Furthermore, the jury charge made it clear that delay damages were only for costs actually sustained by Evergreen and caused by MMCC. I charged the jury that "if you find in favor of Evergreen on any or all of its delay claims, you may award Evergreen damages for additional costs it proves were incurred as a result of delays . . . caused by [MMCC]." I further cautioned the jury to "not engage in speculation or guess-work; Evergreen must have provided you with a sufficient basis for making a reasonable calculation of damages."
I find that the testimony of Alverson and DeLello, when viewed as it must be in a "light most favorable to the nonmovant," Samuels, 992 F.2d at 16, does provide a legally adequate basis for awarding plaintiff $ 157,302 for its delay damages caused by MMCC. Alverson calculated the delay damages to be $ 167,302 and added a 10% profit for a total of $ 184,032. The jury's award of $ 157,302 is well within Alverson's calculations. Therefore this part of defendants' motion is also denied.
c. Plaintiff's Alleged Breach
Defendants contend that the only reasonable conclusion the jury could have reached was that Evergreen, and not MMCC, had materially breached the Subcontract. I disagree. As noted above, there is substantial evidence in the record to support the jury's findings that MMCC failed to pay Evergreen for work performed and that MMCC breached its duty to deal with Evergreen in good faith. Likewise, the jury was entitled to find, on the evidence presented, that Evergreen did not breach its contractual obligations to MMCC. To prevail on its counterclaim, MMCC had to prove, among other things, that it substantially performed its part of the bargain or that it was ready, willing and able to do 50; it is apparent that the jury found that MMCC had failed to prove this element of its claim.
One reduction, however, should be made in the jury's award. Alverson testified that Evergreen's claim against MMCC should be reduced by $ 30,398 to account for MMCC's cost to complete the Project. MMCC should be given a credit for this amount that Evergreen essentially conceded was due MMCC. Defendants argue that a new trial should be held on the amount of the completion costs, for the record contained evidence that the completion costs were in excess of $ 300,000. Alverson's testimony with respect to plaintiff's damages, however, was clearly accepted by the jury, whereas the testimony of MMCC's witnesses was rejected.
Moreover, the jury found that there was no breach on the part of Evergreen, and thus there is no basis for another trial. Under these circumstances, I will limit this credit to $ 30,398.
2. The Motion for a New Trial
An error of law, if prejudicial, may be grounds for a new trial under Fed. R. Civ. P. 59(a). See 11 Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 2805 (1973). But "no error in either the admission or the exclusion of evidence . . . is ground for granting a new trial . . . , unless refusal to take such action appears to the court inconsistent with substantial justice." Fed. R. Civ. P. 61.
A motion for a new trial on the basis of the weight of evidence may not be granted unless the jury's verdict is "seriously erroneous." Piesco, 12 F.3d at 344-45. A trial court may refrain from setting aside a verdict and ordering a new trial "where the resolution of the issues depended on assessment of the credibility of the witnesses." Metromedia Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir. 1992), cert. denied, 124 L. Ed. 2d 662, 113 S. Ct. 2445 (1993).
a. Punitive Damages
Defendants argue that it was prejudicial error to permit plaintiff to introduce evidence on its claim for punitive damages. Defendants first attacked the punitive damages claim in their motion for partial summary judgment. On October 1, 1991, Judge Goettel dismissed plaintiff's sole tort claim but declined to dismiss the punitive claims, stating that "where the moral culpability of the breacher is at issue, punitives can be awarded, even if the underlying claim is based on a breach of contract." (Mem. Dec. at 13 n.3).
As part of their motion in limine, defendants moved to dismiss the punitive damages claim under this Court's general discretionary power to review and revise its prior rulings. I declined to dismiss the claim. My reasons for allowing plaintiff to proceed with the punitive damages claim were twofold: First, Judge Goettel's prior ruling was the law of the case and I was not presented with authority indicating that this ruling was clearly wrong and should be upset. Second, counsel for plaintiff had argued that MMCC's conduct in connection with the Subcontract evinced a "criminal indifference" to contractual rights, and that there was a "public interest" in preventing this type of conduct. (10/15/94 Tr. at 28-29).
After the close of all of the evidence, and upon the motion of defendants, I dismissed plaintiff's punitive damages claim as I found that it had failed to present a legally sufficient evidentiary basis for a reasonable jury to conclude that public rights were implicated in its claims or that MMCC engaged in conduct aimed at the public generally. See Brink's, Inc. v. City of New York, 717 F.2d 700, 704 (2d Cir. 1983) (citing Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 358, 353 N.E.2d 793, 795, 386 N.Y.S.2d 831, 833 (1976)); Durham Industries, Inc. v. North River Ins. Co., 673 F.2d 37, 41 (2d Cir.), cert. denied, 459 U.S. 827, 74 L. Ed. 2d 64, 103 S. Ct. 61 (1982). I do not believe that my refusal to dismiss plaintiff's punitive damages claim before trial warrants a new trial. See Fed. R. Civ. P. 61.
Defendants submit that plaintiff's presentation of its evidence "was strongly tinged with the punitive theme," and improperly incited the jury to punish defendants. (Def. Mem. at 17). Defendants focus particular attention on plaintiff's use of MMCC's profit on the Project, and argue that this "evidence was deemed to be relevant largely if not exclusively because of the presence of Plaintiff's punitive damages claim, and was highly prejudicial to MMCC." Id.
Defendants' arguments are rejected. First, the evidence of MMCC's profit was relevant because it supported plaintiff's claim that MMCC did not pay Evergreen for work that Evergreen did for which MMCC received payment from the Army Corps of Engineers. In other words, as Evergreen argued, the fact that MMCC exceeded its original expectations with respect to profit is evidence that it got away without paying Evergreen.
Second, proof of bad faith and malice were relevant in respects other than punitive damages. Plaintiff alleged, among other things, that MMCC breached the Subcontract by failing to deal in good faith and that the "no damage for delay" clause of the Subcontract was invalid due to MMCC's bad faith and willful, malicious conduct. Hence, I overruled defendants' objections and admitted evidence that was relevant to these claims of bad faith and fraud, that also was relevant to the issue of punitive damages. This evidence included: MMCC's handling of the confession of judgment and promissory note; MMCC's inflation of the backcharges; MMCC's receipt of payment for Evergreen's work and refusal in turn to pay Evergreen; and Dennis Capolino's purported statement when negotiating the backcharges that DeLello could try to litigate but that MMCC would tie him up for years.
On the other hand, I granted defendants' objections and refused to admit evidence that was relevant only to the punitive damages claim. This included evidence of MMCC's profits from other construction projects, its annual revenues, its total size and assets, and the Capolino family's annual income and total net worth. I held that plaintiff would be able to present this evidence only after the jury ruled on liability, and only if the jury found in favor of plaintiff on liability. Of course, we did not get that far because I dismissed the punitive damages claim at the close of the evidence.
Hence, defendants' arguments of prejudice are without merit.
b. The Weight of the Evidence
Defendants request that if the Court does not enter judgment in their favor as a matter of law, a new trial should be ordered on the issues of plaintiff's alleged breach and its delay and extra work claims. Additionally, defendants request a new trial on the issue of the enforceability of the promissory note.
Defendants state that "this Court should grant a new trial because the jury reached a seriously erroneous result and the verdict is a miscarriage of justice." (Def. Mem. at 20). I disagree.
On the basis of the evidence in the record discussed above, I find that the jury's findings on the Plaintiff's claims of extra work, delay damages, breach of contract and on the validity of the promissory note were not "seriously erroneous." Piesco, 12 F.3d at 344-45. There was testimony and documentary evidence offered in support of each of the claims and concerning the note. Moreover, on each of these issues there were conflicts in the testimony that required the jury to make credibility findings. Metromedia Co., 983 F.2d at 363. The jury clearly found the testimony of DeLello and Alverson more credible than that of Dennis Capolino and the employees of MMCC. Accordingly, defendants' motion for a new trial is denied.
B. Evergreen's Cross-Motion
Evergreen cross-moves for prejudgment interest and attorneys' fees and costs. Plaintiff also moves for an order granting it judgment on the $ 80,000 promissory note and compelling MMCC to enter a satisfaction of the award based on the confession of judgment MMCC entered in the Dutchess County court against Evergreen.
1. Prejudgment Interest
Plaintiff seeks prejudgment interest on the damages awarded by the jury. The injuries for which the jury awarded Evergreen damages were sustained in 1987 and 1988. The Supreme Court has recognized the time value of money, and noted that money received today for services provided previously is not equivalent to the same dollar amount had it been received at the time the services were provided. Missouri v. Jenkins, 491 U.S. 274, 283, 105 L. Ed. 2d 229, 109 S. Ct. 2463 (1989). For this reason, the Supreme Court has held that prejudgment interest is an element of complete compensation. West Virginia v. United States, 479 U.S. 305, 310, 93 L. Ed. 2d 639, 107 S. Ct. 702 (1987); General Motors Corp. v. Devex Corp., 461 U.S. 648, 655-56, 76 L. Ed. 2d 211, 103 S. Ct. 2058 (1983). Thus, Evergreen is entitled to an award of prejudgment interest on the damages it suffered as a result of MMCC's material breach of the Subcontract.
Interest will be awarded to plaintiff on the sum of $ 589,036.51 (the jury's award of $ 619,434.51 less a credit for completion costs of $ 30,398) at the rate of 9% per annum from July 12, 1988, which is 60 days after the last day plaintiff performed work on the project.
As of today, interest will have accrued in the amount of $ 370,220.88.
2. Attorneys' Fees and Costs
Evergreen also seeks a determination by this Court of the amounts of attorneys' fees and costs to be awarded pursuant to Judge Goettel's July 1993 Decision. Additionally, Evergreen moves for an award of its attorneys' fees and costs for the entire litigation based on: (1) Fed. R. Civ. P. 11; (2) 28 U.S.C. § 1927; and (3) the "inherent power" of this Court to make such an award.
a. The July 1993 Decision
In his July 1993 Decision from the bench, Judge Goettel dismissed MMCC's second counterclaim and awarded Evergreen attorneys' fees with costs and expenses because "it appears that there is merit to plaintiff's contention that the defendants brought the counterclaim solely for purposes of harassing plaintiff. . . ." (7/2/93 Tr. at 9). Judge Goettel did not, however, set the amount to be awarded, as he ruled that the determination of the "actual amount to be set" would be held "in abeyance" until the "final disposition" of the case. (Id. at 9).
b. Recovery of Fees Against General
Evergreen argues that both General and MMCC should be held accountable for its fees and costs under the July 1993 Decision because Judge Goettel, in rendering his decision, referred to defendants in the plural.
(Cahill Affid. dated 1/3/95 at P 10). General argues that the July 1993 Decision must logically be restricted to MMCC.
Although both defendants were represented by Steven O'Hare, Esq., at the time and he consistently signed pleadings as "Attorney for Defendants," the second counterclaim clearly was brought on behalf of MMCC and not General.
General was simply the construction bond surety and had no direct dealings with Evergreen. Judge Goettel's order should be given its common sense meaning; the July 1993 Decision will be read as imposing costs and fees against MMCC only.
c. Evergreen's Fees and Costs Under Judge Goettel's Decision
The next issue is the amount of fees and costs Evergreen should be awarded pursuant to Judge Goettel's July 1993 Decision.
Rule 11 was amended on April 22, 1993, effective December 1, 1993. Since the conduct at issue occurred and Judge Goettel made a finding that Rule 11 was violated prior to the effective date of the 1993 amendments, the pre-December 1, 1993 version of Rule 11 applies. See Sussman v. Bank of Israel, 56 F.3d 450, 1995 U.S. App. LEXIS 13653 (2d Cir. June 2, 1995) ("pre-1993 version of Rule 11" applied, where conduct in question occurred in 1991). The relevant portion of the pre-December 1, 1993 version of Rule 11 provided:
If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee.
Fed. R. Civ. P. 11 (as amended up to but not including April 22, 1993).
The amount of attorneys' fees to be awarded as a Rule 11 sanction is a matter "committed to the discretion of the district court." Caisse Nationale de Credit Agricole-CNCA v. Valcorp, Inc., 28 F.3d 259, 266 (2d Cir. 1994). In determining the amount of a "reasonable" attorneys' fee award, a court must remember that "the principal objective of the imposition of Rule 11 sanctions is not compensation of the victimized party but rather the deterrence of baseless filings and the curbing of abuses." Id. Because the general American rule is that a prevailing party cannot recover attorneys' fees, Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975), the courts must be mindful that:
Rule 11 is not a free-shifting mechanism and does not create an entitlement in adverse parties to compensatory damages or attorney's fees . . . . Rather it is intended " to maintain the integrity of the system of federal practice and procedure"
Estate of Calloway v. Marvel Entertainment Group, 9 F.3d 237, 241 (2d Cir. 1993), cert. denied, 128 L. Ed. 2d 459, 114 S. Ct. 1829 (1984) (quoting Business Guides, Inc. v. Chromatic Communications Enters., Inc., 498 U.S. 533, 552, 111 S. Ct. 922, 934, 112 L. Ed. 2d 1140 (1991)). Hence, the Second Circuit has held that the "lodestar amount need not be routinely awarded" and "a fee substantially less than the lodestar amount is permissible" when courts are setting the amount of Rule 11 sanctions. Eastway Constr. Corp. v. City of New York, 821 F.2d 121, 122-23 (2d Cir.), cert. denied, 484 U.S. 918, 98 L. Ed. 2d 226, 108 S. Ct. 269 (1987). Moreover, Rule 11 sanctions do not "shift the entire cost of litigation; they shift only the cost of a discrete event." Business Guides, Inc., 498 U.S. at 553, 111 S. Ct. at 934. The courts should exercise their discretion "to award only that portion of a defendant's attorney's fee thought reasonable to serve the sanctioning purpose of the Rule." Eastwa y , 821 F.2d at 123.
Applying these principles to the present case, I believe Evergreen should be awarded $ 35,000 in fees from MMCC.
First, Judge Goettel's July 1993 decision clearly applied only to certain of MMCC's counterclaims and third-party claims; his ruling did not apply to the entire litigation. Indeed, in granting defendants' motion to dismiss the second counterclaim, Judge Goettel stated:
Because it appears there is merit to plaintiff's contention that the defendants brought the counterclaim solely for purposes of harassing plaintiff, the plaintiff's request for attorneys' fees with costs and expenses [is] granted but the actual amount to be set will be held in abeyance till the final disposition of this litigation.