Court Opinion

ID: 4350300
Source: CourtListenerOpinion
Date Created: 2018-12-13 18:01:30.322682+00
Date Added: 2024-06-11T14:30:15.014754
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 18a0618n.06

                                        No. 18-3324

                        UNITED STATES COURT OF APPEALS
                             FOR THE SIXTH CIRCUIT

 PNC     EQUIPMENT     FINANCE,              )
 successor by merger on behalf of            )                    FILED
 PNCEF, LLC formerly known as                )               Dec 13, 2018
 National City Commercial Capital            )           DEBORAH S. HUNT, Clerk
 Company, LLC, formerly known as             )
 National City Commercial Capital            )
 Corporation,                                )
                                             )    ON APPEAL FROM THE UNITED
        Plaintiff-Appellee,
                                             )    STATES DISTRICT COURT FOR
        v.                                   )    THE SOUTHERN DISTIRCT OF
                                             )    OHIO
 MARK MARIANI,                               )
                                             )
        Defendant,                           )
                                             )
 HARRY CARR,                                 )
        Defendant-Appellant.                 )

BEFORE:       CLAY, McKEAGUE, and BUSH, Circuit Judges.

       CLAY, Circuit Judge. Harry Carr (“Carr”) appeals the decision of the district court to

grant the Motion for Summary Judgment (“Motion”) filed by Plaintiff PNC Equipment Finance,

LLC (“PNCEF”) and to deny Carr’s Motion to Amend, Stay, or Vacate the district judge’s order

(“Post-Judgment Motion”).
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

                                  STATEMENT OF FACTS

        A.     Factual History

        Carr is an attorney and a sophisticated businessman.1 In 2013, Carr and Mark Mariani,

another sophisticated businessman,2 formed HM, LLC (“HM”) for the purpose of purchasing

aircraft.

        HM purchased five airplanes and a helicopter. Each purchase was financed. In December

2005, PNCEF, as lender, and HM, as borrower, entered into a “Master Aircraft Mortgage and

Security Agreement” (“Mortgage Agreement”). HM delivered a promissory note for $35,000,000.

Carr and his business partner guaranteed the note and promised to perform all of HM’s obligations

to PNCEF under the Mortgage Agreement and related documents. The parties subsequently

modified the Mortgage Agreement on several occasions over the next five years. These

modifications extended the maturity date to January 15, 2010.

        When the loans matured, the outstanding balance of $40,900,000 became immediately due.

HM failed to remit the amount owed. On February 9, 2010, PNCEF sent HM and the guarantors a

notice of default and demanded immediate payment. Neither HM nor the guarantors repaid the

balance owed. On August 20, 2010, PNCEF demanded immediate surrender of the aircraft. In

September 2010, HM sold one of its aircraft and remitted $8,000,000 from the sale proceeds to

PNCEF. But HM did not surrender its remaining aircraft as demanded by PNCEF.

        PNCEF, HM, and the guarantors subsequently entered into an “Aircraft Transfer and

Settlement Opportunity Agreement” under which PNCEF would fully discharge HM of its

        1
          Carr graduated from the University of Connecticut law school in 1983. Carr has worked
as an attorney in Washington, D.C., held two vice president positions at AT&T, and served as an
upper-level executive in four smaller companies.
        2
         Mariani owns a garden center and a construction business. He has created more than 10
single purpose entities related to these projects.
                                                   -2-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

obligations if HM surrendered one of its remaining aircraft and repaid $2,500,000 by December

31, 2010. HM surrendered the aircraft.3 But HM did not remit the funds. PNCEF gave HM and the

guarantors three more opportunities to satisfy their obligations at a fraction of the total amount

owed. The parties executed three forbearance agreements (dated April 6, 2011, September 30,

2011, and April 5, 2013). Each forbearance agreement gave HM the opportunity to discharge all

obligations to PNCEF by paying a certain amount ($2,500,000.00, $1,500,000.00, and

$1,650,000.00, respectively) by a certain date. Each time, HM failed to remit the requisite funds

by the deadline.

       After HM and the guarantors failed to take advantage of the fourth opportunity to discharge

their debt at a discounted rate, PNCEF decided it would no longer accommodate them. On January

3, 2014, PNCEF demanded immediate payment of the full balance of the outstanding debt. Neither

HM nor the guarantors repaid the balance owed.

       B.      Procedural History

       PNCEF sued Carr and Mariani for breach of contract. PNCEF moved for summary

judgment. PNCEF attached several exhibits in support of its Motion, two of which are at issue in

this appeal: (1) the transcript from Carr’s deposition, which neither Carr nor the court reporter

signed, and (2) a sworn affidavit from David Chambers, a vice president for PNCEF, who opined

that HM and the guarantors owed $26,421,527.93 under the Mortgage Agreement. After reviewing

the parties’ submissions, the magistrate judge issued a Report and Recommendation (“R&R”)

recommending that the district court grant PNCEF’s Motion. The district court adopted the R&R

and granted summary judgment in favor of PNCEF.

       3
        PNCEF sold the aircraft and applied the proceeds to the outstanding amount due under
the Mortgage Agreement.
                                             -3-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

       Carr filed a Post-Judgment Motion and argued that the district judge should have

disqualified herself under 28 U.S.C. § 455(a) and 28 U.S.C. § 144 because of a conflict of interest.

Carr alleged that PNCEF previously provided the judge’s spouse with an aviation loan but let him

“‘off the hook’ of [the] aviation loan personal guaranty and forbearance agreement” because his

wife was a federal judge. (R. 63-1 at PageID #1318.) Carr stated that he learned about this

information from a “former employee and officer” of PNC. (Id. at PageID #1316–17.) Carr also

filed a “Certification” to support his allegation. But the “Certification” contains minimal factual

support for Carr’s allegations. For instance, it does not name the person that allegedly told Carr

about PNCEF letting the district judge’s husband “off the hook” on his aviation loans, state when

the judge’s husband allegedly had aviation loans with PNCEF, or assert that the judge or her

husband even knew that PNCEF let the husband “off the hook” because his wife was a federal

judge. (See R. 65-1.)

       The magistrate judge issued an R&R recommending that the district court deny Carr’s Post-

Judgment Motion. The district court adopted the R&R. This appeal followed.4

                                           DISCUSSION

I.     Evidentiary Issues

       Carr argues that the district court erred by considering his unsigned deposition transcript

and Chambers’ affidavit at summary judgment. This Court disagrees.

       A.        Legal Standard

       “This Court reviews a district court’s grant of summary judgment de novo.” Maben v.

Thelen, 887 F.3d 252, 258 (6th Cir. 2018) (citing Gillis v. Miller, 845 F.3d 677, 683 (6th Cir.

2017)). But this Court reviews a district court’s evidentiary rulings in the context of a motion for

       4
           Mariani did not appeal the district court’s judgment.
                                                  -4-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

summary judgment for abuse of discretion. Lauderdale v. Wells Fargo Home Mortg., 552 F. App’x

566, 569 (6th Cir. 2014) (citing Griffin v. Finkbeiner, 689 F.3d 584, 592 (6th Cir. 2012)); United

States v. Foresome Entm’t Co., 78 F. App’x 458, 461 (6th Cir. 2003). Accordingly, this Court must

review the district court’s consideration of the unsigned deposition transcript and Chambers’

affidavit under the abuse of discretion standard.5 See United States v. Heinsohn, 132 F.3d 34, 1997

WL 745296, at *2 (6th Cir. 1997) (unpublished table opinion) (reviewing “the district court’s

decision to admit the deposition transcript for an abuse of discretion” (citing United States v.

Mareno, 933 F.2d 362, 375 (6th Cir. 1991))).

       “An abuse of discretion occurs when a district court commits a clear error of judgment,

such as applying the incorrect legal standard, misapplying the correct legal standard, or relying

upon clearly erroneous findings of fact.” King v. Harwood, 852 F.3d 568, 579 (6th Cir. 2017)

(internal quotation marks omitted) (quoting Info-Hold, Inc. v. Sound Merch., Inc., 538 F.3d 448,

454 (6th Cir. 2008)).

       B.       The District Court Did Not Abuse Its Discretion by Considering Carr’s
                Unsigned Deposition Transcript

                1.      Relevant Legal Principles

           Fed. R. Civ. P. 30 allows a deponent or party to review the deposition transcript upon

request. Rule 30(e) provides:

       (1) Review; Statement of Changes. On request by the deponent or a party before the
           deposition is completed, the deponent must be allowed 30 days after being notified by
           the officer that the transcript or recording is available in which:

       5
         Carr erroneously asserts that this Court should evaluate the district court’s consideration
of the deposition transcript and affidavit under a de novo standard of review. Carr fails to
appreciate that while this Court reviews a district court’s decision to grant summary judgment de
novo, this Court reviews corresponding evidentiary decisions under a deferential abuse of
discretion standard. See, e.g., Lauderdale, 552 F. App’x at 569.
                                                 -5-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

           (A) to review the transcript or recording; and

           (B) if there are changes in form or substance, to sign a statement listing the changes
               and the reasons for making them.

Fed. R. Civ. P. 30(e). Rule 30 does not explain how an officer must make the transcript “available”

for review.6 But federal courts have held that Rule 30 does not require that a court reporter mail a

copy of a transcript to a deponent. Parkland Venture, LLC v. City of Muskego, 270 F.R.D. 439,

441 (E.D. Wis. 2010); Williams v. Kettler Mgmt. Inc., No. CBD-12-1226, 2014 WL 509474, at *3

(D. Md. Feb. 5, 2014). And one federal court has held that a court reporter complies with Rule 30

by inviting a deponent to review the transcript at her office. Parkland Venture, 270 F.R.D. at 441.

       The Sixth Circuit has repeatedly held that a district court does not abuse its discretion by

admitting an unsigned deposition transcript unless the party opposing the transcript shows that the

transcript contained inaccuracies or that she was otherwise prejudiced by its introduction. See

Willis v. Morris, 124 F.3d 202, 1997 WL 561332 at *2 (6th Cir. 1997) (unpublished table opinion)

(holding that the district court did not abuse its discretion by relying on an unsigned deposition

transcript at the summary judgment stage because the plaintiff-deponent “has not pointed to any

perceived inaccuracies in his deposition testimony, nor has he shown any prejudice by the use of

his deposition in this case.”) (citing Vukadinovich v. Zentz, 995 F.2d 750, 754 (7th Cir. 1993));

Heinsohn, 132 F.3d 34 (holding that the district court did not abuse its discretion by admitting an

unsigned deposition transcript when the deponent did not contest the transcript’s accuracy).

               2.      Application to the Matter at Hand

       The district court did not abuse its discretion by relying on Carr’s unsigned deposition

transcript. Carr does not allege that the deposition transcript contains any inaccuracies. And Carr

       6
          There is a dearth of case law on this issue. The parties’ briefs were unhelpful, as neither
party cited any authority for what Rule 30 requires.
                                                  -6-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

does not explain how consideration of the transcript prejudiced him. Rather, Carr argues that the

mere fact that he did not sign his deposition transcript precluded the district court from considering

the transcript at the summary judgment stage. But the Sixth Circuit has repeatedly held that a

district court does not abuse its discretion by relying on an unsigned transcript unless the party

who opposes the transcript demonstrates that the transcript contains inaccuracies. Willis, 124 F.3d

202; Heinsohn, 132 F.3d 34. Because Carr does not contend that the transcript contains

inaccuracies, Carr’s argument fails. See Willis, 124 F.3d 202; Heinsohn, 132 F.3d 34.

       Carr also argues that the admission of the deposition transcript violated Rule 30. This

argument lacks merit. The court reporter complied with Rule 30 because she gave Carr the

opportunity to review the transcript. In his opposition to PNCEF’s Motion, Carr attached an email

chain between himself, PNCEF’s attorney, and the court reporting company. This document shows

that Carr asked PNCEF’s attorney when he would provide a copy of Carr’s deposition transcript.

PNCEF’s attorney responded by informing Carr that Carr needed to order the transcript from the

court reporting company. PNCEF’s attorney copied a representative from the court reporting

company on his response to Carr. Carr emailed the court reporting company and asked when it

would provide him a copy of his deposition transcript. A representative from the court reporting

company explained that Carr could purchase the transcript directly from the company. In a follow-

up email, the company representative clarified that even if Carr did not want to purchase the

transcript, he could come to the court reporting company’s offices within 30 days to review it in

person. Carr never took advantage of this option. But, as the emails indicate, Carr had the

opportunity to review his transcript. Therefore, the court reporter complied with Rule 30. See

Parkland Venture, 270 F.R.D. at 441.

                                                 -7-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

       Carr additionally argues that the district court erred by considering his deposition transcript

because it constituted inadmissible hearsay. This argument clearly fails. Carr’s deposition

testimony does not constitute hearsay because it is “an opposing party’s statement.” Fed. R. Evid.

801(d)(2)(A); see generally United States v. Vasilakos, 508 F.3d 401, 407 (6th Cir. 2007).

Therefore, the district court did not err by considering the transcript.

       C.      The District Court Did Not Abuse Its Discretion by Relying on Chambers’
               Affidavit

               1.      Relevant Legal Principles

       “Rule 26(a)(1) requires parties to disclose early in discovery persons likely to have

discoverable information if the disclosing party may use that information or person to support its

claim or defense.” Abrams v. Nucor Steel Marion, Inc., 694 F. App’x 974, 982 (6th Cir. 2017)

(citing Fed. R. Civ. P. 26(a)(1)(A)(i)). Rule 26(e)(1)(A) imposes a continuing obligation upon a

party to “supplement or correct its disclosure or response in a timely manner if the party learns

that in some material respect the disclosure or response is incomplete or incorrect . . . .” Emanuel

v. Cty. of Wayne, 652 F. App’x 417, 423 (6th Cir. 2016) (quoting Fed. R. Civ. P. 26(e)(1)(A)).

       “Rule 37 requires trial courts to punish parties that violate this provision in Rule 26 with

exclusion of evidence or witnesses, unless the sanctioned party can show that the violation is

substantially justified or harmless . . . .” Abrams, 694 F. App’x at 982 (citing Fed. R. Civ. P.

37(c)(1)). “The burden is on the potentially sanctioned party to prove harmlessness.” R.C.

Olmstead, Inc., v. CU Interface, LLC, 606 F.3d 262, 272 (6th Cir. 2010) (citing Roberts ex rel.

Johnson v. Galen of Virginia, Inc., 325 F.3d 776, 782 (6th Cir. 2003)). “The decision not to impose

sanctions is reviewed for an abuse of discretion.” Johnson, 325 F.3d at 782 (citing King v. Ford

Motor Co., 209 F.3d 886, 900 (6th Cir. 2000)).

                                                 -8-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

       2.      Application to the Matter at Hand

       Carr argues that the district court abused its discretion because it considered Chambers’

affidavit despite the fact that PNCEF failed to identify Chambers in its Initial Disclosures. Carr

characterizes PNCEF’s use of Chambers’ affidavit as an “ambush” similar to “the proverbial first

year torts loaded spring gun.” (Def. Br. at 16–17.) In response, PNCEF argues that its failure to

strictly comply with Rule 26 constituted harmless error because its Initial Disclosures named two

other bank officials and disclosed all relevant information that PNCEF possessed regarding its

financial dealings with Carr.

       The district court did not abuse its discretion by considering Chambers’ affidavit because

PNCEF’s failure to comply with Rule 26(a)(1) was harmless. While PNCEF did not identify

Chambers in its Rule 26(a) Initial Disclosures, Carr was not prejudiced. PNCEF’s Initial

Disclosures identified two vice presidents for PNCEF and stated that they possessed information

regarding the terms of the Mortgage Agreement, Carr’s guarantees, the subsequent negotiations

and forbearance agreements, and the current balance owed to PNCEF. While PNCEF ultimately

submitted an affidavit from Chambers—himself a vice president for PNCEF—rather than from

either of the individuals identified in the Initial Disclosures, Chambers opined on the exact same

subject matter as the other individuals would have opined on. Moreover, Chambers exclusively

opined on topics listed in the Initial Disclosures. Carr did not suffer prejudice because Chambers

happened to sign the affidavit rather than one of the previously-identified corporate

representatives. Furthermore, Carr did not serve written discovery on, depose, or otherwise

conduct any discovery on the two corporate representatives that the Initial Disclosures named.

Under these circumstances, Carr did not suffer prejudice from PNCEF’s failure to name Chambers

in its Initial Disclosures. Because PNCEF’s failure to comply with Rule 26(a)(1) was harmless,

                                               -9-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

the district court did not abuse its discretion by considering Chambers’ affidavit at summary

judgment. See Abrams, 694 F. App’x at 982 (identifying a five factor test that Carr cannot survive);

Fed. R. Civ. P. 37(c)(1).

       Carr contends that the mere fact that the Initial Disclosures did not identify Chambers itself

warrants reversal. But, as explained above, the district court did not need to exclude Chambers’

affidavit because Carr did not suffer prejudice from PNCEF’s failure to identify Chambers in its

Initial Disclosures. See Abrams, 694 F. App’x at 982; Fed. R. Civ. P. 37(c)(1). Accordingly, Carr’s

argument fails.

II.    Recusal

       Carr argues that the district judge abused her discretion by failing to recuse herself. This

Court is not persuaded by Carr’s argument.

       A.         Legal Standard

       This Court “review[s] a judge’s denial of a disqualification motion for an abuse of

discretion.” Harris v. Morris, No. 17-1373, 2017 WL 8776683, at *2 (6th Cir. Oct. 26, 2017)

(citing Burley v. Gagacki, 834 F.3d 606, 616 (6th Cir. 2016)). “An abuse of discretion occurs when

a district court commits a clear error of judgment, such as applying the incorrect legal standard,

misapplying the correct legal standard, or relying upon clearly erroneous findings of fact.” King,

852 F.3d at 579 (internal quotation marks omitted) (quoting Info-Hold, 538 F.3d at 454).

       B.         Relevant Legal Principles

       28 U.S.C. § 455(a) provides that a federal judge “shall disqualify h[er]self in any

proceeding in which h[er] impartiality might reasonably be questioned.” This Court has explained

that § 455(a) “imposes an objective standard . . . .” Gagacki, 834 F.3d at 616 (citing United States

v. Adams, 722 F.3d 788, 837 (6th Cir. 2013)). Thus, “[a] judge must recuse himself only ‘if a

                                               -10-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

reasonable, objective person, knowing all of the circumstances, would have questioned the judge’s

impartiality.’” In re Polyurethane Foam Antitrust Litig., No. 17-3361, 2017 WL 8791098, at *4

(6th Cir. Dec. 14, 2017) (quoting United States v. Sammons, 918 F.2d 592, 599 (6th Cir. 1990));

see also Ragozzine v. Youngstown State Univ., 783 F.3d 1077, 1079 (6th Cir. 2015). “The judge

need not recuse himself under § 455(a) ‘based on the subjective view of a party, no matter how

strongly that view is held.’” In re Polyurethane Foam Antitrust Litig., 2017 WL 8791098, at *4

(quoting Sammons, 918 F.2d at 599).

       “[A] judge is presumed to be impartial.” Scott v. Metro. Health Corp., 234 F. App’x 341,

352 (6th Cir. 2007) (citing United States v. Denton, 434 F.3d 1104, 1111 (8th Cir. 2006)).

Therefore, “[t]he burden is on the moving party to justify disqualification.” Gagacki, 834 F.3d at

616 (citing Consol. Rail Corp. v. Yashinsky, 170 F.3d 591, 597 (6th Cir. 1999)).

       C.      Application to the Matter at Hand

       Carr argues that the district court judge abused her discretion by failing to recuse herself.

Carr states that he learned from a former employee of PNCEF that the judge’s spouse had aircraft

loans with PNCEF, that PNCEF forgave a significant portion of the loans, and that judge’s spouse

was “let off the hook” from a forbearance agreement because of his wife’s status as a federal judge.

(R. 63-3 at #1326–27.) According to Carr, § 455(a) required that the judge recuse herself because

a reasonable person would question her impartiality. In response, PNCEF argues that a reasonable

person would not question the judge’s impartiality because (1) according to Carr’s Certification,

the judge’s husband was one of “multiple people” with whom PNCEF settled aviation loans for

less than the balance due under the loan or forbearance agreement, and (2) PNCEF offered Carr

the opportunity to settle his aviation loan for substantially less than the original loan amount—the

same favorable treatment Carr alleges the judge’s husband received.

                                               -11-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

       The district judge did not abuse her discretion by failing to recuse herself. While Carr

alleges that the judge’s husband settled his aviation loans for a substantially lower amount than he

originally owed, PNCEF gave Carr himself several chances to discharge his obligations under his

aviation loans for a small fraction of the amount that he actually owed. Carr cannot convincingly

claim that the judge lacked partiality due to the fact that her husband allegedly received the same

opportunity that PNCEF extended to Carr and “multiple other” people. Additionally, Carr does not

allege that the judge’s husband still has aviation loans with PNCEF or that he and PNCEF have

any ongoing financial relationship. Furthermore, Carr has presented a paucity of evidence to

substantiate his allegations; he fails to name the person who allegedly told him that PNCEF let the

district judge’s husband “off the hook,” he does not state when the judge’s husband allegedly had

aviation loans with PNCEF, and he does not assert that the judge or her husband were ever aware

that PNCEF let the husband “off the hook” because his wife was a federal judge. (See R. 65-1.)

For these reasons, a reasonable person would not question the judge’s impartiality. See, e.g., In re

Polyurethane Foam Antitrust Litig., 2017 WL 8791098, at *4. Accordingly, the judge did not

abuse her discretion by failing to recuse herself. Id.

       Carr cites Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847 (1988) to support

his argument. But Liljeberg is inapposite. In Liljeberg, a district judge presided over a case seeking

declaratory judgment about disputed ownership of a hospital. Id. at 850. The judge sat on the Board

of Trustees of a university that had plans to purchase land from one of the parties to the litigation.

Id. The university’s success in this potential acquisition “turned, in large part,” on which one of

the parties prevailed in the declaratory judgment action before the district judge. Id. The Supreme

Court held that the district judge violated § 455(a) by failing to recuse himself because he was on

the Board of Trustees of a university that had a direct financial interest in the outcome of the

                                                 -12-
No. 18-3324, PNC Equipment Finance v. Mark Mariani, et al.

litigation. Id. Liljeberg does not apply here. There is no evidence that the judge in this case has an

interest in the outcome of the litigation.

       Carr’s attempt to analogize this case to Preston v. United States, 923 F.2d 731 (9th Cir.

1991) is similarly unpersuasive. Preston involved a wrongful death lawsuit brought against the

United States. Id. at 732. While the lawsuit named only the United States as a defendant, the United

States had a contract with a third-party contractor that would indemnify the United States should

the plaintiffs prevail. Id. at 735. Prior to joining the federal bench, the judge worked at a law firm

when it represented the contractor in a state court action arising out of the same decedent’s death.

Id. at 734. The Ninth Circuit held that the judge abused his discretion by not recusing himself given

that he had previously worked at a firm that represented a party with an interest in the action. Id.

Preston does not pertain here. Unlike the judge in Preston, the district judge does not have an

interest in the outcome of the litigation.

       Carr also argues that the district judge abused her discretion by delegating the Post-

Judgment Motion to the magistrate judge. Carr does not cite any authority to support his argument

or explain why the district judge should not have referred the matter to the magistrate. Furthermore,

given that Carr asserts that the district judge harbored bias against him, it would seem that Carr

would prefer for the magistrate judge—rather than the district judge—to decide Carr’s Post-

Judgment Motion in the first instance. Finally, the district judge reviewed the magistrate judge’s

recommendation de novo, rendering Carr’s argument moot.

                                             CONCLUSION

       For the reasons stated above, the Court AFFIRMS the district court.

                                                -13-