Norman v. Elkin et al

Filing 165

MEMORANDUM OPINION re plaintiff's motion for new trial (D.I. 159). Signed by Judge Leonard P. Stark on 3/26/12. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JEFFERY M. NORMAN,
Plaintiff:

v.

C.A. No. 06-005-LPS

DAVID W. ELKIN, RICHARD M. SHORIN,
and THE ELKIN GROUP, INC.
Defendants,
and
US MOBILCOMM, INC.,
Nominal Defendant

Sean J. Bellew, David A. Felice, BALLARD SPAHR LLP, Wilmington, DE; Kurt Heyman,
PROCTOR HEYMAN LLP, Wilmington, DE,
Attorneys for Plaintiff.
Steven L. Caponi, BLANK ROME LLP, Wilmington, DE; Christine S. Azar, LABA TON
SUCHAROW, Wilmington, DE.
Attorneys for Defendant.

MEMORANDUM OPINION

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March 26. 2012
Wilmington, Delaware

Pending before the Court is Plaintiffs Motion to Alter or Amend the Jury Verdict. or in
the alternative, Motion for a New Trial. (D.l. 159) For the reasons discussed below, the Court
will grant Plaintiffs Motion for a New Trial.
I.

BACKGROUND 1
Plaintiff Jeffery M. Nonnan (''Plaintiff') filed this action in the Delaware Court of

Chancery on December 2. 2005, asserting nine causes of action against defendants David W.
Elkin. Richard M. Sorkin, and The Elkin Group, Inc. ("'Defendants''): fraud, breach of contract.
conversion/misappropriation, breach of fiduciary duty, breach of duty of disclosure, aiding and
abetting breach of fiduciary duty. usurpation of corporate opportunity, unjust enrichment, and
declaratory relief. (See D.l. 1) On January 3, 2006, Defendants removed this case to federal
court. (See id.) This Court held a three-day jury triaL during which only the breach of contract,
fraud, and conversion claims were presented to the jury. See Norman v. Elkin. 726 F. Supp. 2d
464,468 (D. Del. 201 0). The jury found for Plaintiff on each of these claims. (See D.l. 119)
Specifically, the jury found that "Defendant David Elkin breached an agreement by failing to
distribute proceeds from the sales ofUS Mobilcomm. Inc.'s assets on a pro rata basis (i.e.,
giving Plaintiff his 25% share).'' (D.I. 119 at 2,

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A3) The jury awarded Plaintiff $1 in nominal

damages on the breach of contract claim, $105,756 in compensatory damages and $48,000 in
punitive damages on the fraud claim, and $38,062 in compensatory damages on the
conversion/misappropriation claim. (Id. at 2-4) The total damage award was $191.819, which

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The background relevant to this action has been set forth more fully by the Court in
previous decisions entered in this case. See Norman v. Elkin, 726 F. Supp. 2d 464, 467-68 (D.
Del. 2010) (D.l. 156); see also D.l. 98.

was equal to $1 more than Plaintiff's 25% share of distributions. (D.I. 159

at~

11) At the time

of the jury verdict, the Court reserved judgment on the remaining claims and on whether
Plaintiff's claims were barred by the applicable statutes of limitations. See Norman. 726 F.
Supp. 2d at 468.
Post-trial. Defendants filed motions challenging the validity of the jury's findings with
respect to the claims of fraud, conversion, and breach of contract.~ (See D.l. 126) On July 30,
2010, the Court issued an Order vacating the findings of liability against the Defendants for
fraud and conversion. (D.l. 157) In its July 30th Opinion. the Court held that the fraud and
conversion claims were barred by the applicable statutes oflimitations. See Norman. 726 F.
Supp. 2d at 471-72. However, the Court determined that the breach of contract claim based on
failure to make pro rata distribution of the proceeds from the sale of corporate assets was not
time barred. Id. at 4 71. As a result, the jury· s verdict was reduced from $191 ,819 to $1. (D .I.
161 at3)
Subsequently. on August 27,2010, Plaintiff filed the pending Motion to Alter or Amend
the Jury Verdict, or in the alternative, Motion for a New Trial. (D.I. 159) The parties completed
briefing on this motion on October 1 L 2010. (D.l. 163)

II.

LEGALSTANDARDS
A.

Motion to Alter or Amend the Jury Verdict

A motion for reconsideration may be filed pursuant Federal Rule of Civil Procedure 59( e)

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With respect to the breach of contract claim. Defendants did not challenge the
sufficiency of the evidence relating to the jury's finding of breach of contract for failure to make
pro rata distributions. See Norman. 726 F. Supp. 2d at 471 n.3. Rather, Defendants challenged
two other breach of contract claims. which the Court found to be barred by the applicable statute
of limitations. See id. at 4 70-71.
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or Federal Rule of Civil Procedure 60(b). Although motions for reconsideration under both rules
serve similar functions. each has a particular purpose. See United States v. Fiorelli, 337 F.3d
282, 288 (3d Cir. 2003). For instance,''Rule 60(b) allows a party to seek relief from a final
judgment. and request reopening of his case, under a limited set of circumstances including
fraud, mistake, and newly discovered evidence." Gonzalez v. Crosb.v, 545 U.S. 524, 528 (2005).
Additionally, Rule 60(b) "allows a party to move for relief if it is no longer equitable that the
judgment should have prospective application.'' FeH' v. Hawkins. 540 U.S. 431, 441 (2004)
(internal quotation marks omitted). A motion filed pursuant to Rule 60(b) is addressed to the
sound discretion of the trial court guided by accepted legal principles applied in light of all
relevant circumstances. see Pierce Assoc.\·., Inc. v. Nemours Found., 865 F.2d 530, 548 (3d Cir.
1988), but may be granted only in extraordinary circumstances, Moolenaar v. Gov 't (~l Virgin

Islands, 822 F.2d 1342, 1346 (3d Cir. 1987).
In contrast, Rule 59(e) is ''a device to relitigate the original issue decided by the district
court, and [it is] used to allege legal error.'' Fiorelli, 337 F.3d at 288. The moving party must
show one of the following in order to prevail on a Rule 59( e) motion: ( 1) an intervening change
in the controlling law; (2) the availability of new evidence that was not available when the court
issued its order; or (3) the need to correct a clear etTor of law or fact or to prevent a manifest
injustice. See Max's Seq{ood Cafe v. Quinteros. 176 F.3d 669, 677 (3d Cir. 1999). A motion for
reconsideration is not appropriate to reargue issues that the Court has already considered and
decided. See Brambles USA. Inc. v. Blocker. 735 F. Supp. 1239. 1240 (D. Del. 1990).

B.

Motion for a New Trial

In pertinent part, Federal Rule of Civil Procedure 59(a) provides: ·'[t]he court may. on

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motion, grant a new trial on all or some of the issues - and to any party ... after a jury trial, for
any reason for which a new trial has heretofore been granted in an action at law in federal court.''
Among the most common reasons for granting a new trial are: (1) the jury's verdict is
against the clear weight of the evidence, and a new trial must be granted to prevent a miscarriage
of justice; (2) newly discovered evidence has surfaced that would likely have altered the
outcome of the trial; (3) improper conduct by an attorney or the court unfairly influenced the
verdict; and (4) the jury's verdict was facially inconsistent. See Zarow-Srnith v. N.J. Transit Rail
Operations, inc., 953 F. Supp. 581, 584 (D.N.J. 1997).

The decision to grant or deny a new trial is committed to the sound discretion of the
district court. See Allied Chern. Corp. v. Da(flon, Inc., 449 U.S. 33, 36 (1980); Olefins Trading.
Inc. v. Han Yang Chern. Corp., 9 F.3d 282, 289 (3d Cir. 1993) (reviewing district court's ruling

on new trial motion under deferential ''abuse of discretion" standard). However, where the
ground for the new trial is that the jury's verdict was against the great weight of the evidence, the
court should proceed cautiously, because such a ruling would necessarily substitute the court's
judgment for that of the jury. See Klein v. Hollings, 992 F.2d 1285, 1290 (3d Cir. 1993). In
reviewing a motion for a new trial, the court need not view the evidence in the light most
favorable to the verdict winner. StilL a new trial should be granted only where '"a miscarriage of
justice would result if the verdict were to stand,'' the verdict '·cries out to be overturned,'' or the
verdict "shocks [the] conscience.'' Williarnsonv. Consol. Rail Corp., 926 F.2d 1344, 1348 (3d
Cir. 1991): see also Price v. Del. Dep't ofCorrections, 40 F. Supp. 2d 544,550 (D. Del. 1999).

III.

DISCUSSION
A.

Judicial Estoppel

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As an initial matter. Defendants contend that the doctrine of judicial estoppel bars
Plaintiff from arguing that the jury's damage award on the breach of contract claim is flawed.
(See D.l. 161 at 6) In response, Plaintiff contends that its current position is not inconsistent
with any earlier asserted position. (See D.l. 163 at 3-4) Specifically, Plaintiff posits that
Defendants never challenged the $1 breach of contract damage award in their post-trial motions
and, thus, any response that Plaintiff made to those motions did not address or pertain to the
breach of contract damages. (/d. at 3)
In the Third Circuit. a party is judicially estopped from taking a position if: (1) the
position is irreconcilably inconsistent with that asserted in a prior proceeding; (2) the
inconsistent position culpably threatens the court's integrity or is intended to play fast and loose
with the court; and (3) judicial estoppel would address the affront to the court's integrity. See
Montrose Med. Grp. Participating Sav. Plan v. Bulger, 243 F.3d 773, 780-81 (3d Cir. 2001).
The Court concludes that the doctrine of judicial estoppel does not apply in the instant
case because Plaintiffs current position- that the jury's breach of contract damage award is
flawed- is not "irreconcilably inconsistent'' with its post-trial position that there was sufficient
evidence introduced at trial to support the jury's assessment of damages for the fraud and
conversion claims. To support their claim of judicial estoppel, Defendants rely on various
statements that Plaintiff made "to support the contention that the jury award of fraud and
conversion damages was supported by the record:' (D.l. 161 at 5) However, these statements
did not relate to the breach of contract claim and. thus, cannot be the basis for judicial estoppel
with respect to the breach of contract claim. At bottom, there is nothing inconsistent between
defending the jury's verdict on the intentional tort claims and arguing that- with no damages

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now being awarded on those claims- the verdict of $1 is inconsistent with the great weight of
the (largely undisputed) evidence. Indeed, Plaintiff has not previously taken a position on the
adequacy of damages for the breach of contract claim. Additionally, there is no evidence that the
Plaintiff's various positions on damages threaten the integrity of the Court or represent an
attempt to "play fast and loose with the Court." Accordingly, the doctrine of judicial estoppel
does not apply here.

B.

Motion to Amend or Alter the Jury Verdict

Reviewing the parties' arguments in light of the applicable legal standards, the Court
concludes that Plaintiff has not demonstrated that alteration or amendment of the jury verdict is
warranted.
1.

Rule 59(e)

First, Plaintiff asserts that the Court should amend the jury verdict under Rule 59(e)
because there is a need to correct a clear error of law or prevent manifest injustice. (D.I. 159 at
4) Yet, Plaintiff fails to identify any clear legal error or manifest injustice.
After determining that the defendant David Elkin had breached the agreement, the jury
also found that $1 was an ·'amount of damages [that] would be sufficient to compensate Plaintiff
for his loss." (D.I. 119 at 2, ,-r A4) The determination of damages lies within the province of the
jury and should not be disturbed by this Court. See At!. Sounding Co. v. Townsend, 129 S. Ct.
2561, 2566 (2009): Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340. 353 (1998) (''It
has long been recognized that by the law the jury are judges of the damages.'') (internal
quotation marks omitted).
Plaintiff's mere dissatisfaction with the jury's assessment of damages does not constitute

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manifest injustice. See generally Solo v. United States, 2011 WL 4929423, at* 1 (D. Del. Oct.
17. 2011) ("[D]issatisfaction with the court's decision ... is not a legitimate basis [for] granting
a motion for reconsideration under Rule 59( e)."); Ogden v. Keystone Residence, 226 F. Supp. 2d
588, 606 (M.D. Pa. 2002) ("The simple fact that [plaintiff] is unhappy with the result of the
[case] is an insufficient basis to grant her relief.'').
Accordingly, the Court concludes that this is not a case where modification of the jury's
damage award is appropriate.

2.

Rule 60(b)(5)

Next, Plaintiff asserts that the Court should amend the verdict under Federal Rule of
Civil Procedure 60(b)(5), which provides that a party may file a motion for relief from a final
judgment if: ( l) the judgment has been satisfied, released or discharged; (2) a prior judgment
upon which it is based has been reversed or otherwise vacated; or (3) it is no longer equitable
that the judgment should have prospective application. See Fed. R. Civ. P. 60(b)(5). Plaintiff
asserts that prospective application of the jury's verdict is no longer equitable. (D.l. 159 at 4)
However. the jury's verdict on damages is not prospective; rather, it constitutes a present remedy
for a past wrong. See United States v. Dansbw:v, 1996 WL 592645, at *3 (E.D. Pa. Oct. 15.
1996) (''Rule 60(b )(5) applies to any judgment that has prospective effect as contrasted with
those that offer a present remedy for a past wrong.'') (internal quotation marks and citation
omitted). Thus, Rule 60(b)(5) does not apply to the jury's damage award. See Gibbs v. Maxwell
House, 738 F .2d 1153. 1156 (II th Cir. 1984) (stating there is ''not a ·prospective effect' within

the meaning of[R]ule 60(b)(5) ... ifplaintiffwere continuing to feel the effects of a money
judgment against him''); Marshall v. Ed ofEduc., 575 F.2d 417.425 (3d Cir. 1978) (stating

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unsatisfied judgment for monetary damages is not prospective); see also generanv Cincinnati
Ins. Co. v. Flanders Elec. ,\-totor Serv., 131 F .3d 625, 630 (7th Cir. 1997) (stating that fact ''that a
court's action has continuing consequences ... does not necessarily mean that it has 'prospective
application' for purposes of Rule 60(b)(5)"). Accordingly. the Court will deny Plaintiffs
Motion to Alter or Amend the Jury Verdict.
C.

Motion for New Trial

Altematively, Plaintiff requests that this Court grant it a new trial on damages for its
breach of contract claim. (D.l. 159 at I) Plaintiff bases this request on its assertion that the
jury's verdict was against the weight of the evidence. (See id. at 5)
It is undisputed that Plaintiff and David Elkin were the only two shareholders of US

Mobilcomm. Inc. ("USM''), a closely-held corporation (0.1. 61 at§ Ill, ,-r A) and that Plaintiff
owns 25% of USM (id. at§

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F). The jury expressly found that Elkin ''breached an

agreement by failing to distribute proceeds from the sales of[USM's] assets on a pro rata basis

(i.e., giving Plaintiff his 25% share).'' (0.1. 119) It is undisputed that the proceeds from the
sales of USM's assets are $767. 274. 3 It is further undisputed that Plaintiff did not receive any
cash distributions from USM for the period of2001 to the present. (0.1. 61 at ,-r DOD)
The Court concludes that a mere award of a single dollar for the breach of contract claim
is against the clear weight of the evidence in this case given the jury's conclusion that Elkin
breached the contract by not giving Plaintiff his 25% share. There was no evidence presented at
trial that Elkin was entitled to anything less than his 25% share. or $191,818. Had the jury only

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This total comes from the addition of payments from USM that Elkin paid to himself.
(See D.l. 61 at 12-13)
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had before it the breach of contract claim, it could not have justifiably awarded a mere $1 in
damages. Therefore, the Court concludes that allowing the jury's determination of damages for
the breach of contract claim to stand would constitute a miscarriage of justice, as there is no

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reasonable basis to uphold the jury's damage award. Accordingly, the Court will grant
Plaintiffs Motion for a New Trial on the issue of damages for the breach of contract claim. 4

D.

Request for Attornev's Fees

In their briefing. Defendants assert that they are entitled to attorney's fees for the time
spent in responding to Plaintiffs pending motion because ·'Plaintiffs motion is wholly
unsupported in law and fact to a level that runs afoul of Federal Rule of Civil Procedure 11 ."'
(D .I. 161 at 10) The Court finds that Defendants· request for attorney's fees as a Rule 11
sanction is wholly without merit. Rule 11 states that by submitting a written motion to the
Court. the attorney ''certifies that to the best of the person's knowledge, information. and belief,
formed after an inquiry reasonable under the circumstances ... the claims, defenses, and other
legal contentions are warranted by existing law or by a nonfrivolous argument .... •· Fed. R.
Civ. P. ll(b)(2). In light of the Court's decision to grant Plaintiff's request for a new trial, it is
indisputable that Plaintiffs filing did not violate Rule 11. Accordingly, the Court will deny
Defendants' request for attorney's fees.

IV.

CONCLUSION
For the foregoing reasons. the Court will grant Plaintiffs Motion for a New Trial. The

new trial will be limited exclusively to the issue of appropriate damages for the breach of

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Defendant fails to address in its brief Plaintiffs request for a new trial under Rule 59(a).
The Court assumes Defendant opposes such relief.
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contract claim. All of Plaintiffs other requests for relief will be denied. An appropriate Order
follows.

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