Legacy Data Access, Inc. v. Cadrillion, LLC ( 2021 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 19-1974
LEGACY DATA ACCESS, INC., a Georgia corporation; DIANNE M. PETERS, a
Georgia resident,
Plaintiffs – Appellees,
v.
CADRILLION, LLC, a North Carolina limited liability company; LEGACY DATA
ACCESS, LLC, a North Carolina limited liability company; JAMES YUHAS, a
North Carolina resident,
Defendants - Appellants,
Appeal from the United States District Court for the Western District of North Carolina, at
Charlotte. Frank D. Whitney, District Judge. (3:15-cv-00163-FDW-DCK)
Argued: December 7, 2020 Decided: January 5, 2021
Before GREGORY, Chief Judge, and MOTZ and HARRIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Mark Hiller, ROBINSON, BRADSHAW & HINSON, P.A., Chapel Hill,
North Carolina, for Appellants. John Robert Buric, JAMES, MCELROY & DIEHL, P.A.,
Charlotte, North Carolina, for Appellee. ON BRIEF: John R. Wester, Demi Lorant
Bostian, Andrew R. Wagner, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte,
North Carolina, for Appellants. Preston O. Odom III, John R. Brickley, JAMES,
MCELROY & DIEHL, P.A., Charlotte, North Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
This diversity contract dispute returns to us after remand to the district court. See
Legacy Data Access, Inc. v. Cadrillion, LLC, 889 F.3d 158, 162 (4th Cir. 2018) (Legacy
Data I). In Legacy Data I, we reversed the judgment of the district court as to conversion
and punitive damages and remanded for a new trial on damages for breach of contract. Id.at 164–68. We also vacated the district court’s grant of attorneys’ fees and remanded for
the court to reassess the proper amount of fees in light of the outcome of the new trial. Id.at 168–69. On remand, the jury determined that Legacy Data Access, Inc. (“Legacy
Georgia”) and its owner Dianne Peters (now Dianne Disser) (collectively “Plaintiffs”) were
entitled to $1,591,094 in damages. The court awarded them $1,073,597 in attorneys’ fees.
Cadrillion, LLC (“Cadrillion”), Legacy Data Access, LLC, and Cadrillion manager James
Yuhas (collectively “Defendants”) appeal, challenging the district court’s evidentiary
rulings and the attorneys’ fee award. For the reasons set forth within, we affirm.
I.
We first briefly describe the proceedings resulting in our initial opinion in this case
and then set forth those leading to the present appeal.
A.
Plaintiffs entered into an Asset Purchase Agreement (the “Agreement”) with
Defendants. The Agreement provided that Cadrillion would purchase Legacy Georgia’s
assets by making two separate payments: 1) an amount to be paid on the closing date of
the Agreement, and 2) a “Deferred Purchase Price” to be paid upon certain triggering
events, including the exercise of a “Call Option.” The Agreement included a complex
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formula to calculate the Deferred Purchase Price, also known as the “Call Price.” On
January 15, 2015, Cadrillion exercised the Call Option but never paid the Call Price. See
Legacy Data I, 889 F.3d at 162–63.
B.
Plaintiffs filed suit in April 2015, alleging claims for breach of contract, conversion,
abuse of process, and unfair and deceptive trade practices. Id. at 163. At the trial on
liability and compensatory damages, the jury found Cadrillion liable for breach of contract
and awarded $256,500 in compensatory damages. Id. at 162. The jury also found
Cadrillion and Yuhas liable on the conversion claim and awarded $1,499,999 in
compensatory damages. Id. The district court granted judgment as a matter of law to all
Defendants on the abuse of process claim, and the jury rejected Plaintiffs’ unfair and
deceptive trade practices claim. Id. At a second trial on the question of punitive damages,
the jury awarded Disser a total of $3 million in punitive damages. Id. Following post-trial
motions, the court reduced the compensatory damages award based on the conversion
claim to $460,406 and eliminated the compensatory damages award on the breach of
contract claim as double recovery. Id. at 163. The court reduced the punitive damages to
a total of $1.38 million, granted Plaintiffs an award of pre- and post-judgment interest, and
awarded Plaintiffs $743,297 in attorneys’ fees against Cadrillion. Id.
C.
On appeal, we affirmed the district court’s judgment as to the abuse of process and
unfair and deceptive trade practices claims, but reversed the judgment on the conversion
claim and punitive damages. Id. at 171. Defendants conceded liability as to breach of
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contract, id. at 163, but we concluded that the jury award on this claim was contrary to the
record evidence and remanded for a new trial on the appropriate measure of contract
damages. We explained that, “[s]ince Plaintiffs claimed that Cadrillion breached the
Agreement by not paying the Call Price, the appropriate measure of damages would
naturally be equal to the Call Price.” Id. at 168. We remanded for a new trial to recalculate
the Call Price because Defendants’ expert had valued the Call Price “at somewhere
between $548,227 and $953,102” and Plaintiffs’ expert “valued the Call Price at
$1,499,999,” and so it “could not be as low as the $256,500 awarded by the jury.” Id.
As to attorneys’ fees, we observed that the Agreement contains a reciprocal
attorneys’ fees provision. Id. Neither party challenged the applicability of the provision
to this dispute on appeal. However, North Carolina law requires that the fee award reflect
“the results obtained” and the “extent to which the party seeking attorneys’ fees prevailed
in the action.” N.C. Gen. Stat. § 6-21.6(c)(1), (11). Because both of these factors might
have substantially changed on remand, we vacated the district court’s grant of attorneys’
fees and remanded for the court to reassess the appropriate fee award after a new trial. Id.
at 169.
On remand, the jury found Plaintiffs entitled to recover $1,591,094 in damages and
the court determined Cadrillion is liable to Plaintiffs for $1,073,597 in attorneys’ fees.
II.
Initially, we address Cadrillion’s claims that the district court improperly permitted
Plaintiffs to introduce evidence of Cadrillion’s prior calculations of the Call Price, entitling
Cadrillion to a new trial.
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We review the district court’s evidentiary rulings and denial of Cadrillion’s motion
for a new trial for abuse of discretion. Padilla v. Troxell, 850 F.3d 168, 175 (4th Cir. 2017);
Minter v. Wells Fargo Bank, N.A., 762 F.3d 339, 346 (4th Cir. 2014). “[S]ave [] the most
exceptional circumstances,” we will not grant a new trial. Minter, 762 F.3d at 346. We
will order a new trial only if “(1) the verdict is against the clear weight of the evidence, or
(2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even
though there may be substantial evidence which would prevent the direction of a verdict.”
Id.
Cadrillion contends that the prior Call Price calculations were the subject of
settlement negotiations and therefore inadmissible under Rule 408. See Fed. R. Evid. 408
(barring evidence of the “offering” of a compromise “to prove or disprove the validity or
amount” of the claim). The mandate rule bars this claim. The mandate rule “forecloses
litigation of issues decided by the district court but foregone on appeal or otherwise
waived.” S. Atl. Ltd. P'ship of Tennessee, LP v. Riese, 356 F.3d 576, 584 (4th Cir. 2004).
Here, prior to the first trial, the district court denied Defendants’ motion in limine to
exclude the prior calculations under Rule 408, and overruled Defendants’ related standing
objection. Defendants did not contest this ruling in the first appeal.
Where “an argument could have been raised on an initial appeal, it is inappropriate
to consider that argument on a second appeal following remand.” Omni Outdoor Advert.,
Inc. v. Columbia Outdoor Advert., Inc., 974 F.2d 502, 505 (4th Cir. 1992). This is true
regardless of whether the issues were “expressly or impliedly decided by the appellate
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court” in the first instance. S. Atl. Ltd. P'ship of Tennessee, 356 F.3d at 584 (quotations
omitted). We therefore decline to consider Cadrillion’s Rule 408 claim now.
Cadrillion also argues that its prior calculations of the Call Price are not relevant.
The prior calculations vary significantly and Cadrillion contends that Plaintiffs only sought
to introduce them to make Cadrillion look like a “bad actor.” Appellees’ Br. at 11, 15. We
recognize that Cadrillion might have preferred the jury not know the full range of its prior
Call Price calculations, but that does not render the calculations irrelevant. See Fed. R.
Evid. 401 (“Evidence is relevant if: (a) it has any tendency to make a fact more or less
probable than it would be without the evidence; and (b) the fact is of consequence in
determining the action.”). Defendants’ own expert relied on the most significant
component of the prior calculations (a $225,040 overhead allocation deduction) as part
of the calculations he presented to the jury. The prior calculations were also relevant to
fact witness credibility, as both Disser and Scott Peters, Legacy Georgia’s transactional
counsel and part-owner, testified that they received multiple calculations from Cadrillion
before it executed the Call Option. And the Agreement required that these calculations be
made in “good faith.” Relevancy is “a low barrier requiring only that evidence be worth
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consideration by the jury.” Minter, 762 F.3d at 349. The prior Call Price calculations
easily meet this standard. *
In any event, even if the district court erred in ruling on the prior Call Price
calculations, Cadrillion has not demonstrated that any error was “so grievous as to have
rendered the entire trial unfair.” EEOC v. Consol Energy, Inc., 860 F.3d 131, 145 (4th Cir.
2017). To the contrary, the $1,591,094 verdict was within the range of credited testimony
from each side’s experts ($1,039,013 from Defendants and $1,676,435 from Plaintiffs).
Cf. Legacy Data I, 889 F.3d at 168 ($256,500 contract damages award from the first trial
required reversal because it was “substantially below the range of the credited testimony”).
Accordingly, Cadrillion has failed to establish evidentiary errors sufficient to justify a new
trial.
III.
Defendants’ arguments with respect to attorneys’ fees also fail. Defendants first
contend that the Agreement’s fee provision is unenforceable because it is contained in a
section of the Agreement related to enforcement of the noncompete and confidentiality
provisions, rather than in the section related to expenses.
*
For these reasons, we also reject Cadrillion’s contention that Plaintiffs offered Yuhas’s
testimony regarding his Call Price calculations solely for impeachment purposes. The premise of
this argument — that neither party relied on the prior calculations — is incorrect. Yuhas was the
source of the $225,040 overhead allocation deduction relied upon by Defendants’ expert. The
district court therefore did not err in permitting the testimony.
Cadrillion’s Rule 403 argument similarly fails. First, we have doubts as to whether
Cadrillion preserved its argument that the danger of unfair prejudice substantially outweighed the
probative value of the prior calculations. Second, we will only overturn a Rule 403 decision under
the most extraordinary of circumstances. Minter, 762 F.3d at 349. Cadrillion offers no such
circumstances here.
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The mandate rule again bars our review of this argument. Following the first trial,
the district court determined that the “reciprocal attorneys’ fees provision” in the
Agreement applied to this dispute. The parties did not challenge this ruling on the first
appeal, and we remanded the fee issue for recalculation pursuant to that provision. Legacy
Data I, 889 F.3d at 168. Although the mandate rule permits us to correct “a blatant error”
under “extraordinary circumstances,” United States v. Bell, 5 F.3d 64, 66–67 (4th Cir.
1993), no manifest error has occurred here. By the fee provision’s own terms, it applies to
“any action, suit or arbitration proceeding arising out of or relating to [the Agreement] or
any breach or alleged breach thereof.” Defendants had the opportunity to litigate this issue
following the first trial. We decline to resurrect it now.
IV.
Defendants make two additional claims with respect to attorneys’ fees. First, they
contend that they, too, are entitled to attorneys’ fees for the claims they successfully
litigated in the prior trial and appeal. Second, they argue that the district court’s fee award
to Plaintiffs failed to distinguish sufficiently between claims that Plaintiffs won and claims
that they lost. Our careful review of the record, the district court’s opinion, and the
arguments of counsel persuades us that these contentions are totally without merit.
Accordingly, on these claims we affirm on the basis of the thorough and well-reasoned
opinion of the district court. Peters v. Cadrillion, LLC, No. 3:15-CV-00163, 2019 WL
3756391, at *3–7 (W.D.N.C. Aug. 8, 2019).
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V.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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