Commercial Property Investments, Inc. v. Quality Inns Intern., Inc.

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: HEANEY; MORRIS SHEPPARD ARNOLD
• Citation: Commercial Property Investments, Inc. v. Quality Inns Intern., Inc., 61 F.3d 639 (8th Cir. 1995)
• Decision Date: 20 September 1995
• Docket Number: No. 94-2509,94-2509
• Parties: COMMERCIAL PROPERTY INVESTMENTS, INC., a Minnesota corporation, Appellee, v. QUALITY INNS INTERNATIONAL, INC., a Delaware corporation, Appellant.

Page 639

61 F.3d 639

32 Fed.R.Serv.3d 880

COMMERCIAL PROPERTY INVESTMENTS, INC., a Minnesota corporation, Appellee, v. QUALITY INNS INTERNATIONAL, INC., a Delaware corporation, Appellant.

No. 94-2509.

United States Court of Appeals Eighth Circuit.

Submitted March 13, 1995.

Decided July 31, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

20, 1995. ^*

Kirk W. Reilly, Minneapolis, MN, argued (Lawrence R. Commers and Joanne H. Turner, on the brief), for appellant.

George O. Ludcke, Minneapolis, MN, argued (Keith J. Nelsen, on the brief), for appellee.

Before MAGILL, Circuit Judge; HEANEY, Senior Circuit Judge; and MORRIS SHEPPARD ARNOLD, Circuit Judge.

HEANEY, Senior Circuit Judge.

This matter comes before the court for the second time. The action arose when Commercial Property Investments, Inc. ("CPI") brought suit against Quality Inns International, Inc. ("Quality") for damages incurred due to alleged misrepresentations and omissions made by a Quality vice president. CPI alleged that Quality's fraudulent conduct, which occurred during and subsequent to discussions concerning the sale of a hotel franchise to CPI, violated the Minnesota Franchise Act and Minnesota common law. Our court affirmed the district court's grant of summary judgment on CPI's Minnesota Franchise Act claim and reversed the court's grant of summary judgment on CPI's common-law fraud claim. See Commercial Property Inv., Inc. v. Quality Inns Int'l, Inc., 938 F.2d 870, 871 (8th Cir.1991) (CPI I ).

On remand, a four-week jury trial was held on CPI's common-law fraud claim. The jury returned a verdict in CPI's favor and awarded compensatory damages in the sum of $796,056. The court subsequently added prejudgment interest to the jury award, bringing the total award to $1,028,624. Quality's motion for judgment notwithstanding the verdict or, in the alternative, for a new trial was denied. Quality now appeals. Because our first opinion sets forth the facts in considerable detail, we need not reiterate them here.

Quality argues that (1) the district court erred in instructing the jury about the effect of a written disclaimer on CPI's reliance on certain oral misrepresentations by Quality; (2) the district court erred in denying Quality's motion for judgment notwithstanding the verdict or, alternatively, for a new trial because there was insufficient admissible evidence of actionable misrepresentation or justifiable reliance to support a finding of fraud; and (3) CPI failed to meet its burden of proving damages because no evidence was introduced at trial that established CPI's loss at the time it discovered the fraud in June 1987. We affirm.

I. The Jury Instruction

Quality first assigns error to the district court's jury instruction regarding a disclaimer included in a pro forma document that Walter Francois, Vice President of Franchise Development for Quality, gave to Jeffrey Nielsen, CPI's owner and operator. The pro forma, which showed occupancy percentages, average daily rates, and gross and net income for the first three years of a new 128-room Comfort Inn, included the following disclaimer:

The accompanying financial projections are for illustration purposes only and are based on estimates and assumptions. No implied or expressed representations are made that these projections actually will be achieved for a specific project.

Jt.App. at 323. With regard to the disclaimer, the district court instructed the jury as follows:

A disclaimer in a contract will only negate a claim of fraud where the disclaimer explicitly states a fact completely the opposite of the claimed misrepresentations.

As to plaintiff's Exhibit # 3, the pro forma, the numbers contained therein are effectively disclaimed. But, as to the claim that CPI's reliance went beyond the effectively disclaimed information in the pro forma to include the oral representations of Walter Francois, if any, they are not disclaimed.

If you find that CPI relied on misrepresentations which were not squarely contradicted by the written disclaimer, you must find the disclaimer ineffective to negate reliance.

Jt.App. at 304 (emphasis added). Quality argues that by charging the jury that it "must find the disclaimer ineffective to negate reliance" the court removed from the jury's province the fact issue of whether CPI justifiably relied on oral misrepresentations by Quality. Stated somewhat differently, Quality argues that the instruction precluded the jury from considering the effect of the written disclaimer on CPI's reliance on oral misrepresentations Francois made to Nielsen.

The instruction was discussed extensively at a jury conference in which both parties actively participated. During the conference in response to the court's statement of intent to include the language, Quality's counsel stated:

I think the last parenthetical, your instruction that you must find the disclaimer ineffective to negate reliance, I think that is a factual determination. That is, the jury is entitled to try to determine whether or not there was ... reliance--

Feb. 2, 1994, Trial Tr. at 125-26. The court responded to Quality's concern, noting that the proposed language properly left the issue of reliance for the jury's consideration. In addition, the court noted that a separate instruction on fraud and misrepresentation adequately discussed the issue of justifiable reliance. ¹ Id. at 127. At the conclusion of the charge conference the court inquired of Quality's attorney whether there were additional instructions Quality wished to include. Counsel responded: "Well, Your Honor, usually we have a few that we would like. Unfortunately, I think that ... the instructions look pretty good as they stand." Id. at 142. After discussing an additional instruction, the court asked counsel once more: "Does the defense have something more?" Id. at 143. Quality's attorney responded: "We do not." Id.

Following closing arguments, the court held a conference with counsel in chambers to discuss any additional language the parties wished to include in the instructions. CPI's attorney requested additional language in an instruction regarding the time of discovery of the fraud. Counsel for Quality requested no additional instructions. At a bench conference immediately thereafter the court again invited the parties to raise any additional concerns they had about the instructions: "Remembering that your requested instructions and objections are of record, do you have any further requested instructions, or further requested objections?" Counsel for both parties responded negatively to the court's question. Feb. 3, 1994, Trial Tr. at 83.

As the record shows, at no time during the charge conference or after closing argument did Quality's attorney challenge the instruction on the ground it raises on appeal--that the instruction precluded the jury from considering the written disclaimer in deciding the issue of reliance. At most, Quality's comment during the charge conference that "the jury is entitled to try to determine whether or not there was ... reliance" can be construed as an alternative instruction. We have held, however, that merely tendering an alternative instruction without objecting to some specific error in the trial court's charge or explaining why the proffered instruction more accurately states the law does not preserve the error for appeal. Johnson v. Houser, 704 F.2d 1049, 1051 (8th Cir.1983). Rule 51 of the Federal Rules of Civil Procedure requires a specific objection before the jury retires when the district court rejects a requested instruction. Barton v. Columbia Mut. Cas. Ins. Co., 930 F.2d 1337, 1341 (8th Cir.1991). Error in instructions not properly objected to is waived unless the error is plain error, e.g., error resulting in a miscarriage of justice. Johnson, 704 F.2d at 1051. "When reviewing instructions for plain error, this court has stated that the district court has discretion in the style and wording of jury instructions so long as the charge as a whole fairly and adequately states the law." Beckman v. Mayo Found., 804 F.2d 435, 438 (8th Cir.1986). Because Quality did not specifically raise the issue before the district court it now raises on appeal, we find that Quality has waived its right to object to the court's instruction.

Even assuming that Quality properly preserved its objection to the instruction, we find no error in the court's instruction. Viewed alone, the instruction is compatible with our statement of Minnesota law in CPI I ² in which we held that the question of reliance is one for the trier of fact. Consistent with our holding, the district court charged the jury that if it found that CPI relied on misrepresentations that were not squarely contradicted by the written disclaimer, it must find the disclaimer ineffective to negate reliance. The disclaimer instruction logically followed the court's instruction on fraud and misrepresentation, which discussed rather extensively the issue of justifiable reliance. The instruction, as we read it, in no way precluded the jury from considering the impact of the disclaimer on CPI's reliance, but rather, consistent with our summary of Minnesota law in CPI I, instructed the jury that a written disclaimer cannot operate to nullify a claim of fraud where claimed misrepresentations are not explicitly contradicted by the disclaimer. ³

II. The Sufficiency of the Admissible Evidence

Quality next contends that CPI's complaint failed to allege fraud with sufficient particularity to satisfy the requirements of Rule 9(b) of the Federal Rules of Civil Procedure. Accordingly, it argues the district court erred in denying Quality's motion for judgment notwithstanding the verdict or, alternatively, for a new trial because allegations set forth in CPI's Third Amended Complaint ("the complaint") were insufficient to support a claim of fraud.

A motion for judgment notwithstanding the verdict (now motion for judgment as a...