L.P.P.R., Inc. v. Keller Crescent Corp., CIVIL ACTION NO. 10-2872
| Decision Date | 31 August 2012 |
| Docket Number | CIVIL ACTION NO. 10-2872 |
| Parties | L.P.P.R., INC. and LEHIGH PRESS PHARMACEUTICAL PRODUCTS, INC. Plaintiffs, v. KELLER CRESCENT CORPORATION and CLONDALKIN GROUP, INC. Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
MEMORANDUM RE: POST-TRIAL MOTIONS
After a jury trial in which a verdict was entered in favor of Plaintiffs L.P.P.R., Inc. and Lehigh Press Pharmaceutical Products, Inc. ("LPPR") and against Defendants Keller Crescent Corporation and Clondalkin Group, Inc.1 ("Keller"), Keller moved to amend the judgment2 (ECF No. 112), and also submitted a Motion for Judgment as a Matter of Law (ECF No. 125) and a Motion for a New Trial (ECF No. 126). For the reasons stated below, the Court entered an Order DENYING the Motion for Judgment as a Matter of Law and Motion for a New Trial, andGRANTING the Motion to Amend the Judgment. (Order Re: Post-Trial Motions, ECF No. 138).
The Puerto Rico Treasury Department offers tax credits to incentivize purchasers of distressed Puerto Rican businesses to continue operations in Puerto Rico. Through two substantially identical Asset Purchase Agreements ("the Contract"), Keller agreed to purchase assets from distressed Puerto Rican corporations, Plaintiffs L.P.P.R., Inc. and Lehigh Press Pharmaceutical Products, Inc. The Contract also provided that Keller would sell the potential tax credit and that the parties would share the proceeds from that sale, minus the costs of "collecting and selling such tax credits." Under the Contract, ninety percent of the net proceeds of the sale of the tax credit were allocated to LPPR and ten percent were assigned to Keller.3
Companies are only eligible to receive tax credits under the relevant program if they keep the acquired business open for ten years. A company that shuts down before that time must pay the Puerto Rico Treasury Department back for a portion of the credit, determined by the number of years under ten that it did not operate. To protect itself, the Puerto Rico Treasury Department will only issue tax credits to purchasers that guarantee their promise to remain open for ten years by posting collateral—typically, but not necessarily, a bond.
Here, Keller eventually posted a bond, obtained a tax credit, and sold it for $1,785,000.Keller subtracted what it considered to be the costs of collecting and selling the tax credit, including $317,917 it spent to post a bond for the tax credit and $207,542 in legal fees. Keller then transferred ninety percent of the remaining $1,133,587 to LPPR.
LPPR complained that Keller improperly subtracted those costs, and filed a Complaint in this Court, suing for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) promissory estoppel, and (4) unjust enrichment. The Court granted summary judgment in favor of Keller on LPPR's breach of the implied covenant of good faith and fair dealing claim and unjust enrichment claim. (Order Re: Motion for Partial Summary Judgment, ECF No. 42).
In March 2012, the Court held a trial on LPPR's breach of contract and promissory estoppel claims. Prior to trial, Keller submitted Motions in Limine (ECF Nos. 50-54), and after holding oral argument, the Court entered an Order granting some of the relief Keller sought. (Order, ECF No. 61). Relevant to the present Motions, the Court granted Keller's Motion in Limine to Preclude Rewriting the Contract (ECF No. 50) and Motion in Limine to Preclude Parol Evidence (ECF No. 51) and explained that "the Court made clear that the parol evidence rule would bar any testimony contracting the terms of the written contract." (Order, ECF No. 61).
At the conclusion of testimony, Keller moved for judgment as a matter of law under Fed. R. Civ. P. 50 on both counts. 3/21/12 Tr. 72:24-74:25. The Court granted Keller's Motion as to LPPR's promissory estoppel claim. Id. at 75:3-5, 78:22-79:1. Only the breach of contract claim was submitted to the jury. Id. at 75:1-3.
The Court divided the jury interrogatories into two parts. The jury was first asked "do you find that plaintiffs have proved by a preponderance of the evidence that defendants breachedthe contract by deducting the cost of the legal fees?" 3/22/12 Tr. 19:20-24. The jury answered "No." Id. at 19:25. The jury was next asked "[d]o you find that plaintiffs have proven by a preponderance of the evidence that defendants breached the contract by deducting the cost of the bond premium?" Id. at 20:1-3. The jury answered "Yes" to this question and assigned LPPR $317,917 in damages. Id. at 20:4-7.
Keller filed the post-trial motions listed above, LPPR responded, and the Court held oral argument on June 28, 2012. See generally 6/28/12 Tr. The Court then permitted the parties to submit short supplemental letter briefs.
On August 14, 2012, the Court entered an Order denying the Motion for Judgment as a Matter of Law and Motion for a New Trial, but amending the judgment, and indicated that this explanatory Memorandum would follow. (Order Re: Post-trial Motions, ECF No. 138).
Rule 59 of the Federal Rules of Civil Procedure allows a trial court, in its discretion, to grant a new trial "on all or part of the issues in an action where 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)(1). For example, the Court may grant a new trial because (1) the verdict is against the weight of the evidence, (2) the damages are excessive, or (3) substantial errors were made in the admission or rejection of evidence or the giving or refusal of instructions. See Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940).
When the asserted basis for a new trial is trial error by the judge, Farra v. Stanley-Bostitch, Inc., 838 F. Supp. 1021, 1026 (E.D. Pa. 1993) (citations and internal quotation marks omitted).
When the asserted basis for a new trial is the that jury verdict is against the weight of the evidence, the district court properly grants a new trial "only when the record shows that the jury's verdict resulted in a miscarriage of justice or where the verdict, on the record, cries out to be overturned or shocks our conscience." Klein v. Hollings, 992 F.2d 1285, 1290 (3d Cir. 1993) (citing EEOC v. DE Dep't of Health & Soc. Servs., 865 F.2d 1408, 1413 (3d Cir. 1989)).
Generally, the decision to grant or deny a new trial "is confided almost entirely to the discretion of the district court." Blancha v. Raymark Indus., 972 F.2d 507, 512 (3d Cir. 1992) (citing Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36 (1980)). Such an endeavor is not lightly undertaken, however, because it necessarily "effects a denigration of the jury system and to the extent that new trials are granted the judge takes over, if he does not usurp, the prime function of the jury as the trier of the facts." Lind v. Schenley Indus., Inc., 278 F.2d 79, 90 (3d Cir. 1960) (en banc).
The primary foundation for Keller's Motion for a New Trial and Motion for Judgment as a Matter of Law is its contention that this Court wrongfully admitted parol evidence.
The Delaware parol evidence rule "provides that when two parties have made a contract and have expressed it in a writing to which they have both assented as to the complete and accurate integration of that contract, evidence . . . of antecedent understandings and negotiationswill not be admitted for the purpose of varying or contradicting the writing." Cohen v. Formula Plus, Inc., 750 F. Supp. 2d 495, 502 (D. Del. 2010) (citing Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 556 (Del. Super. Ct. 2005)) (internal quotation marks and alteration omitted); see also Del. Code. Ann., tit. 6, § 2-202 (). When writings are unambiguous, Delaware courts construe them as written, and "give language which is clear, simple, and unambiguous the force and effect required." Hibbert v. Hollywood Park, Inc., 457 A.2d 339, 342 (Del. 1983) (citation omitted) (applying contact law to interpret a corporate bylaw).
As noted above, prior to trial Keller moved for summary judgment on the issue of contract interpretation only, contending that the Contract was unambiguous. (Defendants' Motion for Partial Summary Judgment, ECF No. 32, at 8-12). LPPR, in its response, argued that the Contract was ambiguous. (L.P.P.R. Inc. and Lehigh Press Pharmaceutical Products, Inc.'s Opposition to Defendants' Motion for Partial Summary Judgment, ECF No. 33, at 5-9). In denying Keller's Motion for Summary Judgment, the Court specified that it was "not necessarily finding that these terms are ambiguous or are not ambiguous." (Memorandum, ECF No. 41, at 7). At the hearing on Keller's Motions in Limine, however, the Court ruled that the Contract was not ambiguous because the words "collecting and selling" are "normal English words." 12/19/12 Tr. 3:24-4:8. At that time, LPPR did not press further its argument that the Contract wasambiguous. The Court then granted Keller's Motions in Limine in part. (Order, ECF No. 61). At trial, prompted by LPPR's proposed instruction to the jury...
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