Hoffman v. L&M Arts
| Decision Date | 04 September 2014 |
| Docket Number | Civil Action No. 3:10-CV-0953-D |
| Court | U.S. District Court — Northern District of Texas |
| Parties | MARGUERITE HOFFMAN, Plaintiff, v. L&M ARTS, et al., Defendants. |
Plaintiff Marguerite Hoffman ("Hoffman") brought this lawsuit against defendants L&M Arts ("L&M"), David Martinez ("Martinez"), and Studio Capital, Inc. ("Studio Capital"), arising from the sale at public auction of the 1961 Mark Rothko oil painting, Untitled (the "Rothko painting"), which she alleged breached the confidentiality clause of the letter agreement under which she had sold the painting several years earlier. The parties tried Hoffman's breach of contract claim and defendants' waiver defenses to a jury, which found in Hoffman's favor. The jury awarded compensatory damages under two measures of damages, one of which Hoffman elected to recover under the court's directive. After the court entered the judgment, defendants filed the instant renewed Fed. R. Civ. P. 50(b) motions for judgment as a matter of law. Because the court concludes that a reasonable jury could not have found that L&M had actual or apparent authority to enter into a binding contract on behalf of Martinez and Studio Capital, the court grants their motion and dismisses this action against them with prejudice. Because the court concludes that a reasonable jurycould have found in Hoffman's favor against L&M on her breach of contract claim, but that she is not entitled to recover under the measure of damages that she elected, the court grants L&M's motion in part and denies it in part. For procedural reasons, the court concludes that it must dismiss Hoffman's action against L&M so that she can file a timely successive motion to alter or amend the judgment, thereby enabling the court to award her damages by second amended judgment under an alternative measure of damages. The court is filing today an amended judgment in accordance with the rulings that follow.1
This case is the subject of several prior opinions,2 with which the parties are well familiar. Accordingly, although the court will begin by summarizing certain background facts, the jury verdict, and defendants' pertinent contentions in support of their Rule 50(b) motions, it will primarily recount the pertinent facts and procedural history in the context of its specific rulings below.
Hoffman sold the Rothko painting in April 2007 under the terms of a letter agreement dated April 24, 2007 (the "Letter Agreement") that provided that "[t]his letter will serve asan agreement between Greenberg Van Doren Gallery on behalf of the seller and L&M Arts on behalf of the buyer for the sale of [the Rothko painting]." L&M Ex. 28. John Van Doren ("Van Doren") of Greenberg Van Doren Gallery and Robert Mnuchin ("Mnuchin") of L&M signed the letter, which contained the following confidentiality clause that is at the center of this lawsuit: Id.
Hoffman had attempted through Van Doren to sell the Rothko painting before. After Van Doren contacted Mnuchin about a possible sale, Mnuchin and his partner at L&M, Dominique Lévy ("Lévy"), identified Studio Capital as a potential buyer. L&M did not disclose Studio Capital's identity. The parties negotiated a price of $19 million, with $17.6 million to be paid to Hoffman and a $700,000 commission to be paid to each agent. On February 27, 2007 Van Doren, on behalf of Hoffman, and L&M, on behalf of the buyer, entered into a letter agreement to sell the Rothko painting to L&M's undisclosed principal (the "February Agreement"). The February Agreement included this provision: P. Ex. 21.
Before the February sale was finalized, an art professional contacted Hoffman to discuss the fact that she was selling the Rothko painting. Hoffman was alarmed that a thirdparty had discovered that the painting was for sale, and she decided not to proceed with the transaction. The buyer remained interested in making the purchase, however, and the negotiations for the sale of the Rothko painting were revived.
In April 2007 Hoffman agreed to sell the painting for the original net price of $17.6 million, with the additional requirement that the buyer make a confidential cash contribution to the Dallas Museum of Art ("DMA"). Unlike the February Agreement, which included a clause that referred to the seller's "wish . . . that the sale and terms of the sale remain confidential" and the "request[] that confidentiality be maintained indefinitely," id. (emphasis added), the Letter Agreement contained the clause under which all parties agreed "to make maximum effort to keep all aspects of this transaction confidential indefinitely," L&M Ex. 28.
Following the April 2007 sale, L&M invoiced Martinez and Studio Capital for the Rothko painting. Studio Capital kept the painting in storage, and it eventually consigned it to Sotheby's in 2010. Sotheby's auctioned the Rothko painting on May 12, 2010, and it sold for $31,442,500, a price more than $13 million in excess of what Hoffman had received when she sold it privately in 2007.
Hoffman sought to prove at trial that L&M, Martinez, and Studio Capital breached the confidentiality clause of the Letter Agreement and that she was damaged as a result because, when she sold the Rothko painting privately, she did so at a substantial discount in exchange for the promise of strict confidentiality, forfeiting the additional millions of dollars that the painting would have brought if sold at public auction. The jury found that Hoffmanproved her breach of contract claim against L&M, Martinez, and Studio Capital,3 although it had a more modest view of the extent of her compensatory damages. Regarding Hoffman's requests for damages, the jury found as follows: "[t]he difference, if any, between the sum of money for which Hoffman sold the painting in the transaction in question and what she could have sold the painting for at public auction on or around April 24, 2007," Ct. Charge Question No. 3(A), was "$500,000"; "[t]he difference, if any, between the value of the benefits Hoffman conveyed under the contract to the defendant in question and the value of the benefits she received in exchange," id. Question No. 3(B), was "0" as to L&M and "0" as to Studio Capital/Martinez4; and "[t]he value of the benefits that the defendant in question received in connection with the transaction" was "$450,000" for L&M and "$750,000" for Studio Capital/Martinez, id. Question No. 3(C).
After the jury returned its verdict, the court directed Hoffman to elect her remedy as between the two measures of damages that the jury had answered in her favor. In a letter to the court,5 Hoffman maintained that she was entitled to recover the aggregate amount of damages that the jury had found in answer to Question No. 3(A) and (C), i.e., $1.7 million.Alternatively, she requested that the court award the sum of $1.2 million that the jury had found in answer to Question No. 3(C). In a memorandum decision, the court rejected Hoffman's position that she was entitled to the aggregate amount of compensatory damages that the jury had found in response to Question No. 3(A) and (C); instead, it entered judgment in Hoffman's favor in the amount of her alternative request for $450,000 from L&M and $750,000 from Studio Capital and Martinez.6
L&M, Studio Capital, and Martinez moved at all pertinent times during trial and after the verdict for judgment as a matter of law. They now renew their Rule 50(b) motions. Studio Capital and Martinez move for judgment on several grounds, but the court need only reach one: that a reasonable jury could not have found that L&M was their agent and that they were bound by the Letter Agreement.7 L&M moves for judgment as a matter of law on the following grounds: (1) Hoffman elected a legally barred disgorgement remedy; (2) she failed to prove her breach of contract claim because there was insufficient evidence of a breach; and (3) she failed to prove her breach of contract claim because there was insufficient evidence of causation.
"A motion for judgment as a matter of law 'challenges the legal sufficiency of the evidence to support the verdict.'" Jacobs v. Tapscott, 516 F.Supp.2d 639, 643 (N.D. Tex. 2007) (Fitzwater, J.) (quoting Hodges v. Mack Trucks, Inc., 474 F.3d 188, 195 (5th Cir. 2006)), aff'd, 277 Fed. Appx. 483 (5th Cir. 2008).
Judgment as a matter of law is appropriate with respect to an issue if there is no legally sufficient evidentiary basis for a reasonable jury to find for a party on that issue. This occurs when the facts and inferences point so strongly and overwhelmingly in the movant's favor that reasonable jurors could not reach a contrary verdict. In considering a Rule 50 motion, the court must review all of the evidence in the record, drawing all reasonable inferences in favor of the nonmoving party; the court may not make credibility determinations or weigh the evidence, as those are jury functions. In reviewing the record as a whole, the court must disregard all evidence favorable to the moving party that the jury is not required to believe. That is, the court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.
Id. (quoting Brennan's Inc. v. Dickie Brennan & Co., 376 F.3d 356, 362 (5th Cir. 2004). The court will "'uphold a jury verdict unless the...
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