Elia v. Roberts ( 2019 )

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 EASTERN DISTRICT OF CALIFORNIA 7 8 ARIEL ELIA, individually and as CASE NO. 1:16-cv-0557 AWI EPG Successor Trustee to the Alan Elia 9 Declaration of Trust Dated March 18, ORDER RE: MOTION FOR 2002, RECONSIDERATION 10 Plaintiff 11 v. 12 JOHN ROBERTS, and individual; TEXAS 13 ENVIRONMENTAL PRODUCTS, INC., a (Doc. 137) Texas corporation; and TEXAS 14 ENVIRONMENTAL PRODUCTS, a partnership, joint venture or other form of 15 business organization unknown, and DOES 1 through 20, inclusive, 16 Defendants 17 18 I. Background 19 Defendant John Roberts (“Roberts”) founded and owned Texas Environmental Products, 20 Inc. (“TEP Inc.”) which manufactured and sold fertilizer. Alan Elia (“Alan Elia”) sold fertilizer in 21 the Fresno area on behalf of Defendants starting in 2004. Defendants assert that Alan Elia was an 22 independent contractor who worked on commission. Plaintiff asserts that Alan Elia formed a 23 partnership with Roberts; the partnership conducted business as a new entity also named Texas 24 Environmental Products (“TEP Partnership”). Throughout their business relationship, Roberts 25 handled the manufacturing of the fertilizer and Alan Elia handled all of the sales. Defendants and 26 Alan Elia roughly split the profits from the business each year. Alan Elia died at the end of 27 February 2015. Roberts continued the sale of fertilizer in this area and sold TEP Inc. in December 28 2015. 1 Alan Elia created a trust in 2002 (“Trust”) whose beneficiaries are his children Ariel and 2 Britz Elia (“Beneficiaries”). Alan Elia’s interest in the business relationship with Defendants 3 belongs to the Trust. Alan Elia was the original trustor/trustee. Robyn Esraelian was the attorney 4 who represented the Trust. After Alan Elia’s passing, Harold Zinkin (“Zinkin”) became the 5 trustee. In 2015, Zinkin and Esraelian communicated with Roberts about monies owed to the 6 Trust. They attempted to reach a settlement based on an understanding that Alan Elia was an 7 independent contractor. However, the Beneficiaries opposed the settlement, arguing that Alan 8 Elia was a partner. Based on this difference of opinion, the Beneficiaries and Zinkin agreed that 9 Ariel Elia would replaced Zinkin as the trustee. 10 In February 2016, Plaintiff Ariel Elia, both in her personal capacity and as the trustee for 11 the Trust, filed suit against Defendants on claims of accounting, breach of fiduciary duty (to the 12 partnership), and declaratory relief. Plaintiff contends that the December 2015 sale also 13 encompassed TEP Partnership. Defendants contend that TEP Partnership does not exist. 14 Additionally, Plaintiff sought an additional double damages penalty under Cal. Prob. Code § 859 15 for a bad faith breach of fiduciary duty to a trust. Plaintiff proceeded under two theories of 16 monetary relief. First, under the theory that Alan Elia was a partner, Plaintiff sought 50% of the 17 profits from fertilizer sales in 2015 and 50% of the proceeds from the sale of TEP Partnership. 18 Second, under the theory that Alan Elia was an independent contractor, Plaintiff sought the 19 commission on any sales. The second theory was not clearly part of Plaintiff’s complaint or joint 20 pretrial statement. See Docs. 1 and 32. The court permitted Plaintiff to amend claims to conform 21 to evidence. 22 An eight day jury trial was held, starting October 31, 2017. The jury found that Alan Elia 23 and Roberts did not have a partnership agreement but that Alan Elia was in a contractual 24 relationship with TEP Inc. and was owed commission on sales made; the jury awarded Plaintiff 25 $452,937.64. Doc. 105. That amount is roughly equivalent to 50% of the profits from the entirety 26 of 2015. In post trial motions, both parties made motions to amend judgment. Docs. 108, 117, and 27 118. In key part, Defendants’ motion for remittitur was granted. Plaintiff’s monetary award was 28 reduced by five-sixth to $75,489.61 to correspond to the profits from January and February; 1 Plaintiff was given the option of accepting the reduced award or the option of a new trial on the 2 issue of damages from breach of sales commission contract. Doc. 132. Plaintiff opted for a new 3 trial and made the present motion for reconsideration of the order granting remittitur. Docs. 133 4 and 134. 5 6 II. Legal Standard 7 “A motion for reconsideration should not be granted, absent highly unusual circumstances, 8 unless the district court is presented with newly discovered evidence, committed clear error, or if 9 there is an intervening change in the controlling law.” Marlyn Nutraceuticals, Inc. v. Mucos 10 Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009), citations and quotations omitted. 11 Reconsideration is an “extraordinary remedy,” to be used “sparingly as an equitable remedy to 12 prevent manifest injustice.” Wood v. Ryan, 759 F.3d 1117, 1121 (9th Cir. 2014), quoting Kona 13 Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). “A party seeking 14 reconsideration must show more than a disagreement with the Court’s decision, and recapitulation 15 of the cases and arguments considered by the court before rendering its original decision fails to 16 carry the moving party’s burden.” United States v. Westlands Water Dist., 134 F. Supp. 2d 1111, 17 1131 (E.D. Cal. 2001), citations and quotations omitted. 18 19 III. Discussion 20 A. Necessity of Remittitur 21 Plaintiff disagrees that remittitur is proper in this case. At base, remittitur was granted 22 because the jury did not follow the jury instructions correctly. A court “will not reverse the jury’s 23 assessment of the amount of damages unless the amount is grossly excessive or monstrous, or 24 unless the evidence clearly does not support the damage award. A damage award also cannot 25 stand if it could only have been based on speculation or guesswork.” Blanton v. Mobil Oil Corp., 26 721 F.2d 1207, 1216 (9th Cir. 1983), citations omitted. “Failure by the jury to follow the court’s 27 instructions, which results in prejudice to the moving party, is a proper ground for a new trial.” 28 AlphaMed Pharm. Corp. v. Arriva Pharm., Inc., 432 F. Supp. 2d 1319, 1356 (S.D. Fla. 2006), 1 citing Shushereba v. R.B. Industries, Inc., 104 F.R.D. 524, 529 (W.D. Pa. 1985), Anderson v. 2 Breazeale, 507 F.2d 929 (5th Cir. 1975); Thomas v. Stalter, 20 F.3d 298, 303 (7th Cir. 1994); J.A. 3 Jones Constr. Co. v. Steel Erectors, Inc., 901 F.2d 943, 944 (11th Cir. 1990). Because the jury 4 misunderstood the jury instructions, their damages award was not supported by the evidence 5 presented at trial. Both the jury instructions and verdict form stated that damages for breach of a 6 sales commission contract commissions were to be based on commissions for sales made in 7 January and February 2015. Instead, the jury awarded damages based on profits for the entirety of 8 2015. Plaintiff argues that the jury was free to use the jury instructions given for breach of 9 partnership/fiduciary duty in calculating damages. See Doc. 135, 2:1-4:21. That is an incorrect 10 interpretation of the jury instructions. 11 Plaintiff also argues that California law allows for commissions to be paid on sales that 12 took place after the end of the sales commission relationship if a person was the procuring cause 13 of the sale: “an agent selling goods on commission is entitled to a commission on goods sold by 14 him during the continuance of the agency, although the goods were not delivered or paid for, or 15 even where the orders were not received by the principal, until after the termination of the 16 relationship. If the contract contemplates that the agent shall receive compensation for sales of 17 which the agent was the procuring cause, the agent is entitled to a commission on sales procured 18 by him although the sales were actually consummated by the principal after the termination of the 19 agency.” Zinn v. Ex-Cell-O Corp., 24 Cal. 2d 290, 296 (Cal. 1944), quoting 3 C.J.S., Agency § 20 187. “[T]he rule is that if an agent (or broker) is the inducing or procuring cause of the contract, 21 he is entitled to the commission, even though the principal takes it out of his own hand and 22 completes it. Stiglich v. Jani-King of Cal., 2008 Cal. App. Unpub. LEXIS 9390, *13-14 (Cal. App. 23 4th Dist. 2008) (awarding commissions even after the sales commission employment relationship 24 ended), quoting Brea v. McGlashan, 3 Cal. App. 2d 454, 465, 39 P.2d 877, 882 (Cal. App. 2nd 25 Dist. 1934). “For this theory to apply, the governing contract must either provide that a 26 commission is earned by ‘procuring’ a sale or not contain contrary provisions.” Tuma v. Eaton 27 Corp., 2011 U.S. Dist. LEXIS 81085, *3 (S.D. Cal. 2011). While this is true, the jury instructions 28 and verdict form were not worded in that manner. This theory of recovery was not raised at the 1 time those documents were being crafted. Plaintiff argues that “The jury plainly rejected the 2 evidence cited in the order and in the motion to the effect that the contract terms only allowed Elia 3 to recover commissions for the two months that he was alive in 2015 and accepted the conflicting 4 testimony, provided by the same person, that Elia was entitled to receive a commission on a sale to 5 a customer which he had originated regardless of how that sale was consummated or whether Elia 6 was personally involved at all.” Doc. 135, 16:22-27. The problem is that the limitation to January 7 and February of 2015 was embodied in the jury instructions and verdict form. While the jury can 8 choose to disbelieve some of the evidence, it can not reject the jury instructions. 9 10 B. Waiver 11 Second, Plaintiff argues that Defendants waived their ability to ask for remittitur because 12 they did not make that objection before the jury was discharged. Doc. 135, 12:1-2. “When counsel 13 is invited to consider whether or not to discharge the jury, counsel risks waiver of objections to 14 any inconsistencies in the jury’s findings if counsel does not raise the issue before the jury is 15 excused.” Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1331 (9th Cir. 1995). 16 At that point, additional questions can be posed to the jury to resolve the inconsistency. 17 Defendants argue that this requirement only applies when there is an internal inconsistency in the 18 verdict. “Where the jury’s verdict is in no way internally inconsistent, there is no more basis for 19 resubmission to the jury than in any other case in which a party believes the verdict to be 20 inconsistent with the record. The usual procedures for overturning jury verdicts as inconsistent 21 with the facts therefore suffice and may be used without objecting to the verdict before the jury is 22 dismissed.” Kode v. Carlson, 596 F.3d 608, 611 (9th Cir. 2010). The nature of Defendants’ 23 objection to the verdict is that the jury’s damage award amount does not follow from the evidence. 24 Defendants did not waive their remittitur argument by failing to object before the jury was 25 discharged. Further, this argument was not raised by Plaintiff in opposition to Defendants’ 26 original motion for remittitur. See Doc. 122. 27 28 C. Scope of New Trial 1 In the prior order granting remittitur, Plaintiff was given the choice of accepting the lower 2 amount or a new trial on the issue of damages for a breach of contract. Plaintiff argues that the 3 new trial should encompass all issues, including liability for breach of partnership agreement, and 4 not be limited to damages for breach of contract. When liability and damages are distinct and 5 there is no evidence of prejudice, a new trial limited to damages is appropriate. Cosby v. 6 Autozone, Inc., 445 F. App'x 914, 917 (9th Cir. 2011) (“In the event Mr. Cosby refuses remittitur, 7 a new trial will go only to the issue of damages. The issues of liability and damages are distinct, 8 and there is no evidence in the record—and neither party contends—that any passion or prejudice 9 affected the jury’s verdict on liability.”); see also Edwards v. Sears, Roebuck & Co., 512 F.2d 276, 10 282 (5th Cir. 1975) (“If the passion, prejudice, caprice, undue sympathy, arbitrariness or more 11 taints only the damage award and not the liability assessment, the proper response is a remittitur or 12 a new trial addressed to damages alone.”). As stated in the last order, there is no evidence that the 13 jury acted with inappropriate motivation in this case. 14 In terms of liability, the jury found that Plaintiff and Defendants did not have a partnership 15 agreement; instead, Plaintiff and TEP Inc. had a sales commission contract relationship. See Doc. 16 105. For damages, the jury determined that the amount of damages from the breach of sales 17 commission contract to be $452,937.64. See Doc. 105. The question of liability for breach of 18 partnership agreement and damages for breach of sales commission contract are analytically 19 distinct. The relevant facts in this case are somewhat analogous to that of Real v. Cont'l Grp., Inc., 20 627 F. Supp. 434 (N.D. Cal. 1986), an employment age discrimination case. The jury found in 21 favor of the plaintiff-employee and awarded back pay while finding no entitlement to emotional 22 distress or punitive damages. Id. at 438. However, the back pay awarded exceeded the amount 23 that was due (based on the evidence presented) through the date of trial. Id. at 451. Further, the 24 jury was instructed to cut off the back pay award at an earlier date based on defendant’s good faith 25 offer for reinstatement to a comparable position. Id. at 451. With these facts, the trial court 26 granted remittitur with the option of a new trial limited to back pay damages; the court specifically 27 found that there would be no need to revisit the questions of emotional distress and punitive 28 damages in a potential new trial. Id. at 438. In sum, the court found that there was no need to 1 revisit the overall issue of liability or even alternate forms of damages that were rejected by the 2 jury in the first trial. In another case, a jury found in favor of plaintiff on a defamation claim but 3 in favor of the defendant on the wrongful termination claim. Shaffer v. Ariz. Citizens Clean 4 Election Comm'n, 2006 U.S. Dist. LEXIS 2196, at *1 (D. Ariz. Jan. 19, 2006). The trial court 5 determined that the damages awarded included amounts for both defamation and wrongful 6 termination. Id. at *9. The court granted remittitur but only offered the option of a new trial on 7 defamation damages without reopening the question of liability for wrongful termination. Id. at 8 *9. In contrast, one court found that liability and damages intertwined when the original verdict 9 did not specify what specific actions constituted the Section 1983 violation that gave rise to 10 damages: 11 The problem with attempting to separate the issue of damages from the issue of liability in any retrial of this case is that the case was presented to the first jury on 12 several different theories of liability. For example, plaintiff alternatively contended that defendants violated his Fourth and Fourteenth Amendment rights by (1) 13 striking him in the ribs, (2) applying unreasonable pressure to his throat, and (3) unreasonably chaining him to the grate in his cell rather than using an alternative 14 means of restraint. The damages which would flow from each of those alleged actions would, of necessity, be different. Without knowing which conduct the first 15 jury found to constitute the constitutional violation, the second jury would be unable to assess the damages proximately resulting from that conduct. 16 Antoine v. Cty. of Sacramento, 583 F. Supp. 2d 1174, 1176 (E.D. Cal. 2008) (court faced with 17 motion for new trial and did not consider remittitur). 18 In the present case, the verdict form was clear. The jury found that there was no 19 partnership agreement between the parties; there was a sales commission contract which 20 Defendants breached, giving rise to damages. The question of liability for breach of partnership 21 agreement is not intertwined with the sales commission contract damages. However, Plaintiff’s 22 alternate argument that California law allows commissions to be paid on sales that took place after 23 the end of the sales commission relationship may be relevant to a jury’s determination of sales 24 commission contract breach damages. Though this theory was not encompassed in the jury 25 instructions and verdict form in the first trial, the court will not rule out the possibility that it may 26 be included in any future instructions or verdict form. 27 28 1 IV. Order 2 Plaintiff's motion for reconsideration is DENIED. 3 4 IT IS SO ORDERED. SK hha 5 | Dated: _ September 30, 2019 : : _-SENIOR DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28