El Campo Ventures, LLC v. Stratton Securities, Inc,. et al
Filing
136
ORDER DENYING Defendant's 114 Motion for Remittitur, or in the alternative, Motion for New Trial. Signed by Judge Robert Pitman. (klw)
Case 1:20-cv-00560-RP Document 136 Filed 08/23/22 Page 1 of 8
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
EL CAMPO VENTURES, LLC,
Plaintiff,
v.
STRATTON SECURITIES, INC., et al.,
Defendants.
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1:20-CV-560-RP
ORDER
Before the Court is Defendant Stratton Securities, Inc.’s (“Defendant”) Motion for
Remittitur, or in the Alternative, Motion for New Trial, (Dkt. 114), and related briefing, (Dkts. 118,
120). After considering the parties’ arguments, the facts in the record, and the relevant law, the
Court denies Defendant’s motion.
I. BACKGROUND
This breach-of-contract case arises out of an agreement between the parties pertaining to the
Studios in Carrizo Spring, Texas, a town southwest of San Antonio and about 30 miles from the
border with Mexico. The Studios is a complex consisting of modular buildings that initially housed
oilfield workers. (R. & R., Dkt. 66, at 1). Several years later, Defendant, which owns the Studios, was
looking to sell the facilities. Plaintiff El Campo Ventures LLC (“Plaintiff”) offered to facilitate the
sale of the Studios with the goal of selling the facilities to the government to use as an immigration
detention facility. (Id. at 3; P-1). The parties entered into a proceeds sharing contract pursuant to
which the parties agreed to share proceeds from the sale of the Studios—with Defendant collecting
the first $4 million and the parties evenly splitting any additional proceeds. (P-1). In the end, the
government wanted to lease the Studios, rather than purchase it, and Defendant told Plaintiff that
Plaintiff would be compensated as if it were a sale. (P-2). Defendant entered into a three-year lease
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with the government in 2019 for the Studios to be used as a facility for unaccompanied minors. (D19; R. & R., Dkt. 66, at 4). Under the lease agreement, Defendant was required to make repairs and
improvements to the Studios, and the government could exercise an option to extend the lease term
twice by one year for years four and five. (D-19).
In 2020, Plaintiff sued Defendant, Daniel Stratton, and Shannon Stratton in Dimmit
County.1 (Orig. Pet., Dkt. 1-2). Daniel and Shannon Stratton are South Carolina residents who own
Defendant. (Am. Compl., Dkt. 37, at 3). Plaintiff alleged that it had held up its side of the bargain by
making a deal with the government which leased the Studios. (Id. at 1–2). Yet, according to Plaintiff,
Defendant breached their agreement by refusing to share transaction proceeds. (Id. at 11). The case
was removed to federal court on April 15, 2020. (Dkt. 1).
The case was tried to a jury in September 2021. (Minute Entries, Dkts. 100, 101, 102). Jury
selection and the parties’ cases spanned three days. (See id.). On the final day of trial, the jury was
charged, deliberated, and reached a verdict. (Dkts. 108, 109). The jury found that Defendant
breached its contract with Plaintiff and awarded Plaintiff $4,095,300 in damages. (Verdict, Dkt. 109,
at 1). In its motion, Defendant challenges the jury’s damages award as erroneous.
II. LEGAL STANDARDS
A. Motion for Remittitur
A party’s alternative request for remittitur, rather than a new trial, may be granted where the
damage award was “merely excessive or so large as to appear contrary to right reason.” Brunnemann v.
Terra Intern, Inc., 975 F.2d 175, 178 (5th Cir. 1992). “A verdict is excessive as a matter of law if shown
to exceed ‘any rational appraisal or estimate of the damages that could be based upon the evidence
before the jury.’” Id. at 178 (quoting Kolb v. Goldring, Inc., 694 F.2d 869, 871 (1st Cir. 1982)). “A
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Plaintiff initially sued other defendants, as well, but later amended their complaint.
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verdict will be considered excessive only if it is greater than the maximum amount the trier of fact
could properly have awarded.” Hernandez v. M/V Raajan, 841 F.2d 582, 587 (5th Cir.
1988). Faced with an excessive damages award, a “court may either order a new trial on damages
or may give the plaintiff the option of avoiding a new trial by agreeing to a remittitur of the
excessive portion of the award.” Id. “Remittitur is the process by which a court compels a plaintiff
to choose between reduction of an excessive verdict and a new trial.” Cornell University v.
Hewlett-Packard Company, 609 F. Supp. 2d 279, 285–86 (N.D.N.Y 2009) (citations omitted).
B. Motion for New Trial
“A district court can grant a motion for new trial [under Federal Rule of Civil Procedure
Rule 59(a)] if the first trial was unfair or if the jury verdict was against the great weight of the
evidence.” Cates v. Creamer, 431 F.3d 456, 460 (5th Cir. 2005); see also Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 433 (1996). Rule 59 allows the Court to grant a new trial “on all or some of the
issues” presented in the initial trial. But “even when only one issue is tainted by error or prejudice, a
new trial must nevertheless be granted on all issues ‘unless it clearly appears that the issue to be
retried is so distinct and separable from the others that a trial of it alone may be had without
injustice.’” Eximco, Inc. v. Trane Co., 748 F.2d 287, 290 (5th Cir. 1984) (quoting Gasoline Prod. Co. v.
Champlin Ref. Co., 283 U.S. 494, 500 (1931)).
The Fifth Circuit has identified three factors that support granting a new trial: “the simplicity
of the issues, ‘pernicious occurrences’ at trial, and the extent to which the evidence is in dispute.” Id.
(quoting Scott v. Monsanto Co., 868 F.2d 786, 789 (5th Cir. 1989)). This test is disjunctive; only one
factor must weigh in favor of granting a new trial, and even if none do, a new trial may be justified
when other indicia demonstrate that the jury verdict was incorrect. Id. at 460–61. This standard
requires the jury’s verdict to be “against the great—not merely the greater—weight of the evidence.”
Scott, 868 F.2d at 789 (quoting Conway v. Chemical Leaman Tank Lines, Inc., 610 F.2d 360, 362–63 (5th
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Cir. 1980)). “[M]ere conflicting evidence or evidence that would support a different conclusion by
the jury cannot serve as the grounds for granting a new trial.” Dawson v. Wal-Mart Stores, Inc., 978
F.2d 205, 208 (5th Cir. 1992).
III. ANALYSIS
A. Motion for Remittitur
Defendant requests remittitur based on its theory that the jury’s damages award is not
supported by the record. According to Defendant, the jury included the optional lease extension
years in their calculation as follows:
The total amount of loan proceeds received by Defendant for rent to be paid under
the lease for the three-year term was $6,430,600. (Am. Stipulated Facts, Number 26).
After deducting the amount due to Defendant under the proceeds sharing contract
of $4,000,000, the remaining amount is $2,430,600. Plaintiff’s fifty percent share of
this amount is $1,215,300. The amount of rent due under the lease for option years
four and five if the government exercises the options is $2,280,000 per year, or a
total of $4,560,000. D-19. Plaintiff’s fifty percent share of this amount for each year
if the government exercises the options would be $2,280,000. The total amount
which would therefore be due to Plaintiff through option year five would have been
$3,495,300.
(Id. at 2).
Defendant then surmises that the jury came up with its $4,095,300 damages award as
follows:
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(Id. at 3).
Using this math, Defendant argues the jury’s award is erroneous on several bases. First, the
jury erroneously assumed that the government will exercise the options for years four and five.
Defendant believes the evidence did not support that the government intends to do so since no one
from the government testified at trial and the evidence at trial “proved the government does not
intend to exercise the options for years four and five.” (Mot. Remittitur, Dkt. 114, at 5). Second, the
jury erroneously included $45,000 in monthly utility reimbursements for option years four and five.
According to Defendant, the “utility reimbursement is not rent payable under the Lease but is a
reimbursement for utilities which is then reconciled on a quarterly basis, based on actual usage.” (Id.
at 6). Third, the jury erroneously failed to deduct Defendant’s expenses under the lease through
August 2021 which totaled $1,968,541.75. (Id. at 7). Defendant states that Plaintiff did not dispute
those expenses. Fourth and finally, Defendant claims remittitur is required for the damages awarded
for option years four and five to reduce them to present value. (Id.).
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Defendant’s remittitur claim fails for several reasons, all of which stem from the fact that
Defendant—and the Court—do not and cannot know how the jury calculated damages. For
example, this Court cannot know whether the jury considered the utility reimbursements or future
damages, much less how they calculated future damages. Setting aside Defendant’s conjecture, the
Court focuses on the jury’s award of $4,095,300. The jury’s award is a dollar figure that was within
the range of damages evidence presented at trial. Defendant offered a damages model that totaled
$231,000. (D-74). Plaintiff’s expert calculated damages to be $8,815,532 if the Government exercised
the lease renewal options as well as the $12,000,000 purchase option. (See Reply, Dkt. 120
(conceding that Plaintiff sought damages between $8,815,532 and $25,546,185)). Plaintiff’s expert
also calculated damages based on an estimated value submitted to a bank and arrived at a figure of
$25,546,186. (Id.; P-66). There also was an audio recording between Plaintiff and Daniel Stratton in
which Plaintiff requested $4 million from Defendant as a buyout of its interest in the contract to
which Daniel Stratton responded, “[Y]ou can take me to court and beat my ass up but I’m never
paying you $4 million.” (P-41). While a verdict for $25 million perhaps would not be supported by
the evidence, the jury’s award of just over $4 million is supported by the evidence. The jury enjoys
substantial discretion in awarding damages within the range shown by the evidence. Neiman-Marcus
Group, Inc. v. Dworkin, 919 F.2d 368, 372 (5th Cir. 1990). Here, the jury’s award sits squarely within
the range of damages evidence—and in fact is lower than Plaintiff’s range—and was supported by
the evidence presented at trial.
Even assuming the jury included future damages in its award, the jury did not err if it did so.
The jury heard evidence that supported future damages, including: (1) the Government listing the
“period of performance” for the lease as ending on December 31, 2024, (D-36, at 2); (2) the
Government’s investments in the property that exceeded $2.6 million, (P-11); and/or (3) an aerial
photograph of the property that showed heavy equipment clearing the surrounding land from which
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the jury may have inferred that the Government intended to make room for additional
improvements, (P-3). If the jury did include future damages, it had a rational basis for adding future
damages to its award.
B. Motion for New Trial
In the alternative, Defendant requests a new trial. Defendant’s first three bases merely repeat
arguments this Court has already rejected: (1) the damages award is against the great weight and
preponderance of the evidence and are excessive because it was not known if the government would
exercise the renewal options; (2) the damages award is against the great weight and preponderance
of the evidence because they are based on speculation and conjecture; and (3) the damages award
wrongly included expenses incurred under the lease. (See Dkt. 114, at 4–10). These arguments fail for
essentially the same reasons. First, Defendant makes these arguments based on its assumption of
how the jury calculated damages, which cannot be assumed. Second, to the extent the jury’s award
included future damages, the jury heard evidence that would have supported an award that included
future damages. The fact that there may also have been evidence submitted to the jury that tended to
show that the government would not likely exercise the renewal options does not render the verdict
invalid. “[M]ere conflicting evidence or evidence that would support a different conclusion by the
jury cannot serve as the grounds for granting a new trial.” Dawson, 978 F.2d 205, 208. Here, as
discussed above in Section III.A., the evidence supported the jury’s award of damages, and the jury’s
verdict was not against the great weight of the evidence.
Finally, Defendant contends that Question Two on the verdict form contained prejudicial
error. Question Two was on damages and followed the initial breach of contract question. The
breach of contract question asked: “Did Defendant Stratton Securities, Inc. fail to comply with the
Proceeds Sharing Agreement dated May 2, 2019? In making this determination, consider whether
Defendant Stratton Securities, Inc. waived the May 17, 2019 deadline in the Proceeds Sharing
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Agreement dated May 2, 2019.” (Dkt. 119, at 1). The jury answered yes and moved to Question
Two, which asked: “What sum of money, if paid now in cash, would fairly and reasonably
compensate Plaintiff El Campo Ventures, LLC for its damages that resulted from Defendant
Stratton Securities, Inc.’s failure to comply with the Proceeds Sharing Agreement dated May 2,
2019?” (Id.).
Defendant argues Question Two violates the terms of the contract because, under the
contract, the parties would only share proceeds if the Government exercised the renewal option.
(Dkt. 114, at 10–11). According to Defendant, Question Two allowed the jury to award damages not
supported by the contract, failed to limit damages to the first three years of the lease, and allowed
the jury to award damages based on option years four and five and the purchase option. Defendant
also argues that Question Two failed to inform the jury it may not speculate in awarding damages.
Assuming Defendant requested a speculation instruction, which Defendant does not claim it did,
such an instruction was unnecessary. The jury charge instructed the jury to judge the facts from the
testimony heard and evidence submitted and decide the case “based entirely on . . . the evidence
presented to you in the courtroom.” (Dkt. 108, at 2). The jury could award damages only based on
the evidence they heard at trial, and as discussed above, the jury heard evidence that supported an
inference that the government would exercise its renewal options. Based on that evidence, the jury
could have and may have awarded future damages.
IV. CONCLUSION
For these reasons, IT IS ORDERED that Defendant’s Motion for Remittitur, or in the
Alternative, Motion for New Trial, (Dkt. 114), is DENIED.
SIGNED on August 23, 2022.
_____________________________________
ROBERT PITMAN
UNITED STATES DISTRICT JUDGE
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