526 F.2d 922 (5th Cir. 1976), 74-3433, Jamison Co., Inc. v. Westvaco Corp.

Docket Nº:74-3433.
Citation:526 F.2d 922
Party Name:JAMISON COMPANY, INC., Plaintiff-Appellee, v. WESTVACO CORPORATION, formerly West Virginia Pulp and Paper Company, Defendant-Appellant.
Case Date:February 06, 1976
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 922

526 F.2d 922 (5th Cir. 1976)

JAMISON COMPANY, INC., Plaintiff-Appellee,

v.

WESTVACO CORPORATION, formerly West Virginia Pulp and Paper Company, Defendant-Appellant.

No. 74-3433.

United States Court of Appeals, Fifth Circuit.

Feb. 6, 1976

Rehearing and Rehearing En Banc Denied April 15, 1976. See 530 F.2d 34.

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Dean Booth, Michael C. Murphy, Atlanta, Ga., for defendant-appellant.

Gary N. Ackerman, Edward E. Dorsey, James H. Keaten, David M. Rapp, Atlanta, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before GOLDBERG and AINSWORTH, Circuit Judges, and NICHOLS, Associate Judge. [*]

GOLDBERG, Circuit Judge.

The facts and issues in this litigation revolve around the construction of defendant Westvaco's pulp plant at Wickliffe, Kentucky. In the spring of 1969, the plaintiff, Jamison Company, and the defendant entered into two contracts, each covering a different construction phase, under which Jamison agreed to supply and install piping at Westvaco's new mill. The first contract, set to begin on May 1, 1969, required completion by December 1, 1969, while the second contract contemplated that work would commence on May 5, 1969 and be finished by March 3, 1970. Westvaco obligated itself to pay Jamison $667,000 for the first contract and $1,042,000 for the second--a total contract price of $1,709,000. The parties' agreement provided for the contingencies of 'termination with cause' and of 'termination without cause.' 1

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In this suit, Jamison asserts that Westvaco terminated Jamison without cause, and further, that after termination the parties reached a settlement agreement which Westvaco subsequently breached. Westvaco, denying the wrongful termination and settlement allegations, argues that the termination was for good cause. Defendant also counterclaims for those costs in excess of Jamison's contract price incurred in hiring another contractor to complete the piping job. The jury rendered a verdict for Jamison in the amount of $607,000, from which decision Westvaco appeals. 2 After examining the record in the light of counsels' briefs and arguments, we conclude that the jury's verdict was excessive, having no support in the evidence, and that a new trial must be ordered as to all issues.

I. THE SUFFICIENCY OF THE EVIDENCE

Initially, we examine defendant's assertion that the evidence in support of plaintiff's theories of liability--the termination without cause and the settlement counts--was insufficient to justify jury submission. 3 This review is necessary because if we find that none of the propositions which might have supported a verdict in plaintiff's favor have an adequate evidentiary basis, then the verdict would fall notwithstanding the amount of damages returned. In that event, we would not need to reach the question of excessive damages.

A. The 'Termination Without Cause' Claim.

On September 9, 1969, defendant Westvaco terminated plaintiff Jamison, hiring another contractor to finish Jamison's work. The events occurring between May 1, 1969, and the termination date are much disputed and, not unexpectedly, provide the substance for Jamison's first contention--that the termination was without cause. Jamison asserts that it did not breach the contract, and that if it did breach the contract, the breach is excused because it resulted in all material respects from the hindrance and interference of defendant. Plaintiff draws our attention to evidence supporting its contentions that at the time of termination it was in substantial compliance with the contract; that it could have completed the piping job on time; and that any delays or difficulties ensued from Westvaco's wrongful actions--specifically defendant's failures 1) adequately to prepare the work site, 2) to deliver final drawings at the required times, and 3) to coordinate work among the various contractors. Westvaco denies these contentions, asserting instead that the overwhelming evidence supports its conclusion that plaintiff's work did not constitute substantial compliance, and that Westvaco in no way prevented plaintiff from fulfilling its contractual obligations. Our review of the record convinces us that the facts and inferences do not so strongly favor Westvaco that a jury of reasonable persons could not return a verdict for the plaintiff.

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See Boeing Co. v. Shipman, 5 Cir. 1969, 411 F.2d 365, 373--75. For this reason, we approve the district court's submission of the 'termination without cause' claim to the jury and denial of Westvaco's motion for judgment notwithstanding the verdict.

B. The Settlement Claim.

Also, as noted, plaintiff argues that at the September 9, 1969, termination meeting the parties entered into a definite, certain and unambiguous settlement agreement under which Westvaco was to pay Jamison the amount of its costs incurred, and that later, Westvaco breached that agreement. Defendant counters that the evidence will not support a jury finding of a legally sufficient settlement contract. Examining the record, we encounter sharply conflicting and somewhat confused testimony with respect to the purported agreement. However, although apparently inconsistent at points, Mr. Jamison's testimony with respect to a cost basis settlement, if believed by the jury, would justify a verdict under the settlement count. 4 Therefore we cannot say that the district court erred in submitting this second claim to the finders of fact. Having found that plaintiff's two contentions provided proper bases for jury consideration and determination of liability, we turn to the question of excessive damages.

II. THE EXCESSIVENESS OF THE VERDICT

Westvaco argues that the $607,000 jury award so far surpasses 'the maximum recovery supported by the evidence and authorized by the Court's instruction' that the district court's refusal of a new trial amounted to an abuse of discretion. Specifically, defendant asserts that no legally viable calculations under either the 'termination without cause' or the settlement claim can support the jury's verdict.

In Glazer v. Glazer, 5 Cir. 1967, 374 F.2d 390, 413, Judge Wisdom set forth the legal test for evaluating a damages finding in cases such as this. He said:

Here . . . abuse of discretion is present in the court's failure to grant the defendants' motion for a new trial or for remittitur. The verdict was excessive as a matter of law in that it exceeds any rational appraisal or estimate of the damages that could be based upon the evidence before the jury.

See Natco Inc. v. Williams Brothers Engineering Co., 5 Cir. 1974, 489 F.2d 639, 641; Glazer v. Glazer, 278 F.Supp. 476, 481--82 (E.D.La.1968). Cf. United States v. Simmons, 5 Cir. 1965, 346 F.2d 213, 218.

The question for this Court is whether viewing the testimony and exhibits most favorably to the plaintiff, there is within the standard quoted above sufficient evidence as to damages to support a verdict of $607,000. The plaintiff, asserting in oral argument that 'there are an infinite number of ways to arrive at the magic figure,' outlined three basic approaches.

A. Termination Without Cause

1. The Cost Approach.

According to plaintiff's counsel, the 'most plausible way' that the jury might have reached its verdict begins with an evaluation of Jamison's costs under the district court's 'termination without cause' instruction. That instruction,

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not objected to by either party, provided:

The measure of Jamison's damages, if any, as a result of the termination of the contracts, should you find that such termination by Westvaco was unjustified, is the proportionate share of the contract price, based on work done, plus the reasonable expenses of the termination, without deduction for the cost of the completion of the work after termination. I further charge you that such damages would include the proportionate share of profits that would have been realized by Jamison if full performance had been permitted. However, in order to recover lost profits, Jamison has the burden of proving to you that it would have made a profit had it been allowed to complete the contract and how much that profit would have been. From that amount, should you determine that Jamison is entitled to recover, should be deducted any payments made by Westvaco to or for the benefit of Jamison. 5

Jamison's analysis begins with the nonprofit portion of the instruction. Equating the contractual term 'the proportionate share of the contract price, based on work done' with those costs actually incurred, 6 plaintiff calls our attention to testimony of $487,000 in direct costs. To this sum, plaintiff adds $43,000 for 'allocated overhead' and subtracts $225,000 for payments already made by Westvaco to Jamison.

Plaintiff rightfully increases this subtotal of $305,000 by $76,000 which represents the monies Westvaco admitted owing Jamison on an unrelated contract (Luke).

$305,000 subtotal
76,000 owed to Jamison (Luke)
$381,000 subtotal forward
If we accept arguendo $381,000 as the amount due under the first part of the 'termination without cause' jury instruction, Page 929 Jamison still must demonstrate an evidentiary basis for the remaining portion ($226,000) of the jury's verdict ($607,000).

$607,000 verdict
(381,000) subtotal

$226,000 shortfall

Appellee Jamison attempts to make up this...

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