293 F.3d 912 (5th Cir. 2002), 01-30185, Industrias Magromer Cueros v. Louisiana Bayou Furs

Docket Nº:01-30185.
Citation:293 F.3d 912
Party Name:INDUSTRIAS MAGROMER CUEROS Y PIELES S.A., Plaintiff-Appellee, v. LOUISIANA BAYOU FURS INC., et al., Defendants, Louisiana Bayou Furs Inc., William L. Berry, Defendants-Appellants.
Case Date:June 24, 2002
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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293 F.3d 912 (5th Cir. 2002)


LOUISIANA BAYOU FURS INC., et al., Defendants,
Louisiana Bayou Furs Inc., William L. Berry, Defendants-Appellants.

No. 01-30185.

United States Court of Appeals, Fifth Circuit

June 24, 2002

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Brent Bennett Barriere (argued), Owen Bennett St. Amant, Phelps Dunbar, New Orleans, LA, Luther T. Munford, Phelps Dunbar, Jackson, MS, Harry Alston Johnson, III, Phelps Dunbar, Baton Rouge, LA, for Plaintiff-Appellee.

Charles D. Marshall, Jr. (argued), Charles A. Snyder, Milling Benson Woodward, New Orleans, LA, Glenn G. Morris (argued), Baton Rouge, LA, for Defendants-Appellants.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before JONES, EMILIO M. GARZA and CARL E. STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Louisiana Bayou Furs, Inc. ("Bayou Furs") and William L. Berry ("Berry") appeal from the district court's denial of their motion for judgment as a matter of law, or in the alternative, motion for a new trial. They also appeal the court's grant of judgment as a matter of law for Industrias Magromer Cueros y Pieles S.A. ("Industrias") on its force majeure defense. For the following reasons, we AFFIRM in part and REVERSE in part.


This dispute arises from a contract for the sale of unprocessed nutria skins. On November 12, 1997, Industrias entered into an agreement with Bayou Furs to purchase 200,000 nutria skins (the "Nutria Agreement"). Industrias is an Argentinian company which is a "dominant force" in the world market for nutria coats and products. During the relevant time period, Bayou Furs was a closely-held Louisiana corporation in the business of buying nutria pelts and other furs from Louisiana

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trappers and reselling them in national and international markets.1

Prior to 1997, Industrias routinely purchased pelts directly from Louisiana trappers. In June of 1997, Industrias representatives were introduced to Bayou Furs as a potential bulk supplier of fur pelts. In September of 1997, Irving Camlot ("Camlot"), President of Bayou Furs, informed Industrias that Bayou Furs was prepared to provide a substantial amount of nutrias skins. Leonardo Grozovsky ("Leonardo"), President of Industrias, and his son Frederico Grozovsky ("Frederico"), Managing Director of Industrias, invited Camlot to visit Industrias's facilities in Argentina and to discuss a possible future business relationship. Camlot accepted the invitation and traveled to Argentina with Jimmy Goode, a buyer and grader employed by Bayou Furs, and Berry, chairman of Bayou Furs's board of directors and the Director of Wetland Management for Louisiana Land & Exploration Company ("LL&E").2

While in Argentina, Camlot and Berry negotiated the Nutria Agreement with Leonardo and Frederico. Nestor Molczadzki ("Molczadzki"), an Industrias employee with years of experience in grading pelts, also attended the negotiations. Berry introduced himself as the chairman of Bayou Furs's board of directors and director of LL&E's Office of Wetland Management. Berry described LL&E as one of the largest landowners in Louisiana. According to Industrias, Berry was the dominant figure in the negotiations, and repeatedly emphasized LL&E's connection with Bayou Furs and its support for the Nutria Agreement. Bayou Furs and Berry contend that he was merely a bystander to the contract negotiations and that Camlot negotiated the agreement for Bayou Furs.

During the negotiation of the Nutria Agreement, Industrias informed Camlot and Berry that it required 200,000 nutria pelts for its winter and spring production requirements. Camlot and Berry represented that Bayou Furs could timely deliver the required pelts. Industrias alleges that it expressed concerns about dealing with the newly formed Bayou Furs, and that Berry represented that there was no need for concern because LL&E stood behind Bayou Furs's agreement. The parties prepared a written agreement in Industrias's office, and the Nutria Agreement was executed on November 12, 1997. The Nutria Agreement was signed by Camlot for Bayou Furs, Leonardo for Industrias, and also by Berry, Frederico, Molczadzki, and Maximilian Forman.

The Nutria Agreement provided that Bayou Furs would supply 100,000 nutria skins by February 15, 1998. Industrias was obligated to pay $7.90 per pelt for the highest grade pelts, and lesser amounts for lower grade pelts. Under the terms of the Nutria Agreement, Industrias provided a $703,000 letter of credit in favor of Bayou Furs as consideration for the first 100,000 pelts. The agreement provided for Industrias's right to inspect and grade the skins prior to acceptance. Upon acceptance of the skins, Industrias was obligated to provide a certificate of inspection, which entitled Bayou Furs to draw from the letter of credit. The agreement also

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provided for the sale of another 100,000 skins at a later date.

In December of 1997, Molczadzki traveled to Bayou Furs's warehouse at Sicily Island, Louisiana to inspect and grade 20,000 of the first 100,000 nutria skins. Bayou Furs contends that Molczadzki spent two weeks improperly downgrading the skins. Camlot informed Molczadzki that Bayou Furs would not sell the skins to Industrias on the basis of the improper downgrading, and told Molczadzki to return to Argentina. After learning of the dispute, Frederico joined Molczadzki in Louisiana in an attempt to secure delivery. Frederico and Molczadzki contacted Berry to urge Bayou Furs's compliance with the terms of the Nutria Agreement. Berry refused to intervene with Camlot's decision. Subsequently, Bayou Furs sold the pelts one week later to another buyer for forty percent more than the price agreed on in the Nutria Agreement.

On July 8, 1998, Industrias filed suit in federal court against Bayou Furs, Camlot, Berry and several of Bayou Furs's shareholders alleging (1) breach of contract, (2) violations of the Louisiana Unfair Trade Practices Act ("LUTPA"), (3) detrimental reliance, (4) intentional misrepresentation, and (5) negligent misrepresentation. Industrias dismissed all claims against Camlot and Bayou Furs's shareholders prior to trial.

In pre-trial proceedings, Industrias moved to add Berry's employer, LL&E, as a party-defendant. The parties reached an agreement whereby LL&E would not be added as a defendant on the basis of LL&E's agreement to provide a Letter of Undertaking indemnifying Berry for any judgment rendered against him on Industrias's claims (up to $5,000,000). The Letter of Undertaking also provided that Industrias was prohibited from bringing the indemnity agreement to the jury's attention unless Berry placed his ability to pay a judgment at issue.

The case was tried before a jury in five days. Bayou Furs and Berry moved for judgment as a matter of law at the close of Industrias's case arguing that there was insufficient evidence to demonstrate (1) a violation of LUTPA, (2) a breach of contract for failure to sell the second 100,000 skins, (3) bad faith, and (4) intentional misrepresentation. The court denied the motion. Industrias also moved for judgment as a matter of law asserting that there was undisputed evidence that Bayou Furs's failure to perform under the contract had nothing to do with force majeure. Based on Camlot's judicial admission that the supply of nutrias had nothing to do with poor weather conditions in Louisiana, the court granted the motion. The jury found that (1) a breach of contract occurred, (2) Berry was not personally obligated to perform the contract, (3) Bayou Furs and Berry violated LUTPA, (4) Industrias detrimentally relied on representations made by Bayou Furs and Berry, (5) Bayou Furs and Berry intentionally misrepresented material facts when negotiating and executing the contract, but they did not do so with an intent to obtain an unjust advantage or to cause a loss or inconvenience to Industrias, (6) Bayou Furs and Berry did not make any negligent misrepresentations to Industrias, and (7) Bayou Furs and Berry acted in bad faith. On the basis of the jury's factual findings, the district court entered judgment against Bayou Furs for breach of the Nutria Agreement, and against Bayou Furs and Berry for violations of LUTPA and detrimental reliance. The court entered judgment against Bayou Furs and Berry, jointly and severally, in the amount of $3,465,350.

Bayou Furs and Berry renewed their motion for judgment as a matter of law or,

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in the alternative, a new trial. The motion was denied. Bayou Furs and Berry now appeal, arguing that they are entitled to judgment as a matter of law or, alternatively, a new trial. They assert that there was insufficient evidence adduced to support Industrias's claim of (1) a LUTPA violation, (2) detrimental reliance, (3) bad faith, and (4) breach of contract on the second 100,000 skins. They also assert that the court erred in holding that force majeure was inapplicable. Further, they contend that the damages awarded were excessive and that Berry should not be required to pay more than twenty six percent of the damages—the percentage of fault that they assert the jury assigned to him. Lastly, they maintain that the district court erred by allowing Industrias to refer to the indemnity agreement.

I. Standard of Review for Judgment as a Matter of Law and for Granting a New Trial

We review de novo a district court's grant or denial of a motion for judgment as a matter of law. Stokes v. Emerson Elec. Co., 217 F.3d 353, 356 (5th Cir. 2000). Judgment as a matter of law is appropriate if "there is no legally sufficient evidentiary basis for a reasonable jury to find for [a] party on [an] issue." Fed. R.Civ.P. 50(a). Reviewing all of the evidence in the record, a "court must draw all...

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