Air et Chaleur, S.A. v. Janeway

• Decision Date: 08 March 1985
• Docket Number: No. 185,D,185
• Citation: 757 F.2d 489
• Parties: 17 Fed. R. Evid. Serv. 867 AIR ET CHALEUR, S.A., Pierre Berger, Daniel Cauchie, Jacques W. Van De Velde, Plaintiffs-Appellees, v. Eliot JANEWAY, Defendant-Appellant. ocket 84-7409.
• Court: U.S. Court of Appeals — Second Circuit

Page 489

757 F.2d 489

17 Fed. R. Evid. Serv. 867

AIR ET CHALEUR, S.A., Pierre Berger, Daniel Cauchie, Jacques W. Van De Velde, Plaintiffs-Appellees, v. Eliot JANEWAY, Defendant-Appellant.

No. 185, Docket 84-7409.

United States Court of Appeals Second Circuit.

Argued Oct. 31, 1984.

Decided March 8, 1985.

Max Gitter, New York City (Paul, Weiss, Rifkind, Wharton & Garrison, New York City, of counsel), for defendant-appellant.

Richard M. Meyer, New York City (Jeremy Heisler, Milberg, Weiss, Bershad, Specthrie & Lerach, New York City, of counsel), for plaintiffs-appellees.

Before FEINBERG, Chief Judge, and LUMBARD and MESKILL, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from a judgment entered in the United States District Court for the Southern District of New York after a five day jury trial before Owen, J. After the jury found for plaintiffs on the issue of defendant's liability for breach of contract, the court directed a verdict for plaintiffs on damages, and awarded them $382,000. For the reasons stated below, we affirm the judgment of the district court.

BACKGROUND

Plaintiffs in this diversity action are Air et Chaleur, a Belgian corporation, and Pierre Berger, Daniel Cauchie and Jacques Van de Velde, European businessmen. Defendant Eliot Janeway, a nationally known financier and economic consultant, owned stock in Medserco, Inc., a Minnesota corporation headquartered in St. Louis, Missouri, which provided health insurance for preventive medicine and ran outpatient clinics for minor surgical procedures. He also served as Medserco's economic advisor.

In August 1978, the individual plaintiffs went to St. Louis to investigate Medserco to determine whether they wished to make an investment in, or engage in joint ventures with, that company. The following month, Janeway and a number of Medserco officials went to Paris for a meeting with the plaintiffs. Here the plaintiffs first encountered Janeway. After a long morning session, the parties retired to a restaurant to continue their discussions.

During the course of the luncheon, Janeway stated that, if plaintiffs purchased 66,000 shares of Medserco stock at $4.50 per share, he would buy the stock from them at $6.00 per share. Plaintiffs subsequently purchased the stock at that price. The stock was restricted and legended, the restrictions to terminate in October 1980.

In May 1979, in response to a request from Van de Velde for a written verification of his oral commitment Janeway sent a letter to Van de Velde, the text of which is set out in the margin. ¹ Both Van de Velde and Janeway used October 1981 as the repurchase date, but Van de Velde later claimed that his use of that date was a mistake. In a letter dated July 20, 1979, Richard Ross, president of Medserco, indicated to Van de Velde that he believed that the arrangement was for two rather than three years. He also said, "I should like to suggest that you still seem to have the problem of consideration to make the agreement binding. It would seem only fair that if Mr. Janeway is giving you a put, he should also have a call of some sort." In November 1979, Janeway wrote to plaintiff Cauchie:

Dear Mr. Cauchie:

I am advised that your failure to be responsive to the request made of you to furnish consideration in compensation for the Put I offered you voids my offer.

This is to notify you that we have no arrangement.

Yours sincerely,

/s/Eliot Janeway

The value of Medserco stock, which had been approximately $5 per share in September 1978, had slipped to $4 in October 1980 and then plummeted to 20 cents per share by November 1981. On October 28, 1981, plaintiffs tendered their stock to Janeway, as directed in his letter of May 14, 1979. Janeway refused to accept the tender and pay the purchase price. Medserco filed for bankruptcy in November 1981, one week after plaintiffs filed this suit.

In a trial before Judge Owen and a jury, plaintiffs contended that Janeway had made an oral promise to purchase their stock at $6 per share upon tender of the shares to him. Janeway argued that his statement was intended to be a put which would be effective only if plaintiffs gave him the corresponding call. ² Therefore, he asserted that because no call was ever given, his offer never became binding. Janeway also argued that the plaintiffs had decided to buy Medserco stock before the Paris meeting occurred, so that the contract was unsupported by consideration.

The court first charged the jury on liability, stating that it would charge separately on damages if necessary. After the jury returned a verdict for all plaintiffs on the liability issue, the court determined that there were no factual issues concerning damages for jury determination. The court held that plaintiffs had a duty to mitigate damages by securing a replacement put after Janeway's breach. However, the court also ruled that the burden was on defendant to prove the scope of the possible mitigation and that defendant had failed to introduce evidence sufficient to carry this burden. Defendant's counsel requested that the court reopen proof to allow for the introduction of evidence on damages, but the court refused. Instead, the court directed a verdict for plaintiffs in the amount of $382,000, which represented the cost of 66,000 shares at $6 per share, minus 20 cents per share, the low bid price for the day of tender.

DISCUSSION

Janeway's first argument on appeal is that there was no evidence from which the trier of fact could find a three year put exercisable in October 1981. He contends that the contract was at most for two years. The origin of this finding below is less than crystal clear from the record. The precise question of the duration of the contract was not submitted to the jury. The jury was asked only to determine whether the contract as the court described it existed. Janeway's sole contention below was that there was no contract; defense counsel neither addressed the issue of duration nor requested submission of the question to the jury.

Insofar as the argument that the put was for two years raises a new issue not considered below, we are barred from considering it here. Schmidt v. Polish People's Republic, 742 F.2d 67, 70 (2d Cir.1984). Although this barrier to appellate consideration of new issues is not absolute, only the threat of "manifest injustice" would persuade us to ignore it. Id.; cf. Sojak v. Hudson Waterways Corp., 590 F.2d 53, 54-55 (2d Cir.1978). Janeway was represented below by competent counsel who took a calculated risk in not presenting an alternative interpretation of his client's case. The failure of this choice does not constitute manifest injustice. See Schmidt, 742 F.2d at 70 ("strategically motivated attack" not sufficient to be considered manifest injustice).

Even if we were to find that the question of the contract's duration had been adequately preserved for appeal, we would still decline to reverse the district court's decision. The October 1981 date was mentioned in two letters: the April 25, 1979 letter from Jacques Van de Velde to Janeway and the May 14, 1979 letter from Janeway to Van de Velde. Although both Van de Velde and Richard Ross, Medserco's president, testified that they believed that the use of 1981 as the tender date was erroneous, Janeway chose not to contest the terms of the contract. Because Janeway made this strategic choice, and thus did not dispute his own letter, it was not unreasonable for the trier of fact to consider Janeway's letter in defining the scope of the contract. Our role in reviewing such a determination is limited.

We may not weigh conflicting evidence, judge the credibility of witnesses, or substitute our judgment for that of the jury. Rather, we are bound to view the evidence, including all reasonable inferences to be drawn therefrom, in the light most favorable to the prevailing party, even though contrary inferences might reasonably be drawn.

Unijax, Inc. v. Champion International, Inc., 683 F.2d 678, 684 (2d Cir.1982). Viewed in this light, the record supports the jury's verdict. We cannot say that the jury's findings reflect "sheer surmise and conjecture." Armstrong v. Commerce Tankers Corp., 423 F.2d 957, 960 (2d Cir.), cert. denied, 400 U.S. 833, 91 S.Ct. 67, 27 L.Ed.2d 65 (1970).

More significantly, the district court's charge to the jury on the issue of liability included no less than three references to October 1981 as the tender date. See, e.g., J.App. at 705 ("for the plaintiff to prevail you must find that there was a contract to permit a repurchase upon tender, to require a repurchase upon tender in October of 1981 that bound Mr. Janeway, and that he dishonored it." (emphasis added)); J.App. at 723. This charge resulted in a verdict for all plaintiffs against Janeway, based on the jury's finding that the contract described by the judge existed. Although the jury charge was interrupted by a lengthy colloquy between the attorneys and Judge Owen, Janeway's counsel never took advantage of the numerous opportunities to object to the use of the three year date in the charge.

To the extent that the decision as to the duration of the contract was based on Judge Owen's use of October 1981 as the tender date in his charge to the jury, defendant's argument may be read as an assignment of error in the charge. Ordinarily, however, an error in a jury charge will not be considered on appeal unless a timely objection was made at trial, stating the nature of, and the grounds for, the objection. Fed.R.Civ.P. 51; Haskell v. Kaman Corp., 743 F.2d 113, 123 (2d Cir.1984); Goodman v. Heublein, Inc., 645 F.2d 127, 131 (2d Cir.1981); Williams v. City of New York, 508 F.2d 356, 362 (2d Cir.1974). See also Steinhauser v. Hertz Corp., 421 F.2d 1169, 1172 (2d Cir.1970) (noting that counsel had made objections quite clear in colloquy, we found that position was adequately presented). No such objection was made here.

We may review a jury charge for...