Iowa-Mo Enterprises, Inc. v. Avren

• Decision Date: 30 January 1981
• Docket Number: Nos. 79-1556,IOWA-MO,79-1560,s. 79-1556
• Parties: ENTERPRISES, INC., Appellee, v. Herman AVREN and Vicki Avren, Appellants.ENTERPRISES, INC., Appellant, v. Herman AVREN and Vicki Avren, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 443

639 F.2d 443

IOWA-MO ENTERPRISES, INC., Appellee, v. Herman AVREN and Vicki Avren, Appellants.

IOWA-MO ENTERPRISES, INC., Appellant, v. Herman AVREN and Vicki Avren, Appellees.

Nos. 79-1556, 79-1560.

United States Court of Appeals Eighth Circuit.

Submitted May 20, 1980.

Decided Jan. 30, 1981.

Edward C. Cody, St. Louis, Mo., for Herman and Vicki Avren.

Frederick H. Mayer, St. Louis, Mo., for Iowa-Mo. Enterprises.

Before HENLEY and McMILLIAN, Circuit Judges, and ROY, District Judge. ^*

HENLEY, Circuit Judge.

Herman and Vicki Avren appeal from a judgment of the district court, ¹ entered on jury verdicts, holding the Avrens liable for damages to Iowa-Mo Enterprises, Inc. (Iowa-Mo) for breach of their agreement to purchase certain real property and rejecting the Avrens' counterclaim for return of their earnest money. Contending that the amount of damages awarded was inadequate, Iowa-Mo cross-appeals from the denial of its post-trial motion to amend the judgment, or, in the alternative, to grant a new trial limited to the issue of damages. For reasons to be stated, we affirm the judgment of the district court.

BACKGROUND

Defendants Herman Avren and his wife, Vicki, are residents of St. Louis County, Missouri. Plaintiff Iowa-Mo is an Iowa-chartered corporation having its principal place of business in Des Moines, Iowa. By written contract dated August 20, 1976 the Avrens agreed to purchase the Kimberling Inn, a motel located in southwestern Missouri and owned by Iowa-Mo. In exchange for the Inn, the Avrens were to assume the outstanding first mortgage debt of $727,500.00 on the property and were to convey to Iowa-Mo a commercial lot and building in Edwardsville, Illinois, owned by Mrs. Avren and variously valued between $215,000.00 and $300,000.00. Iowa-Mo promised to transfer title to the Inn by warranty deed and to provide the Avrens, on or before closing, with a commitment for a title insurance policy

insuring absolute fee simple title to the real estate in Buyers free of all liens and encumbrances except a first mortgage lien to Great Southern Savings & Loan Association and except as to all restrictions, easements and covenants now of record, zoning laws and ordinances and general real estate taxes due after the date of closing.

Closing of the sale was set for September 1, 1976. Upon signing the agreement, the Avrens deposited $5,000.00 earnest money.

On August 31, one day before the scheduled closing, Herman Avren called Charles Wasker, the secretary of Iowa-Mo, and told him that because of misrepresentations by Iowa-Mo agents during negotiations, the Avrens would not complete the transaction. In a conversation the next day with John Neiman, Iowa-Mo's president, Avren repeated his accusation of fraud and again refused to go through with the purchase. Shortly thereafter Iowa-Mo received a telegram from the Avrens denying any obligation to buy the Inn and requesting return of their earnest money.

Within two weeks after the Avrens' repudiation, Iowa-Mo sold the Inn for $100,000.00 cash and assumption of the first mortgage loan, which had been paid down to $720,000.00 by Iowa-Mo. Closing of this sale was originally scheduled for October 1, 1976, but did not actually take place until October 29.

In January of 1977 Iowa-Mo brought this diversity action against the Avrens in federal district court, seeking damages in excess of $247,000.00 for breach of contract. The Avrens denied liability and counterclaimed for return of their $5,000.00 earnest money on three alternative grounds. The only one of these defenses involved in the issues on appeal is that, for reasons unrelated to the Avrens' prior repudiation, Iowa-Mo would have been unable to perform on September 1 as promised.

On March 21, 1979, after an eight-day trial, the jury returned two general verdicts in favor of Iowa-Mo, assessing its damages at $35,000.00 and rejecting the Avrens' counterclaim. The district court entered a judgment thereon, and the Avrens moved for judgment n. o. v. or for a new trial. Iowa-Mo maintained that the damages awarded were inadequate, and moved for amendment of the judgment or for a new trial solely on the issue of damages. On April 11, 1979, the district court denied all post-trial motions, and both sides have appealed.

The Avrens claim that the district court committed reversible error in (1) excluding evidence that Iowa-Mo had forfeited its certificate to do business in Missouri; (2) giving Instruction No. 7, plaintiff's verdict director; (3) giving Instruction No. 8, on the measure of plaintiff's damages; and (4) making certain other evidentiary rulings. On its cross-appeal Iowa-Mo argues that the jury's finding of liability was correct, but that the evidence of damages adduced at trial, when viewed most favorably to the Avrens, required a verdict of at least $122,500.00 for Iowa-Mo.

THE AVRENS' APPEAL

Iowa-Mo's License To Do Business in Missouri.

The Avrens' first argument for reversal is based on Missouri's statutory requirement that a foreign corporation obtain a "certificate of authority" from the secretary of state before transacting business in the state. Mo.Rev.Stat. § 351.570(1) (1978). The following sanctions are provided:

Every foreign corporation now doing business in or which may hereafter do business in this state which shall neglect or fail to comply with the (certification requirement) shall be subject to a fine of not less than one thousand dollars ...; in addition to which penalty, no foreign corporation, failing to comply with this chapter, can maintain any suit or action, either legal or equitable, in any of the courts of this state, upon any demand, whether arising out of the (sic) contract or tort, while the requirements of this chapter have not been complied with.

Mo.Rev.Stat. § 351.635 (1978). It is undisputed that on January 1, 1976 Iowa-Mo forfeited its certificate to do business in Missouri, and, as of the time of trial, had not been reinstated.

At trial the Avrens raised for the first time the issue of Iowa-Mo's forfeiture and sought to introduce evidence thereof in order to prove, first, that Iowa-Mo could not bring suit on the contract in Missouri and, second, that Iowa-Mo would not have been legally able to perform on September 1, 1976, as the contract required. This evidence consisted of (1) testimony by an employee of the Missouri secretary of state concerning the official record of forfeiture, and (2) a document, mailed to the Avrens upon request, verifying the forfeiture and bearing the signature and official seal of the secretary of state. Upon Iowa-Mo's objection, the district court excluded the evidence for two reasons: (1) the Avrens had not pleaded Iowa-Mo's lack of capacity to sue by "specific negative averment," as required by Federal Rule of Civil Procedure 9(a); and (2) the Avrens had not listed the evidence on their pretrial submission, identifying possible witnesses and exhibits, as required by the court's pretrial order and local court rule.

On appeal the Avrens challenge this ruling on the ground that the proffered evidence concerned Iowa-Mo's substantive right to recover on the contract, not its capacity to sue in federal court. To afford Iowa-Mo a remedy in this diversity action when it had no right enforceable in the Missouri courts would, appellants claim, violate the principles established in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and its progeny. Relevant here are Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524 (1949), and Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947). In regard to their failure to list the evidence on their pretrial submission, the Avrens explain that they first learned of Iowa-Mo's forfeiture and obtained official confirmation thereof after their submission had been filed. Appellants also assert that a pretrial order "ordinarily does not require the listing of a records custodian as a trial witness."

We believe that the second reason stated by the district court fully justified the exclusion of the evidence in question, regardless of the purpose for which the Avrens offered the evidence, ² and we therefore affirm the court's exclusionary ruling on this ground. This court has held that a district court may exclude from evidence at trial any matter which was not properly disclosed in compliance with the court's pretrial orders, and such a ruling will be reversed on appeal only for abuse of discretion. See Admiral Theatre Corp. v. Douglas Theatre Co., 585 F.2d 877, 896-98 (8th Cir. 1978); United States v. Pirnie, 472 F.2d 712 (8th Cir. 1973); Labbee v. Roadway Express, Inc., 469 F.2d 169, 172 (8th Cir. 1972). See also Fed.R.Civ.P. 37(b)(2)(B). The procedural history of this case clearly indicates that the district court did not abuse its discretion by excluding the evidence of Iowa-Mo's forfeiture. The complaint initiating this action was filed on January 3, 1977, and trial did not begin until March 12, 1979. During the interim both parties conducted extensive discovery proceedings, including the taking of more than fifteen depositions in Des Moines, St. Louis and the Kimberling City area. By leave of the court, defendants filed their counterclaim in March, 1978. The date of trial was set and then postponed no fewer than nine times. Against this background, defendants' counsel claimed at trial that he had first been alerted to the possibility of Iowa-Mo's unlicensed status by a document which he saw at the next to last pretrial conference, in late February, 1979. He did not receive official confirmation of Iowa-Mo's noncompliance until the first week of March, about one week after defendants' pretrial submission had been filed (on February 22) and one week before trial began. ³

In ruling on the admissibility of this evidence, the district court stated that defendants could and should have filed a supplementary exhibit when they received the...