Morse/Diesel, Inc. v. Trinity Industries, Inc.

• Decision Date: 21 December 1994
• Docket Number: No. 84 Civ. 5791 (LAP).,84 Civ. 5791 (LAP).
• Citation: 875 F. Supp. 165
• Parties: MORSE/DIESEL, INC., Plaintiff, v. TRINITY INDUSTRIES, INC., Mosher Steel Company and Aetna Insurance Company, Defendants.
• Court: U.S. District Court — Southern District of New York

875 F. Supp. 165

MORSE/DIESEL, INC., Plaintiff, v. TRINITY INDUSTRIES, INC., Mosher Steel Company and Aetna Insurance Company, Defendants.

No. 84 Civ. 5791 (LAP).

United States District Court, S.D. New York.

December 21, 1994.

COPYRIGHT MATERIAL OMITTED

Arthur S. Friedman, Peter N. Wang, Charles R. Macedo, Friedman, Wang & Bleiberg, P.C., New York City, for plaintiff Morse/Diesel, Inc.

Robert K. Cox, Daniel E. Cohen, Watt, Tieder & Hoffar, McLean, VA, for defendants Trinity Industries, Inc. and Mosher Steel Co.

Anthony J. D'Auria, James J. Terry, Winston & Straw, New York City, for defendant Aetna Ins. Co.

OPINION and ORDER

PRESKA, District Judge:

This is an action in which the plaintiff general contractor seeks to recover costs associated with the untimely completion of one of its subcontractor's work from the subcontractor and the subcontractor's surety company. After a six-week trial held earlier this year, a jury found defendants liable to plaintiff for approximately $25.8 million in compensatory damages.

Presently before me are three motions. Defendant Aetna Insurance Company ("Aetna") seeks relief from the jury's verdict through a motion for a new trial pursuant to Fed.R.Civ.P. 59. Plaintiff Morse/Diesel, Inc. ("Morse/Diesel") moves for an order entering judgment against both defendants in the amount of the jury's verdict, with interest, fees, and costs added on. Finally, in the event judgment is entered, both defendants have moved for a 30 day stay of execution.

My rulings, set forth in more detail below, are as follows. Aetna's motion for a new trial is denied on the basis of my finding that the trial errors alleged by Aetna were not properly preserved by Aetna's prior counsel (who was simultaneously counsel for Trinity Industries, Inc. ("Trinity")) as grounds for post-trial relief. Morse/Diesel's motion for entry of judgment is granted to the extent indicated below, and defendants' motion for a stay of execution is denied.

Background

The subject of this ten year old litigation is the construction of the Mariott Marquis Hotel in the heart of Manhattan. Plaintiff, Morse/Diesel, was the general contractor for the project. Defendant Mosher Steel Company ("Mosher") was the subcontractor in charge of erecting the project's structural steel. Defendant Trinity is the corporate successor to Mosher.¹ Defendant Aetna issued a performance bond on behalf of Trinity with respect to the structural steel subcontract.

For reasons not necessary to recount here, Trinity was over a year late in completing the erection of the structural steel. Morse/Diesel thus instituted this litigation, claiming against Trinity and Mosher as principals, and against Aetna on the performance bond, for some $37 million in damages resulting from the delay. There followed some ten years of litigation capped by a six-week jury trial.

As the trial drew to a close, I convened a conference to discuss the jury charge. Prior to the conference, I had examined the parties' earlier-submitted requests to charge, formulated a draft jury charge, and distributed my draft to the parties for their initial review. At the conference, held on May 17, 1994, counsel for the parties and I went through the jury charge page by page, and I heard counsel's objections, discussion and argument where either or both sides disagreed with the draft. The conference lasted some five hours; there was no court reporter present.

The following day, having provided the parties with a revised proposed jury charge incorporating some of their objections to my initial draft, I afforded counsel the opportunity to state on the record their objections to the charge. I thereafter made changes to the charge in response to some of the objections voiced by counsel on the record at this juncture. E.g., Trial Transcript, Vol. 29, 5/18/94, at 5794 1.1-1.10. Aetna and Trinity's common trial counsel then voiced none of the objections which Aetna, by new and separate counsel, now advances as error. After counsel had completed stating their objections for the record, counsel immediately proceeded to deliver their closing arguments. I then instructed the jurors on the law of the case and discharged them to deliberate. The following day, the jury returned a verdict for Morse/Diesel, against both defendants, for approximately $26 million.

DISCUSSION

I. The Rule 59 Motion

In the instant Rule 59 motion, Aetna's new counsel attacks my instructions to the jury concerning plaintiff's performance bond claim against it. The relevant language, in its entirety, as read to the jury, is as follows:

With regard to Morse/Diesel's claims against Aetna, you have heard evidence that Aetna Insurance Company posted a performance bond as surety for Mosher/Helena.

The primary purpose of a performance bond is to guarantee that the principal, in this case, Mosher/Helena, will perform its entire contract. It is a form of insurance.

The bond indemnifies an owner against breach by the contractor. The liability of a surety on a performance bond follows the liability of the principal on the bond. In other words, the surety will be held liable if the principal is held liable, so if you choose to render a verdict against Mosher/Helena, such verdict should also be rendered against Aetna.

Aetna's new counsel now contends this charge was incorrect in three respects. First, Aetna now maintains, my characterization of the performance bond as "a form of insurance" was a misstatement of the law and a conceptual error. Second, Aetna now asserts that I erred in neglecting to instruct the jury that its liability under the performance bond was contingent upon its receipt from Morse/Diesel of a formal declaration of default by Trinity (Aetna's contention is that such notice was never received). Finally, Aetna now argues that I erred in instructing the jury that Aetna's liability to Morse/Diesel was co-extensive with Trinity's; on the contrary, Aetna now claims, its exposure was narrower. The relevant law and the terms of the performance bond, Aetna now says, rendered it liable only for the excess costs of completing Trinity's subcontract work in the event Trinity failed to do so; consequential damages stemming from Trinity's delay in performing its subcontract (i.e., the type of damages awarded Morse/Diesel by the jury) were not within the range of its exposure.

Aetna contends that as a result of these errors, the jury was permitted to render a verdict against it that was contrary both to law and to the performance bond. Plaintiff counters that Aetna's points of error were not properly preserved and that, even considering the merits, my instructions to the jury regarding Aetna were correct.

A. Preservation of Errors

In pertinent part, Rule 59 provides that:

A new trial may be granted to all or any of the parties and on all or part of the issues (1) 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....

A motion under Rule 59 may be predicated on a court's error in giving, or refusing to give, instructions to the jury. Anderson v. Branen, 17 F.3d 552, 555 (2d Cir.1994); Hygh v. Jacobs, 961 F.2d 359, 365 (2d Cir. 1992). However, under Rule 51,

no party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection.

Rule 51 does not require a party to make its exceptions upon a formal record. One must, however, object in a manner which satisfies the rule's purpose of alerting the trial judge to the alleged error and allowing the court an opportunity to correct it. See Niehus v. Liberio, 973 F.2d 526, 529 (7th Cir.1992); Kakavas v. Flota Oceanica Brasileira, S.A., 789 F.2d 112, 120 (2d Cir.) (holding point of error preserved where counsel's actions had been "enough to alert the judge to the question whether his charge properly reflected the law"), cert. denied, 479 U.S. 853, 107 S.Ct. 186, 93 L.Ed.2d 120 (1986); Cohen v. Franchard Corporation, 478 F.2d 115, 122 (2d Cir.), cert. denied, 414 U.S. 857, 94 S.Ct. 161, 38 L.Ed.2d 106 (1973).

With respect to its first two points of error, it is apparent that Aetna did not comply with the dictates of Rule 51. Prior to the filing of this motion, counsel for Aetna did not so much as mention, much less object to, the charge's reference to the performance bond as "a form of insurance"² or the charge's failure to note that a declaration of default was a precursor to Aetna's liability. As to the latter point, Aetna's new counsel now argues that it was raised "implicitly" in one of his predecessor's proffered instructions, titled "Performance Bond Only Ensures Performance." However, even if that were true — and it is not³ — Rule 51 expressly requires that objections concerning jury instructions be raised "distinctly." Thus, a point buried "implicitly" in the text of a requested charge is not properly preserved for post-trial review. Palmer v. Hoffman, 318 U.S. 109, 119, 63 S.Ct. 477, 483, 87 L.Ed. 645 (1943) (noting that an objection to a charge "must ... bring into focus the precise nature of the alleged error").

As to the third error alleged, Aetna argues that the instruction on the scope of its liability was erroneous in failing to provide that Aetna's liability on the performance bond was limited to completion costs and, conversely, excluded delay damages. Aetna maintains it preserved the point for appeal by incorporating it into a requested instruction titled "Performance Bond Only Ensures Performance;" raising it during the off-the-record charge conference; and marking the "Performance Bond Only Ensures Performance" requested instruction into the record as part of an exhibit of rejected charges.

Had all of that indeed taken place, the point assuredly would have been called to my...