U.S. ACCU-MEASUREMENTS, LLC et al v. RUBY TUESDAY, INC.
OPINION AND ORDER granting 48 Motion in Limine; denying 49 Motion in Limine. Signed by Judge Kevin McNulty on 1/14/14. (sr, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
U.S. ACCUMEASUREMENTS, LLC
and ROSS CONSULTING GROUP,
Civ. No. 10-5011 (KM)
OPINION AND ORDER
RUBY TUESDAY, INC.,
KEVIN MCNULTY, U.S.D.J.:
Before me are two motions in limine filed by the defendant, Ruby
Tuesday, Inc., in advance of the imminent jury trial in this matter.
Defendant requests, in its first motion, that I preclude the plaintiffs, U.S. Accu
Measurements, LLC and Ross Consulting Group, Inc., from offering evidence or
argument related to their demand for punitive damages. Defendant requests, in
its second motion, that I preclude Plaintiffs from offering evidence or argument
related to their claim for unjust enrichment. For reasons discussed briefly
infra, I will GRANT Defendant’s first motion and DENY its second motion. Both
rulings are, however, subject to revision depending upon the evidence at trial.
This case concerns two written agreements between Plaintiffs and
Defendant, pursuant to which Plaintiffs prepared comprehensive audit reports
assessing whether Defendant had paid the correct amount of common area
maintenance (“CAM”) to its landlords at malls nationwide. (Final Pretrial Order
at ¶ 3 (Doc. No. 37)). Under those contracts, Defendant is to pay Plaintiffs for
such auditing services “only when, as and if refunds and cost reductions are
realized, as received by [Defendant], and whether in cash, kind, or by way of
rental credit.” (Contract, Pltf.’s Tr. Br. at Ex. 1 (Doc. No. 42). The contracts set
Plaintiffs’ fee as either 25 percent or 50 percent of Defendant’s gross recovery of
CAM overpayments to its landlords, depending on certain circumstances. (Id.).
Plaintiffs’ central allegation in this dispute is that Defendant used the audit
reports to arrive at settlements with its landlords that included refunds of CAM
overcharges, but that Defendant never paid Plaintiffs’ fee or even informed
Plaintiffs that such settlements had occurred. (Pltf.’s Tr. Br. at 2). Plaintiffs’
causes of action are: 1) breach of contract, 2) breach of the covenant of good
faith and fair dealing, 3) unjust enrichment, and 4) accounting. (Complaint
(Doc. 1-1)). Plaintiffs’ good faith and unjust enrichment claims include a
demand for punitive damages. (Icij.
Motion to Exclude Punitive Damages
Defendant contends that its potential liability has been premised solely
alleged breaches of its contracts with Plaintiffs, and not on any other duty.
Punitive damages, it says, are unavailable as a matter of law. (First Motion
(Doc. 48)). Plaintiffs respond that punitive damages for breach of contract are
available when the parties were in a special relationship of trust, as in the case
of a joint venture. (Opposition to Motions (Doc. No. 51)).
As a general rule—and the parties agree on this much—punitive
damages are not generally recoverable upon a breach of contract, unless the
breach also constitutes a tort. Lightning Lube v. Witco Corp., 4 F.3d 1153, 1194
(3d Cir. N.J. 1993) (citing W.A. Wright, Inc. v. KDI Sylvan Pools, Inc., 746 F.2d
215, 217 (3d Cir. 1984) and Restatement (Second) of Contracts § 355 (1979)).
Plaintiffs cite some authority that a breach of contract that also constitutes a
breach of fiduciary duty may warrant punitive damages even if no separate
claim of a fiduciary breach has been asserted. See Sandier v. Lawn-A-Mat
Chemical & Equipment Corp., 141 N.J. Super. 437, 449-451 (App. Div. 1976)
(“There may arise a case involving such an aggravated set of facts that punitive
damages might be appropriate regardless of the contract form of the cause of
action and even though it may be beyond the scope of recognized
Plaintiffs have never indicated, outside of their opposition to this motion
in limine, that Defendant breached a fiduciary duty, or that the parties were in
a fiduciary relationship. The complaint does not assert any cause of action for
breach of fiduciary duty. I might overlook that in accordance with the dicta in
Sandier. The trouble is that the complaint also lacks any factual allegations
suggesting that the parties are joint venturers, or indeed that they stand in any
relationship of trust. In the complaint, Plaintiffs refer to themselves as
“vendors.” (See Doc. No. 1- 1). Likewise, Plaintiffs’ trial brief does not contain
any factual assertion or argument that the parties stood in a special or
fiduciary relationship. Plaintiff’s claims and arguments are all rooted in the
parties’ status as contracting parties and in Defendant’s alleged failure to abide
by the contract. (See Doc. No 42). The Final Pretrial Order does not list, as an
issue for trial, whether the parties stood in a special, fiduciary, or joint
venturer relationship (see Doc. No. 37 at ¶J 4, 9). The PTO does not so much
as mention this issue specifically, or the issue of punitive damages generally.
(See id. at ¶J 4.A.2, 9).
Even adopting arguendo the relaxed standard set forth in dicta in
Sandier, I cannot find any cognizable allegation or showing of a special
relationship of trust. For all that appears in the papers before me, punitive
damages are unavailable as a matter of law. Evidence going exclusively to the
issue of punitive damages would therefore be irrelevant. See Sandier, 141 N.J.
Super. 437, 451-52.
The motion in limine is granted, at least provisionally. Of course, much
evidence relevant to punitive damages would also be relevant to show a
contractual breach or ordinary damages. Such dual-purpose evidence is not
excluded by this ruling.
I say “provisionally” for the following reasons. It is possible that the
evidence as presented might suggest a basis for an award of punitive damages.
But even if I now thought punitive damages were properly in the case, I would
bifurcate the issues and try the punitive damages case separately, if and when
the jury found liability and ordinary damages. Therefore, at the close of the
evidence or after the jury’s verdict, the Plaintiffs may if appropriate move to
reconsider this ruling and reopen the proofs for the purpose of considering
Motion to Exclude Unjust Enrichment
Defendant argues that there can be no recovery under a theory of unjust
enrichment, or quasi-contract, because there is a valid, express contract that
covers the same subject matter. There is no dispute that there exists a written
contract governing Plaintiffs’ provision of auditing services. (Second Motion
(Doc. No. 49)). Therefore, Defendant argues, evidence and argument relating to
Plaintiffs’ unjust enrichment claim must be excluded from the trial. Plaintiffs
respond that they are free to argue and submit both express and quasicontract theories to the jury—they simply may not recover under both.
Whether the written contract governs this dispute, they say, may remain open
as an issue for the jury. In addition, quantum meruit recovery may occur even
where a contract is present, if performance is incomplete. (Opposition to
Motions (Doc. No. 51)).
The first principle, cited prominently
submission of inconsistent theories to the jury:
a plaintiff who has attempted to prove both breach of
contract and unjust enrichment need not choose
which one will go to the jury, as long as there is
sufficient evidence as to both. Under proper
instructions from the judge, the jury may decide which
of the two was proved, and plaintiff will be able to
recover under one of the theories. It is only recovery
under inconsistent theories that is not permitted.
Caputo v. Nice-Pak Products, Inc., 300 N.J. Super. 498, 504 (App. Div. 1997). As
a general matter, this rule aligns with the provisions of Federal Rule of Civil
Procedure 8(a) and 8(d) permitting parties to set forth inconsistent theories and
seek inconsistent forms of relief.
In Caputo, the plaintiff was the inventor of a patented product allegedly
used by defendant, his former employer, without proper compensation to
plaintiff. Plaintiff argued that an agreement to assign the invention in exchange
for $1.00 and “other good and valuable consideration” incorporated an oral
promise to pay a ten percent royalty on sale. Defendant denied this. At trial,
the court forced plaintiff to present only one theory to the jury, so plaintiff
dropped his contract claim and elected to rely on a quantum meruit claim. At
the close of the evidence, the trial court entered a directed verdict against
plaintiff on his quantum meruit claim. The Appellate Division, affirmed the
directed verdict denying quantum meruit and held that the parties did not have
a contract. Id. at 505-507. But in dictum, the Appellate Division essentially
stated that both the breach of contract claim and quantum meruit claim, if
supported by sufficient evidence, could have been presented to the jury. Id. at
504-505 (“Plaintiff correctly contended before the trial court that, if the jury
found that there was no valid contract, the jury could then consider whether
plaintiff nonetheless might recover for unjust enrichment[.]”) Thus, if there is a
sufficient factual basis to submit both a breach of contract and quantum
meruit recovery to the jury, then the jury may be charged as to both. See id.;
see also Don Corson Constr. Co. v. Hrebek, 2007 N.J. Super. Unpub. LEXIS
759, *74 (App. Div. June 5, 2007) (citing Caputo and holding that “the court
correctly decided that the quantum meruit claim should proceed to the jury.”)
It is only duplicate recovery that is prohibited.
The second principle, also cited by Plaintiffs, authorizes quantum meruit
where a plaintiff who has rendered part performance seeks restitution:
Where the defendant fails or refuses to perform his
contract and is justified therein by the plaintiff’s own
breach of duty or non-performance of a condition, but
the plaintiff has rendered a part performance under
the contract that is a net benefit to the defendant, the
plaintiff can get judgment for the amount of such
benefit.. if [1 the defendant, with knowledge that the
plaintiff’s breach of duty of duty or non-performance of
condition has occurred. assents to the rendition of the
part performance, or accepts the benefit of it, or
retains property received although its return in specie
is still not unreasonably difficult or injurious.
Power-Matics, Inc. v. Ligotti, 79 N.J. Super. 294, 306-07 (App. Div. 1963) (citing
2 Restatement, Contracts, § 357, p. 623). See also Kutzin v. Pimie, 124 N.J.
500, 515-516 (N.J. 1991). Within the Power-Matics framework, the question is
whether Defendant may be obliged to pay for the service Plaintiffs actually
performed, even if Defendant’s duty to pay has not arisen under the terms of
the governing contract.
The third principle, cited by Defendants, prohibits the use of quasicontract to undermine or contradict an express contract:
Quasi-contractual liability will not be imposed  if an
express contract exists concerning the identical
subject matter. The parties are bound by their
agreement, and there is no ground for implying a
promise as long as a valid unrescinded contract
governs the rights of the parties.
Suburban Transfer Service, Inc. v. Beech Holdings, Inc., 716 F.2d 220, 227 (3d
Cir. 1983). That rule has particular application to contracts, like this one, for
the provision of services:
where parties have made an express contract for, e.g.,
the performance of services, and that express contract
has not been either rescinded by consent or materially
breached, recovery is not available on a theory of
implied contract; a subsisting contract for the
performance of services in exchange for an agreed
price is inconsistent with an implied contract or a
quasi-contractual obligation to compensate the same
services upon some different basis.
Farese v. McGarry, 237 N.J. Super. 385, 392 (App. Div. 1989)(citing Shapiro v.
Solomon, 42 N.J. Super. 377, 383-385 (App. Div. 1956))(cited in Caputo at 504).
Farese itself, however, permitted a quasi-contract claim, because the
claim did not relate to the “same services” as the parties’ express contract.
There, the plaintiff, a tenant, brought a quasi-contract claim after making
improvements to the house he rented from the defendant landlord. The
landlord claimed that any quasi-contract claim for the value of the additional
work was precluded by the written lease, which defined the scope of
renovations: “Tenant agrees to keep the premises in good repair following the
Tenant’s completion of all the renovations in the kitchen and linen closet as
agreed to by the parties prior to the signing of this agreement. The Landlord will
be responsible for the cost of all material and supplies used and necessary for
the agreed upon renovations (not to exceed $500).” Id. at 392-393 (emphasis
added). The court applied the rule that a quasi-contract claim cannot operate
where an express contract covers the same subject matter: “If the lease had
stated that the tenant would renovate the house as part of his rental obligation,
he could not have recovered for [thel value [of the renovations] on a quasi
contract theory.” IcL at 393. But it then drew a distinction between the
kitchen/linen closet renovations contracted for in the lease and the additional,
extra-contractual work that Plaintiff performed on other portions of the house.
The contract (i.e., the lease) did not address renovations to areas beyond the
kitchen and linen closet. Plaintiff’s unjust enrichment claim, then, was
separate, and did not conflict with the terms of the contract. Plaintiff was
entitled to assert and recover on that unjust enrichment claim. Id. at 392-33.
Within the Farese-Suburban Transfer framework, then, the question is
whether the written contract, which both parties acknowledge, governs the
precise services that were in fact rendered.
The written contract here appears to fully govern the auditing services
provided by Plaintiffs, as well as the remuneration therefor. Without more, it
would run afoul of the third principle.
That said, however, some versions of the facts in this case suggest that
quantum meruit might be appropriate under the second, restitutionary
principle. Defendant’s primary theory is that its duty to pay did not arise
because it never used the audit reports to obtain CAM refunds as contemplated
by the contract. (Dfd. ‘s Tr. Br. at 8-11). Rather, having failed to recover CAM
overpayments, it engaged in more global negotiations to cancel the leases. (Id.
at 3-5). Plaintiffs meanwhile argue that CAM overpayment refunds were
embedded in Defendant’s lease cancellation settlements; alternatively, Plaintiffs
contend that the audit reports were used for either factual background or for
leverage in obtaining such settlements (Pltf.’s Tr. Br. at 10, 14).
There are thus contested factual issues surrounding these settlements. A
jury might find that CAM refunds were embedded in the settlements, and
conclude that there was a breach of, e.g., the contractual covenant of good faith
and fair dealing. If the jury finds no such breach, it might nevertheless
conclude that the audits benefited Defendant in a way that would justify
quantum meruit recovery under the logic of Power-Matics, 79 N.J. Super. at
306-307 (permitting restitution of benefits conferred notwithstanding existence
of contract) or possibly even Farese, 237 N.J. Super. at 392 (permitting
quantum meruit recovery where no contractual term addresses the precise
In short, the issue is not so clear cut that I can withdraw it from the
jury’s consideration in advance of the presentation of the evidence. Whether to
present the jury with inconsistent theories is a strategic, not a legal, question.
The second motion in limine is therefore DENIED.
Here, too, however, I caution the parties that the issue might be revisited
at some point, depending upon the evidence. Under Caputo or more general
procedural principles I will assess, at trial’s end, whether there is sufficient
evidence to instruct the jury on breach of contract, quantum meruit, or both.
THIS MATTER having been opened to the Court by Defendant on its
motions in limine [Doc. Nos. 48, 49] to preclude the introduction of evidence
and argument concerning Plaintiffs’ demands for punitive damages and
Plaintiffs’ unjust enrichment cause of action; and the Plaintiffs having opposed
such motions [Doc. No. 51]; and this Court having considered the papers
before it pursuant to Federal Rule of Civil Procedure 78(b); for the reasons
stated above, and for good cause shown;
IT IS this 14th day of January, 2014
ORDERED that Defendant’s First Motion in Limine to preclude
introduction of evidence and argument concerning punitive damages is
GRANTED; and it is further
OREDERED that Defendant’s Second Motion in Limine to preclude
introduction of evidence and argument concerning unjust enrichment is
HO KEVIN MÔNULTY
United States District Jidg/
Dated: January 14, 2014
Newark, New Jersey
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