Opinion
CIVIL ACTION No. 02-2015-CM
January 26, 2004
MEMORANDUM AND ORDER
The trial in this matter commenced on September 10, 2003. On September 12, 2003, the jury returned a verdict in favor of plaintiff against defendant in the amount of § 348,900.38. This matter is before the court on defendant's Renewed Motion for Judgment as a Matter of Law or, in the Alternative, for Remittitur and/or New Trial (Doc. 104).
I. Standards
A judgment as a matter of law is appropriate "if after a party has been fully heard on an issue, there is no legally sufficient evidentiary basis for a reasonable jury to find for a party." The trial court should not "lightly presume the decision of a reasonable juror, judgment `may be granted only if the evidence points but one way and is susceptible to no reasonable inference which may support the opposing party's position.'" Turnbull v. Topeka State Hosp., 255 F.3d 1238, 1239 (10th Cir. 2001) (quoting Phillips v. Hillcrest Med. Ctr., 244 F.3d 790, 796 (10th Cir. 2001)). In its review, the court should not weigh the evidence, pass on the credibility of witnesses, or substitute its judgment for that of the jury. Lockard v. Pizza Hut, Inc., 162 F.3d 1062, 1068 (10th Cir. 1998). Instead, the court should construe all evidence and the inferences therefrom in the light most favorable to the nonmoving party. Phillips, 244 F.3d at 796 (10th Cir. 2001); Kinser v. Gehl Co., 184 F.3d 1259, 1267 (10th Cir. 1999).
Motions for new trials are "not regarded with favor and should only be granted with great caution." United States v. Kelley, 929 F.2d 582, 586 (10th Cir. 1991). A new trial is not to be granted unless the court finds that prejudicial error has occurred or substantial justice has not been done. Johnson v. Colt Indus. Operating Corp., 609 F. Supp. 776, 779 (D. Kan. 1985). In other words, new trials should be granted only in limited circumstances where the court believes the verdict is against the weight of the evidence, where prejudicial error has occurred, or where a miscarriage of justice would result should the verdict be permitted to stand. Braintree Labs., Inc. v. Nephro Tech, Inc., 81 F. Supp.2d 1122, 1136 (D. Kan. 2000); Fed.R.Civ.P. 59.
With respect to a motion for remittitur, the party claiming an excessive verdict carries the heavy burden of demonstrating that the verdict was clearly, decidedly, or overwhelmingly against the weight of the evidence. Absent an award so excessive or inadequate as to shock the judicial conscience and to raise an irresistible inference that passion, prejudice, corruption or other improper cause invaded the trial, the jury's determination of the fact is considered inviolate. Hynes v. Energy West, Inc., 211 F.3d 1193, 1206 (10th Cir. 2000) (quoting Campbell v. Bartlett, 975 F.2d 1569, 1577 (10th Cir. 1992)).
II. Discussion
A. Statute of Limitations
Defendant raises the same argument regarding the statute of limitations as it did in its motion for summary judgment, which this court denied in its June 25, 2003 Order. Defendant maintains that plaintiff's claim is time-barred pursuant to the three-year statute of limitations set forth in Kan. Stat. Ann. § 60-512, which states that "all actions upon contracts, obligations or liabilities express or implied but not in writing" shall be brought within three years. Kan. Stat. Ann. § 60-512(1). Defendant contends that plaintiff's claim relies on an obligation that is collateral to its written agreement with Maple Leaf Management Company (Maple Leaf), and that, as a result, the obligation can only be deemed to be implied.
It its previous ruling, the court relied on Hoelting Enters, v. Nelson, 23 Kan. App. 2d 228, 929 P.2d 183 (1996). Hoelting involved a mortgage and promissory note executed by Trailridge Investors, L.P. (Trailridge) in favor of the plaintiff. The individual partners of Trailridge did not sign the mortgage or promissory note. Trailridge defaulted on the mortgage and thereafter filed for bankruptcy. Plaintiff then filed an action against the individual partners of Trailridge. The partners contended that the plaintiff's action was barred by the three-year statute of limitations. The court of appeals held that the claim was not time-barred because the five-year statute of limitations applied. In so holding, the court stated:
The nature of [plaintiff's] action is for the enforcement of secured property agreements, which are written contracts. The contractual nature of the action is not altered by the fact [that plaintiff] seeks to enforce the partnership contract against the partners personally.Id. at 232, 929 P.2d at 186. Defendant argues that Hoelting is not applicable because the written contract in Hoelting expressly identified the partnership as a contracting party.
However, the Revised Uniform Partnership Act (RUPA), which Kansas has adopted pursuant to Kan. Stat. Ann. § 56a-101 et seq., employs a broad definition of "partnership" that includes both the relation created by express agreement or that implied from the conduct of the parties. Therefore, under RUPA, there is no distinction between a partnership that is either expressly or impliedly formed. The fact that defendant in this case may have become a partner impliedly does not change the true nature of plaintiff's cause of action, which is a suit alleging breach of the RMR-Maple-Leaf/Plaintiff Agreement. As such, the five-year statute of limitations applies to plaintiff's breach of contract claim. Defendant's motion for judgment as a matter of law on this basis is denied.
B. Parole Evidence
At trial, the court allowed plaintiff to admit parole evidence to establish the existence of a partnership or joint venture between defendant, RMR Industries, Inc., and Maple Leaf (referred to collectively as "RMR-Maple Leaf). At the motion in limine conference, the court noted that the caselaw appeared to be somewhat inconsistent on whether parol evidence is admissible in this circumstance but pointed out that there exists authority for the proposition that parol evidence can be used to vary or contradict a contract when the litigation is between a party to the contract and a stranger. The court stated that it believed this is the better approach in this instance, since strangers to a contract have not consented to its terms and have no right to reform or set it aside. Defendant asserts that South Dakota law applies given the choice of law provision contained in Maple Leaf's subcontract with plaintiff. Assuming, without deciding, that South Dakota law applies, the court holds that the admission of such parol evidence was appropriate.
Under South Dakota law, strangers to a contract are not barred from admitting parol evidence:
"The parol evidence rule is limited to the parties to the contract or writing and their privies. Therefore, where the controversy is between a party to a written contract and one who is neither a party nor a privy to it, the rule which the courts usually refer to as `excluding parol evidence tending to vary, modify or contradict the writing' does not apply." See Chamberlayne Evidence, § 3550; Clapp v. Huron County Banking Co., 50 Ohio St. 528, 35 N.E. 308; 8 Ann. Cas. 348, 349; 22 C.J. 1292; 10 R.C.L. 1020.
The reason that strangers are not limited by the parol evidence rule is stated in 1 Greenl. Ev., § 279, thus: "It cannot affect third persons, who, if it were otherwise, night be prejudiced by things recited in the writings, contrary to the truth, through the ignorance, carelessness, or fraud of the parties; and who, therefore, ought not to be precluded from proving the truth, however contradictory to the written statement of others."Smith v. Shields, 240 N.W. 498, 500 (S.D. 1932).
In this case, plaintiff is a stranger to the agreement between defendant and RMR-Maple Leaf Agreement (the Master Agreement). Accordingly, the court correctly determined that the introduction of parole evidence was not barred, either under Kansas or South Dakota law. Defendant is not entitled to judgment as a matter of law or a new trial on this basis.
C. Estoppel
Defendant argues that plaintiff is judicially estopped from denying that defendant had an independent contractor relationship with Maple Leaf. Defendant asserts that, on the one hand, plaintiff argued that the relationship of RMR and Maple Leaf, and in particular RMR's liability for Maple Leaf's obligations, arose by virtue of the express terms of the Master Agreement, but that, on the other hand, plaintiff argued that the Master Agreement's express definition of the defendant-RMR-Maple Leaf independent contractor relationship was not definitive. Defendant contends that plaintiff affirmatively relied on the provision of the Master Agreement, stating that RMR would be jointly and severally liable for Maple Leaf's liability, both to obtain a judgment against RMR in the Johnson County action, and to argue to the jury that evidence of an RMR-Wickes implied partnership somehow established a Maple Leaf-Wickes partnership.
Prior to the instant action, plaintiff obtained default judgments against RMR and Maple Leaf in Johnson County District Court action.
Quite frankly, the court does not view plaintiff's arguments as inconsistent. The position that RMR and Maple Leaf were jointly and severally liable pursuant to the terms of the Master Agreement is not necessarily inconsistent with the position that there existed an implied partnership between defendant, RMR, and Maple Leaf, which was not expressly stated in the Master Agreement.
However, even if the two positions were inherently inconsistent, the court finds that estoppel does not bar plaintiff's claims. "A party can assert judicial estoppel when four elements are satisfied: (1) a position taken must contradict a declaration in a prior judicial action; (2) the two actions must involve the same parties; (3) the party asserting the theory must have changed its position; and (4) the changed position must have been in reliance on the prior statement." See Knorp v. Albert, 29 Kan. App. 2d 509, 28 P.3d 1024, 1030 (2001) (citing Griffin v. Dodge City Coop. Exch., 23 Kan. App. 2d 139, 927 P.2d 958 (1996)).
Defendant has not established the requisite elements for judicial estoppel. Defendant has not identified a "declaration" in this action that "contradicts" a declaration in the prior action. Moreover, defendant cannot establish that it changed its position in reliance on any purported declaration. Defendant always has maintained that the Master Agreement established an independent contractor relationship. If defendant perceived that plaintiff took "inconsistent" positions, it could have argued that to the jury in this case. The doctrine of estoppel is inapplicable.
D. Sufficiency of the Evidence
Defendant argues that plaintiff failed to present legally sufficient evidence that, as of June 13, 1997, a partnership relationship existed between defendant, RMR, and Maple Leaf. The court disagrees.
Generally, plaintiff's evidence established that defendant wanted to expand its lumber sales by "bundling" its lumber with a labor component so that defendant itself could provide rough-in framing for potential projects. By all admissions, defendant could not supply the labor component itself, so it looked to RMR/Maple Leaf to provide the labor.
A critical fact in determining whether a partnership or joint venture existed is whether the parties intended to create that relationship. The intention of the parties to enter into a joint venture or a partnership may be implied from their common reference to each other as "partners" without objection by the other. Goben v. Barry, 234 Kan. 721, 726, 676 P.2d 90 (1984). Plaintiff presented evidence of such "common references" as partners between defendant, RMR, and Maple Leaf.
Another criteria in determining whether a partnership or joint venture existed is whether the parties jointly controlled property. Plaintiff presented evidence that defendant and RMR/Maple Leaf had joint control over the lumber that was used on their projects, including the project at issue in this case.
The jury also heard evidence regarding the community of control over and active participation in the management and direction of the business enterprise. Plaintiff presented evidence that representatives of defendant and RMR/Maple Leaf made joint sales calls and presentations to potential customers, including Rau Construction, to whom the "Partnership Letter of Intent" was provided. Plaintiff also presented evidence, through the testimony of David Roby, that defendant and RMR/Maple Leaf shared the cost of additional lumber to be used on the projects.
Defendant's primary objection to the sufficiency of plaintiff's evidence is based on the contention that there are few references to a partnership or joint venture between defendant and Maple Leaf only. In this regard, the evidence was uncontroverted that Maple Leaf and RMR were owned by the same person, David Roby. And although Maple Leaf and RMR apparently were separate corporations, Jim Humbert acknowledged on cross examination that he thought of them as one entity. Consistent with that testimony, Exhibit 28 (which Jim Humbert sent to Dick Rhoads) repeatedly refers to Maple Leaf and RMR as a single entity, and demonstrates defendant's belief that the two companies were acting as one. Therefore, the jury was presented evidence that defendant itself did not make a distinction between the two companies.
Significantly, RMR and Maple Leaf jointly bid the labor portion of the Overland Park Project to defendant. (Plaintiff's Exhibit 30, "RMR/Maple Leaf Scope of Work"). Consistent with that bid, Maple Leaf and RMR agreed to be jointly liable for each other's obligations under the Master Agreement. From that evidence, the jury could infer that both RMR and Maple Leaf were in a partnership or joint venture with defendant, pursuant to which defendant would supply the lumber and RMR and Maple Leaf would supply the labor for the project at issue in this case.
The jury's verdict is supported by sufficient evidence. Defendant's motion for a new trial on this basis is denied.
E. Closing Argument
During closing argument, plaintiff's counsel told the jury that all parties involved with the Overland Park project had been paid for their work except for plaintiff. Plaintiff's counsel then stated that he assumed that defendant had been paid. Defendant argues that such statements were improper because no evidence was presented during the trial as to whether or not defendant received full payment from the general contractor, Rau Construction Company, and, in fact, defendant never received full payment.
Defendant made no objection at trial to any of plaintiff's counsel's argument. "Counsel . . . cannot as a rule remain silent, interpose no objections, and after a verdict has been returned seize for the first time on the point that the comments to the jury were improper and prejudicial." Glenn v. Cessna Aircraft Co., 32 F.3d 1462, 1465 (10th Cir. 1994) (quoting United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 238-39 (1940)). "A party who waits until the jury returns an unfavorable verdict to complain about improper comments during opening statement and closing argument is bound by that risky decision and should not be granted relief." Glenn, 32 F.3d at 1465, (citing Gonzalez v. Volvo of America Corp., 752 F.2d 295, 298 (7th Cir. 1985). Defendant's objection is untimely and affords no basis for overturning the jury's verdict.
F. Exhibits 16 and 28
Defendant argues that plaintiff offered evidence of settlement efforts by defendant for the purpose of establishing defendant's purported admission of liability. Both exhibits were the subject of the motion in limine filed by defendant, and defendant objected during trial that the exhibits were prejudicial and barred under Federal Rule of Evidence 408. Exhibit 16 is a January 20, 1998 letter from Scott Bly of defendant to David Roby of RMR/Maple Leaf. Exhibit 28 is a January 26, 1998 letter from Jim Humbert of defendant to Dick Rhoads of plaintiff.
"An offer to compromise involves an offer by one party to do or pay something in exchange for a release from liability." Hatch Kirk Power Servs. Corp. v. City of Girad, 1998 WL 918850, at *3 (D. Kan. 1998). With respect to Exhibit 16, the letter contains no offer of compromise and was not even sent to plaintiff. Accordingly, Exhibit 16 is not an offer to compromise within the meaning of Rule 408 as it applies to the circumstances of this case and was, therefore, properly admitted.
Regarding Exhibit 28, the court notes that the substance of the letter does not involve an offer by one party to do or pay something in exchange for a release from liability. Rather, the letter states, "After we know the issues we wish to meet with you to negotiate a settlement or resolve this problem for all of us." The court does not consider this an offer of compromise within the meaning of Rule 408.
However, even if the court construed Exhibit 28 as an offer of compromise, its contents were still properly admitted. Rule 408 does not exclude compromise evidence in all situations, but only where the evidence is offered to prove liability for the claim or its amount. The rule does not require exclusion when the evidence is offered for another purpose. In this case, the contents of the letter could have been construed by the jury as evidence of defendant exerting control over the subcontractors who were not paid by Maple Leaf and as evidence of defendant sharing the expenses of the alleged partnership or joint venture. Defendant's request for a new trial on this basis is denied.
G. Damages
Defendant contends that it is entitled to judgment as a matter of law or a remittitur of the verdict amount based on plaintiff's failure to mitigate damages. Specifically, defendant argues that plaintiff failed to properly investigate Maple Leaf before entering the contract and failed to mitigate its damages once Maple Leaf first defaulted on its payment obligations.
The court instructed the jury as to the measure of damages and, more importantly, the court gave the jury an instruction on defendant's defense of failure to mitigate. Moreover, defendant was given a full and fair opportunity to present its theory at trial that plaintiff failed to mitigate its damages. The court concludes that the jury's determination of damages is supported by the evidence. There is no basis on which the award of damages may be remitted.
IT IS THEREFORE ORDERED that defendant's Renewed Motion for Judgment as a Matter of Law or, in the Alternative, for Remittitur and/or New Trial (Doc. 104) is denied.