Ganz v. Lyons Partnership, L.P.

• Decision Date: 10 April 1997
• Docket Number: No. 3:94-CV-2545P.,3:94-CV-2545P.
• Citation: 961 F.Supp. 981
• Parties: GANZ, Plaintiff, v. LYONS PARTNERSHIP, L.P., Defendant.
• Court: U.S. District Court — Northern District of Texas

961 F.Supp. 981

GANZ, Plaintiff, v. LYONS PARTNERSHIP, L.P., Defendant.

No. 3:94-CV-2545P.

United States District Court, N.D. Texas, Dallas Division.

April 10, 1997.

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Frank Charles Vecella, Brian Allan Kilpatrick, Jackson & Walker, Dallas, TX, Scott Glenn Camp, Baker & Hostetler, Houston, TX, Annabel Lugo Hoffman, McFall Law Firm, Dallas, TX, Thomas R. Lucchesi, Cleveland, OH, Bruce O. Baumgartner, Baker & Hostetler, Cleveland, OH, for Ganz.

Jerry R. Selinger, Jenkens & Gilchrist, Dallas, TX, Thomas Shawn Leatherbury, Stephen Lloyd Levine, Vinson & Elkins, Dallas, TX, Barry I. Slotnick, Richards & O'Neil, New York City, Jill Bohannon Davenport, Crouch & Hallett, Dallas, TX, Joyce D. Slocum, Richardson, TX, for Lyons Partnership LP.

MEMORANDUM AND ORDER ON LYONS' MOTIONS FOR JUDGMENT AS A MATTER OF LAW, NEW TRIAL, OR REMITTUR, ALTERNATIVELY

URBOM, Senior District Judge.

This matter comes before me on the defendant's, Lyons Partnership, L.P., post-trial motions for a judgment as a matter of law pursuant to Rule 50(b) of the Federal Rules of Civil Procedure, a new trial pursuant to Federal Rule of Civil Procedure 59(a)(1), or remittitur, alternatively. Based on my review, I shall deny the defendant's motion for judgment as a matter of law; however, a remittitur is in order with respect to certain unproved damages. Therefore, I shall conditionally grant Lyons' motion for a new trial, solely on the issue of damages related to Baby Bop, in the event the plaintiff, Ganz, does not accept the remittitur.

BACKGROUND

This case was tried to a jury between August 8 and 19, 1996, in Dallas, Texas. It involves a contract dispute between Ganz, a Canadian toy distributor, which had obtained the right to distribute Barney and Baby Bop "plush" (i.e."stuffed") toys in Canada from Lyons, a United States limited partnership, which owned the intellectual property rights to these products. In early 1993, Ganz approached Lyons about becoming the Canadian mass-market distributor for Barney and Baby Bop plush.

The parties concur that an agreement between them existed, but dispute its terms. Sometime between March 10 and March 18, 1993, they reached some agreement, for on the latter date, Ganz issued a purchase order for 264,000 toys and Lyons accepted it. Further, Oanz opened a letter of credit payable to Lyons. This purchase order was amended several times to increase the number of toys requested, eventually reaching 720,000 items ordered, and Lyons directed its manufacturer to produce these toys. The letter of credit was also amended as the number of toys increased and, eventually, was replaced with another. A formal, written contract embodying their oral understanding was desired by both parties and they were working toward such a document. However, no final, written contract to which the parties affixed their signatures exists. A "final" draft distribution agreement, to which Lyons now points as the contract, was never signed by either of them.

The parties made a number of claims against one another, but by the time the matter was submitted to the jury, the case had narrowed to the parties' respective breach-of-contract claims. Ganz claimed a breach of contract resulting from Lyons' alleged delay in shipping the products, as well as Lyons' alleged failure in using its "best efforts" in protecting the Canadian toy market from infringements. Because of these failures, Ganz claimed it was left with 174,000 unsold toys upon which it lost profits. It likewise claimed lost profits on an additional 204,000 toys on which it did not take delivery. Both of Ganz' breach of contract claims rested on the existence of an oral and written contract entered into by the parties in March 1993. Lyons counterclaimed that Ganz had failed to take delivery of and pay for 204,000 plush toys on which it was obligated under the parties' agreement. The jury returned its verdict on August 20, 1996. It found that Lyons had breached its agreement with Ganz because of delays in delivery of the toys under the March purchase order. It awarded Ganz damages in the amount of $2,255,935 for this breach. The jury also found for Ganz on its failure to protect the market claim and awarded $1,565,333 in damages. Finally, the jury found against Lyons on its counterclaim.

STANDARD OF REVIEW

A motion for judgment as a matter of law, made pursuant to Federal Rule 50(b), should be granted only when, after considering all of the evidence presented by the parties and all reasonable inferences arising therefrom in a light most favorable to the non-moving party, the court finds that the facts and inferences point so strongly in favor of one party that reasonable persons could not arrive at a contrary verdict. Mattern v. Eastman Kodak Co., 104 F.3d 702, 705 (5th Cir.1997) (citing Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc)); Resolution Trust Corp. v. Cramer, 6 F.3d 1102, 1109 (5th Cir.1993). Only those grounds raised in a pre-verdict motion for judgment as a matter of law, made pursuant to Rule 50(a), may be heard in a post-verdict Rule 50(b) motion. See, e.g., Kutner Buick, Inc. v. American Motors Corp., 868 F.2d 614 (3d Cir.1989).¹

Federal Rule of Civil Procedure 59(a) provides that "[a] new trial may be granted to all or any parties and on all or part of the issues ... in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States ..." FED. R. CIV. P. 59(a). See 6A MOORE'S FEDERAL PRACTICE. ¶ 59.08 (1996) for a list of reasons. Granting a motion for a new trial, timely filed, is within the sound discretion of the trial court. See, Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251, 61 S.Ct. 189, 194, 85 L.Ed. 147 (1940); Smith v. Transworld Drilling Co., 773 F.2d 610 (5th Cir.1985). The Fifth Circuit has explained that "[w]e require that new trials should not be granted on evidentiary grounds [(as Lyons argues in this case)] `unless, at a minimum, the verdict is against the great — not merely the greater — weight of the evidence.'" Shows v. Jamison Bedding, Inc., 671 F.2d 927, 930 (5th Cir. 1982) (quoting Conway v. Chemical Leaman Tank Lines, Inc., 610 F.2d 360, 362 (5th Cir.1980)).

Lastly, under Texas law, a remittitur of damages is warranted where the jury's verdict is not sufficiently supported by the evidence so that it would be "manifestly unjust" to uphold the damage award. K Mart Corp. v. Rhyne, 932 S.W.2d 140, 145 (Tex. App.1996) (no writ) (citing Pope v, Moore, 711 S.W.2d 622, 623-24 (Tex.1986)); Larson v. Cactus Utility Co., 730 S.W.2d 640, 641 (Tex.1987), reh'g denied June 17, 1987.

DISCUSSION

Before I address Lyons' claims, I first consider the question of whether the jury could reasonably conclude that time was of the essence under the parties' agreement. "The general rule is that time is not of the essence in a contract unless the parties expressly make it so, or there is something in the nature or purpose of the contract and the circumstances surrounding it which make it apparent that the parties intended that time be of the essence." Siderius, Inc. v. Wallace Co., 583 S.W.2d 852, 863 (Tex.Civ.App.1979) (no writ) (citations omitted). It is a question for the jury unless the contract expressly makes time of the essence, or the subject matter of the contract is such that the court may take judicial notice of the fact that the parties obviously intended for time to be of the essence. Lockhart-Hutchens v. Bergstrom, 434 S.W.2d 453, 456 (Tex.Civ.App. 1968) (ref'd n.r.e.). I find that there was sufficient evidence from which the jury could conclude that time was of the essence.

Ganz employees made it clear to Lyons representatives during discussions in February and early March that time was a critical factor in selling Barney in Canada. (S. Ganz depo. at 18-21; H. Ganz, 1:122-24, 139-40, 144-45, 149-50, 180-81; Pl.'s Exs. 55, 57). Further, this was reiterated in the March 18, 1993, purchase order, (Pl.'s Ex. 3), which stated: "TO COMMENCE A.S.A.P. PREFERABLY NO LATER THAN APRIL." next to the shipping date. It was again stressed in an April 1, 1993, memorandum, (Pl.'s Ex. 62), from Debby Chan, a Ganz employee, to Judy Bennett, a Lyons employee. It read: "[i]t is very important that the shipping schedule faxed to us by Gail (copy attached) will be complied with as we are making commitments to our customers based on this." (Pl.'s Ex. 62) (emphasis in original) Attached to the memorandum was the shipping schedule for the initial 264,000 toys. The schedule was supplied by Lyons to Ganz. It provided that the last shipping date from Indonesia for any portion of the toys which were part of this order would be May 15, 1993.

A letter of credit, no. 1026258, covering this order was opened by Ganz on March 25, 1993. Lyons argues that in amending this letter of credit on June 3, 1993, to provide for a different latest shipping date of July 10, 1993, Ganz also amended the original purchase order's shipping date to July 10, 1993. Because it complied with this revised date, Lyons contends, it did not breach the contract. (Def.'s Br. at 8 n. 5, 14-15 citing Siderius, Inc. v. Wallace Co., 583 S.W.2d 852, 864 (Tex.Civ.App.1979) (no writ)). Ganz counters that the jury could find from the evidence that amending the letter of credit did not amend the parties' understanding that time was of the essence or the shipping date for the original order of 264,000 items, both part of the underlying oral agreement. I agree.

The central principle behind letters of credit is the "independence principle," whereby they are recognized to be separate and distinct contracts from the underlying contract of sale. International Chamber of Commerce, UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (UCP) art. 3, I.C.C. Publication No. 400 (1983 Revision) (letters of credit, "by their nature, are...