Kaiva, LLC v. Parker
| Decision Date | 05 March 2018 |
| Docket Number | NO. 1:15-CV-63-DMB,1:15-CV-63-DMB |
| Parties | KAIVA, LLC PLAINTIFF v. MICHAEL PARKER and DEBRA PARKER DEFENDANTS |
| Court | U.S. District Court — Northern District of Mississippi |
This action is before the Court on various post-trial motions filed by the parties.
On April 8, 2015, Kaiva, LLC filed a four-count complaint in this Court against Michael and Debra Parker. Doc. #1. The complaint asserted claims for breach of contract, breach of the duty of good faith and fair dealing, promissory estoppel, and unjust enrichment arising from an agreement for Kaiva to purchase the Parkers' Subway sandwich franchise located in Okolona, Mississippi.
Kaiva's claims for breach of contract and breach of the duty of good faith and fair dealing were tried before a jury April 17-21, 2017.1 See Docs. #79, #80. At the close of Kaiva's case in chief, the Parkers orally moved for a directed verdict "on the basis that the plaintiffs have failed to put in any evidence of Kaiva, LLC's losses." Doc. #92-1 at 4. The Court, construing the motion as a Rule 50(a) motion for judgment as a matter of law, denied the requested relief.2 The Parkers then presented their case.
At the close of all evidence, Kaiva moved for a directed verdict on its claims. Doc. #99. The Parkers opposed the motion on multiple grounds, including on the issue of damages. Regarding damages, the Parkers' counsel stated, Doc. #99 at 5-6.
The Court denied Kaiva's motion and the case went to the jury. The jury found for Kaiva on both claims and awarded $250,000 in compensatory damages. Doc. #86. The jury also awarded a total of $15,000 in punitive damages—$7,500 against Michael and $7,500 against Debra. Id.
On May 1, 2017, Kaiva filed a motion seeking attorney's fees. Doc. #87. The Parkers responded in opposition on May 15, 2017, Doc. #89; and then one week later, filed a motion for judgment as a matter of law or for a new trial, Doc. #92. Kaiva replied in support of its motion on May 23, 2017, Doc. #94, and responded in opposition to the Parkers' motion on June 5, 2017, Doc. #101.
On June 9, 2017, the Parkers filed a motion to exceed the page limitation imposed by local rule for their reply in support of their motion for judgment as a matter of law. Doc. #103. Three days later, the Parkers filed their reply. Doc. #104.
Rule 7(b)(5) of the Court's Local Civil Rules provides that a "[m]ovant's original and rebuttal memorandum briefs together may not exceed a total of thirty-five pages ...." "Page limitations are important, not merely to regulate the Court's workload, but also to encouragelitigants to hone their arguments and to eliminate excessive verbiage." Fleming v. Cty. of Kane, 855 F.2d 496, 497 (7th Cir. 1988) (citation omitted). Accordingly, leave to exceed a page limitation "should only be sought in exceptional circumstances." Id.
In their motion, the Parkers seek leave to exceed the page limitation by three pages because Kaiva's response to the motion for judgment as a matter of law:
asserts issues to which Defendants could not have reasonably anticipated having to respond. Namely, Plaintiffs argue that Defendants waived the right to seek a JMOL citing old law that predates the 2006 Amendment to Rule 50 and Fifth Circuit case law interpreting same, and Plaintiffs added a new claim for lost profits to increase its damages beyond what it sought at trial.
Doc. #103.
Kaiva did not respond to the motion to exceed the page limitation; therefore, the motion may be granted on this ground alone. See L.U. Civ. R. 7(b)(3)(E) (). Regardless, because the Parkers stated adequate grounds to exceed the page limitation by three pages, the motion is granted. The Parkers' reply brief, which, together with their original brief, exceeds the page limitation by three pages,3 is deemed properly filed.
The Parkers' post-trial motion seeks judgment as a matter of law under Federal Rule of Civil Procedure 50 or, in the alternative, a new trial under Rule 59.
Pursuant to Federal Rule 50(a), a party may move for a judgment as a matter of law "at any time before the case is submitted to the jury." Fed. R. Civ. P. 50(a)(2). Such a motion may be granted on a claim or defense "[i]f a party has been fully heard on an issue [necessary to the claimor defense and] ... a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue ...." Fed. R. Civ. P. 50(a)(1). In the event a Rule 50(a) motion is not granted, Rule 50(b) provides:
No later than 28 days after the entry of judgment--or if the motion addresses a jury issue not decided by a verdict, no later than 28 days after the jury was discharged--the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59.
Fed. R. Civ. P. 50(b). "In ruling on the renewed motion, the court may: (1) allow judgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct the entry of judgment as a matter of law." Id.
"When a case is tried to a jury, a motion for judgment as a matter of law is a challenge to the legal sufficiency of the evidence supporting the jury's verdict." Cowart v. Erwin, 837 F.3d 444, 450 (5th Cir. 2016) (quotation marks omitted). To evaluate the sufficiency of the evidence, a court must "draw all reasonable inferences and resolve all credibility determinations in the light most favorable to the nonmoving party." Id. The reviewing court must "uphold the verdict unless there is no legally sufficient evidentiary basis for a reasonable jury to find as the jury did." Id. (quotation marks omitted).
Rule 59(a), unlike Rule 50, does not allow for a directed judgment. Rather, it provides that a "court may, on motion, grant a new trial on all or some of the issues--and to any party-- ... after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court." Fed. R. Civ. P. 59(a)(1)(A). "Motions for a new trial ... must clearly establish either a manifest error of law or fact or must present newly discovered evidence." Naquin v. Elevating Boats, L.L.C., 817 F.3d 235, 240 n.4 (5th Cir. 2016). In this regard, "[a] trial court should not grant a new trial on evidentiary grounds unless the verdict is against the great weight of the evidence." Seibert v. Jackson Cty., 851 F.3d 430, 439 (5th Cir. 2017).
Whether under Rule 59 or Rule 50, federal courts in diversity cases "apply federal standards of review to assess the sufficiency or insufficiency of the evidence in relation to the verdict, but in doing so ... refer to state law for the kind of evidence that must be produced to support a verdict." Hamburger v. State Farm Mut. Auto. Ins. Co., 361 F.3d 875, 884 (5th Cir. 2004) (quotation marks omitted).
Around July 2010, Michael and Debbie Parker began negotiations with Jennifer and Ray Bentley to sell their Subway franchise to Kaiva, LLC, an entity owned by the Bentleys. During the negotiations, Michael prepared for Ray a profit and loss statement estimating that the Subway store would earn approximately $103,000 in profit for the 2010 fiscal year. Michael separately stated that the store earned a net profit of between 25% to 30% per year.
Sometime after these representations by Michael, the parties reached an agreement for the sale of the Parkers' Subway franchise to Kaiva. The basic terms of the agreement were that the Parkers would sell Kaiva their Subway franchise for a purchase price of $300,000, to be paid with a $15,000 down payment and then 120 monthly installments of $3,309.09 at an interest rate of 7%, for a total sum of $406,853. Additionally, Kaiva agreed to rent from the Parkers the building housing the Subway store for $800 per month.
The parties further agreed that the Parkers would transfer ownership of the Subway franchise to Kaiva after Kaiva paid half of the purchase price and that, following full payment, Kaiva would have ownership of "everything except the building." Doc. #92-7 at 61. According to the Bentleys, the parties chose to structure the deal in this way because the Bentleys could not obtain a loan to purchase the business. According to the Parkers, the deal was organized in this manner because the parties knew that, pursuant to the Parkers' franchise agreement, Subway hadto approve the transfer and also had a right of first refusal for any transfer of the franchise. The Bentleys, for their part, testified that they knew they had to be approved to ultimately take over the franchise but were never told that, pursuant to the franchise agreement, Subway had a right of first refusal or that the Parkers did not have the right to lease the premises, or that the agreement itself violated the franchise agreement and was thus voidable by Subway.
The Bentleys began operating the Subway store in September 2010. The Bentleys' tax returns for 2010 reflect that they valued the franchise itself at $150,000, and the store's equipment at $150,000.
By April of 2011, the Bentleys learned that the store was operating with an annual net profit of approximately $20,000, far below the $103,000 represented by Michael. Additionally, following a 2011 interaction with a Subway corporate representative, the Bentleys began to believe there was "something" about the deal with the Parkers that could result in Subway terminating the franchise. Notwithstanding these discoveries, the Bentleys elected to...
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