Elia v. Roberts et al

Filing 150

ORDER RE: MOTION FOR INTERLOCUTORY APPEAL (Doc. No. 145 ), signed by District Judge Anthony W. Ishii on 12/23/2019. Plaintiff's motion for certification of an interlocutory appeal is GRANTED. (Gonzales, V)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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ARIEL ELIA, individually and as
Successor Trustee to the Alan Elia
Declaration of Trust Dated March 18,
2002,

v.

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ORDER RE: MOTION FOR
INTERLOCUTORY APPEAL

Plaintiff

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CASE NO. 1:16-cv-0557 AWI EPG

JOHN ROBERTS, and individual; TEXAS
ENVIRONMENTAL PRODUCTS, INC., a
Texas corporation; and TEXAS
ENVIRONMENTAL PRODUCTS, a
partnership, joint venture or other form of
business organization unknown, and DOES
1 through 20, inclusive,

(Doc. 145)

Defendants

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I. Background
Defendant John Roberts (“Roberts”) founded and owned Texas Environmental Products,

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Inc. (“TEP Inc.”) which manufactured and sold fertilizer. Alan Elia (“Alan Elia”) sold fertilizer in

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the Fresno area on behalf of Defendants starting in 2004. Defendants assert that Alan Elia was an

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independent contractor who worked on commission. Plaintiff asserts that Alan Elia formed a

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partnership with Roberts; the partnership conducted business as a new entity also named Texas

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Environmental Products (“TEP Partnership”). Throughout their business relationship, Roberts

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handled the manufacturing of the fertilizer and Alan Elia handled all of the sales. Defendants and

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Alan Elia roughly split the profits from the business each year. Alan Elia died at the end of

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February 2015. Roberts continued the sale of fertilizer in this area and sold TEP Inc. in December

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2015.

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Alan Elia created a trust in 2002 (“Trust”) whose beneficiaries are his children Ariel and

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Britz Elia (“Beneficiaries”). Alan Elia’s interest in the business relationship with Defendants

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belongs to the Trust. Alan Elia was the original trustor/trustee. Robyn Esraelian was the attorney

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who represented the Trust. After Alan Elia’s passing, Harold Zinkin (“Zinkin”) became the

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trustee. In 2015, Zinkin and Esraelian communicated with Roberts about monies owed to the

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Trust. They attempted to reach a settlement based on an understanding that Alan Elia was an

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independent contractor. However, the Beneficiaries opposed the settlement, arguing that Alan

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Elia was a partner. Based on this difference of opinion, the Beneficiaries and Zinkin agreed that

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Ariel Elia would replaced Zinkin as the trustee.

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In February 2016, Plaintiff Ariel Elia, both in her personal capacity and as the trustee for

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the Trust, filed suit against Defendants on claims of accounting, breach of fiduciary duty (to the

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partnership), and declaratory relief. Plaintiff contends that the December 2015 sale also

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encompassed TEP Partnership. Defendants contend that TEP Partnership does not exist.

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Additionally, Plaintiff sought an additional double damages penalty under Cal. Prob. Code § 859

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for a bad faith breach of fiduciary duty to a trust. Plaintiff proceeded under two theories of

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monetary relief. First, under the theory that Alan Elia was a partner, Plaintiff sought 50% of the

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profits from fertilizer sales in 2015 and 50% of the proceeds from the sale of TEP Partnership.

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Second, under the theory that Alan Elia was an independent contractor, Plaintiff sought the

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commission on any sales. The second theory was not clearly part of Plaintiff’s complaint or joint

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pretrial statement. See Docs. 1 and 32. The court permitted Plaintiff to amend claims to conform

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to evidence.

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An eight day jury trial was held, starting October 31, 2017. The jury found that Alan Elia

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and Roberts did not have a partnership agreement but that Alan Elia was in a contractual

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relationship with TEP Inc. and was owed commission on sales made; the jury awarded Plaintiff

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$452,937.64. Doc. 105. That amount is roughly equivalent to 50% of the profits from the entirety

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of 2015. In post trial motions, both parties made motions to amend judgment. Docs. 108, 117, and

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118. In key part, Defendants’ motion for remittitur was granted. Plaintiff’s monetary award was

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reduced by five-sixth to $75,489.61 to correspond to a 50% share of profits from January and
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February 2015; Plaintiff was given the option of accepting the reduced award or the option of a

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new trial on the issue of damages from breach of sales commission contract. Doc. 132. Plaintiff

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opted for a new trial and made a motion for reconsideration. Docs. 133 and 134. The motion was

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denied. Doc. 141. Plaintiff has now made a motion seeking interlocutory appeal. Doc. 145.

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Defendants oppose the motion. Doc. 146.

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II. Legal Standard
Title 28 U.S.C. § 1292(b) states “When a district judge, in making in a civil action an order
not otherwise appealable under this section, shall be of the opinion that such order involves a

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controlling question of law as to which there is substantial ground for difference of opinion and

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that an immediate appeal from the order may materially advance the ultimate termination of the

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litigation, he shall so state in writing in such order. The Court of Appeals which would have

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jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be

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taken from such order, if application is made to it within ten days after the entry of the order:

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Provided, however, that application for an appeal hereunder shall not stay proceedings in the

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district court unless the district judge or the Court of Appeals or a judge thereof shall so order.”

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The Ninth Circuit has listed the requirements for such a certification as: “(1) that there be a

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controlling question of law, (2) that there be substantial grounds for difference of opinion, and (3)

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that an immediate appeal may materially advance the ultimate termination of the litigation.” In re

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Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982). Overall, Congressional

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legislative history “indicates that [interlocutory appeal] was to be used only in extraordinary cases

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where decision of an interlocutory appeal might avoid protracted and expensive litigation. It was

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not intended merely to provide review of difficult rulings in hard cases.” United States Rubber Co.

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v. Wright, 359 F.2d 784, 785 (9th Cir. 1966).

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III. Discussion
Remittitur was granted because the jury did not follow the jury instructions and verdict
form correctly. The jury was directed to determine the amount of commissions Alan Elia earned
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for sales made in January and February 2015. As stated in prior orders, the parties agree that the

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jury decided to award Plaintiff approximately 50% of the profit for the full 2015 year instead of

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commissions limited to January and February of that year. See Doc. 117-1, 6:23-7; Doc. 122,

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3:26-6:18. Plaintiff disagrees with the court’s ruling on two points. First, Plaintiff argues that the

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instructions and verdict form do not limit the damages award to January and February 2015.

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Plaintiff’s interpretation is that “everywhere the phrase January and February 2015 is used in the

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instructions or verdict form the instruction or questions relates to a description of a claim being

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made by Plaintiff, not to how damages are calculated or to determining what the terms of the

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implied-in-fact contract are which, as noted, necessarily determines the amount of damages

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available.” Doc. 146, 9:27-10:3. Second, Plaintiff argues the court used the wrong standard to

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find that remittitur was appropriate. Plaintiff is correct that this court relied on out of circuit

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authority to come to this conclusion. “Failure by the jury to follow the court’s instructions, which

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results in prejudice to the moving party, is a proper ground for a new trial.” AlphaMed Pharm.

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Corp. v. Arriva Pharm., Inc., 432 F. Supp. 2d 1319, 1356 (S.D. Fla. 2006), citing Shushereba v.

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R.B. Industries, Inc., 104 F.R.D. 524, 529 (W.D. Pa. 1985); Anderson v. Breazeale, 507 F.2d 929

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(5th Cir. 1975); Thomas v. Stalter, 20 F.3d 298, 303 (7th Cir. 1994); J.A. Jones Constr. Co. v.

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Steel Erectors, Inc., 901 F.2d 943, 944 (11th Cir. 1990). This precedent seems to fit within the

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Ninth Circuit standards which state that a court “will not reverse the jury’s assessment of the

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amount of damages unless the amount is grossly excessive or monstrous, or unless the evidence

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clearly does not support the damage award. A damage award also cannot stand if it could only

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have been based on speculation or guesswork.” Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1216

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(9th Cir. 1983), citations omitted. In this case, because the jury did not follow the instructions and

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verdict form, the damage award was not supported by the evidence.

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Defendants argue that the grant of remittitur is not a controlling questions and that it is a

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mixed question of law and fact which renders it inappropriate for interlocutory appeal. This court

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disagrees. If the Ninth Circuit were to find that remittitur was improperly granted, no new trial

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would need to be held. An issue which could immediately end the case is a controlling question of

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law. See Nat'l Ass'n of African-American Owned Media v. Charter Communs., Inc., 2016 U.S.
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Dist. LEXIS 185867, *11 (C.D. Cal. Dec. 12, 2016). Such a ruling would clearly advance the

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ultimate termination of this suit. The question of remittitur is also an issue of law in this case.

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“[W]hile the Ninth Circuit has apparently not had occasion to address the issue, many courts have

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found the question of law must be a ‘pure question of law,’ not a mixed question of law and fact or

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an application of law to a particular set of facts.” Aldapa v. Fowler Packing Co., 2016 U.S. Dist.

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LEXIS 115064, *3 (E.D. Cal. Aug. 26, 2016), citing Ahrenholz v. Board of Trustees of the Univ.

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of Ill., 219 F.3d 674, 675-77 (7th Cir. 2000); but see Dalie v. Pulte Home Corp., 636 F. Supp. 2d

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1025, 1028 (E.D. Cal. 2009) (“the Ninth Circuit Court of Appeals has never embraced the rule that

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only pure legal questions are controlling questions of law under § 1292(b)”). Here, the parties

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have agreed to that the jury’s award was based on sales for the full 2015 year; there is no dispute

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in that regard. The relevant jury instructions and verdict form constitute approximately a dozen

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pages of text. They constitute an extremely limited record for review. What the instructions and

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verdict form required of the jury and the appropriate standard for remittitur constitutes a compact

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question suitable for interlocutory appeal review. Whether to adopt precedent from outside the

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circuit can qualify as a substantial difference of opinion. See Rancheria v. Salazar, 2010 U.S. Dist.

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LEXIS 23317, *38-39 (N.D. Cal. Feb. 23, 2010) (“substantial grounds for difference of opinion

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may exist where there is ‘a dearth of precedent within the controlling jurisdiction and conflicting

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decisions in other circuits’”). The grant of remittitur qualifies for interlocutory appeal

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certification.

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The scope of the new trial was limited to a consideration of damages under the breach of

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contract claim. Doc. 132, 11:10-13. Plaintiff’s request for a new trial on all issues, including

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liability for breach of partnership agreement, was denied. Doc. 141, 8:2. In opposition,

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Defendants assert that “Plaintiff further requests that the Appellate Court be able to review the

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limitations placed on the new trial – permitting only a trial on the amount of damages.” Doc. 147,

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4:9-10. The court does not find such a request to be encompassed in either the notice, the moving

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brief, or the reply brief. See Docs. 145, 146, and 148. Plaintiff does not make a direct request for

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review of that aspect of the orders or brief how that issue would meet the interlocutory appeal

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standard. Therefore, the court does not address Defendants’ arguments in opposition with respect
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to the scope of the new trial.

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IV. Order
Plaintiff’s motion for certification of an interlocutory appeal is GRANTED.

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IT IS SO ORDERED.
Dated: December 23, 2019
SENIOR DISTRICT JUDGE

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