Trinity Carton Co., Inc. v. Falstaff Brewing Corp.
| Decision Date | 05 August 1985 |
| Docket Number | No. 83-3623,83-3623 |
| Citation | 767 F.2d 184 |
| Parties | TRINITY CARTON COMPANY, INC., Plaintiff-Appellee, Cross-Appellant, v. FALSTAFF BREWING CORP., Defendant-Appellant, Cross-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Molony, Nolan, North & Riess, Ernest A. Burguieres, III, Lawrence J. Molony, Bruce A. North, Metairie, La., for defendant-appellant, cross-appellee.
James J. Morrison, New Orleans, La., for plaintiff-appellee, cross-appellant.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before THORNBERRY, GARWOOD, and HILL, Circuit Judges.
In this Louisiana diversity case, defendant-appellant Falstaff Brewing Corporation challenges a judgment for damages against it for its breach of a sublease. Falstaff maintains that the district court, which refused to give Falstaff's proposed instruction, improperly instructed the jury on the issue of consent to confection of the sublease; that the court abused its discretion by refusing to give proposed instructions on conditions precedent, implied conditional offer, and suspensive condition, and by denying post-verdict trial amendments which alleged matters of affirmative defense, including prescription; and that the magistrate's initial recommendation, in the damages phase of the trial, of zero damages was proper as a matter of Louisiana law. Trinity Carton Company, Inc., plaintiff below, cross-appeals, complaining of the district court's failure to award it damages for Falstaff's breach of its obligation to purchase a trash baler under the terms of the contract to sublease.
We hold that neither the district court's refusal of Falstaff's trial amendments and proposed jury instructions, nor its refusal to give verbatim Falstaff's proposed instruction on consent, constituted an abuse of the court's discretion. We agree with the district court that the magistrate's finding of zero damages was improper as a matter of law. On the cross-appeal, we hold that Falstaff is liable to Trinity under their agreement for the purchase of the baler. We therefore affirm the district court's judgment in all respects, except insofar as it contains no award to Trinity for the purchase of the baler; and consequently we remand with instructions to the district court to reform its judgment accordingly.
In 1964, Falstaff subleased from Trinity 1 the premises adjacent to Falstaff's New Orleans brewery, upon which it erected and operated a can handling facility. The property of which this subleasehold was a part was leased to Trinity by its owner, Broad Street Corporation. 2 In the latter half of 1969, Falstaff sought to sublease the remainder "Confirming our telephone conversation yesterday, Falstaff will take a sublease from Trinity Carton Company of all the property heretofore leased from Broad Street Corporation by Trinity Carton Company other than the property heretofore subleased to Falstaff. The rental offered is $.65 per square foot net.
of the Trinity leasehold, with the intention of demolishing the existing improvements and building a can manufacturing plant. In October 1969, Trinity and Falstaff began discussions, but were unable to agree upon a price. Trinity, acting through its New Orleans attorney, Russel Schonekas, desired a net rental 3 at an annual rate of $1.20 per square foot, while Falstaff was willing to offer only in the range $.60 to $.65 per square foot net. Negotiations remained stalemated until an April 13, 1970 telephone conversation in which James S. McClellan, Falstaff's general counsel and a member of its Board of Directors, made what he characterized as Falstaff's final offer, for $.65 per square foot net. Schonekas asked that McClellan put this in writing, and received from McClellan the following letter, dated April 14, 1970:
Construing this to be a firm offer of sublease, Schonekas urged and obtained Trinity's approval of sublease at this net rental. Schonekas sent McClellan an acceptance telegram on April 20, 1970, reading:
After receiving the telegram, McClellan telephoned Schonekas in New Orleans that afternoon. According to Schonekas' testimony, the discussion proceeded as if a sublease agreement had been consummated with all terms other than the amount of the net rent to be identical to those contained in the parties' 1964 sublease. McClellan, however, testified that only the amount of the net rent had been discussed and agreed upon, and that there could be no confection of any sublease obligation until and unless written consent for Falstaff's demolition plan was obtained from Broad Street, and the sublease had been reduced to writing and signed.
Without consulting Schonekas or Trinity, McClellan instructed Falstaff's New Orleans counsel, Lawrence J. Moloney, to seek written consent from Broad Street for Falstaff's proposed demolition. Because the existing building had value as a depreciation tax deduction, Broad Street required a payment from Falstaff of $241,000 before it would give consent. Falstaff refused, and Moloney informed Trinity and Broad Street that the sublease deal was off.
Nonetheless, Trinity felt that a binding sublease had been confected, and Schonekas so advised McClellan in a letter dated May 8, 1970. 5 McClellan responded by letter Trinity filed this diversity suit in the district court below in December 1973, alleging breach of a sublease contract, and seeking accelerated rents for the term of the sublease, consequential expenses, including costs of renovation necessary to place other tenants in the premises in mitigation of damages, and the purchase price of the baler. The liability phase of the case was tried to the jury, which returned a general verdict for Trinity. Three months later, Falstaff offered several trial amendments, most in the nature of affirmative defenses; leave to file all but one, for setoff, was denied by the district court.
dated May 13, 1970, denying that a sublease existed, and asserting: "As you have known from the outset of our negotiations ... the subleasing of this property by Falstaff was conditioned upon the obtaining of [Broad Street's demolition] approval." 6
The district court referred the question of damages to a magistrate, who returned a recommendation of zero damages. The district court refused to accept this recommendation, characterizing it as overturning the jury's verdict on liability. The magistrate's second recommendation assessed damages of $1,011,913.33. The district court accepted most of these recommendations with minor adjustments, for a total of $1,055,549.76, together with interest and ten percent attorneys' fees. The court did not, however, assess the purchase price of the baler against Falstaff, though the net damages reflected credits to Falstaff for $6,594.20 in baler rents.
The essential contest on liability was whether a binding oral sublease was in effect between Trinity and Falstaff in May 1970. The jury's verdict was for Trinity, and hence determined that such a sublease was in effect. Falstaff attacks this result by two main objections, although it does not challenge the sufficiency of the evidence or the jury's verdict per se. First, Falstaff asserts that the district court abused its discretion when it failed to give Falstaff's proposed instruction on consent, because the court thereafter inadequately instructed the jury on the Louisiana law of confection of obligations. Falstaff also claims that the district court overemphasized the question of whether the agreement was to be confected orally or by a writing, and that such emphasis confused or misled the jury about the consent issue.
Falstaff's second line of attack respecting the consent question is an assertion that the district court abused its discretion by refusing, first, to give Falstaff's proposed jury instructions on implied conditions, conditional offers, conditions precedent and suspensive conditions, and, second, by denying Falstaff leave to file its proposed post-verdict amendments to its pleadings. Our disposition of these second points is procedural, and is discussed below separately.
A. The District Court's Instructions to the Jury. We turn first to adequacy of the district court's instruction to the jury on the issue of consent. The Louisiana law of obligations provides that no contract is properly confected without the consent of both parties to all essential terms of the contract. LSA-C.C. art. 1766; see also N-Y Associates, Inc. v. St. Charles Parish Policy Jury, 422 So.2d 520 (La.App.1982); Woodward v. Barringer, 24 So.2d 200 (La.App.1945). Neither party disputes that there was agreement as to price. Falstaff's position was that no other The district court's instructions to the jury formulated the consent issue in two ways. First, the jury was told it must determine whether the parties mutually intended to be bound by the sublease contract before, or not until, a formal written sublease was signed. The district court properly instructed the jury that, under Louisiana law, a valid oral contract could be confected where it was not the intention of the parties that an obligation obtain only upon execution of a writing. See, e.g., Mermelstein v. Schwab, 64 So.2d 37, 38 (La.App.1953). The question of whether the...
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