,

       MALCOLM M. KELSO, R. DALE STERRITT, JR., EDWARD W.
        ROUSH, JR., FRED ROYER, RICHARD D. STERRITT, SR.,
         LARRY STERRITT, STERRITT PROPERTIES, INC., and
                   20TH CENTURY HOLDINGS, INC.,

                                           Defendants-Appellants,

                             VERSUS

               CONTINENTAL INVESTMENT CORPORATION,

                                              Defendant-Appellee.

          Appeal from the United States District Court
               For the Northern District of Texas
                         (3:99-CV-628-G)
                          June 7, 2002

Before DUHÉ, DeMOSS, and CLEMENT, Circuit Judges.
PER CURIUM:*

                          I.   PROCEDURAL HISTORY

       This case involves a convoluted mix of facts and parties.

There is one plaintiff, Stewart Rahr (suing on his own behalf and

on behalf of Continental Investment Corporation), and five groups

of appealing defendants: (1) Dale Sterritt; (2) the “Sterritt

Group” (consisting of Dick Sterritt, Larry Sterritt, Sterritt

Properties, Inc. and 20th Century Holdings, Inc.); (3) Edward W.

Roush; (4) Fred Royer; and (5) Malcolm Kelso.1

       Rahr initially sued the defendants on October 9, 1998, in the

Eastern District of New York.        He alleged that various defendants

were   engaged   in   a   massive    fraudulent   enterprise   related   to

Continental Investment Corporation (CIC).         He sought to recoup the

approximately $12 million that he invested in CIC and lost as a

result of the defendants’ fraudulent activities.

       The suit was then moved by the defendants to a bankruptcy

court in Texas.       On May 18, 1999, it was transferred to the

Northern District of Texas.         CIC then intervened to assert claims

against the defendants.        When the case was finally tried in the

Northern District of Texas, the jury returned a unanimous verdict

  *
   Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
  1
    On March 19, 2001, this Court dismissed Kelso’s appeal pursuant
to the fugitive disentitlement doctrine. On September 17, 2000, we
reconsidered that decision and reinstated his appeal.

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for the plaintiffs against some of the defendants, and the District

Court accordingly entered judgment in their favor.          Some of those

defendants now appeal here.         Finding no error, we AFFIRM the

District Court’s judgment.

                           II.   THE FACTS

     CIC is a waste disposal company, which has been liquidated in

bankruptcy since the onset of this litigation.          Dale Sterritt was

CIC’s President and CEO.     Before 1998, Sterritt Properties, Inc.

was CIC’s largest shareholder.

     Rahr   met   Dale   Sterritt       in    1995.    Based     on   Dale’s

representations about CIC, Rahr began investing in the company and

continued to purchase stock in CIC through 1998.               In total, he

invested about $11.6 million, becoming CIC’s largest investor.           He

also made loans totaling $450,000 to Dale and a Sterritt-family-

owned company. Ultimately, his entire investment was lost, and the

loans were never repaid.

     At trial, the specifics of the various business ventures and

dealings at issue were discussed in great detail.                In brief,

according to the plaintiffs’ allegations, the defendants induced

investors to buy millions of dollars of CIC stock by “representing

that CIC’s immense quarry excavation in Atlanta was ideally suited

for use as a municipal landfill, and by promising that CIC was

about to be listed on the NASDAQ.”           Then, “[o]nce the investment

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dollars started pouring in, the Sterritts, Roush, and Royer used

[several] related corporations to siphon the money into their own

pockets, and used various illegal stock sales to raise even more

cash    for   themselves.”      According   to   Rahr,   the   defendants

accomplished their fraudulent scheme in part by using companies

that, while held out as unrelated to the Sterritts, were secretly

owned and controlled by them.

                         III.    ISSUES RAISED

       Five groups of defendants filed briefs here.       Each defendant

raised several issues, and some issues were raised by more than one

defendant.    In summary, the defendants challenge: (1) whether the

District Court abused its discretion by imposing sanctions against

the defendants who did not participate in the pre-trial order; (2)

whether the District Court abused its discretion by placing time

limitations on the parties during trial; (3) whether the defendants

are entitled to a new trial because the jury foreperson allegedly

engaged in misconduct; (4) whether the plaintiff, Stewart Rahr, had

standing to bring claims on CIC’s behalf; (5) whether the District

Court lacked jurisdiction to submit certain questions to the jury;

and (6) whether the District Court erred by issuing an All Writs

Act injunction requiring permission from the court for any party to

file bankruptcy or any related lawsuits in other jurisdictions. In

addition, the defendants raised numerous challenges related to the

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legal and factual sufficiency of the evidence.

                           IV.   CONCLUSION

     After   reviewing   the   voluminous   record   in   this   case   and

carefully considering the parties’ respective briefings, we find no

error on the part of the District Court with respect to those

issues not waived on appeal.     Accordingly, we AFFIRM the District

Court’s judgment.

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