MITCHELL & ASSOCIATES, INC. VS. PCB APPS, LLC (L-5751-16, MIDDLESEX COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1612-19
MITCHELL & ASSOCIATES, INC.,
Plaintiff-Appellant/Cross-
Respondent,
v.
PCB APPS, LLC and NOLA
BUSINESS SOLUTIONS, INC.,
Defendants/Third-Party
Plaintiffs-Respondents/Cross-
Appellants,
and
NAG KARAKA,
Defendant/Third-Party Plaintiff,
v.
DWIGHT MITCHELL,
Third-Party Defendant.
________________________________
Submitted April 19, 2021 – Decided May 21, 2021
Before Judges Rothstadt and Mayer.
On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-5751-16.
Rubin, Kaplan & Associates, attorneys for
appellant/cross-respondent Mitchell & Associates, Inc.
(Evelyn A. Donegan, of counsel and on the briefs).
Archer & Greiner, PC, attorneys for respondent/cross-
appellant PCB Apps, LLC (Michael J. Lauricella, of
counsel and on the briefs).
PER CURIAM
Plaintiff Mitchell & Associates, Inc. appeals from the following orders:
pretrial discovery orders;1 evidentiary and in limine determinations rendered by
the trial judge on September 3, 2019; a September 9, 2019 order barring
plaintiff's representative from presenting certain testimony during trial; an
October 25, 2019 order denying plaintiff's motion for additur or, alternatively ,
a new trial on damages only; and a November 13, 2019 order for judgment
awarding damages to plaintiff in the amount of $177,000. Defendant PCB Apps,
LLC (PCB) cross-appeals from the following: denial of its motion in limine to
preclude testimony by plaintiff's representative regarding PCB's financial
1
Plaintiff's notice of appeal includes four pretrial discovery orders: a November
21, 2019 order, two January 25, 2019 orders, and a March 26, 2019 order. Only
one discovery order, a January 25, 2019 order, was included in plaintiff's
appendix.
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figures; an order denying PCB's motion for a directed verdict; and an October
25, 2019 order denying PCB's Rule 4:40 motion. We affirm all orders on appeal
and cross-appeal.
We begin with a brief summary of the parties' dispute. Three individuals,
Dwight Mitchell, Bryan Boutte, and Nag Karaka sought to form a joint venture.
Their effort to form a joint venture never materialized in a formal written
agreement, although the three men participated in multiple email exchanges and
face-to-face meetings regarding the joint venture. Mitchell eventually
demanded payment for plaintiff's work performed pursuant to the joint venture.
Boutte, Karaka, and their separate companies declined to pay plaintiff.
The following is a more detailed recitation of the facts giving rise to the
appeal and cross-appeal based on the testimony adduced by the witnesses during
the trial.
Testimony of Dwight Mitchell
Plaintiff's principal, Mitchell, testified his company implemented large
scale computer systems for multi-national corporations. Specifically, plaintiff
sells and services software to clients. On occasion, plaintiff employed
subcontractors to perform its work. In 2014, plaintiff worked on a project for
AT&T and AT&T's client, Berry Plastics, Inc. (Berry). Realizing it needed
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assistance with the AT&T and Berry job, plaintiff hired subcontractors through
PCB.2
Through the AT&T and Berry work, Mitchell met Boutte.3 Boutte wanted
to work with Mitchell and potentially form a partnership. Mitchell initially
declined the offer to form a partnership. Boutte then offered to invest $100,000
as a "capital investment" in a potential partnership, and Mitchell agreed to work
with Boutte and Nola. The partnership intended to sell services to AT&T's
clients who might require computer system services.
In a September 25, 2014 email to an executive at AT&T, Boutte confirmed
formation of a partnership with Mitchell, writing "though we have not signed
any contracts, [Mitchell] and I are in an agreement with moving forward in a
partnership."
Originally, the partnership was limited to Mitchell and Boutte. A few
weeks later, the men explored the possibility of including Karaka and PCB in
the partnership. The three men met in New Brunswick on October 17, 2014, to
discuss "form[ing] a joint venture." At the meeting, the three men agreed each
would invest $100,000 in capital toward the joint venture. In an October 18,
2
Karaka's company is PCB.
3
Boutte's company is defendant Nola Business Solutions, Inc. (Nola).
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2014 email recapping the meeting, Boutte wrote, "we all agree that we will move
towards a joint venture[,]" and "[a]ll three parties will share equally on an
opportunity's net profit." At trial, Mitchell took the position this email formed
the joint venture agreement.
In November 2014, Boutte sent an email referring to PCB and plaintiff as
"core partners of Nola." In late November 2014, the three men exchanged emails
regarding the partnership. Mitchell emailed Boutte and Karaka, stating he
wanted to "get up to speed on . . . finalizing our legal agreement." Karaka agreed
it was "a good idea to complete the business plan," and he circulated a "proposed
final agreement for the consortium."
However, Karaka's draft document differed from the agreement discussed
among the three men on October 1, 2014. For example, the effective start date
of the joint venture changed from October 2014 to January 15, 2015. In addition,
the draft document proposed the "shareholding" date would commence in April
2015. Additionally, the three men would buy into Nola in April, instead of
fronting the $100,000 capital investment immediately. Mitchell disagreed with
the proposed changes in the draft document. As a result, Boutte and Karaka
prepared a second draft document to address Mitchell's concerns.
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On January 15, 2015, the three men again discussed the "joint venture
agreement." Mitchell expressed concern over the lack of immediate payment of
the capital investment, stating he and Kavaka were carrying significant costs
without financial assistance from Boutte. Boutte and Karaka decided to draft a
more "equitable" agreement.
Mitchell continued to disagree with the proposal because the terms
identified plaintiff as working for Nola rather than serving as Nola's partner.
Mitchell, expecting to receive a "partnership document," believed the document
did not memorialize the terms of the joint venture agreement.
In late January 2015, the three men resumed discussions to finalize the
joint venture agreement. Mitchell sought to form a limited liability company
(LLC) in which the three men would be shareholders in the LLC. Boutte
explained he was unable to convert Nola into an LLC.
On February 1, 2015, the men had a telephone conference to discuss the
status of the joint venture. Boutte noted Mitchell's disapproval of the proposed
payment structure and invited Mitchell to present a counterproposal. Mitchell
wanted to implement the plan outlined during the October 17, 2014 meeting and
memorialized in the October 18, 2014 email, which he claimed called for sharing
"gross profit" equally.
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Three days later, Mitchell sent an email to Karaka, asking if Karaka
finished drafting the "consortium agreement." On February 27, 2015, Karaka
sent a revised agreement that included a capital contribution in the amount of
$400,000 instead of $100,000 and spread the payment over time rather than an
initial lump sum payment. Because he never discussed the increased capital
contribution, Mitchell deemed the revised document "unacceptable."
Mitchell requested the original agreement set forth in the October 18, 2014
email be effectuated. Boutte and Karaka preferred the new proposal. While the
men had further discussions regarding a joint venture, there was never a formal
written agreement.
On March 6, 2015, Boutte sent an email to Mitchell regarding receipt of
payment from AT&T for work performed by the group. Boutte asked Mitchell
to sign a sales commission agreement in order to pay plaintiff for its share of the
work.
Although Mitchell agreed to return a signed copy of the agreement, he did
not do so. Mitchell refused to sign the sales commission agreement, reiterating
he wanted to proceed with the joint venture as stated in the October 18, 2014
email.
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Mitchell testified the three men continued working despite their
disagreements related to the joint venture. According to Mitchell, he remained
"actively involved," planning and performing billable work on behalf of the joint
venture.
Soon after, Mitchell decided to end his involvement with the other men.
On March 27, 2015, Boutte again requested Mitchell sign the sales commission
agreement. In a March 27, 2015 email, Mitchell declined to sign the document,
writing "[Boutte] and [Karaka] can partner on this opportunity going forward."
After this date, plaintiff did not perform any work for Berry. While Mitchell
had no desire to help Boutte and Karaka going forward, he "expected to be paid
for the work . . . already done," including the work to establish the joint venture
and completed for Berry. Mitchell never spoke with Boutte or Karaka after the
March 27 emails.
At trial, Mitchell testified as to the amount defendants owed plaintiff.
Mitchell explained PCB billed Berry a total of $5,601,825 and Nola billed Berry
a total of $1,157,255. According to Mitchell's calculations, under the joint
venture agreement, plaintiff was owed a one-third share of thirty percent of the
amount billed by PCB and Nola. Thus, Mitchell testified defendants owed
$675,908 to plaintiff.
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On cross-examination, Mitchell testified the October 2014 joint venture
agreement was controlling despite his failure to tender the required $100,000
capital contribution. He supported this contention by explaining neither Boutte
nor Karaka made the $100,000 investment in the joint venture.
Regarding plaintiff's damages, Mitchell testified the October 2014
proposal called for thirty percent of gross revenue to be split evenly among the
three partners. According to Mitchell, the thirty percent figure was an accurate
estimate of the partnership's actual profit and was the standard markup for
plaintiff's work prior to participating in the joint venture. Mitchell, however,
admitted his damages calculation included revenue received nearly three years
after his decision to leave the joint venture.
Mitchell explained the October 18, 2014 email, stating the three men
would share the "net profit" rather than "gross profits," was subsequently
clarified. However, he conceded there was no writing reflecting any such
clarification. According to Mitchell, plaintiff worked for Berry three months
prior to any discussion regarding a joint venture, and plaintiff was owed money
for that work.
Mitchell indicated the October 18, 2014 email served as the written
agreement for the joint venture and there was no formal memorialization of "all
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the finite details." According to Mitchell, the email did not include "everything"
discussed during the October 2014 face-to-face meeting, such as the required
"monetary contribution." Mitchell claimed he did not respond to the October
18, 2014 email because he "trusted" Boutte and Karaka and believed the parties
had a "verbal" agreement.
During his testimony, Mitchell included sums in his damages calculation
for work billed to AT&T that failed to net any profit. Similarly, Mitchell's
damages included bills submitted to AT&T without any markup, resulting in
zero profits on those billed services.
Testimony of Nag Karaka
Karaka testified he intended to form a joint venture with Mitchell. In
October 2014, Karaka, Boutte, and Mitchell sought to form a joint venture to
conduct work for Berry and pursue work on behalf of other clients. According
to Karaka, Mitchell would supply a client list and technical know-how for the
joint venture. He also testified the costs associated with the joint venture would
be split three ways.
Karaka's company, PCB, billed Berry a total of $5,545,390.08. PCB also
billed $967,703.03 to Nola for work on behalf of Berry. However, PCB only
received $5,164,989.53 for its Berry work.
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Karaka explained he worked for AT&T as a "solutions architect." After
leaving AT&T, Karaka formed PCB. PCB's services included selling,
implementing, and supporting software solutions for other companies.
Karaka and PCB first worked with Mitchell in 2013 as a subcontractor for
plaintiff. The two companies worked well together, and Karaka had a "great"
relationship with Mitchell.
Karaka told the jury about the face-to-face meeting with Mitchell and
Boutte on October 17, 2014. At the meeting, Karaka, Boutte, and Mitchell
discussed a partnership. He described the meeting as informal and explained
nothing was decided at the meeting. According to Karaka, the three men never
agreed to a three-way split of thirty percent of the gross profit and did not discuss
a per person capital contribution of $100,000 to fund the joint venture.
Immediately after this meeting, Boutte sent an email summarizing the
discussions and identifying the next steps in the joint venture process. The
summary did not include capital contributions or sharing thirty percent of gross
profits. Karaka believed Boutte's email accurately reflected the sharing of "net
profits" among the parties.
According to Karaka, Mitchell never said he considered Boutte's October
18, 2014 email to be the joint venture agreement. Karaka explained the men
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"were still discussing" and never finalized any agreement. Despite the lack of a
formal agreement, the three men continued discussing a joint venture and
working together.
Regarding Mitchell's March 27, 2015 email, Karaka understood Mitchell
no longer wished to be part of a joint venture or work for Berry. Karaka never
heard from Mitchell after this email.
Without plaintiff's participation, Karaka and Boutte continued working for
Berry. Plaintiff was not involved in work for Berry or any other joint venture
clients after March 2015.
Karaka testified regarding payment received by PCB for the Berry work.
PCB received $5.1 million in total payment from Berry, not $5.5 million as
Mitchell alleged. Contrary to Mitchell's testimony, Karaka explained PCB did
not receive a thirty percent gross profit margin. According to Karaka, PCB lost
money for the first five months due to substantial startup costs. He explained
PCB lost "a little more than" a "quarter of a million dollars" in that time frame.
Karaka testified PCB made approximately $25,000 in total profits from the
Berry work, significantly lower than the $675,000 amount plaintiff sought as its
one-third share of the profits.
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Karaka testified PCB, through Nola, received payment for various Berry
work between January and March 2015 to mid 2019. PCB received $10,914 a
month for its work during this time period.
Karaka was asked why PCB continued to work with Berry if its profit
margin was so small. Karaka replied that some of the work was unexpected and
future projects, which PCB anticipated would be more profitable, were
cancelled.
Testimony of Bryan Boutte
Boutte explained his initial introduction to plaintiff. Boutte's prior
employer did a substantial amount of work for AT&T and Berry. Because
Boutte's employer needed a specific software program specialist to complete the
Berry work, plaintiff became a vendor for the project. Mitchell served as a
project manager, but plaintiff required more manpower to complete the job, and
Mitchell hired PCB to assist plaintiff.
Believing his prior employer was squandering business opportunities,
Boutte sought to foster his own business relationship with AT&T and mentioned
the idea to an AT&T employee. The AT&T employee encouraged Boutte to
form his own company and partner with AT&T. In September 2014, Boutte
formed Nola.
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Boutte told Mitchell about his forming Nola, but Mitchell initially had no
interest in partnering with Nola. When Boutte again discussed the business,
emphasizing Nola's relationship with AT&T, Mitchell became interested.
Mitchell suggested including PCB as part of a business opportunity.
On October 4, 2014, Boutte and Mitchell signed a letter of intent. Five
days later, Boutte and Karaka signed a letter of intent. The letters of intent
protected confidential and proprietary information and explained the parties
were exploring a partnership. The documents explicitly stated no party was
obligated to enter into an agreement. The documents further provided, "This
letter sets forth the entire agreement of the parties . . . and may not be amended
or modified except pursuant in a written agreement signed by the parties hereto."
According to Boutte, this provision meant any agreement to form a partnership
required a signed written contract.
On October 17, 2014, Boutte, Karaka, and Mitchell met face-to-face in
New Brunswick. Boutte characterized the meeting as an informal "discussion"
with "lively ideas going back and forth." According to Boutte, the men made
"some decisions that we said we wanted to put in process" but no "business
relationships" were "consummated." As a result of this meeting, the three men
agreed to work toward "putting together something" and everyone would be paid
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equally. Because the agreement was "no[t] set in concrete," Boutte explained
further discussion was required to "flesh it out." Boutte intended to schedule
future "periodic meetings" related to the partnership.
Immediately after the meeting, Boutte sent the October 18, 2014 email,
summarizing the discussions during face-to-face gathering. The email provided
"action items," describing the next steps in the partnership. The "major" action
items according to the email included moving towards a "joint venture model,"
fleshing out the model, and testing the model. The model contemplated the three
men acting as vendors, becoming Nola shareholders, or forming a separate
company.
In the October 18, 2014 email, Boutte stated "net profits" would be split
among the partners, with "net profits" meaning revenue minus expenses.
According to Boutte, the term "gross profits" was omitted from the email
because it was never discussed during the in-person meeting. Nor was there any
mention of capital contributions during the meeting.
Boutte's October 18, 2014 email also included items not discussed as part
of the face-to-face meeting. Boutte included the items because he believed the
additional terms were important for a partnership structure. One addition was
the creation of a "Master Services Agreement," identifying the mechanism for
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Nola's payment to PCB and plaintiff because those parties were incurring costs
and fronting resources for the partnership.
Boutte testified the email summary was not intended to memorialize a
joint venture agreement but rather a recitation of statements made during the
face-to-face meeting. Neither Karaka nor Mitchell responded to Boutte's
October 18, 2014 email.
In a November 3, 2014 email to Karaka and Mitchell, Boutte set forth the
next steps in formulating the partnership, trying to "document as much as
possible" in the email. While the three men continued to discuss forming
partnership, no agreement was reached on the issue.
Eventually, Nola placed a vendor with a client through PCB, generating
revenue for Nola. As a result, Boutte wanted to pay plaintiff, and he forwarded
a sales commission agreement to be signed by Mitchell.4 Mitchell claimed his
attorney needed to review the agreement.
Boutte subsequently received an email from Mitchell's attorney, who
advised that Nola should be converted into an LLC. Boutte explained he formed
Nola as a corporation and did not want to convert the entity to an LLC.
4
Boutte sent a similar agreement to PCB. Karaka signed the agreement on
behalf of PCB and returned the document to Boutte.
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Moreover, Boutte found the suggestion premature as the three men were still
discussing the best option for formal ownership in the joint venture.
In March 2015, Boutte again asked Mitchell to sign the sales commission
agreement so he could pay plaintiff for the AT&T work. Mitchell claimed he
would forward the signed agreement but never did.
Boutte had discussions with AT&T regarding a new work proposal with
Mitchell serving as a program manager for the technical work. An AT&T
employee told Boutte to remove Mitchell from the proposal but did not explain
the reason for the request. Boutte suspected AT&T had doubts about Mitchell
and plaintiff's work performance.
In March 2015, Berry decided to stop working with Mitchell. Later that
month, Boutte sent another copy of the sales commission agreement to Mitchell
to sign. In a March 27, 2015 email, Mitchell declined to sign the agreement and
stated Boutte and Karaka could "partner on this opportunity going forward."
According to Boutte, the "opportunity" referred to work for AT&T and Berry.
After the March 27 email, Boutte did not hear from Mitchell, and plaintiff was
never a part of the joint venture.
Boutte denied agreeing to pay plaintiff a third of gross profits or revenues
generated. Boutte testified the joint venture proposed splitting net profits evenly
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among the three men. He also testified there was never a joint venture to support
plaintiff's damages claim.
According to Boutte, there was a "gentlemen's agreement" to "be partners
in pursuing opportunities." Boutte testified:
[T]here was a target towards developing a joint venture.
We had not and never had developed a joint venture.
We had an agreement that said we would continue to
work together and actually mapped out a three[-]phase
approach. This was phase one that says we can work
together[,] and we had an understanding that if these
opportunities came to fruition without having
investment in either one's company, that we would
share the profits regardless of who was doing the
implementation.
On February 23, 2017, nearly two years after Mitchell's email declining
to pursue a partnership opportunity, Mitchell sent an email to Boutte. In that
email, Mitchell claimed, "although we never finalized the agreement," plaintiff
still expected payment from the "Berry Plastics Consortium." The email
surprised Boutte because Mitchell opted out of the potential joint venture on his
own accord.
During cross-examination, Boutte explained he never offered to invest
$100,000 as a capital contribution to persuade Mitchell to partner in the joint
venture. However, Boutte conceded the three men discussed contributing
$100,000 each to capitalize the joint venture.
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Testimony of Debbie Garrison
Debbie Garrison, who worked at Berry, testified on behalf of defendants.
Garrison knew plaintiff and Mitchell. Garrison initially recommended Mitchell
as a project manager for Berry. However, neither plaintiff nor Mitchell signed
a contract with Berry.
Plaintiff worked for Berry in its Belgium office. After completion of this
work, Berry declined to use plaintiff for future work. Garrison received several
complaints regarding Mitchell's work and contacted AT&T for advice. AT&T
recommended Berry use a different project manager as a result of the
complaints. Berry ceased working with plaintiff in March 2015.
Testimony of Anthony Pedano
Anthony Pedano, an AT&T employee, testified for defendants. Pedano
first met Mitchell in 2014 because AT&T needed to replace an existing project
team. AT&T had no intention of hiring Mitchell or plaintiff, and only interacted
with plaintiff as a "vendor."
Pedano knew Boutte, and the two discussed Boutte's business. It was
Pedano who suggested Boutte name his company "Nola." Nola and AT&T
entered into a separate vendor agreement that did not involve Mitchell or his
company.
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After plaintiff completed the initial vendor work for AT&T, Pedano
mentioned using Mitchell and his company on future projects with Berry.
Pedano learned Berry sought to discontinue using plaintiff and Mitchell due to
"personality conflicts that were developing on the project team." According to
Pedano, Garrison recommended AT&T cease using plaintiff.
The Litigation
Believing a joint venture agreement existed, plaintiff sued PCB and
Karaka for breach of the agreement. Plaintiff amended its complaint to add a
claim against Nola for breach of the agreement. In a third amended complaint,
plaintiff added claims against defendants for tortious interference, unfair
competition, and breach of the joint venture. Defendants filed answers and
counterclaims.
Disputes arose during discovery requiring judicial resolution. In an
October 12, 2018 order, the motion judge denied plaintiff's motion to compel
the production of documents regarding revenue generated by PCB and Nola. 5
Plaintiff filed a motion for reconsideration or clarification regarding the October
2018 discovery order. In a November 21, 2018 order, the motion judge
compelled defendants to produce certain records. However, nothing in the
5
Plaintiff's motion requested "actual QuickBooks Reports as to expenses."
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language of the November 2018 order compelled defendants to produce expense
back-up documents.6
In January 2019, plaintiff filed a motion to enforce the November 2018
discovery order. Plaintiff claimed defendants produced document summaries
rather than original documents. During argument on plaintiff's discovery
motion, the motion judge found plaintiff's request "to get every last back up
document" was "oppressive." In an effort to end discovery motion practice, the
motion judge signed a January 25, 2019 order requiring plaintiff to select ten
documents "at random" from PCB's expense report and compelling defendants
to supply the original statements of work (SOW) between Berry and PCB for
the selected documents. According to the judge, if the documents matched the
summaries, the issue would be resolved. In the event the documents did not
match the summaries, plaintiff could return to court for additional relief.
In February 2019, PCB produced the back-up documents for the ten
selected items from the expense reports, as well as the other documents to be
produced pursuant to the January 2019 order.
6
Significantly, plaintiff's counsel prepared the form of the November 2018
order. If plaintiff sought statements of work, as it argues on appeal, there is no
mention of such documents in the order.
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After receiving the back-up documents, plaintiff again moved to compel
the production of documents. In a March 26, 2019 order, the judge denied the
motion, noting, "If the plaintiff is able to demonstrate at trial that the [d]efendant
has intentionally withheld discoverable documents, the [p]laintiff may seek from
the trial judge a jury instruction for a negative inference."
After the completion of discovery and adjournment of several trial dates,
trial was scheduled for September 2019. Prior to the start of trial, the trial judge
entertained several motions.
Plaintiff filed a motion on the eve of trial to amend its complaint to include
claims for fraudulent concealment and spoliation. The judge denied the motion,
finding a request to amend the complaint to add new causes of action two days
before the start of trial was prejudicial to defendants. The judge explained it
would be inappropriate to allow plaintiff to "completely expand the scope of
what the trial would be addressing . . . with no opportunity for the defense to
engage in further discovery . . . ." Further, the judge stated there was more than
ample time for plaintiff to have sought to amend its complaint earlier based on
the five extensions of discovery and five adjournments of the trial. She also
noted plaintiff never moved to reopen discovery to assert the new claims or file
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a motion for sanctions against defendants based on the alleged withholding of
discovery.
In denying the request to add a claim for spoliation of evidence, the judge
found plaintiff could not meet the "spoliation factors under a [Rule] 4:62
analysis . . . ." Regarding plaintiff's request for an adverse inference based on
defendants' purported withholding of discovery, the judge concluded the claim
was "not supported in this record and it would be improper for the [c]ourt to
permit that." Rejecting plaintiff's request to add a claim for fraudulent
concealment, the judge noted fraud must be pleaded with specificity and "there
is not that specificity here."
In another pretrial motion filed by plaintiff, the judge denied a request to
allow Mitchell to "testify as to certain gross profit per hour figures in terms of
trying to come up with damages calculations . . . to posit for the jury . . . ." In a
related pretrial motion on behalf of defendants, the judge "bar[red] plaintiff from
being able to be presented as an expert on the issue of damages." The judge
deemed any testimony by Mitchell related to a thirty-eight percent profit margin
was "clearly within . . . the purview of an expert . . . to go through how PCB
arrived at . . . their gross profit and the amounts by which . . . to do that
calculation."
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After deciding the pretrial motions, the matter was tried before a jury over
the course of eight days, starting on September 9, 2019 and ending on September
19, 2019.
After the close of plaintiff's case, PCB and Nola moved for a directed
verdict under Rule 4:37-2. The judge partially granted defendants' motions for
a directed verdict, dismissing counts five and six, alleging unfair competition.
However, the judge allowed plaintiff to proceed on its claims for breach of
contract based on the existence of a joint venture. According to the judge, "it's
going to be for the jury's consideration as to what they can glean from the
evidence constituted the material terms . . . of that joint venture in the event that
they find one existed."
At the close of the evidence, defendants moved for judgment under Rule
4:40. After hearing argument on the motion, the judge reserved, explaining the
rule provides a judge "can submit all issues to the jury and then if [the judge]
believes that there is an error with respect to what should have gone before them,
[the judge] can correct [any issues] within [ten] days of receiving a
verdict . . . ."
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The judge conducted a charge conference with counsel and then charged
the jury accordingly. After receiving the judge's instructions, the jury
deliberated on plaintiff's remaining claims.
During deliberations, the jury submitted several written questions to the
judge. The first question read: "Do damages have to be calculated on numbers
as evidenced or based on the jury's calculation of fairness?" After consulting
with counsel, the judge reread the sections of the jury charge germane to
damages calculations.
The second jury question, submitted in three parts, read: "Are we
permitted to include damages? What are damages? Legal fees?" Because the
judge and counsel were confused as to the meaning of these three questions, the
judge asked the jury to return to the deliberation room and clarify their
questions. After the jury discussed their questions outside the presence of the
judge and counsel, the jury returned to the courtroom, and the judge asked the
jury foreperson for clarification. The foreperson replied, "We wanted to know
what the definition of damages is." The judge repeated the jury charges
governing damages. The judge also explained plaintiff asserted no claim to legal
fees in this case and the jury should not consider legal fees.
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The jury rendered a verdict on September 19, 2019. By unanimous vote,
the jury found plaintiff proved there was a joint venture between plaintiff, PCB,
and Nola, and plaintiff "performed pursuant to the terms of the joint venture
agreement." In addition, the jury unanimously found PCB and Nola breached
their obligation to plaintiff, and the breach resulted in damages. By a five to
one vote, the jury awarded damages to plaintiff in the amount of $177,000.
On October 25, 2019, the judge heard post-trial motions. Plaintiff moved
for additur or, alternatively, a new trial. PCB moved for a judgment under Rule
4:40 or, alternatively, remittitur. The judge denied the requests for additur and
remittitur, noting additur or remittitur required an agreement between the parties
and they did not agree.
In denying plaintiff's motion for a new trial limited to damages, the judge
found the jury's verdict was "not shocking to the [c]ourt's conscience." She
explained "[i]t [was] well within [the jury's] purview to have listened to the
evidence, made determinations on what they feel there was agreement on, to
balance the equities in terms of their assessment of what the proofs were relative
to damages and to reach . . . a calculation with respect to damages that was
acceptable and just to them." Additionally, she noted "ambiguity" in the record
regarding damages and indicated "there [was] nothing off of this very . . .
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substantial trial record, that would cause the [c]ourt to find that the high standard
for a [m]otion for a [n]ew [t]rial with respect to damages has been reached."
The judge also denied PCB's renewed Rule 4:40 motion, focusing on "the
factors necessary for plaintiff to establish a prima facie case for a joint venture."
She concluded giving plaintiff "the benefit of all evidence that can be gleaned
in the record . . . . the jury had the ability to look at all [the] factors and to
properly adjudicate the issue of whether they believed plaintiff had proven the
establishment of a joint venture . . . ." The judge stated, "[T]he jury listened
attentively for a long time with respect to a lot of conflicting evidence and did a
yeoman's job of being able to come to a resolution that they felt was justified
within the record."
On appeal, plaintiff challenges various pre-trial and post-trial orders
issued by the court, arguing the judges erred with respect to their rulings. In
addition, plaintiff argues it is entitled to additur or, alternatively, a new trial as
to damages only. We reject plaintiff's arguments.
We first address plaintiff's challenge to the pretrial discovery orders. We
review discovery orders for abuse of discretion. Capital Health Sys., Inc. v.
Horizon Healthcare Servs., Inc., 230 N.J. 73, 79-80 (2017). "[A]ppellate courts
are not to intervene but instead will defer to a trial judge's discovery rulings
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absent an abuse of discretion or a judge's misunderstanding or misapplication of
the law." Id. at 78-79 (citing Pomerantz Paper Corp. v. New Cmty. Corp., 207
N.J. 344, 371 (2011)).
Here, we discern no mistake of law or abuse of discretion regarding the
motion judge's discovery orders. Plaintiff and defendants sought judicial
resolution of discovery disputes concerning defendants' disclosure of documents
related to plaintiff's damages claim. After presiding over three separate motions
related to plaintiff's continued demands for documents, the motion jud ge
characterized plaintiff's third motion as "oppressive" in that plaintiff sought to
obtain "every last back up document."
As the trial judge aptly noted, the motion judge made a "Solomon"-like
decision to resolve the parties' discovery issues. The judge ordered plaintiff to
select ten documents "at random" from PCB's expense report and compelled
defendants to supply the original SOW for the selected documents. The motion
judge found PCB complied with the January 25, 2019 order.
We defer to the motion judge's discovery rulings. Plaintiff failed to
explain how production of every single SOW and supporting backup
documentation were required to support its damages calculation. Moreover,
nothing precluded plaintiff from issuing subpoenas to obtain the information
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from the entities who were billed for work performed by defendants. On this
record, we discern no abuse of discretion or misapplication of the law regarding
the motion judge's discovery orders.
Plaintiff also argues the trial judge erred in denying its motions in limine.
We review a trial court's grant or denial of an in limine motion for abuse of
discretion. Brenman v. Demello, 191 N.J. 18, 31 (2007).
We reject plaintiff's argument that PCB's failure to produce every SOW,
despite PCB's compliance with the court's discovery orders, entitled it to a
spoliation inference. As the trial judge explained, the parties were engaged in
"legitimate and ongoing and repeated discovery disputes . . . ." She concluded
defendants complied with the discovery orders and plaintiff's requests were "not
substantiated in the record." As a result, no discovery sanctions were warranted,
and the trial judge properly denied plaintiff's motion in limine.
We next review plaintiff's contention the trial judge erred in precluding
Mitchell from testifying as to plaintiff's entitlement to a thirty-eight percent
gross profit in support of plaintiff's damages calculation. We review a trial
court's decision to admit or exclude evidence for abuse of discretion. Estate of
Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 383-84 (2010). Appellate
courts will not disturb a trial court's evidentiary rulings unless they are "so wide
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off the mark that a manifest denial of justice resulted." Green v. N.J. Mfrs. Ins.
Co., 160 N.J.480, 492 (1992) (quoting State v. Carter, 91 N.J. 86, 106 (1982)).
at 492.
Here, the trial judge found Mitchell lacked personal knowledge of the joint
venture's gross profits to allow him to testify plaintiff was entitled to a specific
percentage of defendants' gross profits. See N.J.R.E. 602 ("A witness may
testify to a matter only if evidence is introduced sufficient to support a finding
that the witness has personal knowledge of the matter . . . . This rule does not
apply to expert testimony under Rule 703.") At trial, Mitchell testified as a fact
witness. He was never qualified as an expert witness. Nor is there anything in
the record supporting Mitchell's personal knowledge of the joint venture's
profits. To the contrary, Karaka testified the joint venture had a significantly
lower gross profit rate or lost money on the work performed by it. Based on this
record, we discern no abuse of discretion in excluding Mitchell's testimony
suggesting a thirty-eight percent gross profit on the work performed by the joint
venture.
We next review plaintiff's argument the trial judge erred in denying its
motions to amend the complaint. We recognize "Rule 4:9-1 requires that
motions for leave to amend be granted liberally" in the interest of justice, and
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"the granting of a motion to file an amended complaint always rests in the court's
sound discretion." Kernan v. One Wash. Park Urban Renewal Assocs., 154 N.J.
437, 457 (1998). However, trial courts are free to deny leave to amend a
pleading on the eve of trial. Verni ex rel. Burstein v. Harry M. Stevens, Inc.,
387 N.J. Super. 160, 195 (App. Div. 2006) (citing Pressler & Verniero, Current
N.J. Court Rules, cmt. 2.2.2 on R. 4:9-1 (2021)). In addition, leave to amend is
properly denied where "allowing the amendment would unduly protract the
litigation or cause undue prejudice." Pressler & Verniero, Current N.J. Court
Rules, cmt. 2.2.1 on R. 4:9-1 (2021) (citing Cutler v. Dorn, 196 N.J. 419, 441
(2008)).
Applying these principles, there is no basis to disturb the trial judge's
denial of plaintiff's motion to amend the complaint. Plaintiff sought leave to
amend its pleading two days prior to the start of the trial after several discovery
extensions and numerous adjournments of the trial date. Further, plaintiff's
proposed amended pleading asserted brand new claims against defendants. The
trial judge properly denied leave to amend, finding the newly added claims ,
raised just before trial, were prejudicial to defendants because defendants would
have to defend the claims absent discovery and without adequate time to prepare
a defense.
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Plaintiff also claims its motion for additur should have been granted or,
alternatively, a new trial on damages only should have been ordered. We
disagree.
"A jury's verdict, including an award of damages, is cloaked with a
'presumption of correctness.'" Cuevas v. Wentworth Grp., 226 N.J. 480, 501
(2016) (quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 598 (1977)). To
overcome "[t]he presumption of correctness that attaches to a damages award[,]"
the party moving for a new trial or additur must "establish, 'clearly and
convincingly,' that the award is 'a miscarriage of justice.'" Ibid. (quoting Baxter,
74 N.J. at 596).
We review a damages award employing the same standard as the trial
court, "with one exception–an appellate court must pay some deference to a trial
judge's 'feel of the case.'" Ibid. (quoting Johnson v. Scaccetti, 192 N.J. 256, 282
(2007)). We do not disturb the jury's award "unless it is 'so disproportionate to
the injury . . . as to shock the conscience and [convince the court] that to sustain
an award would be manifestly unjust.'" Ming Yu He v. Miller, 207 N.J. 230,
249 (2011) (quoting Baxter, 74 N.J. at 604). "[T]he evaluation of damages is a
matter uniquely reposed in the jury's good judgment, and to justify judicial
interference, '[t]he verdict must be "wide of the mark" and pervaded by a sense
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of "wrongness."'" Jastram ex. rel Jastram v. Kruse, 197 N.J. 216, 229 (2008)
(second alteration in the original) (quoting Johnson, 192 N.J. at 281).
"The standard of review on appeal from decisions on motions for a new
trial is the same as that governing the trial judge–whether there was a
miscarriage of justice under the law." Risko v. Thompson Muller Auto. Grp.,
Inc., 206 N.J. 506, 522 (2011) (citing Bender v. Adelson, 187 N.J. 411, 435
(2006)). A court is not required to grant a motion for a new trial because a party
complains the damages award is too small. Anderson v. A.J. Friedman Supply
Co., 416 N.J. Super. 46, 71-72 (App. Div. 2010).
Applying these standards, we are satisfied the trial judge correctly denied
plaintiff's motion for a new trial on damages. The judge summarized the
divergent testimony concerning plaintiff's damages and explained the jury found
no single witness credible on the issue of damages. The judge noted plaintiff
sought damages over a five-year period despite defense testimony and evidence
indicating plaintiff ended its relationship with the joint venture five months after
the initial face-to-face meeting. Further, there was conflicting testimony
regarding plaintiff's entitlement to a share of gross profits versus net profits and
how profits would be calculated.
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We also reject plaintiff's contention the jury was confused in calculating
the damages award. "Once the jury is discharged, both trial and appellate courts
are generally bound to respect its decision, lest they act as an additional and
decisive juror." Kassick v. Milwaukee Elec. Tool Corp., 120 N.J. 130, 135-36
(1990) (citing Dolson v. Anastasia, 55 N.J. 2, 6 (1969)). "The jury's views of
the facts and the credibility of the witnesses as expressed in its verdict are
entitled to deference from both the trial and appellate courts." He, 207 N.J. at
251-52. We do not reweigh the evidence and substitute our judgment for that of
the jury. See Jastram, 197 N.J. at 235.
Similarly, we decline to decipher the jury's logic or rationale in awarding
damages based purely on the jury's written questions to the court. Plaintiff offers
only speculation and conjecture as to the meaning of the jury's written questions.
Plaintiff's damages claim was multifaceted and vigorously disputed by
defendants. There is no evidence in the record the jury misunderstood the
evidence or judge's instructions in arriving at the damages award. The judge
consulted with counsel prior to responding to the jury's questions and re-read
the charges regarding the calculation of damages. There is no merit to plaintiff's
argument the jury was confused about damages based on their written questions.
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Further, the jury clearly rejected many components of plaintiff's claim for
damages based on the evidence and testimony. The jury rendered credibility
determinations and reviewed the evidence. In discharging its duty, we do not
second-guess the jury's credibility assessments or weigh the persuasiveness of
the evidence presented. A reasonable jury could accept the testimony and
evidence to determine the sum of $177,000 properly compensated plaintiff for
its damages. While plaintiff sought a much larger award, the amount awarded
is supported by the record based on the jury's considered evaluation of the
conflicting evidence and their credibility determinations regarding the various
witnesses. Under the circumstances, we agree the jury's award did not shock the
judicial conscience, and we perceive no basis to interfere with the damages
award.
For the same reason, we affirm the trial judge's denial of plaintiff's motion
for additur. See City of Long Branch v. Jui Yung Liu, 203 N.J. 464, 492 (2010)
(applying to motions for additur the same standard for new trial motions based
on a claim the damages award is against the weight of the evidence); see also
Pressler & Verniero, Current N.J. Court Rules, cmt. 3 on R. 4:49-1(a) (2021)
("[N]either additur nor remitter can be ordered unless a new trial, at least on the
damages issue, would be warranted.")
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We next consider PCB's cross-appeal. PCB argues the jury award should
be vacated and plaintiff's claims dismissed. In the event this court declines to
dismiss plaintiff's claims, PCB asserts the jury's award should stand. We reject
PCB's argument for dismissal of plaintiff's claims and affirm the jury's damages
award.
A motion for judgment may be made at the close of plaintiff's case, Rule
4:37-2(b), or after the verdict, Rule 4:40-1. We review motions under both rules
applying the same standard as the trial court. Smith v. Millville Rescue Squad,
225 N.J. 373, 397 (2016). Both motions are governed by the same standard:
"[I]f, accepting as true all the evidence which supports the position of the party
defending against the motion and according [it] the benefit of all inferences
which can reasonably and legitimately be deduce therefrom, reasonable minds
could differ, the motion must be denied." Verdicchio v. Ricca, 179 N.J. 1, 30
(2004) (quoting Estate of Roach v. TRW, Inc., 164 N.J. 598, 612 (2000)). A
motion made under either rule "should only be granted where no rational juror
could conclude that the plaintiff marshaled sufficient evidence to satisfy each
prima facie element of a cause of action." Godfrey v. Princeton Theological
Seminary, 196 N.J. 178, 197 (2008) (citing Pitts v. Newark Bd. of Educ., 337
N.J. Super. 331 (App. Div. 2001)).
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In rendering the verdict, the jury found plaintiff performed in accordance
with the terms of the joint venture. Despite the lack of capital contributions by
the three men, the jury heard testimony the parties worked together pursuing
business opportunities, and plaintiff carried significant costs as part of the joint
venture. The jury also heard testimony indicating the exact terms of the joint
venture were fluid and subject to frequent changes. Therefore, the jury could
have credibly concluded plaintiff performed in accordance with the terms of the
joint venture absent a formal written agreement and without payment of a
$100,000 capital contribution by each partner. Because none of the partners
tendered money as part of a capital contribution toward the joint venture, the
jury could have determined such payment was not a material term in forming
the joint venture.
Additionally, plaintiff presented evidence of damages stemming from the
joint venture. Mitchell testified the parties agreed to split gross profits three-
ways, while defendants denied any such agreement. Further, plaintiff
admittedly never received payment for work performed by the joint venture
between October 2014 and March 2015 despite the partnership's receipt of
payment from AT&T for work during that time period. Giving plaintiff every
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favorable inference, we are satisfied the trial judge properly denied defendants'
motions to dismiss.
Affirmed.
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