Windsor Shirt Co. v. New Jersey Nat. Bank

• Decision Date: 11 May 1992
• Docket Number: Civ. A. No. 90-4851.
• Citation: 793 F. Supp. 589
• Parties: WINDSOR SHIRT COMPANY v. NEW JERSEY NATIONAL BANK.
• Court: U.S. District Court — Eastern District of Pennsylvania

793 F. Supp. 589

WINDSOR SHIRT COMPANY v. NEW JERSEY NATIONAL BANK.

Civ. A. No. 90-4851.

United States District Court, E.D. Pennsylvania.

May 11, 1992.

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Paul R. Rosen, Neils Korup, Robert L. Grundlock, Spector, Gadon & Rosen, P.C., Philadelphia, Pa., for plaintiffs.

Karen Anne Pieslak, Gregory M. Harvey, Philadelphia, Pa., for defendant.

Michael S. Poulos, Ernst & Young, Cleveland, Ohio, for movant.

Gregory M. Harvey, Morgan, Lewis & Bockius, Philadelphia, Pa., for Terence J. Fox, and Archer & Greiner, a Professional Corporation, movant.

OPINION

CAHN, District Judge.

I. Background

On December 1st, 1989, defendant New Jersey National Bank ("Bank") informed plaintiff Windsor Shirt Company ("Windsor") that it was ending its banking relationship with Windsor. The Bank called Windsor's Loan Agreement of November 18, 1988 ("Loan Agreement"), which was not due to expire until May, 1990, because it believed that Windsor had materially breached the Loan Agreement. The Bank demanded that Windsor immediately repay its remaining obligations under the Loan Agreement, $ 5.2 million, or face bankruptcy. Windsor agreed to repay $ 3.5 million in December through emergency liquidation of its Christmas inventory¹ in exchange for the Bank's promise to forbear from forcing Windsor into bankruptcy and to permit Windsor's management to sell the company. By February, 1990, Windsor had paid the Bank all of the $ 5.2 million it owed, and Windsor's management sold the company to Phillips Van Heusen ("PVH"), Windsor's former main supplier, for $ 2.00.

This suit was brought by Kenneth J. Bogdanoff ("Bogdanoff") and Judith Bogdanoff, the founders and sole shareholders of Windsor, on behalf of themselves and Windsor (who had assigned its rights against the Bank to the Bogdanoffs). Plaintiffs alleged various tort and contract claims, some of which were dismissed by this court during trial in response to a motion by Defendant pursuant to Fed. R.Civ.P. 50(a). Plaintiffs alleged that the Bank agreed to lend Windsor an additional $ 3 million over the credit line in the Loan Agreement, and breached that oral contract by refusing to make the alleged loan. Plaintiffs alleged that the Bank's refusal to fund the $ 3 million loan gave rise to damages resulting from the Bank's contract breach, tortious breach of contract, negligent misrepresentation, fraudulent conduct, and violation of its duty of good faith. Plaintiffs also alleged, in connection with the Loan Agreement, that the Bank breached the Loan Agreement and violated its duty of good faith. This court dismissed all of Windsor's claims except the allegations of breach of contract and violation of the duty of good faith in connection with the Loan Agreement. This court also dismissed the Bogdanoffs as parties to this suit, leaving Windsor as the sole plaintiff. See Order of November 15, 1991. The Bank also brought a counterclaim, based on the Loan Agreement, which would allow it to recover costs associated with the enforcement of the Loan Agreement.

This case was tried to a jury for 19 trial days from October 8, 1991 until November 15, 1991. In its answers to interrogatories, the jury found that Windsor had proven, by a preponderance of the evidence, that the Bank had violated the contractual provisions of the Loan Agreement.² The jury then awarded damages in the amount of $ 3.5 million for the loss suffered by Windsor as a result of the breach.³

Now before the court is Defendant's Motion for Judgment as Matter of Law or, in the alternative, For a New Trial.⁴ The court heard oral argument on these motions on February 3, 1992. For the reasons set forth below, the Motion will be denied.

II. Standards

A. Standards for Granting Judgment as a Matter of Law

A court cannot enter judgment as a matter of law unless the party seeking the judgment made a Rule 50(a) Motion at the close of all the evidence at trial. See Keith v. Truck Stops Corp. of America, 909 F.2d 743, 744 (3d Cir.1990); Mallick v. International Brotherhood of Electrical Workers, 644 F.2d 228, 233 (3d Cir.1981); Fed. R.Civ.P. 50(b).

The specific grounds for judgment as a matter of law must be asserted in the motion for a directed verdict. If the issue was not raised in the motion for the directed verdict at the close of all the evidence, it is improper to grant the motion on that issue. The requirement that the specific issue be raised first in the motion for a directed verdict, before the issue is submitted to the jury, affords the non-moving party an opportunity to reopen its case and present additional evidence. Further, when a trial court decides an issue after it was properly submitted to the jury, it may deprive the non-moving party of its seventh amendment rights.

Bonjorno v. Kaiser Aluminum and Chemical Corp., 752 F.2d 802, 814 (3d Cir. 1984), cert. denied, 477 U.S. 908, 106 S.Ct. 3284, 91 L.Ed.2d 572 (1986) (emphasis supplied) (citations omitted).

In deciding whether a Rule 50(b) motion should be granted, "a court must view the evidence in the light most favorable to the non-moving party, and determine whether `the record contains the "minimum quantum of evidence from which a jury might reasonably afford relief."'" Keith, 909 F.2d at 745 (citation omitted). See also Andrews v. City of Philadelphia, 895 F.2d 1469, 1478 (3d Cir. 1990); Bhaya v. Westinghouse Electric Corp., 832 F.2d 258, 259 (3d Cir.1987), cert. denied, 488 U.S. 1004, 109 S.Ct. 782, 102 L.Ed.2d 774 (1989); Grace v. Mauser-Werke GMBH, 700 F.Supp. 1383, 1387 (E.D.Pa.1988). It is for this reason that "normally, when the evidence is contradictory, judgment as a matter of law is inappropriate." Bonjorno, 752 F.2d at 811 (citation omitted). The jury must weigh the evidence, if the evidence is in dispute, because "evaluation of witness credibility is the exclusive function of the jury." Bhaya, 832 F.2d at 262. See also Bonjorno, 752 F.2d at 811; Grace, 700 F.Supp. at 1387.

B. Standard for Granting a New Trial

"In general, the ordering of a new trial is committed to the sound discretion of the district court." Bonjorno, 752 F.2d at 812. See also Williamson v. Consolidated Rail Corp., 926 F.2d 1344, 1348 (3d Cir. 1991); Honeywell v. American Standards Testing Bureau, Inc., 851 F.2d 652, 655 (3d Cir.1988), cert. denied, 488 U.S. 1010, 109 S.Ct. 795, 102 L.Ed.2d 787 (1989); Feingold v. Raymark Industries, Inc., 1988 Westlaw 76114 at *3 (E.D.Pa. July 19, 1988); Grace, 700 F.Supp. at 1387. A new trial cannot be granted, however, merely because the court would have weighed the evidence differently and reached a different conclusion. See Feingold, 1988 Westlaw 76114 at *3; Grace, 700 F.Supp. at 1387. A court can only exercise its discretion to grant a new trial because the verdict was against the weight of the evidence when the failure to do so would result in injustice, or would shock the conscience of the court. See Williamson, 926 F.2d at 1352-53; Feingold, 1988 Westlaw 76114 at *3; Grace, 700 F.Supp. at 1388.

III. Defendant's Argument for Judgment As a Matter of Law

A. The "Important" Distinction Between a Company And Its Stock

The Bank argues that this court should direct a verdict for the defendant, notwithstanding the jury's findings of fact, because as a matter of law, Plaintiff did not prove any damages during trial. Defendant's argument is based on its motion, made orally before the court as a supplement to its Rule 50(a) motion, that Plaintiff had introduced "no competent evidence in the record of damage to the company" as a result of the Bank's decision to call its loan to Windsor. N.T. Nov. 15 at 4026; see also Memorandum In Support of Defendant's Motion For Judgment or, in the alternative, For a New Trial ("Defendant's Memorandum") at 9. Defendant argues that the statements by witnesses called by Windsor and the Bank upon which Plaintiff relied in arguing its damages case to the jury all referred to the value of Windsor's stock, which was owned by the Bogdanoffs, and not the value of Windsor itself. See Defendant's Supplemental Brief In Reply ("Defendant's Supplemental Brief") at 2.

Defendant seems to be arguing that the this court should have granted a directed verdict at the Rule 50(a) stage of this trial because, although Windsor may have proven that the Bank's actions significantly affected the value of Windsor's stock, Plaintiff did not prove any connection between the value of Windsor's shares and the value of Windsor, the corporation. A review of Defendant's motion under Rule 50(a), Defendant's Memorandum, and Defendant's Supplemental Brief, reveal that Defendant has made no argument contradicting Plaintiff's evidence of the decline in value of Windsor's stock. Defendant is therefore basing its entire Rule 50(b) motion on the contention that a factfinder cannot infer damage to a corporation from a drop in the value of the corporation's stock caused by a contract breach by the corporation's bank. The court rejects this unsupportable argument.

It is beyond peradventure that the market capitalization of all the shares of a company's stock represents the approximate market value of the company. Admittedly, the more inefficient the market, the more divergence there may be between the market capitalization of a company, as represented by the sum of the market price of all its shares, and its "true" value, as measured from the perspective of a fully-informed buyer in a perfectly efficient market. But those subtleties are the concern of academics and are irrelevant to the world of business: To a businessperson, the market capitalization of a company's stock is the company's market value.⁵

Defendant seems to be suggesting that, notwithstanding its proof of the effect of the Bank's actions on the market price of Windsor's stock, Windsor needed to provide the jury with evidence that there was, in late 1989, a reliable relationship between Windsor's share price...