Rathe Salvage, Inc. v. R. Brown & Sons, Inc.

• Decision Date: 23 March 2012
• Docket Number: No. 10–356.,10–356.
• Citation: 2012 VT 18,77 UCC Rep.Serv.2d 140,46 A.3d 891
• Court: Vermont Supreme Court
• Parties: RATHE SALVAGE, INC. v. R. BROWN & SONS, INC., Robert E. Brown and Stephanie A. Brown.

46 A.3d 891

77 UCC Rep.Serv.2d 140

2012 VT 18

RATHE SALVAGE, INC.

v.R. BROWN & SONS, INC., Robert E. Brown and Stephanie A. Brown.

No. 10–356.

Supreme Court of Vermont.

March 23, 2012.

Eric A. Poehlmann and Jennifer E. McDonald of Downs Rachlin Martin PLLC, Burlington, for Plaintiff–Appellee/Cross–Appellant.

Peter F. Langrock, Frank H. Langrock and Devin McLaughlin of Langrock Sperry & Wool, LLP, Middlebury, for Defendants–Appellants/Cross–Appellees.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

BURGESS, J.

¶ 1. Following a jury trial, defendants R. Brown & Sons, Inc., a scrap metal hauling company, and its principal, Robert Brown (both referred to as hauler), were found liable for breach of contract, common law fraud, trespass, breach of the implied covenant of good faith and fair dealing, and consumer fraud. Each of these claims stemmed from hauler's commercial dealings with plaintiff Rathe Salvage, Inc., a scrap metal salvage yard where hauler would crush cars and transport the scrap for sale to steel mills. Hauler was later granted judgment as a matter of law by the trial court overturning the jury's finding of a consumer fraud violation. Hauler now appeals, arguing that: (1) the trial court erred in denying judgment in hauler's favor on the remaining claims because the verdicts were based on insufficient evidence; (2) it is entitled to a new trial because Rathe Salvage's attorney improperly argued to the jury that opposing counsel was implicated in withholding evidence; and (3) the case should be remanded due to the trial court's refusal to conduct a Daubert hearing on the admissibility of hauler's polygraph, or lie detector, testing before excluding such evidence from trial. Rathe Salvage cross-appeals from the trial court's judgment in favor of hauler on the consumer fraud claim. We affirm the judgment of the trial court on all four issues.

¶ 2. The following facts are not in dispute. Rathe Salvage is in the business of acquiring old motor vehicles to sell for spare parts and scrap metal. For several decades Rathe Salvage did business with hauler, which is in the business of crushing and transporting scrap metal for sale. The typical pattern of their transactions was that the parties would agree on the price per ton of scrap metal, Rathe Salvage would identify the junked vehicles to be sold, and hauler would crush the junks for transport to a Montreal steel mill. It was understood that each load would be weighed at the mill, hauler would be paid by the mill, and Rathe Salvage would be paid by the hauler at the previously agreed upon price per ton. Rathe relied upon handwritten weigh slips presented by hauler to figure the tons for which their price per ton was due.

¶ 3. In late 2003, Rathe Salvage terminated this arrangement and contracted with another trucking company. Although the replacement company bought and transported what Rathe Salvage contended were the same kinds of loads, Rathe noticed that the typical load weights reported by the new trucker—and thus, the typical payments received—were significantly higher than those reported by defendant hauler. Although hauler offered several reasons why the replacement trucker's loads were heavier, Rathe Salvage inferred from the difference that hauler had been submitting fraudulent weigh slips, and it sued for, for purposes of this appeal, breach of contract, fraud, and consumer fraud, the last claim based on the allegation that Rathe was a consumer of hauler's services.

¶ 4. Early in the pretrial proceedings, Rathe Salvage moved to compel hauler to produce copies of the steel mill's weigh slip records. Finding that hauler failed to abide by this discovery request, the trial court sanctioned hauler with a default judgment on the issue of liability. This was followed by a later judgment for damages. On appeal, this Court reversed the default judgment, agreeing that, while hauler produced copies of its version of mill transactions in its possession, the steel mill's own records were not under hauler's control, and that the court could not compel hauler to produce the mill's documentation. Rathe Salvage, Inc. v. R. Brown & Sons, Inc., 2008 VT 99, ¶ 18, 184 Vt. 355, 965 A.2d 460. The case was then remanded for further proceedings.

¶ 5. Before the subsequent trial, hauler filed a motion in limine to allow testimony from a polygraph expert on the results of a polygraph examination of Robert Brown, hauler's principal. The trial court denied this motion, noting that this testimony would “invade the province of the jury,” and so was inadmissible, per se, regardless of its purported reliability. The court thus declined, over hauler's objection, to hear its proffered evidence of polygraph reliability as a necessary precondition to admitting expert testimony. See V.R.E. 702 (allowing qualified experts to testify where “scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue”).

¶ 6. The jury did hear evidence, however, about discrepancies between the tons of scrap as reported and paid for by hauler and tons of scrap actually received and sold to the steel mill. One of hauler's former drivers testified that a typical load from the salvage yard weighed significantly more than the average weight reported by hauler. In addition, the owner of another salvage yard who had worked with hauler testified that hauler's reported load weights were much lower than loads transported by other carriers. The jury was told that, after Rathe Salvage ended its business with hauler, the yard shipped several loads of scrap crushed and bundled at the yard by hauler. Upon delivery to the mill, Rathe Salvage discovered that these loads averaged twenty tons, while hauler consistently reported loads averaging fifteen tons. The jury also heard that hauler directed the mill, with whom it enjoyed a close working relationship, not to disclose its records.

¶ 7. At closing argument, Rathe Salvage highlighted the fact that hauler and its counsel recently visited the steel mill in preparation for the trial, yet failed to retrieve the mill's weigh slips for hauler's deliveries of scrap from Rathe Salvage. Objecting, hauler complained that the argument was “not in the evidence,” and that it improperly accused hauler's counsel of conspiring in not getting the mill's weight slips. The court declined to give a curative instruction as requested by hauler, noting that the same argument had been made earlier in the trial and that the court inferred no untoward accusation against counsel from the remarks.

¶ 8. After the jury's verdict for Rathe Salvage on all claims at issue on this appeal,¹ hauler renewed its motions for judgment as a matter of law. The trial court granted judgment for hauler on the consumer fraud claim, but entered judgment for Rathe on the rest of the verdict. With respect to the consumer fraud claim, the court found that the transaction was clearly a sale of junked cars by Rathe Salvage and not a purchase of hauler's transporting or scrap processing services, opining that the only basis for Rathe's claim at trial was that hauler did not pay when it picked up the scrap, and that was because there was no scale at the yard. On that proof, the court reasoned, there was no evidence that Rathe Salvage paid hauler for services. Because Rathe Salvage was not, then, a “consumer” as defined by the Consumer Fraud Act, the corresponding verdict against hauler was vacated.

I.

¶ 9. Hauler contends that the evidence was insufficient to support the common law fraud verdict. On appeal, we apply the same standard as the trial court, asking “whether, taking the evidence in the light most favorable to the prevailing party and excluding any modifying evidence, there is any evidence which fairly and reasonably tends to support the jury verdict.” Turgeon v. Schneider, 150 Vt. 268, 270, 553 A.2d 548, 550 (1988). The evidence presented by Rathe Salvage met this standard.

¶ 10. Hauler asserts that Rathe's case rests entirely on inferences drawn from the fact that the steel mill did not produce its weigh slips for hauler's loads of Rathe Salvage scrap. This characterization, however, ignores the totality of the evidence. First, Rathe Salvage presented testimony from several different drivers and carriers indicating that the weights reported by hauler to Rathe were consistently short of the actual tons hauled. For example, one of hauler's former drivers calculated that the nine bundles of three scrapped cars each on every load, with each car weighing at least a ton apiece, averaged over twenty-seven tons per load, while hauler's comparative weight slips claimed around fifteen to sixteen tons per load. Hauler's own testimony concerning the origins of its weight receipts was that the weights for Rathe's scrap would be date-stamped by the Montreal mill's computerized weigh station on hauler's letterhead. According to hauler, the weights were handwritten while the date stamps were converted, by the mill pressing a button, to an American-style month-day-year format. Rathe Salvage's contradicting evidence was that another carrier of its scrap to the same Montreal mill received weight slips printed on mill letterhead by its computer with the load weights straightforwardly stamped, rather than written, on the receipt and the dates stamped as well, but in the European convention of day-month-year. There was an abundance of circumstantial evidence, some of which is described above, that for years hauler generally represented his loads as not exceeding fifteen tons, when comparable loads later proved to weigh at least twenty tons. The jury was free to consider inculpatory hauler's earlier instruction to the mill not to share its original transaction records. Taking the evidence in a light most favorable to the prevailing party, the jury could have reasonably inferred deception on the part of hauler as to...