Ahern v. Scholz

• Citation: 85 F.3d 774
• Decision Date: 04 December 1995
• Docket Number: Nos. 95-1146,95-1203 and 95-1204,95-1147,s. 95-1146
• Parties: Paul F. AHERN, d/b/a Ahern Associates, Plaintiff--Appellee, v. Donald Thomas SCHOLZ, Defendant--Appellant. Paul F. AHERN, d/b/a Ahern Associates, Plaintiff--Appellant, v. Donald Thomas SCHOLZ, Defendant--Appellee. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 774

85 F.3d 774

Paul F. AHERN, d/b/a Ahern Associates, Plaintiff--Appellee, v. Donald Thomas SCHOLZ, Defendant--Appellant.

Paul F. AHERN, d/b/a Ahern Associates, Plaintiff--Appellant, v. Donald Thomas SCHOLZ, Defendant--Appellee.

Nos. 95-1146, 95-1147, 95-1203 and 95-1204.

United States Court of Appeals First Circuit.

Heard Dec. 4, 1995.

Decided June 4, 1996.

Donald S. Engel, with whom Mark D. Passin, Engel & Engel, Los Angeles, CA, Lawrence G. Green, Susan E. Stenger and Perkins, Smith & Cohen, Boston, MA, were on brief, for Donald Thomas Scholz.

David C. Phillips, with whom David M. Given and Goldstein & Phillips, San Francisco, CA, were on brief, for Paul F. Ahern.

Before TORRUELLA, Chief Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.

TORRUELLA, Chief Judge.

The parties in this breach of contract case, a successful musician and his former manager, dispute whether royalties from record albums have been accounted for and paid to each other. The appeal is from a final judgment by the district court after a jury trial, disposing of all claims in respect to all parties.

BACKGROUND: A BAND OUT OF BOSTON

In this case, the parties dispute many of the facts and the inferences to be drawn from them. Thus we start with a sketch of the basic facts, and address the individual issues in more detail below. Appellant and cross-appellee Donald Thomas Scholz ("Scholz") is a musician, composer, and record producer who was, and is, a member of the musical group BOSTON ("BOSTON"). In late 1975, Scholz entered into three agreements with appellee and cross-appellant Paul F. Ahern ("Ahern"), who was engaged in the business of promoting and managing music groups, and his then partner, Charles McKenzie ("McKenzie") (collectively, the "1975 Agreements"). First, Scholz made a recording agreement (the "Recording Agreement") with Ahern and McKenzie d/b/a P.C. Productions, to which Bradley Delp, the lead singer of BOSTON, was also a party. Second was a management agreement (the "Management Agreement"), also between Scholz and P.C. Productions, under which In early 1976, CBS Records ("CBS") and Ahern Associates, a business name of Ahern and McKenzie, entered into a recording agreement for the exclusive recording services of BOSTON. The group's first album (the "first album") was released in 1976, and sold approximately 11 million copies--one of the highest-selling debut albums ever. Its second album (the "second album") was released in August 1978, and sold approximately 6 million copies.

                Ahern and McKenzie were appointed Scholz' exclusive personal managers worldwide.   The third agreement was a songwriter agreement made between Scholz and Ahern, under which Scholz was obligated to furnish Ahern his exclusive songwriting services for a period of five years
                

In 1978, Scholz and the other members of BOSTON entered into a modification agreement with Ahern and P.C. Productions, dated April 24, 1978. Among other things, the First Modification Agreement modified the 1975 Agreements and changed the financial relationship between Scholz and his managers. Ahern and McKenzie dissolved their partnership. A few years later, in May of 1981, Ahern and Scholz, individually and under various business names, entered into a further modification agreement (the "Further Modification Agreement" or "FMA"), which is at the heart of this dispute. Ahern ceased to be Scholz' manager.

In 1982, with the third album not yet released, CBS cut off the payment of royalties generated from the first and second albums. In 1983, CBS brought suit against Scholz, Ahern, and the members of BOSTON for failure to timely deliver record albums. Scholz' counsel in that action was Donald S. Engel ("Engel"); Ahern had his own counsel. While that litigation was pending, the third album was released by MCA Records ("MCA") in 1986 and sold well over 4 million copies. At the close of trial--seven years after the CBS litigation began--the jury found that Scholz was not in breach of contract. Scholz incurred legal fees of about $3.4 million dollars.

In February 1991, Ahern commenced this action against Scholz for breach of the FMA claiming a failure to pay royalties due under the third album. Scholz asserted various affirmative defenses and counterclaims against Ahern, including breach of the FMA. During trial, Engel, Scholz' lead trial counsel, was twice called as a witness. At the close of the evidence, the court granted Scholz' directed verdict dismissing Ahern's Count III for fraud and IV for breach of implied covenant of good faith and fair dealing. The court also granted Ahern's motion for directed verdict dismissing Scholz' First, Second, and Third Counterclaims and his, Third, Fourth, and Fifth affirmative defenses. Only the parties' respective breach of contract claims went to the jury. The jury found that Scholz breached section 5.2.1 of the FMA to pay Ahern royalties from the third album, and found that Ahern had not breached the FMA to account for and pay Scholz royalties due from the first and second albums. It awarded Ahern $547,007 in damages.

The trial court sitting without a jury also found Scholz had breached the FMA, and heard Ahern's Count II for declaratory relief and Count V for violation of Mass. Gen. L. ch. 93A and Scholz' Fifth Counterclaim for recision of contract for failure to obtain a license. The court denied the declaratory relief Ahern sought in Count I, and awarded him costs, interest and attorney's fees pursuant to Count V for violation of Mass. Gen. L. ch. 93A §§ 2 & 11. The court denied the relief sought by Scholz in his Fifth Counterclaim and held that he waived his Counts VI and VII at oral argument. After a hearing on Ahern's bill of costs and application for reasonable attorney's fees and interest, the court awarded Ahern $265,000 in attorney's fees and $135,000 in costs.

The district court denied, without a hearing, Scholz' motion for a new trial, motion to amend the court's memorandum and order and judgment entered thereon, motion to admit new evidence, and motion to amend the court's memorandum and order and the judgment entered thereon regarding Scholz' Sixth Counterclaim. This appeal followed.

MOTION FOR A NEW TRIAL

Appellant first argues that the district court erred in denying his motion for a new

                trial, made pursuant to Fed.R.Civ.P. 59(a).   We therefore review the record below to determine whether the evidence required that the district court grant the motion for a new trial.   See de Perez v. Hospital del Maestro, 910 F.2d 1004, 1006 (1st Cir.1990).   In reviewing the record of the 16-day trial, we note that both parties presented extensive evidence.   The jury heard testimony regarding a history that spans two decades, involves at least seven contracts, includes detailed numerical accounting, and references more than half a dozen other legal battles.   The parties called a total of fifteen witnesses, seven of whom, including Ahern, Scholz, and Engel, Scholz' counsel, testified twice.   In short, the jury faced a complex and sometimes conflicting set of facts in making its decision as to whether either, neither, or both parties breached the 1981 Further Modification Agreement.   Ultimately, we find that the jury's verdict was not against the clear weight of the evidence, and the district court did not abuse its discretion in so finding
                

A. Standard of Review

"A verdict may be set aside and new trial ordered 'when the verdict is against the clear weight of the evidence, or is based upon evidence which is false, or will result in a clear miscarriage of justice.' " Phav v. Trueblood, Inc., 915 F.2d 764, 766 (1st Cir.1990) (quoting Torres-Troche v. Municipality of Yauco, 873 F.2d 499 (1st Cir.1989)); see Fed.R.Civ.P. 59(a); Sanchez v. Puerto Rico Oil Co., 37 F.3d 712, 717 (1st Cir.1994). In reaching its decision, "the district court has broad legal authority to determine whether or not a jury's verdict is against the 'clear weight of the evidence.' " de Perez, 910 F.2d at 1006. Nonetheless, "the trial judge's discretion, although great, must be exercised with due regard to the rights of both parties to have questions which are fairly open resolved finally by the jury at a single trial." Coffran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 571, 74 L.Ed.2d 933 (1982); see Kearns v. Keystone Shipping Co., 863 F.2d 177, 178-79 (1st Cir.1988). Thus, the district court judge "cannot displace a jury's verdict merely because he disagrees with it or would have found otherwise in a bench trial." Milone, 847 F.2d at 37; see Coffran, 683 F.2d at 6. "The mere fact that a contrary verdict may have been equally--or even more easily--supportable furnishes no cognizable ground for granting a new trial." Freeman v. Package Mach. Co., 865 F.2d 1331, 1333-34 (1st Cir.1988).

Our review is circumscribed: we will disturb the district court's ruling on appellant's motion for a new trial only where there has been a clear abuse of discretion. See Simon v. Navon, 71 F.3d 9, 13 (1st Cir.1995); Newell Puerto Rico, Ltd. v. Rubbermaid Inc., 20 F.3d 15, 22 (1st Cir.1994).

In order to determine whether such an abuse occurred here, we must review the record below. We do this not in the role of "a thirteenth juror," assessing the credibility of witnesses and weighing testimony, but rather to isolate the factual basis for the trial court's ruling and provide the foundation for our action today.

Kearns, 863 F.2d at 179. "So long as a reasonable basis exists for the jury's verdict, we will not disturb the district court's ruling on appeal." Newell Puerto Rico, Ltd., 20 F.3d at 22.

With our standard of review established, we turn to Scholz' argument and the record below. We address each of the two breach of contract claims the jury decided in turn.

B. Did Ahern Breach the FMA?

Scholz argues that Ahern breached his obligations under the 1981 FMA to both account for and pay to Scholz,...