Itel Capital Corp. v. Cups Coal Co., Inc.
| Citation | 707 F.2d 1253 |
| Decision Date | 23 June 1983 |
| Docket Number | No. 81-7703,81-7703 |
| Parties | 13 Fed. R. Evid. Serv. 1243 ITEL CAPITAL CORPORATION, a corporation, Plaintiff-Appellee, Cross-Appellant, v. CUPS COAL COMPANY, INCORPORATED, a corporation; and Herman Mulvehill, Defendants-Appellants, Cross-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Howard & Howard, Charles L. Howard, Jr., Birmingham, Ala., for defendants-appellants, cross-appellees.
Thomas, Taliaferro, Forman, Burr & Murray, John D. Clements, T. Thomas Cottingham, William F. Murray, Jr., Birmingham, Ala., for plaintiff-appellee, cross-appellant.
Appeals from the United States District Court for the Northern District of Alabama.
Before TJOFLAT, HILL and JOHNSON, Circuit Judges.
Defendants Cups Coal Company, Inc., an Alabama mining company, and Cups' president and 97% owner, Herman Mulvehill, appeal from a jury verdict in favor of Itel Capital Corporation, a California capital equipment leasing company which leased equipment to Cups. Itel's amended complaint, based on diversity jurisdiction, alleged conspiracy and fraud by Cups and Mulvehill and claimed a right to payment under the leases and to possession of the equipment leased. Cups and Mulvehill counterclaimed, alleging, inter alia, misrepresentation, conspiracy, and fraud. 1 The trial court ordered a separate trial of the counterclaims and, after a jury trial on Itel's claims, the jury returned a verdict on special interrogatories for $551,000 against both defendants, including $10,000 punitive damages. Based on the answers to the interrogatories, the trial court reduced the judgment against Cups to $538,533.21. The court also denied defendants' motion for a new trial on the condition that Itel consent to a remittitur reducing the verdict against Mulvehill to $497,000, which was the amount that Itel requested against Mulvehill in its complaint plus $10,000 punitive damages. Itel consented to the remittitur without protest. In addition to several alleged errors raised in defendants' appeal, Itel cross appeals from the recalculation of the verdict against Cups and from a refusal to permit Itel to amend its complaint to request more than $497,000 in damages against Mulvehill. We affirm on all issues.
The relationship between Cups and Itel began in the late spring of 1978 when James Dennis, president of Dennis Mining Supply & Equipment Co., 2 told Jack Adams, Itel's Birmingham sales representative, that Cups was a potential Itel leasing customer. Dennis arranged for a meeting between Mulvehill and Adams in his office. At the meeting, the parties discussed the possibility that Itel would purchase a Chicago Pneumatic 750 Drill and a Hough 400 Loader from Dennis and lease the equipment to Cups. According to Adams' testimony, Adams requested a financial statement from Mulvehill and Mulvehill promised to put one together and send it to him. Sometime after the meeting, Itel received a financial statement which subsequent investigation proved was fraudulent. 3 Defendants deny having furnished this statement, but Adams testified that, at a meeting between Adams and Mulvehill, Adams said that Cups' financial statement "looked very good," to which Mulvehill replied, "We do all right." In addition to the financial statement, Itel relied on a verification of Cups' coal reserves purportedly prepared by Associated Investment Services. At trial, the individual employed by Associated Investment Services whose name is signed at the bottom of the coal reserves report testified that he had never prepared a report on Cups Coal Company.
At a closing at Dennis' office on June 15, 1978, Mulvehill executed the 750 Drill lease in the presence of Adams, but deferred a decision on the Hough 400 Loader lease. Adams later attempted to locate Mulvehill when he learned that Mulvehill would sign the Loader lease, but, as often happened, Mulvehill could not be contacted except through Dennis. Adams therefore gave Dennis the lease, and Dennis later returned it with Mulvehill's name signed at the bottom. Mulvehill now denies having executed the Hough 400 Loader lease.
In late July 1978, Itel learned that Cups was interested in leasing two PB 83 Compressors which Itel would purchase from Dennis. Again, Adams could not locate Mulvehill, so the lease was left with Dennis and later returned with Mulvehill's name signed at the bottom. Mulvehill also denies signing the Compressor lease. 4
The fourth and final lease, involving a Chicago Pneumatic 650 Drill, was entered into by Itel and Cups in September 1978. This time, however, Mulvehill suggested that Itel purchase the drill from Henson Truck Sales rather than from Dennis because the Henson drill was cheaper. When Adams and Mulvehill met at Henson Truck Sales, Mulvehill executed the 650 Drill lease in the presence of Adams. Mulvehill does not deny execution of the 650 Drill lease. As with the other three leases, Itel subsequently forwarded payment for purchase of the equipment to the seller. At trial, Itel introduced evidence indicating that over half of the $487,000 paid by Itel to Dennis and to Henson for purchase of the equipment was transferred to Mulvehill's bank accounts, at times by circuitous routes. 5
Cups made payments to Itel on these four leases through much of 1978, but the accounts became past due by early 1979. Despite repeated efforts by Itel to obtain payment from Cups, and promises by Mulvehill to bring the accounts current, Itel finally was forced to terminate the leases and file suit for the amounts past due and for possession of the equipment. 6
We address first appellants' claims that the trial court erred in instructing the jury as to Itel's theory that Cups and Mulvehill ratified the disputed leases and that they are estopped to deny the validity of the leases. Appellants contend that the evidence was insufficient to support these instructions, but a review of the record reveals more than sufficient evidence to support findings as to both ratification and estoppel. At trial, Itel proved that Cups made payments on all of the leases, including the contested Hough 400 Loader lease and the Compressor lease. Some of the Cups' checks even have each of the four lease numbers listed on them and, at least once, Cups made payments on the four leases with four separate checks. The evidence also suggests that defendants accepted the benefits of the disputed leases along with their burdens. Itel contended at trial that Cups and Mulvehill signed certificates of acceptance on the leased equipment, acknowledging that it had been delivered, inspected, and found in good working condition. In their brief to this Court, appellants admit that they retained possession of the equipment under the four leases for a period of time, but argue, as they did in the court below, that Itel reclaimed most of it sometime around December 1978. This evidence is amply sufficient for purposes of a jury finding of ratification that defendants benefited, for a limited period of time, from each of the four leases. See Rush v. Atomic Electric Co., 384 So.2d 1067, 1068 (Ala.1980).
Itel points to the following evidence in support of a finding of estoppel. The record reflects that, on different occasions, Mulvehill discussed with Itel representatives the condition of the equipment under the disputed leases. Further, Itel's credit manager testified that in December 1978 Mulvehill described to him the location of the Hough 400 Loader and the two Compressors. In addition, Mulvehill discussed his past due accounts with Itel representatives more than once, and each time Mulvehill promised to bring all four accounts current. According to Itel, up until the time that this litigation started, Mulvehill had never denied executing any of the leases. The evidence suggests that he was aware of their existence, that by his statements and promises he indicated he considered them to be valid, and that Itel reasonably relied to its detriment. This evidence, considered together with the evidence recited above in support of the finding of ratification, was more than sufficient to support a finding that the defendants are estopped to deny the validity of the leases. See United States Fidelity and Guaranty Co. v. McKinnon, 356 So.2d 600, 606 (Ala.1978). 7
Appellants also contend that the trial court erred in refusing to instruct the jury as to the statute of limitations for fraud. Itel originally filed its complaint on May 3, 1979, and, following discovery, added Mulvehill as a defendant by amendment dated February 19, 1980. The statute of limitations for fraud in Alabama is one year, Ala.Code Sec. 6-2-39, 8 and appellants argue that the statute had run by the time Mulvehill was added. But under Federal Rule of Civil Procedure 15(c),
[w]henever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.
The allegations in Itel's amended complaint clearly "arose out of the conduct, transaction, or occurrence" set forth in the original complaint. As 97% owner of Cups, Mulvehill was on notice as to the action when it was first filed, and appellants' allegation that they were prejudiced by the six months' delay in adding Mulvehill is without merit. See Marks v. Prattco, Inc., 607 F.2d 1153, 1156 (5th Cir.1979)....
To continue reading
Request your trial
-
Apa Excelsior III, L.P. v. Windley
...evidence in the case to determine whether a challenged document meets the standard of Rule 901. See, e.g., Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1259 (11th Cir.1983) (examining other evidence and determining document was properly admitted under Rule With the exception of an in......
-
Brink v. First Credit Resources
...similar to the latter in analyzing whether the notice requirement of Rule 15(c) was satisfied. See Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1258 (11th Cir.1983). The Eleventh Circuit held that, when a complaint naming a corporation as the defendant is later amended to add the cor......
-
In re Integrated Resources Real Estate Sec. Lit.
...related back where it named as defendant the president who owned 97% of the defendant corporation, see Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1258 (11th Cir.1983), or where it named two former employees, founders and principals of a new company, in an action which alleged the n......
-
Lundy v. Adamar of New Jersey, Inc.
...the plaintiff to substitute state officials for the state and a state agency in a Sec. 1983 case); Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1258 & n. 9 (11th Cir.1983) (allowing the plaintiff to relate back the amendment of his complaint to add a new defendant after the limitatio......