City of Phoenix v. Com/Systems, Inc., 81-5471

• Decision Date: 26 May 1983
• Docket Number: No. 81-5471,81-5471
• Citation: 706 F.2d 1033
• Parties: 13 Fed. R. Evid. Serv. 557 CITY OF PHOENIX, Plaintiff-Appellee, v. COM/SYSTEMS, INC., et al., Defendants-Appellants. Richard H. BARRY, Counter-claimant/Appellant, v. CITY OF PHOENIX, Counter-defendant/Appellee. OHIO CASUALTY INSURANCE COMPANY, Cross-claimant, v. Richard H. BARRY, et al., Cross-defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1033

706 F.2d 1033

13 Fed. R. Evid. Serv. 557

CITY OF PHOENIX, Plaintiff-Appellee, v. COM/SYSTEMS, INC., et al., Defendants-Appellants.

Richard H. BARRY, Counter-claimant/Appellant, v. CITY OF PHOENIX, Counter-defendant/Appellee.

OHIO CASUALTY INSURANCE COMPANY, Cross-claimant, v. Richard H. BARRY, et al., Cross-defendant.

No. 81-5471.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 7, 1982.

Decided May 26, 1983.

Don C. Stevens, II, William R. Jones, Jr., Jones, Skelton & Hochuli, Phoenix, Ariz., for plaintiff-appellee.

Robert O. Dyer, Phoenix, Ariz., Michael J. Pearce, George E. Wise, Wise & Nelson, Long Beach, Cal., for defendants-appellants.

Appeal from the United States District Court for the District of Arizona.

Before ELY and CHOY, Circuit Judges, and THOMPSON, ^* District Judge.

CHOY, Circuit Judge:

This diversity action arose out of a contract dispute between the City of Phoenix ("City") and a contractor who had agreed to build a communications system for the City. The contractor's performance bond surety company, which was joined as a defendant, cross-claimed for indemnity against the contractor. We find that (1) the district court acted properly in entering a judgment notwithstanding the verdict on the indemnity cross-claim rather than ordering a new trial; and (2) there is adequate evidence on the record to support the amount of damages awarded to the City by the jury. Therefore, we affirm the judgment entered by the district court.

I. Background

On December 16, 1974, Richard H. Barry ("Barry"), the owner and manager of Com/Systems, entered into a contract with the City. The contract provided that Barry would build, design, and produce a "multi-channeled, multi-position, two-way radio communications remote control system" for the Phoenix Police Department at a price of $179,294. The contract called for Barry to obtain a contract performance surety bond in the amount of one-half the contract price. Accordingly, Ohio Casualty Insurance Company ("Ohio Casualty"), as surety, executed and delivered on behalf of Barry, as principal, a contract performance bond in the amount of $89,632, designating the City as obligee.

Because of a series of revisions requested by the City and other delays caused by problems within Barry's organization, the system remained incomplete in January 1976. On January 19, 1976, the City informed Barry that it considered the delay to be a material breach and was, therefore, cancelling the contract. At the time of cancellation, the City had paid Barry $134,264, leaving approximately $45,000 unpaid on the contract. The City then proceeded to work on the project in-house and finally completed the project in September 1979.

II. The Trial

The City sued Barry and Ohio Casualty for the extra costs it incurred in completing the system, claiming that Barry had breached the contract by failing to meet the contract delivery schedule. Barry counterclaimed against the City, claiming that the City's unilateral cancellation of the contract constituted a breach. Ohio Casualty cross-claimed against Barry for indemnity for any amount it might have to pay the City on the performance bond.

At the trial before a jury, the City presented evidence that it had incurred a total expense of $337,617.26 in completing the communications system. The City's evidence also showed that of that total, $94,508.97 was used to purchase parts. Barry estimated the reasonable cost of completing the system and a City communications officer testified as to his belief concerning completion cost at the time the contract was terminated.

For reasons that are not completely clear, the trial judge instructed the jury that the total award of damages to the City could not exceed $119,000. ¹ The judge correctly instructed the jury that if they found Ohio Casualty liable to the City, then by law, Barry would be liable to indemnify Ohio Casualty for any amount Ohio Casualty paid to the City on the security bond. However, the verdict forms received by the jury included a form that gave the jury the option of finding for the City and against both Barry and Ohio Casualty on the breach-of-contract claim, but for Barry and against Ohio Casualty on Ohio Casualty's cross-claim for indemnification.

The jury returned a verdict on the incorrect verdict form, finding for the City and against Barry and Ohio Casualty in the amount of $90,000, and against Ohio Casualty and for Barry on the indemnity cross- claim. Barry and Ohio Casualty moved for a new trial, or alternatively, for judgment notwithstanding the verdict. The district court entered judgment on the breach-of-contract claim according to the verdict, but entered a judgment notwithstanding the verdict on the indemnity cross-claim. Thus, the district court awarded the City of Phoenix $90,000 against Barry and Ohio Casualty on the breach-of-contract claim and held Barry liable to Ohio Casualty on the indemnity cross-claim.

III. Judgment Notwithstanding the Verdict

By law, Barry was liable to indemnify Ohio Casualty for any amount Ohio Casualty paid to the City on the performance bond. The instructions read by the trial judge correctly informed the jury of the state of the law. Nevertheless, the verdict forms supplied to the jury gave them the option of deciding the indemnity cross-claim, and the jury exercised that option by returning a verdict for Barry and against Ohio Casualty. The trial judge corrected the error by entering a judgment notwithstanding the verdict on the cross-claim.

A judgment notwithstanding the verdict is proper where the evidence and inferences, viewed in the light most favorable to the nonmoving party, can support only one conclusion: that the moving party was legally entitled to a favorable judgment. Allen v. Allstate Insurance Co., 656 F.2d 487, 488 (9th Cir.1981); see Cordero v. CIA Mexicana de Aviacion, S.A., 681 F.2d 669, 672 (9th Cir.1982); Flores v. Pierce, 617 F.2d 1386, 1389 (9th Cir.), cert. denied, 449 U.S. 875, 101 S.Ct. 218, 66 L.Ed.2d 96 (1980). Since Ohio Casualty was entitled to judgment on its cross-claim as a matter of law, the judge acted properly in issuing a judgment notwithstanding the verdict on the cross-claim.

Barry and Ohio Casualty contend that the judgment notwithstanding the verdict was inadequate to correct the jury's error and that the proper way to correct the error would have been to grant a new trial on all issues. A trial judge may grant a new trial in order to prevent fundamental unfairness or a miscarriage of justice. Peacock v. Board of Regents, 597 F.2d 163, 165 (9th Cir.1979); cf. Alma v. Manufacturers Hanover Trust Co., 684 F.2d 622, 625 (9th Cir.1982) (nonjury trial). But the district court's conclusion that no such unfairness was present may be reversed only if this court has a definite conviction that the conclusion was a clear error of judgment. Ruiz v. Hamburg-American Line, 478 F.2d 29, 31 (9th Cir.1973); cf. Alma, 684 F.2d at 625.

After considering the circumstances of this case, we have no such conviction that the district court's decision to deny a new trial was erroneous. The breach-of-contract claim and the indemnity cross-claim rested on totally distinct factual and legal bases. The question of Barry's liability to indemnify Ohio Casualty was irrelevant to the outcome on the breach-of-contract question. Having seen all the evidence and heard all the testimony, the district court judge was in the best position to ascertain that the jury's decision on the breach-of-contract issue was supported by substantial evidence and was not tainted by the jury's erroneous decision on the indemnity issue.

Since the two issues were distinct and separable, no injustice occurred when the district court entered a judgment in accord with one part of the jury's liability verdict but entered a judgment notwithstanding the indemnity portion of the verdict. Cf. Gasoline Products Co. v. Champlin Refining Co., 283 U.S. 494, 500, 51 S.Ct. 513, 515, 75 L.Ed. 1188 (1931) (partial retrial allowable where it clearly appears that issue to be retried is distinct and separable from others); Camalier & Buckley-Madison, Inc. v. Madison Hotel, Inc., 513 F.2d 407, 420-21 (D.C.Cir.1975) (same). We therefore affirm the judgment entered by the district court with respect to the liability issues.

IV. Adequacy of Evidence Supporting Damages Award

Before deciding whether there was sufficient evidence to support the amount of damages awarded by the jury, we must first address two evidentiary questions-- one explicitly raised by Barry and Ohio Casualty and the other implied in their arguments. ²

A. Objection to Testimony by Simmons

John E. Simmons, a City communications officer, testified that the City had expended $337,617.26 in completing the communications system. The trial court allowed the testimony over the objection of the defendants that the proper foundation had not been laid. Although the judge did not specify the reason for his ruling, the questions he asked lead us to infer that he found the testimony admissible as a summary calculation of voluminous writings under Fed.R.Evid. 1006. ³ However, it is not critical that we know the trial judge's rationale; we will uphold the ruling if we find that there is at least one theory under which the evidence was admissible. See SEC v. Chenery Corp., 318 U.S. 80, 88, 63 S.Ct. 454, 459, 87 L.Ed. 626 (1943); Clark v. City of Los Angeles, 650 F.2d 1033, 1036 (9th Cir.1981), cert. denied, 456 U.S. 927, 102 S.Ct. 1974, 72 L.Ed.2d 443 (1982).

Simmons read the $337,617.26 total from Exhibit 87, a computer printout summarizing numerous individual documents. The underlying documents were parts requisitions and work-order requests detailing the cost of parts and labor the City expended in completing the communications system. Although the underlying documents were not offered as evidence at the time of Simmons' testimony, we believe that a foundation was laid...