Opinion
Civil No. 98-303-HA
November 14, 2000
Attorneys for Plaintiff:
Peter C. Richter, Miller Nash Weiner Hager Carlsen, Portland, Oregon
James R. Hermsen, Todd S. Fairchild, Dorsey Whitney Seattle, Washington
Attorneys for Defendant:
Joseph C. Arellano, Daniel L. Keppler, Kennedy, Watts, Arellano Ricks, Portland, Oregon
OPINION AND ORDER
The jury returned a special verdict in favor of defendant on July 12, 2000. Judgment was entered on July 25, 2000, in accordance with the verdict. Plaintiff subsequently moved for a new trial. For the following reasons, this motion is denied.
ARGUMENT
Plaintiff contends that a miscarriage of justice has occurred because defendant used an allegedly false and factually unsupported theory as the basis for introducing evidence concerning the quality of the performance of the grain elevators at issue in the trial. Under plaintiff's theory, defendant falsely interpreted the parties' contract and then relied upon that false interpretation as a means for introducing substantial evidence regarding the undisputed operational efficiency of the elevators at issue.
The following undisputed facts were established at trial. In 1975, defendant Bunge purchased the grain elevator and export facility known as the Irving Terminal Elevator ("the Elevator"), located on the east bank of the Willamette River near the Broadway Bridge in Portland, Oregon. The Elevator was approximately 15 years old at the time. Grain that is shipped to the Elevator by barge, truck, and rail is unloaded at the facility, stored in silos, and loaded into ocean-going vessels for export.
Defendant Bunge operated the Elevator continuously from 1975 until it sold the facility to plaintiff Cargill for $16.5 million in 1995. The Elevator was transferred to Cargill pursuant to a Purchase and Sale Agreement (the Agreement) executed on July 14, 1995. Several provisions of the Agreement were important to the trial, but the warranty of operability, the warranty for truthfulness, and survival clause were especially critical. They provided as follows:
3.13 Condition of Terminal Elevator. To the best of Bunge's knowledge, the Terminal Elevator is operable for its intended use.
3.17 Truthfulness. To the best of Bunge's knowledge, none of the material information contained in any of Bunge's representations or warranties set forth in the Agreement or in any written document or certificate specified in the Agreement or delivered by or on behalf of it at the Closing contains or will contain an untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading.
3.18 Survival. All of the foregoing Representations and Warranties made in or delivered pursuant to Article Three of this Agreement shall not survive the second anniversary of the Closing.
In the arguments presented in the partial summary judgment motions before Magistrate Judge Jelderks, defendant argued that the warranty of operability contained no promise that the elevator would remain operable until some future date, but instead solely concerned the state of defendant's knowledge regarding the elevator at the time of the sale.
In recommending denial of defendant's motion for summary judgment on plaintiff's breach of warranty claim, Magistrate Judge Jelderks reasoned that defendant would be entitled to summary judgment on the claim, except for the existence of the "survival clause." Defendant contended that the "survival clause" should be interpreted as providing two years for plaintiff to bring any claims regarding the fulfillment of defendant's representations and warranties at the time of the sale closing. Magistrate Judge Jelderks, however, concluded that the clause could be construed as permitting plaintiff to bring claims within two years of the sale on the basis of latent defects that emerge in that time period.
Partly because of these alternative reasonable interpretations of the applicable survival provision, his court adopted Magistrate Judge Jelderks' recommendation to deny defendant's motion for partial summary judgment. The parties proceeded to trial, and defendant argued in its opening statement that the warranty of operability was truthful because at the time of the transfer of the Elevator to plaintiff in 1995, the Elevator could be used for receiving, storing and loading grain. Defendant subsequently introduced evidence in support of the Elevator's operability, including repeated testimony about the Elevator's operating efficiency, and several exhibits demonstrating the volume of grain being processed through the Elevator.
In the third week of trial, however, defendant called its former in-house attorney, who testified that n the contract negotiations leading to the final Sales Agreement, the parties had agreed that the warranty of operability and the survival clause were intended to provide plaintiff with two years to discover latent defects at the Elevator. This interpretation conflicted directly with the theories proffered by defendant regarding those clauses. Following this testimony, the court ruled as a matter of law that the proper interpretation of the warranty that the facility was "operable for its intended use" and the survival clause was that defendant warranted that the Elevator was free from hidden or latent defects, both at the time of the purchase and sale and continuing for up to two years thereafter.
The jury was instructed accordingly:
Based upon the evidence in the case, the warranty that the facility was "operable for its intended use," coupled with the survival clause, means that the land and structures that comprise the terminal elevator and which are vital to the use of the terminal elevator for its intended commercial purpose, were free from hidden or latent defects, both at the time of the purchase and sale and continuing for up to two years thereafter.
Final Instructions at p. 13.
Plaintiff contends that defendant either knew, or should have known, that its theories regarding the meanings of the warranty of operability and the survival clause were either inaccurate or highly misleading. Therefore, plaintiff argues, defendant's insistence upon promoting the theories with extensive evidence and argument from counsel unfairly confused the jury and created a miscarriage of justice manifested in an improper verdict.
STANDARDS
A new trial may be granted on all or part of the issues in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States. Fed.R.Civ.P. 59(a). While a motion for a directed verdict or for judgment notwithstanding the verdict is precluded when substantial evidence is presented at trial to create an issue for the jury, the existence of substantial evidence does not prevent the court from granting a motion for a new trial pursuant to Fed.R.Civ.P. 59 if the verdict is against the clear weight of the evidence. Landes Constr. Co. v. Royal Bank of Canada, 833 F.2d 1365, 1371 (9th Cir. 1987); See also Roy v. Volkswagen of Am., Inc., 896 F.2d 1174, 1176 (9th Cir.), amended on other grounds on denial of reh'g, 920 F.2d 618 (9th Cir. 1990), cert. denied, 500 U.S. 928 (1991) (regardless of whether a verdict is supported by substantial evidence, a court may grant a motion for a new trial if it concludes that the verdict is against the clear weight of the evidence, is based on evidence that is false, or to prevent a miscarriage of justice). The judge can weigh the evidence and assess the credibility of witnesses, and need not view the evidence from the perspective most favorable to the prevailing party. Landes, 833 F.2d at 1371 (citations omitted).
ANALYSIS
As is made clear supra, this court possesses the power to grant a new trial if the verdict is against the clear weight of the evidence. The court may weigh the evidence presented at trial under the applicable standards, and should grant a new trial if it concludes that the jury's verdict was in fact against the clear weight of the presented evidence. Landes, 833 F.2d at 1372. Plaintiff's motion has been considered within these parameters, and is found to be without merit.
As is demonstrated by the review of the case's procedural history above, issues of fact precluded summary judgment regarding the interpretation of the parties' Sales Agreement. The parties' counsel detailed their respective interpretations in pretrial motions and in their opening statements to the jury. The court determined the proper interpretations of several terms in the Agreement as a matter of law only after defendant's own witness provided testimony that resolved some of the Sales Agreement's ambiguity. It is unlikely that defendant compromised a scheme to mislead the jury through the testimony of its own witness. Instead, as sometimes happens at trial, a witness testified in a manner that was unanticipated, and the court ruled as a matter of law based, in part, upon that testimony.
Moreover, the challenged evidence regarding the efficiency of the Elevator was relevant to the question of whether defendant knew of defective conditions when it sold the Elevator, and whether defendant should be deemed to have been truthful in its dealings with plaintiff. The jury was explicitly instructed that plaintiff could bring claims on the basis of "latent defects that existed at the time of closing, and which defendant allegedly knew about, but were not discovered by plaintiff until sometime within two years after closing. If defendant Bunge knew of serious latent defects existing at the time of the sale of the elevator facility, and these defects were discovered by Cargill within two years of the sale closing, defendant may be liable to plaintiff for claims based upon these defects." Final Instructions at 13.
In pretrial motions, plaintiff indicated that it had no objections to evidence concerning the use of the Elevator to receive, store and load grain, and plaintiff never sought limiting instructions regarding defendant's evidence after the court ruled upon the survival clause as a matter of law. Plaintiff also took no exceptions to the final instructions. The argument raised now that this evidence was part of an attempt by defendant to mislead the court and jury is rejected.
The court has considered plaintiff's arguments, and finds them unavailing. There are no grounds for the assumption that the jury was confused or unfairly misled, or that a miscarriage of justice has occurred. The jury's verdict is upheld, and plaintiff's motion for a new trial is denied.
CONCLUSION
For the reasons provided above, plaintiff's motion for a new trial (doc. # 223-1) is denied. Plaintiff shall file its Response to defendant's motion for fees (doc. # 225-1) within 11 days of the date indicated below.
IT IS SO ORDERED.