Strauss v. Stratojac Corp.
| Decision Date | 26 January 1987 |
| Docket Number | No. 85-1498,85-1498 |
| Parties | , 6 Fed.R.Serv.3d 1336 Isidore STRAUSS, Plaintiff-Appellee, v. STRATOJAC CORPORATION, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Hugh C. Griffin, Lord, Bissell, & Brook, Chicago, Ill., for defendant-appellant.
Saul I. Ruman, Saul I. Ruman & Assoc., Hammond, Ind., for plaintiff-appellee.
Before CUMMINGS and RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
Appellant Stratojac Corporation (Stratojac) appeals from a judgment entered against it on a jury verdict for $75,000 in compensatory damages and $75,000 in punitive damages. Because Stratojac's challenges to this judgment either have no merit or have been waived, we affirm the judgment of the district court.
Appellee Isidore Strauss, a resident of New York, sought and obtained a position as special assistant to the president of Winer Manufacturing, a clothing manufacturer located in Hammond, Indiana. The president and owner of Winer Manufacturing, Louis Winer, was in his late seventies. Mr. Winer was seeking an assistant to help him in the day-to-day operation of the business. However, he was also attempting to identify a suitable purchaser for his company.
The employment agreement executed by Mr. Strauss and Mr. Winer provided for a six-month trial period. During this time, Winer Manufacturing agreed to pay Mr. Strauss' expenses for commuting between New York and Indiana. Under the terms of the contract, either party could terminate the agreement at the end of the six-month period. If the arrangement proved mutually beneficial, the agreement provided that, at the end of that six-month period, the parties expected Strauss to relocate his family in the Hammond area, and that the term of employment would continue through October 31, 1985. The agreement also provided that Strauss' employment agreement was assignable to the purchaser of Winer Manufacturing, if the company were in fact sold.
The six-month period ended on October 31, 1983. At that time, Mr. Winer was negotiating the sale of Winer Manufacturing to Stratojac. Because the parties had not resolved whether Stratojac would take on Mr. Strauss' contract, Mr. Winer told Mr. Strauss that he would not be expected to relocate his family while his status was uncertain. Mr. Winer also indicated that the company would continue to pay Mr. Strauss' commuting expenses until his long-term employment status was resolved.
On January 31, 1984, Stratojac purchased Winer Manufacturing. As part of the sales agreement, Stratojac agreed to assume Strauss' employment agreement. Mr. Strauss was given the position of Vice President of Manufacturing which he claims was a demotion. The assignment agreement was specifically subject to the terms of the sales agreement between Stratojac and Winer Manufacturing. Apparently, Mr. Strauss sought to have a definite statement of his position with Stratojac. Stratojac, in turn, demanded that Mr. Strauss either move or commit to move to the Hammond area within a few weeks. In a letter dated February 16, 1984, Stratojac's President, Steve Sakin, informed Mr. Strauss that Stratojac would no longer reimburse him for his commuting expenses, and that, if Stratojac did not receive, within three business days, a written commitment from Strauss to move to the Hammond area, it would take "appropriate" action. On February 22, 1984, Mr. Sakin told Mr. Strauss that he was "fired" because he would not commit himself to relocating his family to the Hammond area.
On March 2, 1984, Mr. Strauss commenced this action for breach of contract, interference with contractual relations, conspiracy to breach a contract, and conspiracy to interfere with contractual relations. The case was tried before a jury, 1 and, on January 11, 1985, the jury returned a verdict for Mr. Strauss and against Stratojac in the amount of $75,000 in compensatory damages and $75,000 in punitive damages. The jury also answered five interrogatories that were submitted to it at the request of the defendants. A subsequent motion for judgment notwithstanding the verdict (judgment n.o.v.) was denied. This appeal followed.
In this court, Stratojac raises four challenges to the judgment of the district court. 2 It submits: 1) that the district court should not have entered judgment on the jury's verdict because the answers to the special interrogatories are inconsistent with one another and at least one of these answers is also inconsistent with the general verdict; 2) that Mr. Strauss has not established the necessary elements to prevail on a breach of contract claim; 3) that the evidence does not support an award of punitive damages; and 4) that the compensatory damage award is excessive. We shall address each of these contentions in the following sections.
Inconsistent Verdicts
Stratojac first contends that the jury's answers to the special interrogatories are inconsistent with one another and that at least one of them is inconsistent with the general verdict. Stratojac argues that the entry of judgment was therefore improper under Fed.R.Civ.P. 49. Mr. Strauss counters that the jury's replies are not inherently inconsistent. In any event, he continues, Stratojac has waived this argument by failing to raise it before the trial court.
At the request of the defendant, the court submitted the following interrogatories to the jury (jury responses are indicated by italics):
If the jury has returned a verdict for the plaintiff, it is hereby instructed to answer the following Interrogatories:
1. If you found against some or all of the defendants and in favor of the plaintiff, is your verdict based on the following:
a. wrongful interference with a contract; and/or
b. breach of contract; and/or
c. conspiracy between Stratojac and Winer to interfere with the contract; and/or
d. conspiracy between Stratojac and Winer to breach the contract.
2. As to (a), identify which, if any, of the defendants you found liable for wrongful interference with the contract. Stratojac Corp.
3. As to (b), identify which, if any, of the defendants you found liable for breach of contract. Stratojac Corp.
4. If you award plaintiff compensatory damages, were the damages awarded for:
a. breach of contract
b. wrongful interference
c. both
5. If you award plaintiff punitive damages, were the damages awarded for:
a. wrongful interference
b. breach of contract
c. conspiracy to breach contract
d. conspiracy to interfere with contract
Stratojac now argues that one or more of these answers is inconsistent with the general verdict and that the answers are also inconsistent with each other. In its view, the foregoing answers contain the following inconsistencies: 1) because an assignor remains liable on the contract after a valid assignment, the jury could not consistently find Stratojac, but not Winer, liable for breach of contract; 2) because Stratojac was a party to the contract, the jury could not consistently find Stratojac liable for conspiracy to interfere with the contract; 3) because the jury found that only Stratojac breached the contract, Stratojac could not be liable for interference with Winer Manufacturing's contractual relations; 4) because conspiracy requires more than one conspirator, the jury could not, consistently with Indiana law, award punitive damages for conspiracy to interfere with the contract against Stratojac only (i.e., the jury could not hold only one of two defendants liable for conspiracy); and 5) because there was no award of compensatory damages for conspiracy to interfere with the contract, the jury could not, consistently with Indiana law, award punitive damages on that claim.
We need not resolve definitively Stratojac's contentions with respect to these inconsistencies because we believe that, under the circumstances of this case, Stratojac waived its objection on these grounds to the general jury verdict. This case is governed by the last sentence of Fed.R.Civ.P. 49(b):
When the answers [to the special interrogatories] are inconsistent with each other and one or more is likewise inconsistent with the general verdict, judgment shall not be entered, but the court shall return the jury for further consideration of its answers and verdict or shall order a new trial.
We have not had a previous occasion to decide whether, in the context of this last sentence of Rule 49(b), a failure to object to any alleged inconsistencies in the special interrogatories constitutes a waiver. While the approaches of the other circuits have not been uniform, 3 several circuits have held that a party can waive any objections to such inconsistencies by failing to raise them before the jury has been discharged. See, e.g., Diamond Shamrock Corp. v. Zinke & Trumbo, Ltd., 791 F.2d 1416, 1422-23 (10th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 647, 93 L.Ed.2d 702 (1986); Skillin v. Kimball, 643 F.2d 19, 19-20 (1st Cir.1981); Stancill v. McKenzie Tank Lines, Inc., 497 F.2d 529, 534-35 (5th Cir.1974). In deciding that it was appropriate to invoke the doctrine of waiver, several of these courts have relied on our previous holdings in Barnes v. Brown, 430 F.2d 578, 580 (7th Cir.1970) and Cundiff v. Washburn, 393 F.2d 505, 507 (7th Cir.1968). See, e.g., Diamond Shamrock, 791 F.2d at 1422-23; Skillin, 643 F.2d at 20. In both Barnes and Cundiff, the answers to the interrogatories were consistent with one another but inconsistent with the general verdict. Therefore the second, rather than the third, sentence of Rule 49(b) governed. See 9 C. Wright & A. Miller, Federal Practice and Procedure Sec. 2513 (1971). In these cases, we held that invocation of the doctrine of waiver was appropriate because:
Any other decision would hamper the just and efficient operation of the federal courts. It would encourage jury-shopping by litigants, permitting them to decide whether to take their chances on...
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