38 F.3d 1239 (1st Cir. 1994), 93-2373, Dopp v. Pritzker
|Docket Nº:||93-2373, 94-1130 and 94-1131.|
|Citation:||38 F.3d 1239|
|Party Name:||Paul S. DOPP, Plaintiff, Appellant, v. Jay PRITZKER, Defendant, Appellee. Paul S. DOPP, Plaintiff, Appellee, v. Jay PRITZKER, Defendant, Appellant.|
|Case Date:||October 28, 1994|
|Court:||United States Courts of Appeals, Court of Appeals for the First Circuit|
Heard Aug. 4, 1994.
[Copyrighted Material Omitted]
Ruben T. Nigaglioni, with whom Diana Mendez-Ondina and Ledesma, Palou & Miranda, Hato Rey, PR, were on brief, for plaintiff.
Gael Mahony, with whom Frances S. Cohen, David A. Hoffman, Joshua M. Davis, Hill & Barlow, Boston, MA, Salvador Antonetti-Zequeira, Ricardo Ortiz-Colon, and Fiddler, Gonzalez & Rodriguez, San Juan, PR, were on brief, for defendant.
Before SELYA and CYR, Circuit Judges, and ZOBEL, [*] District Judge.
SELYA, Circuit Judge.
In these appeals, we revisit the remedial phase of a protracted dispute in which the main protagonists are a pair of erstwhile partners, Paul S. Dopp and Jay A. Pritzker. The litigation stems from an oral contract between the two men concerning the purchase of the Dorado Beach Hotel Corporation (DBHC), a company that controlled a complex of hotels and golf courses situated on 1,000 beachfront acres along the north shore of Puerto Rico.
In an earlier opinion we upheld a jury verdict finding Pritzker liable to Dopp, but vacated both the jury's damage award and the trial court's rulings in connection with equitable relief. See Dopp v. HTP Corp., 947 F.2d 506 (1st Cir.1991) (Dopp II ). On remand, the district court held a second trial to determine Dopp's entitlement to various forms of relief. After a jury returned a series of special findings, see Fed.R.Civ.P. 49(a), the district court entered a revised judgment.
Both sides now appeal. 1 Their appeals require that we examine: (1) whether the district court lawfully denied Dopp resolution (a form of rescission) as a remedy for contractual breach; (2) whether the jury's assessment of full damages, $17,000,000, was either excessive, as Pritzker claims, or too niggardly, as Dopp asserts; and (3) whether the district court appropriately awarded Dopp attorneys' fees and prejudgment interest, based on its determination that Pritzker displayed obstinacy in conducting the litigation. After a careful examination of the record and the applicable law, we affirm in part, reverse in part, and remand.
We divide this segment of our opinion into two subparts, treating the facts and the travel of the case separately. In doing so, we write somewhat sparingly because the background of the litigation is already well-documented. See, e.g., id. at 508-09; Dopp v. HTP Corp., 831 F.Supp. 939, 941-42 (D.P.R.1993) (Dopp III ); Dopp v. HTP Corp., 755 F.Supp. 491, 492-94 (D.P.R.1991) (Dopp I ).
In May of 1984, Dopp wangled an option to acquire DBHC for the approximate price of $40,500,000. He secured the option with a $2,000,000 letter of credit supplied with the assistance of Island Resorts, S.A. (IRSA), a Panamanian corporation. The option agreement specified that the underlying purchase-and-sale transaction would be consummated no later than December 3, 1984.
Though playing for high stakes, Dopp had relatively few chips of his own. Thus, he immediately set out in search of financial backing. He encountered heavy seas. With time running out, Dopp turned to Pritzker. The parties reached an oral agreement on November 30, 1984. Under its terms, Pritzker agreed to provide the funds needed to
seal the purchase and reimburse Dopp's and IRSA's costs. In exchange, Dopp agreed that Pritzker would receive an 80% equity interest in a holding company that would be formed to acquire DBHC's stock, and, as a sweetener, that a Pritzker affiliate would be given a long-term contract to manage the hotels coincident with the closing.
The parties formed HTP Corporation (HTP) to serve as the holding company. Dopp controlled 20% of HTP's stock in the first instance, but ceded some shares to IRSA in accordance with a prior arrangement. In the end, Dopp retained a 12% interest in HTP. Meanwhile, Pritzker, through a nominee, held an 80% interest. 2
On December 3, 1984, Pritzker presented two documents to Dopp that supposedly embodied their oral agreement. Pritzker injected into one of these documents--the stock subscription agreement (SSA)--a clause granting the majority shareholder (Pritzker) an option to retire the stock held by the two minority shareholders (Dopp and IRSA) for $50,000 per share, or $1,000,000 in the aggregate, at any time within 10 years. With the purchase option due to expire, the move put Dopp at a huge disadvantage. He signed the documents.
After HTP obtained a one-day extension from the seller, it closed the underlying transaction on December 4, 1984. HTP bought DBHC's stock for $36,846,000, net of adjustments; the seller canceled the letter of credit; Pritzker reimbursed Dopp and IRSA for expenses advanced ($710,000); and Dopp received a prearranged $200,000 "consulting fee."
In mid-1988, Dopp initiated a diversity suit in the United States District Court for the District of Puerto Rico, naming Pritzker, HTP, and several others as defendants. He alleged, inter alia, that the buy-out option in the SSA contravened the oral contract, and that his consent to the SSA had been unfairly procured. After a 10-day trial, a jury found in Dopp's favor, determining that the parties had formed an oral contract on November 30, 1984, and that, thereafter, Pritzker had employed deceit and duress to pressure Dopp into signing the SSA, thereby violating the oral contract. Based on these determinations, the jury awarded Dopp $2,000,000 in damages. Thereafter, the district court, acting in response to Dopp's motion under Fed.R.Civ.P. 59(e), declared the SSA null and void in respect to Dopp's shares in HTP, but declined to order resolution of the oral contract. 3
The first trial produced no fewer than ten appeals. After considering them, we upheld the liability determination but vacated both the damage award and the district court's remedial rulings, see Dopp II, 947 F.2d at 520. We then remanded for further relief-related proceedings, indicating that, "assuming a competent evidentiary predicate, the jury may be instructed on, and asked to determine, variously: (1) full damages ...; (2) the amount of accessory damages, if any, [pursuant to annulment] ...; and (3) the amount of accessory damages, if any, [pursuant to resolution]...." Id. at 519. We also observed that "annulment and resolution are mutually exclusive remedies," and that "the plaintiff may or may not ... satisfy the district court that he is entitled to an order for resolution of the Oral Contract." Id. at 520.
On March 27, 1993, a second jury rendered a series of special findings. The jury fixed the amount of full damages at $17,000,000, and the amount of damages ancillary to resolution (if resolution were ultimately ordered) at either $19,621,000 or $210,071,000, depending on whether the court might order resolution in natura or in kind. See Dopp III, 831 F.Supp. at 942 & n. 5. The jury determined that, if Dopp elected annulment, there would be no accessory damages. See id.
On September 9, 1993, the district court made certain supplementary rulings. Among other things, the court denied Pritzker's motions for judgment as a matter of law and for a new trial; put a damper on Dopp's quest for resolution; rejected Dopp's motion to alter or amend the judgment; upheld the jury's assessment of full damages; and awarded Dopp prejudgment interest and attorneys' fees. 4 See id. at 943-52. These appeals ensued.
In our earlier opinion, we determined that up to three main remedies might be available to Dopp, namely, annulment of the SSA, resolution of the oral contract, or full damages. Dopp II, 947 F.2d at 519. We noted that, in the event Dopp achieved either annulment or resolution, the jury might also award accessory damages. See id. We defined the third remedy, "full damages," as comprising "the amount of damages which would make Dopp whole in the absence of either annulment or resolution...." Id. Withal, we cautioned that the availability of any given remedy depended upon the existence (or nonexistence) of a "competent evidentiary predicate." Id.
At the second trial, Judge Pieras instructed the jurors as to each of these three remedies and commanded them to determine on a contingent basis the amount of money damages, if any, that each anodyne actually would entail. The jurors complied. Following the jury's calculation of potential damages, the judge asked Dopp to elect a remedy. Dopp chose resolution. Much to his dismay, the district court ruled that, given the evidence, resolution was unobtainable. Under protest, Dopp then elected an alternate remedy: full damages. He now beseeches us to reverse the district court's denial of resolution.
In order to respond to Dopp's importunings, we must determine the nature of resolution under Puerto Rico law, settle upon the proper standard of review, consider whether the court below paid sufficient homage to the lessons of Dopp II, and, finally, evaluate the sturdiness of the district court's ruling.
The remedy of resolution emanates from article 1077 of the Puerto Rico Civil Code, which reads in pertinent part:
The right to rescind the obligations is considered as implied in mutual ones, in case one of the obligated persons does not comply with what is incumbent upon him.
The person prejudiced may choose between exacting the fulfillment of the obligation or its rescission, with indemnity for damages and payment of interest in either case. He may also demand the rescission, even after having requested its fulfillment, should the latter appear impossible....
P.R.Laws Ann. tit. 31, Sec. 3052 (1991).
It is noteworthy that "[n]ot every...
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