Computrol Inc. v. Newtrend L.P.

Decision Date13 December 1999
Docket Number99-1242,No. 99-1167,99-1167
Parties(8th Cir. 2000) COMPUTROL, INC., Plaintiff - Appellant/Cross-Appellee, v. NEWTREND, L.P. and CA NEWTREND, INC., Defendants - Appellees/ Cross-Appellants. Submitted:
CourtU.S. Court of Appeals — Eighth Circuit

Appeal from the United States District Court for the Eastern District of Missouri. [Copyrighted Material Omitted] Before RICHARD S. ARNOLD and LOKEN, Circuit Judges, and MELLOY,1 District Judge.

Melloy, District Judge.

After a 34-day trial in the Eastern District of Missouri, a jury awarded $2,663,000 to Appellant, Computrol, Inc., ("Computrol") on a breach of contract claim against Appellee Newtrend, L.P., and Appellee CA Newtrend, Inc., (collectively, "Newtrend"). The jury also decided against Newtrend and Newtrend CEO Robert King, in his individual capacity, on three common law fraud claims.

On post-trial motion, the district court2 ruled as a matter of law that a contractual limitation of liability provision limited Computrol's breach of contract recovery to $469,206.88, and described Newtrend's proof of damages in excess of $469,206.88 as wholly speculative. The district court entered judgment in Computrol's favor in the amount of $469,206.88, plus $150,000 in attorneys fees. The district court also entered judgment as a matter of law against Computrol on the fraud claims, and denied Computrol's bill of costs. Computrol appealed the decision, and Newtrend cross-appealed. For the following reasons, we affirm the post-trial judgment of the district court.

I

Computrol develops custom computer software for the financial services industry, and Newtrend provides software and support services to financial institutions. On December 28, 1992, Computrol entered into a contract with Newtrend to re-engineer a number of Newtrend's INFOPOINT software applications ("the Alliance Agreement"). INFOPOINT is a group of software packages utilized by Newtrend's banking customers. The Alliance Agreement contemplated that Computrol would begin performance under the Agreement by re-engineering Newtrend's Integrated Commercial Loan Application ("ICL"). If Newtrend successfully completed the initial re-engineering of the ICL, then Computrol would re-engineer one additional software application per year. The Agreement provided that Computrol would be paid $430,000 for re-engineering the ICL.3

Although the terms of the Agreement required Computrol to complete the ICL re-engineering project within 270 days of the date the Agreement was signed, the project quickly ran into technical problems. Additionally, the parties disagreed as to the specific terms of the Agreement. After extensive negotiations, the parties agreed to modifications in the software requirements and to increase Computrol's compensation for the project.

In May of 1993, the parties signed an addendum to the Agreement in which Computrol agreed to re-engineer an additional software application, the Integrated Installment Loan ("IIL"). The IIL project also encountered technical complications and never progressed beyond the planning phase.

The relationship between the parties subsequently deteriorated, with Newtrend providing written notice of default to Computrol on January 6, 1994. The notice stated, in pertinent part:

This letter is an official NOTICE OF DEFAULT pursuant to paragraph 11.2 of the . . . Alliance Agreement . . . as modified by Letter Agreement of December 30, 1992 . . . . As evidenced by numerous letters, phone calls, and meetings between our companies, the Commercial Loan Project is months behind schedule, still significantly incomplete and does not contain several promised features. This is a material breach of the Agreement and grounds for termination. Technically, this contract gives you 90 days to cure the defaults, but it will be difficult to cure late delivery when the date has already passed. I suggest that you immediately return the $182,860 paid to date.

At the point Newtrend provided the written notice of default, Computrol had not actually delivered the ICL in its re-engineered format. At trial, the parties disagreed as to whether the ICL re-engineering project was substantially completed.

After Newtrend terminated the Agreement, Computrol filed the instant lawsuit. In its complaint, Computrol alleged claims against both Newtrend and Newtrend CEO King, in his individual capacity, for fraudulent misrepresentation (Count I) and fraudulent concealment (Count II). Computrol also alleged claims against only Newtrend for breach of contract (Count III), breach of fiduciary duty (Count IV), indemnification (Count V), breach of the covenant of good faith and fair dealing (Count VI), quantum meruit (Count VII), business defamation (Count VIII), and injurious falsehood (Count IX). Newtrend counterclaimed for breach of contract (Count I), indemnification (Count II), breach of the covenant of good faith and fair dealing (Count III), and fraudulent inducement/fraudulent misrepresentation (Count IV).

At trial, Computrol advanced a theory it was an unwitting pawn in a larger corporate dispute between King and Newtrend's business affiliates.4 Computrol introduced evidence that Newtrend actually terminated the Agreement because of the corporate dispute, and not because of performance difficulties, delays, or any other factor under Computrol's control. Computrol also presented evidence that Newtrend failed to comply with the termination provisions of the contract. The Agreement allowed a party to terminate only in the event of material or repeated breach and after the nonbreaching party provided the breaching party a detailed notice of deficiencies and a ninety-day cure period for defaults other than payment.

The district court submitted to the jury fraudulent misrepresentation and fraudulent concealment against Newtrend and King, and breach of fiduciary duty against Newtrend. The Court also submitted the breach of contract claim against Newtrend. As to Newtrend's counterclaims, the district court submitted breach of contract and fraudulent misrepresentation.

The jury returned a verdict in favor of Computrol and against Newtrend and King on one count of fraudulent misrepresentation and two counts of fraudulent concealment. The jury awarded $75,000 in damages on each fraud count against Newtrend, and $35,000 in damages on each fraud count against King. The jury also found in favor of Computrol on the breach of contract claim, and awarded $2,663,000 in damages. The jury ruled in favor of Computrol on all of Newtrend's counterclaims.

On post-trial motion, the district court ruled that Computrol's fraud claims and the breach of fiduciary duty claim failed as a matter of law. The district court reduced Computrol's breach of contract recovery from $2,663,000 to $469,206.88, for two reasons. First, the district court stated that the limitation of liability clause barred Computrol from recovering lost profits because "lost profits damages are considered consequential damages." The district court stated that since the parties agreed in the contract that they would not seek consequential damages, Computrol could not recover lost profits. Second, the district court concluded that Newtrend's proof of damages in excess of $469,206.88 was "wholly speculative."

Computrol timely filed a notice of appeal in the district court and raises two distinct issues on appeal. First, Computrol alleges that the district court erred when it reduced the jury's breach of contract verdict from $2,663,000 to $469,206.88. Computrol maintains that the limitation of liability clause did not bar lost profits, and that the proof of damages it offered at trial was sufficiently definite. Second, Computrol asserts that the district court abused its discretion when it awarded only $150,000 in attorney's fees and denied its bill of costs. On cross-appeal, Newtrend asserts that Computrol failed to make a submissible case for breach of contract.

II

Initially, the Court turns to the merits of the breach of contract claim. In its post-trial order, the district court ruled that Computrol submitted evidence from which a reasonable juror could find that Computrol adequately performed its duties under the contract. While Computrol did not complete the ICL in saleable form and the program had fewer functions than originally required under the contract, the district court ruled that Newtrend agreed to numerous extensions of time and to proposed modifications of the ICL software. The district court also ruled that Computrol presented sufficient evidence that Newtrend breached the termination for cause provision by failing to specify sufficiently the reasons it was terminating the Agreement and by failing to provide an adequate opportunity to cure. On appeal, Newtrend maintains that the district court should not have allowed the contract claim to go to the jury and should have ruled for Newtrend as a matter of law.

"Our review of a jury verdict is extremely deferential and we will not reverse for insufficient evidence unless after viewing the evidence in the light most favorable to the verdict, we conclude that no reasonable juror could have returned a verdict for the non-moving party." Morse v. Southern Union Co., 174 F.3d 917, 922 (8 th Cir.), cert. denied, 120 S.Ct. 29 (1999) (internal quotations omitted). In this case, there is sufficient evidence from which a reasonable juror could find that Computrol performed its duties under the Agreement even if Computrol did not complete the ICL within the 270-day time frame. Newtrend Vice President Jerry Nissen testified that when Computrol programmers encountered outdated computer code in the original ICL program, Newtrend authorized Computrol additional time and compensation to rewrite the new program. Nissen stated that Newtrend expected a delay after the company authorized the additional work. Computrol also presented testimony that it did...

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