Burger King Corp. v. Mason

• Decision Date: 01 August 1983
• Docket Number: 82-5803,Nos. 82-5066,s. 82-5066
• Citation: 710 F.2d 1480
• Parties: BURGER KING CORPORATION, Plaintiff-Appellee, Cross-Appellant, v. Gerald A. MASON, et al., Defendants-Appellants, Cross-Appellees. BURGER KING CORPORATION, a Florida Corporation, Plaintiff-Appellee, Counter- Defendant, Cross-Appellant, v. Gerald A. MASON, et al., Defendants-Appellants, Counter-Plaintiffs, Cross- Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1480

710 F.2d 1480

219 U.S.P.Q. 693

BURGER KING CORPORATION, Plaintiff-Appellee, Cross-Appellant, v. Gerald A. MASON, et al., Defendants-Appellants, Cross-Appellees.

BURGER KING CORPORATION, a Florida Corporation, Plaintiff-Appellee, Counter- Defendant, Cross-Appellant, v. Gerald A. MASON, et al., Defendants-Appellants,

Counter-Plaintiffs, Cross- Appellees.

Nos. 82-5066, 82-5803.

United States Court of Appeals Eleventh Circuit.

Aug. 1, 1983.

Edward A. Kaufman, John T. Kinsey, J. Robert Olian, Britton, Cohen, Kaufman, Benson & Schantz, Miami, Fla., for Mason, et al.

Andrew C. Hall, Richard F. O'Brien, III, Hall & O'Brien, Miami, Fla., Mayer, Brown & Platt, Lee N. Abrams, Mark McLaughlin, Chicago, Ill., for Burger King Corp.

Appeals from the United States District Court for the Southern District of Florida.

Before VANCE and HENDERSON, Circuit Judges, and TUTTLE, Senior Circuit Judge.

ALBERT J. HENDERSON, Circuit Judge:

Following approximately five years of litigation in the United States District Court for the Southern District of Florida encompassing two jury trials, one bench trial and countless motions and hearings, the appellants, a group of investors including Gerald Mason, Wesley Hardy, Donald Szabo and Richard Peterson (hereinafter collectively referred to as "Mason") by this appeal, seek to reverse portions of the final judgment. The Burger King Corporation ("BKC"), the original plaintiff in the action, filed a cross-appeal to certain adverse rulings of the district court. Mason also filed a separate appeal from the attorney's fee award and BKC again cross-appealed on this issue. After an exhaustive review of the evidence and each assignment of error, we affirm in part and remand in part for further proceedings.

I. Introduction

BKC, one of the largest franchisors of fast-food restaurants in the United States, maintained a business relationship with Mason for many years. As a result of this relationship, Mason acquired the right to establish Burger King restaurants in two major metropolitan areas and to develop other restaurants throughout the United States during the 1970's. Mason's territorial rights derived from two development agreements between the parties by which Mason obtained the exclusive authority to The long standing Mason-BKC business association began to deteriorate in 1977 when BKC notified Mason of the cancellation of the two exclusive development agreements. In 1978, BKC filed this suit seeking a declaration that it had properly terminated the development contracts. Mason responded with a counterclaim for reinstatement and damages for the revocation. Afterwards, in 1979, BKC informed Mason that it was unilaterally terminating all twenty-seven of its Burger King franchises for failure to comply with the terms of the franchise agreements. Eventually, through amendments to the complaint and counterclaim, the suit filed in 1978 expanded to controversies concerning both the development and franchise agreements as well as demands arising from Mason's liability on the promissory notes and the accounts.

establish Burger King franchises in Pittsburg and Kansas City. Over the years Mason purchased at least twenty-seven Burger King franchises under separate agreements. In connection with the development of some of the franchises, BKC provided financing to Mason for which Mason executed promissory notes. Mason incurred additional obligations for payments due under certain lease agreements with BKC, for supplies furnished on account and for royalties due under the franchise agreements. (The leases, accounts for supplies and royalties will be referred to as the "accounts".)

In 1980 the case came on for trial and the issues were submitted to the jury on special interrogatories. The jury found that the development contracts were validly cancelled but that BKC wrongfully terminated twelve of the franchise agreements. Because of the equivocal nature of the jury's verdict as to the remaining fifteen franchise terminations, the district court ordered a new trial on those agreements. The court also granted a new trial to BKC for a computation of damages resulting from Mason's liability on the promissory notes and accounts. Since there was no genuine issue of fact as to the amount due on the promissory notes and accounts, the district court thereafter entered a summary judgment in favor of BKC for those damages. Before the second jury trial, BKC conceded its error in terminating one of the fifteen franchises left for trial. Also, during the second trial, the district court sustained, as a matter of law, the revocation of seven of the franchises. Thus, by concession or court order, eight of these fifteen terminations were eliminated from the jury's consideration. After the second trial in 1981, the jury found that BKC validly terminated six of the remaining franchises. Consequently, Mason prevailed in its efforts to nullify the terminations of fourteen of its franchises and BKC successfully defended the cancellation of thirteen franchise agreements.

Subsequent to the second jury trial, the district court held a bench trial on BKC's claims for common law trademark infringement, unfair competition and breach of the franchise agreements based upon Mason's post-termination use of the Burger King trademarks. The court awarded to BKC the profits earned from the franchises previously found to have been lawfully terminated for the breach of the franchise agreements.

Finally, the district court conducted a hearing on BKC's application for attorney's fees. The court awarded fees in accordance with the provisions of the development agreements, the notes, the leases and a Florida statute.

II. The 1980 Jury Verdict

In attacking the trial judge's resolution of the 1980 jury verdict, Mason challenges the grant of a new trial limited to the issue of BKC's damages on the promissory notes and the accounts. Second, Mason asserts that the district court also erred in ordering a new trial for a determination of the validity of BKC's cancellation of the franchises not listed on the jury's verdict form.

A. Did the jury compromise?

In its answer to Special Issue # 1, the jury found in favor of BKC on the promissory notes (valued at approximately $1,000,000.00) Neither party brought these inconsistent results to the district court's attention until after the jury had been discharged and it was too late to resubmit the damages question to the jury. BKC eventually filed a motion for a clarification of the jury verdict on the promissory notes and the accounts. By this motion, BKC sought a judgment for the face amount of the debts, as shown by the evidence, plus the "damages" awarded by the jury. Alternatively, BKC moved for a judgment notwithstanding the verdict for the full amount of the obligations. The district court denied both motions and, instead, ordered a new trial limited to a computation of BKC's damages on the promissory notes and the accounts. Subsequent to this order, BKC filed a motion for summary judgment supported by affidavits establishing its entitlement to the full amount of the debts. Since Mason submitted no evidence in opposition to the affidavits, the district court granted judgment to BKC for these liquidated amounts.

                rejecting Mason's affirmative defenses thereto. 1   However, it awarded BKC only $1.00 as damages.  Responding to Issue # 2, the jury sustained BKC's right to recover on the accounts (valued at approximately $500,000.00) and found against the affirmative defenses.  BKC was awarded $100,000.00 as "damages" for this item
                

Mason contends that the jury's inadequate award of damages signifies an improper compromise verdict because there was no dispute as to the correct amount due on the notes and accounts. Mason therefore claims that the liability and damages issues were inseparable and the trial judge erred in restricting a new trial to the question of damages.

Rule 59(a) of the Federal Rules of Civil Procedure provides that a new trial may be granted "on all or part of the issues." The decision whether to grant a new trial is discretionary with the district court and will not be reversed absent an abuse of that discretion. See, e.g., Franks v. Associated Air Center, Inc., 663 F.2d 583, 586 (5th Cir.1981); Lucas v. American Manufacturing Co., 630 F.2d 291 (5th Cir.1980); ² Young v. International Paper Co., 322 F.2d 820, 822 (4th Cir.1963).

It is axiomatic, however, that a partial new trial may not be granted if it would infringe upon a litigant's seventh amendment right to a jury trial. In Gasoline Products v. Champlin Refining Co., 283 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1930), the Supreme Court enunciated the standard which governs partial new trial practice:

[w]here the practice permits a partial new trial, it may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice.

Id. at 500, 51 S.Ct. at 515, 75 L.Ed. at 1191. Applying Champlin Refining, the former Fifth Circuit Court of Appeals held that a jury verdict influenced by an improper compromise cannot stand and a complete new trial is required because liability and damages are inseparable. See, e.g., Lucas v. American Manufacturing Co., 630 F.2d 291, 294 (5th Cir.1980); Hatfield v. Seaboard Air Line R.R. Co., 396 F.2d 721, 724 (5th Cir.1968). Hence, if there is a compromised finding on liability, a separate trial on damages alone will not suffice--both liability and damages must be relitigated in a new trial. Id.

With this admonition in mind, we focus our attention on whether the district court abused its discretion in rejecting the compromise claim. "A compromise verdict Two former Fifth Circuit cases offer instructive examples of situations where the record contained adequate indications of compromise to warrant a complete new trial. In Hatfield, the court held that a jury verdict...