Flowers Ginning Co., Inc. v. Arma, Inc.
| Decision Date | 24 January 1997 |
| Docket Number | No. 96-1314,96-1314 |
| Citation | 106 F.3d 390 |
| Parties | NOTICE: Fourth Circuit Local Rule 36(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. FLOWERS GINNING COMPANY, INCORPORATED, d/b/a Warren Brothers Gin, Plaintiff-Appellee, v. ARMA, INCORPORATED; Ritch McCutchen, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeal from the United States District Court for the Eastern District of North Carolina, at Fayetteville. Alexander B. Denson, Magistrate Judge. (CA-94-46-3-DE)
ARGUED: Frederick Lewis Wright, II, SMITH, CURRIE & HANCOCK, Atlanta, Georgia, for Appellants. Gordon Claiborne Woodruff, Smithfield, North Carolina, for Appellee. ON BRIEF: Stephen Gregory Joy, SMITH, CURRIE & HANCOCK, Atlanta, Georgia; Steven Craig Lawrence, ANDERSON, JOHNSON, LAWRENCE, BUTLER & BOCK, Fayetteville, North Carolina, for Appellants.
Before WIDENER and HAMILTON, Circuit Judges, and PHILLIPS, Senior Circuit Judge.
ARMA, Inc. (ARMA), a distributor of cotton ginning equipment, appeals the magistrate judge's denial of its motion for judgment as a matter of law, or in the alternative for a new trial, see Fed.R.Civ.P. 50, following a jury verdict in favor of Flowers Ginning Company, Inc. (Flowers Ginning), a company which had purchased certain ginning equipment from ARMA. We affirm.
Flowers Ginning is a North Carolina corporation which operated a cotton gin in Newton Grove, North Carolina, from 1986 to 1994. Glenn Flowers was the sole shareholder in Flowers Ginning and continually served as its president. Charlie Warren and Tommy Warren (the Warren brothers), Glenn Flowers' nephews, conducted the day-to-day operations of Flowers Ginning. ARMA is a Georgia corporation with its principal place of business in Cordele, Georgia. ARMA sells and installs new and used cotton ginning equipment.
In 1991, Flowers Ginning decided to purchase a universal density (UD) cotton press and other related equipment in order to serve the needs of its customers as well as meet new cotton ginning volume expectations during a boom year for cotton production. Accordingly, ARMA and Flowers Ginning began discussing a deal whereby Flowers would purchase the UD press and related equipment from ARMA. In light of this contemplated deal, Flowers Ginning began informing its customers about its upcoming increased capacity for production and apparently secured oral commitments to gin 12,314 bales of cotton for the 1991 ginning season.
During the second week of July 1991, Flowers Ginning contacted Southern National Bank (Southern National) to discuss financing for the contemplated equipment purchase from ARMA. On August 19 or August 20, Southern National indicated to Flowers Ginning that it was prepared to make the loan. Accordingly, on or about August 20, Flowers Ginning contacted ARMA's president, Ritch McCutchen (McCutchen), to advise him that it had arranged financing and stood ready to purchase the UD press and other related equipment.
On August 21, McCutchen drafted the written contract at issue here, signed it, and flew to North Carolina to secure Glenn Flowers' signature. For reasons not fully explained in the record, Glenn Flowers was not available to sign the contract that day. Therefore, McCutchen left the contract with Flowers Ginning in North Carolina for Glenn Flowers' signature. The written contract provided that some of the equipment would be delivered immediately; that other equipment would be delivered approximately thirty days from the date the contract was signed; and that other equipment would be delivered within ninety days. Glenn Flowers signed the contract on August 22. That same day, Southern National issued commitment papers for the loan.
On August 26, 1991, Glenn Flowers, the Warren brothers, and Flowers Ginning's corporate attorney, Miles B. Fowler (Fowler), met with Richard DeBose (DeBose), a Southern National executive. According to Flowers Ginning, during a telephone call between DeBose and McCutchen that took place during this meeting, DeBose expressed his desire that the equipment be installed and operational in time for the 1991 ginning season. DeBose's desire rested on his concern that Flowers Ginning would be otherwise unable to repay the loan. DeBose and McCutchen then allegedly agreed that ARMA would have the UD press and related equipment installed and operational by October 1. DeBose then reported McCutchen's agreement to an October 1 installation and operational deadline to Glenn Flowers and the Warren brothers who were present at the meeting.
In completing the loan closing, DeBose relied heavily on McCutchen's promise to have the UD press and related equipment installed and operational by October 1. In addition, Flowers Ginning authorized Southern National to disburse funds to ARMA only after McCutchen promised to have the UD press and related equipment installed and operational by October 1. At the trial however, McCutchen testified that he and DeBose never discussed ARMA having the UD press and related equipment installed and operational by October 1 and that he did not know that Glenn Flowers and the Warren brothers were in the room during his August 26 telephone conversation with DeBose.
On August 27, 1991, Flowers Ginning, through Southern National, paid ARMA the earnest money called for in the contract. ARMA nonetheless failed to have the equipment installed and operational by October 1. ARMA provided all of the equipment subject to the contract by November 12, 1991, a date within the delivery schedule called for in the original written contract as signed by McCutchen and Glenn Flowers.
Flowers Ginning subsequently filed suit against ARMA in the United States District Court for the Eastern District of North Carolina. The suit alleged claims for breach of contract, fraud, civil conspiracy, recision, and unfair trade practices. Flowers Ginning sought compensatory damages for: (1) costs it incurred in completing the installation of the UD press and related equipment; and (2) for lost profits that allegedly resulted from ARMA's failure to have the ginning equipment installed and operational by October 1. Specifically, Flowers Ginning determined that it incurred a total of $183,255 for expenses and improvements to finish installing the UD press and related equipment and make the completed gin operational. (J.A. 545-46). In addition, because Flowers Ginning could not conduct ginning operations for the Fall 1991 ginning season, it could not carry through with its commitments to gin 12,314 bales of cotton. For that season and succeeding years, Flowers Ginning asserted lost calculable profits of over $200,000. (J.A. 554, 570-74, 939).
Following discovery, ARMA filed a motion for summary judgment, which the district court granted in part and denied in part. Accordingly, the district court entered judgment for ARMA on Flowers Ginning's claim for civil conspiracy, but allowed the breach of contract, fraud, recision, and unfair trade practices claims to be tried before a jury. Then the parties consented to trial of this matter before a United States Magistrate Judge. See 28 U.S.C. § 636(b)(2) (1990).
Subsequently, ARMA filed a motion in limine to exclude any evidence that the parties orally agreed to modify the contract to set an October 1 installation and operational deadline, rather than a November 19 installation and operational deadline. 1 In support of the motion, ARMA argued that the statute of frauds and the parol evidence rule as contained in the Georgia Commercial Code (GCC), see Ga.Code Ann. §§ 11-2-201 to 202, barred any evidence of an oral modification before August 27, the date Flowers Ginning paid ARMA the "earnest money." 2 Determining that August 21 constituted the effective date of the contract rather than August 27, the magistrate judge denied ARMA's motion. The case then proceeded to trial.
At the close of Flowers Ginning's case, ARMA made a motion for judgment as a matter of law, see Fed.R.Civ.P. 50(a), which the magistrate judge denied. Flowers Ginning then withdrew its recision claim, leaving only its claim for breach of contract against ARMA and its claims for fraud and unfair trade practices against both ARMA and McCutchen. At the close of all the evidence, ARMA renewed its motion for judgment as a matter of law. The magistrate judge denied the renewed motion.
The case proceeded to the jury, which returned a verdict in favor of Flowers Ginning on its breach of contract claim against ARMA and on its unfair trade practices claim against ARMA and McCutchen. Conversely, the jury found in favor of ARMA and McCutchen on Flowers Ginning's fraud claims. The jury awarded $330,555 on the breach of contract claim against ARMA and $1 on the respective unfair trade practices claims against ARMA and McCutchen. Finding insufficient evidence as a matter of law to support the jury's verdict against either defendant for unfair trade practices, the magistrate judge entered judgment in favor of both ARMA and McCutchen on those claims. The magistrate judge did not disturb the jury's verdict on the breach of contract claim.
ARMA subsequently filed a motion for judgment as a matter of law or in the alternative for a new trial, see Fed.R.Civ.P. 50(b), on two grounds. First, ARMA contended that the magistrate judge erroneously allowed the admission of evidence relating to oral contract modifications occurring before August 27, 1991, and without that evidence no reasonable jury could have found it liable for breach of contract. Second, and in the alternative, ARMA contended that even if it breached the contract, Flowers Ginning presented insufficient evidence to support the damage award on the breach of contract claim. The magistrate judge denied the motion. ARMA timely...
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