Appeal from a judgment entered in the United States District Court for the Southern District of New York after a jury trial before Owen, J., finding defendant liable for a breach of contract and awarding plaintiffs $382,000 in damages.
Feinberg, Chief Judge, and Lumbard and Meskill, Circuit Judges.
This is an appeal from a judgment entered in the United States District Court for the Southern District of New York after a five day jury trial before Owen, J. After the jury found for plaintiffs on the issue of defendant's liability for breach of contract, the court directed a verdict for plaintiffs on damages, and awarded them $382,000. For reasons stated below, we affirm the judgment of the district court.
Plaintiffs in this diversity action are Air et Chaleur, a Belgian corporation, and Pierre Berger, Daniel Cauchie and Jacques Van de Velde, European businessmen. Defendant Eliot Janeway, a nationally known financier and economic consultant, owned stock in Medserco, Inc., a Minnesota corporation headquartered in St. Louis, Missouri, which provided health insurance for preventive medicine and ran outpatient clinics for minor surgical procedures. He also served as Medserco's economic advisor.
In August 1978, the individual plaintiffs went to St. Louis to investigate Medserco to determine whether they wished to make an investment in, or engage in joint ventures with, that company. The following month, Janeway and a number of Medserco officials went to Paris for a meeting with the plaintiffs. Here the plaintiffs first encountered Janeway. After a long morning session, the parties retired to a restaurant to continue their discussions.
During the course of the luncheon, Janeway stated that, if plaintiffs purchased 66,000 shares of Medserco stock at $4.50 per share, he would buy the stock from them at $6.00 per share. Plaintiffs subsequently purchased the stock at that price. The stock was restricted and legended, the restrictions to terminate in October 1980.
In May 1979, in response to a request from Van de Velde for a written verification of his oral commitment Janeway sent a letter to Van de Velde, the text of which is set out in the margin.*fn1 Both Van de Velde and Janeway used October 1981 as the repurchase date, but Van de Velde later claimed that his use of that date was a mistake. In a letter dated July 20, 1979, Richard Ross, president Medserco, indicated to Van de Velde that he believed that the arrangement was for two rather than three years. He also said, "I should like to suggest that you still seem to have the problem of consideration to make the agreement binding. It would seem only fair that if Mr. Janeway is giving you a put, he should also have a call of some sort." In November 1979, Janeay wrote to plaintiff Cauchie:
Dear Mr. Cauchie: I am advised that your failure to be responsive to the request made of you to furnish consideration in compensation for the Put I offered you voids my offer. This is to notify you that we have no arrangement.
The value of Medserco stock, which had been approximately $5 per share in September 1978, had slipped to $4 in October 1980 and then plummeted to 20 cents per share by November 1981. On October 28, 1981, plaintiffs tendered their stock to Janeway, as directed in his letter of May 14, 1979. Janeway refused to accept the tender and pay the purchase price. Medserco filed for bankruptcy in November 1981, one week after plaintiffs filed this suit.
In a trial before Judge Owen and a jury, plaintiffs contended that Janeway had made an oral promise to purchase their stock at $6 per share upon tender of the shares to him. Janeway argued that his statement was intended to be a put which would be effective only if plaintiffs gave him the corresponding call.*fn2 Therefore, he asserted that because no call was ever given, his offer never became binding. Janeway also argued that the plaintiffs had decided to buy Medserco stock before the Paris meeting occurred, so that the contract was unsupported by consideration.
The court first charged the jury on liability, stating that it would charge separately on damages if necessary. After the jury returned a verdict for all plaintiffs on the liability issue, the court determined that there were no factual issues concerning damages for jury determination. The court held that plaintiffs had a duty to mitigate damages by securing a replacement put after Janeway's breach. However, the court also ruled that the burden was on defendant to prove the scope of the possible mitigation and that defendant had failed to introduce evidence sufficient to carry this burden. Defendant's counsel requested that the court reopen proof to allow for the introduction of evidence on damages, but the court refused. Instead, the court ...