appropriate procedural mechanism for determining damages.
Mathias contends that having prevailed on the issue of liability, damages
may be determined by a simple arithmetic calculation of the value of
Waste Management, Inc. (hereinafter "Waste Management") stock as of March
15, 1999, which would have been subject to exercise by Mathias in
connection with the 1992 option contract at issue. This, Mathias
believes, requires no more than an Order of this Court ruling as a matter
of law on the appropriate measure of damages. Defendant Bradley S. Jacobs
(hereinafter "Jacobs") counters that the simple calculation advanced by
Mathias drastically oversimplifies fact-specific issues in this case
which may ultimately reduce Mathias's claim to damages. According to
Jacobs, a fair and equitable resolution of these fact-intensive issues
requires a trial on damages. After reviewing the parties' memoranda and
their views as expressed at the October 26 status conference, the Court
is persuaded that substantial and material issues of fact may ultimately
affect the calculation of damages in this case and, therefore, that a
trial on damages will be necessary.
Jacobs asserts, inter alia, that three significant factual issues
require a trial on damages: (1) that Mathias has admitted under oath that
subsequent option contracts received in 1995 and 1997, as well as
"Friends of Family" stock in United Rentals, Inc., operate as credits
towards any obligation owed to him under the 1992 agreement; (2) that
this Court's prior Decision on the unenforceability of the noncontact
provision may require an apportionment or division of contract value for
the purpose of determining damages; and (3) that undisclosed accounting
fraud as of March 15, 1999, rendered the quoted market price of Waste
Management stock inherently unreliable.
Notwithstanding the fact-intensive nature of these damages and
valuation issues, Mathias contends that a trial is not necessary. Mathias
responds that (1) the 1995 and 1997 option contracts cannot operate as
credits because those contracts were granted to him in contemplation of
future services to be rendered; (2) irrespective of the unenforceability
of the non-contact provision, Mathias gave valuable consideration for
which he may be compensated; and (3) there is no evidence that the market
price for Waste Management stock was influenced by fraud, Mathias was not
responsible for any fraudulent activity, and because there was a large
and active market for Waste Management stock, Mathias could have
exercised his option at the quoted market price on March 15, 1999.
Rather than supporting his argument that these issues may be resolved
by this Court as matters of law without trial, Mathias's responses merely
underscore the highly fact-intensive nature of these inquiries and the
necessity of a trial on damages. On the issue of alleged credits which
may operate to reduce Mathias's recovery under the 1992 contract, Mathias
and Jacobs have marshaled credible evidence that the 1995 and 1997 option
contracts were viewed as both covering new services to be performed and
reducing Jacobs's past obligations, respectively. A fair resolution of
the issue will require examining the circumstances surrounding all three
option contracts, the intent of the parties and their outward
manifestations at the time of entering into the contracts.
The valuation issues raised by the unenforceability of the non-contact
provision and the fair market value of Waste Management stock similarly
entail fact-specific analyses. In short, the parties have raised
substantial and material issues of disputed fact which require a trial on
Three Crown Ltd. Partnership v. Salomon Brothers, Inc.,
906 F. Supp. 876, 882 n. 12 (S.D.N.Y. 1995) ("In their brief, the Salomon
Defendants raise questions regarding Plaintiffs' calculation of Category
A damages. These questions, however, raise genuine issues of material
fact which will have to be resolved at trial. The Salomon Defendants'
arguments concern the sort of uncertainty in the calculation of damages
towards which the language of Bigelow v. RKO Radio Pictures, 327 U.S. 251
(1946) was directed.").
The Court further observes that the nature and scope of the 1992, 1995
and 1997 option contracts were at the heart of discovery proceedings and
that the proper valuation of Waste Management stock was the subject of
Jacobs's expert discovery. Neither party, therefore, can claim prejudice
or surprise as a result of the emergence of these post-discovery damages
issues. Accordingly, to the extent that Jacobs seeks to amend his
pleadings to conform with the damages issues requiring trial, the motion
to amend the answer is granted. See Tokio Marine and Fire Ins. Co. Ltd.
v. Employers Ins. of Wausau, 786 F.2d 101, 103 (2d Cir. 1986) (where an
affirmative defense is "one of the objects of discovery and related
closely to the original claim," the trial court erred in denying
defendant's motion to amend the answer to assert those affirmative
defenses) (quotations and citations omitted).
For the foregoing reasons, it is hereby
ORDERED that the measure of damages in the present controversy shall be
determined by trial on the merits; and it is further
ORDERED that Jacobs's motion to amend the answer is granted; and it is
ORDERED that the parties appear before the Court for a pre-trial
conference on February 1, 2002 at 2:45 PM.
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