Grosvenor Properties Ltd. v. Southmark Corp.

896 F.2d 1149, 15 Fed. R. Serv. 3d 1507, 1990 U.S. App. LEXIS 1772
CourtCourt of Appeals for the Ninth Circuit
DecidedFebruary 8, 1990
DocketNos. 87-2829, 88-1631 and 87-2877
StatusPublished
Cited by28 cases

This text of 896 F.2d 1149 (Grosvenor Properties Ltd. v. Southmark Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Grosvenor Properties Ltd. v. Southmark Corp., 896 F.2d 1149, 15 Fed. R. Serv. 3d 1507, 1990 U.S. App. LEXIS 1772 (9th Cir. 1990).

Opinion

O’SCANNLAIN, Circuit Judge:

Southmark Corporation (Southmark) appeals the district court’s judgment against it following a jury trial in which Southmark was found to have fraudulently misappropriated the benefits of an agreement to form a joint venture between Southmark and Grosvenor Properties (Grosvenor). Grosvenor cross-appeals a directed verdict in favor of William Friedman, vice chairman of Southmark.

Grosvenor and Southmark entered into a joint venture agreement to purchase real estate in British Columbia. It was contemplated that Grosvenor would manage the hotels acquired pursuant to this agreement. A series of negotiations on various aspects of the deal was conducted in Vancouver on November 18 and 19, 1985. These negotiations involved representatives of South-mark, Grosvenor, the potential seller and several brokers. Werby, the president of Grosvenor, called from San Francisco to tell his representative to insist that the seller make certain concessions. If these concessions were not forthcoming, Werby directed his representative to abandon the deal. This same information was conveyed to one of the seller’s brokers in a phone call by Werby. Grosvenor suggests that despite these instructions, Werby had no intention of abandoning the deal, but was merely engaging in a negotiating ploy.

After Grosvenor’s ultimatum was rejected by the seller, Grosvenor’s representative wrote out and showed (but did not deliver) to Southmark's representative a letter stating that Southmark was free to negotiate a [1151]*1151deal for itself. Southmark’s representative then met with the seller’s representative, and discussed a possible deal excluding Grosvenor.

That afternoon, a four-way call occurred, involving Werby, Friedman, and their representatives in Vancouver. During this call, Werby stated that he did not wish to abandon the deal. Southmark subsequently sent a letter to Grosvenor which contained an offer to allow Grosvenor to participate in the acquisition if Grosvenor were willing to abandon its claims to manage the hotels. Grosvenor refused, and Southmark later completed the purchase of the real estate.

Suit was brought by Grosvenor alleging breach of contract, bad faith denial of contract and breach of fiduciary duty. Friedman was also named as a defendant. An eleven day jury trial followed. At the close of the presentation of evidence, the district court granted the motion by defendant Friedman for a directed verdict on the ground that an officer of a defendant corporation acting within the scope of his authority cannot be held liable for conspiring with the corporation to commit a breach of fiduciary duty of the corporation. The district court also directed a verdict for South-mark on the charge of bad faith denial of contract, holding that no such cause of action exists under Canadian law.

The jury found that the termination of the joint venture agreement was caused by the conduct of Grosvenor. Nevertheless, the jury found that Southmark breached its fiduciary duty to Grosvenor by fraudulently misappropriating the benefits of the joint venture agreement. The jury awarded compensatory damages of $4,566,250 to Grosvenor. The court awarded an additional $64,422.25, representing prejudgment interest.

The district court denied Southmark’s motions for judgment notwithstanding the verdict and for a new trial. Southmark appeals, arguing that the district court judge misinterpreted the relevant law, misinstructed the jury and that the jury’s verdicts were inconsistent in light of the governing law.

I

Grosvenor argues that Southmark has waived its objections to the instructions by failing to raise them prior to the withdrawal of the jury. We agree.

A

Federal Rule of Civil Procedure 49(b) governs inconsistencies in special verdicts; objections before the withdrawal of the jury are not required.1 See Pierce v. Southern Pac. Trans. Co., 823 F.2d 1366, 1370 (9th Cir.1987).2 We must reconcile the jury’s verdict responses by the use of any reasonable theory consistent with the evidence. Gallick v. Baltimore & Ohio R. Co., 372 U.S. 108, 119-22, 83 S.Ct. 659, 666-68, 9 L.Ed.2d 618 (1963). Grosvenor asserts that although the verdicts are inconsistent by reference to the correct interpretation of the governing law, the verdicts are consistent when viewed, as they must be, in light of the instructions given. See Toner v. Lederle Laboratories, 828 F.2d 510, 512 (9th Cir.1987), cert. denied, 485 U.S. 942, 108 S.Ct. 1122, 99 L.Ed.2d 282 (1988). We agree.

The district court did not instruct the jury that if it found that Grosvenor breached the joint venture agreement, it could not go on to find that Southmark violated its fiduciary duty to its partner. Rather, the court indicated that breach of the joint venture and breach of fiduciary duty were two alternative theories of liability.

The verdict form given to the jury specifically set forth these two theories as alternatives, asking:

1. Was the termination of the Agreement to Form A Joint Venture caused by [1152]*1152the conduct (as “conduct” is defined in the jury instructions) of:

_ or _

Plaintiffs Defendants

2. Did defendants breach a fiduciary duty to plaintiffs by fraudulently misappropriating the benefits of the Agreement To Form A Joint Venture?

Yes/No

The jury answered question 1 by entering an “X” above “Plaintiffs.” Question 2 was answered “Yes.” In addition, Judge Legge told the jury that “if you have found in favor of the plaintiffs on one of [the first two questions], then you go on to the next question [of proximate causation]” (emphasis added). These statements clearly imply that under the instructions given, the jury could find (as in fact it did) that Southmark breached a fiduciary duty to Grosvenor, even if the jury concluded that Grosvenor’s conduct terminated the joint venture agreement. The district court made it clear that this was its interpretation of the law, when, in rejecting Southmark’s motion for judgment notwithstanding the verdict, the court stated explicitly that these were “alternative theories of recovery which were not necessarily inconsistent.”3

In view of the instructions indicating that there were two alternative theories of liability from which the jury could choose, the verdicts were not inconsistent, rendering Rule 49 inapplicable. Southmark’s argument, that it did not waive its objection to the verdicts because Rule 49 does not require objection before the jury withdraws, is not applicable on the facts of this case.

B

Federal Rule of Civil Procedure 51 states that no party may assign as error the giving or failure to give an instruction unless that party specifically objects to that instruction before the jury retires. See Fed.R.Civ.P.

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Bluebook (online)
896 F.2d 1149, 15 Fed. R. Serv. 3d 1507, 1990 U.S. App. LEXIS 1772, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grosvenor-properties-ltd-v-southmark-corp-ca9-1990.