RULING ON POST-TRIAL MOTIONS
The plaintiffs, Charts Insurance Associates, Inc. (“CIAI”) and Alex Charts (collectively “Charts”), brought this three-count action against Nationwide,
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alleging violations of the Connecticut Franchise Act (“the Franchise Act”), Conn. Gen.Stat. § 42-133e
et seq.,
the Connecticut Unfair
The procedural background of this case has been recounted in prior rulings.
See Alex Charts and Charts Ins. Assoc., Inc. v. Nationwide Mutual Ins. Co.,
On November 29, 2004, the case proceeded to trial. At the conclusion of Charts’ case-in-chief, Nationwide made an oral motion for judgment as a matter of law pursuant to Rule 50. The Court denied that motion without prejudice to Nationwide renewing it at the conclusion of all the evidence. Nationwide made a second motion for judgment as a matter of law at the conclusion of all the evidence. The Court reserved judgment until after the jury had reached its verdict. On De
On January 12, 2005, Charts filed a motion for attorney’s fees and a motion for prejudgment interest. Those motions also have been fully bbiefed by the parties. The Court heard arguments on all post-trial motions on July 20, 2005. 4
NATIONWIDE’S MOTION FOR JUDGMENT AS A MATTER OF LAW, OR, IN THE ALTERNATIVE, FOR A NEW TRIAL
Nationwide’s post-verdict motion seeks judgment as a matter of law as to all counts pursuant to Rule 50, or, in the alternative, a new trial on all counts and/or damages pursuant to Rule 59. The Court turns to the motion for judgment as a matter of law first.
I Motion for Judgment as a Matter of Law
A) Standard of Review
“If, for any reason, the court does not grant a motion for judgment as a matter of law made at the close of all the evidence, the court is considered to have submitted the action to the jury subject to the court’s later deciding the legal questions raised by the motion. The movant may renew its request for judgment as a matter of law by filing a motion no later than 10 days after entry of judgment....” Fed.R.Civ.P. 50(b). When ruling on such a post-verdict motion for judgment as a matter of law, a district court may allow the judgment to stand, order a new trial or direct entry of judgment as a matter of law. Id.
A Court may properly grant a post-verdict Rule 50 motion when “there can be but one conclusion as to the verdict that reasonable men could have reached.”
Merrill Lynch Interfunding, Inc. v. Argenti,
In considering the forgoing principles of law, it has been noted that the moving party bears a “heavy burden” on a post-verdict Rule 50 motion.
Concerned Area Residents for the Env’t v. Southview Farm,
Nationwide’s renewed motion for judgment as a matter of law challenges the jury’s verdict on each count separately. Each argument will be addressed in turn. 5
B) Connecticut Franchise Act
The jury found that Nationwide violated the Franchise Act when it terminated its contracts with Charts and CIAI, and Nationwide now challenges this finding on several grounds.
i) Jury Issue
Nationwide first claims that the Franchise Act claim should not have gone to the jury. The Court rejects this argument for several reasons. First, and most important, it was not raised in the pre-verdict Rule 50 motion.
See Rand-Whitney Containerboard Ltd. Partnership,
Prior decisions from the Connecticut Supreme Court and the United States Court of Appeals for the Second Circuit buttress this conclusion. In
Associated Investment Co. Ltd. Partnership v. Williams Associates IV,
The Second Circuit recently addressed a similar issue, which was also an issue of first impression in this circuit, namely “whether, where one party requests a jury trial on the lost wages issue [under Title VII] and the party’s opponents fail to object, the court is permitted, because the opponents may be deemed to have consented, to submit the issue for a non-advisory jury determination.”
Broadnax,
Although the Court believes that Nationwide has waived its objection to the submission of the Franchise Act claim to the jury, it nevertheless bears noting that there is no decision from the Connecticut appellate courts addressing the question of whether a Franchise Act claim may be submitted to a jury, or holding that a Franchise Act claim was improperly submitted to a jury. There are, however, conflicting trial court decisions on this issue. One judge on the Connecticut Superior Court has found that a plaintiff does not have a right to a jury trial on a Franchise Act claim.
Hartford Electric Supply Co. v. Allen-Bradley Co., Inc., 28
Conn. L. Rptr. 447,
In any event, because Nationwide failed to timely raise this issue at any time during this litigation, much less in its pre-verdict Rule 50 motion, it is not a proper ground for a post-verdict Rule 50 motion for judgment as a matter of law.
ii) The Connecticut Insurance Code
Nationwide next argues that because insurance companies and their agents are subject to extensive regulation by the Connecticut Insurance Code, § 38a-702 et seq., the Connecticut legislature could not have intended for insurance agents to also be protected by the Franchise Act. More specifically, Nationwide argues that because the legislature has failed to enact a “good cause” termination requirement within the Insurance Code, the legislature could not have intended for the “good cause” requirement set forth in the Franchise Act to apply to insurance agents. See Conn. GemStat. § 42-133f(a). This argument was initially raised in Nationwide’s Motion to Dismiss. See “Reply to Plaintiffs Objection to Defendant’s Motion to Dismiss” [doc. # 15] at 2-4. The Court rejected that argument in its Ruling on the Motion to Dismiss [doc. # 6]. Counsel also briefly raised this issue in its initial Rule 50 argument.
The Court reaffirms its decision denying the Motion to Dismiss, and no evidence was presented at trial which alters the Court’s conclusion that the Connecticut legislature did not intend to preclude insurance agents from invoking the protections of the Connecticut Franchise Act. The decisions from other jurisdictions cited by Nationwide to support its view that the Connecticut legislature intended its
iii) Evidentiary Support
The Court instructed the jury that a “franchise” relationship exists only when both of two requirements are met:
(1) There must be an oral or written agreement or arrangement in which a franchisee is granted the right to engage in the business' of offering, selling, or distributing services under a marketing plan or system prescribed in substantial part by a franchisor; and
(2) The operation of the franchisee’s business pursuant to this marketing plan or system must be substantially associated with the franchisor’s trademark, service mark, tradename, logotype, advertising, or other commercial symbpl designating the franchisor or its affiliate.
Nationwide claims that there was insufficient evidence before the jury to find in favor of Charts on the first element, and, therefore, it is entitled to judgment as a matter of law on the Franchise Act count (Nationwide does not challenge the jury’s finding as to the second element).
As to the first element, the Court further instructed the jury as follows: “The first element has a two step inquiry. First, Charts must prove by a preponderance of the evidence that there was an oral or written agreement or arrangement in which it was granted the right to engage in the business of offering, selling, or distributing insurance policies offered by Nationwide.” It is undisputed that Nationwide had entered into contracts with both Alex Charts and CIAI. Moreover, according to the parties’ stipulation of facts, “Alex Charts was the President of Charts Insurance Associates, Inc. (‘CIAI’), which was a Connecticut corporation
engaged in the business of selling and servicing
Nationwide insurance policies and other related products.within the State of Connecticut.” This stipulation was read to the jury and was also supported by other evidence at trial, including testimony from Ruben Gainey, Nationwide’s Vice President and Regional Manager for New England, that an agent was in the business of selling and servicing Nationwide polices. (Trans.12/1/04, pg.109).
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Therefore, this admission and the consistent evidence gave the jury sufficient evidentiary support for its finding that Nationwide had granted Charts and CIAI “the right to engage in the business of offering, selling, or distrib
As to the second step of the first element, namely whether Charts offered, sold or distributed Nationwide policies pursuant to a marketing plan or system which was prescribed in substantial part by Nationwide, the Court instructed the jury as follows:
This requirement focuses on the amount of control exercised in the conduct of Charts’ business as a significant factor in determining whether a franchise was created. You should consider several factors to determine whether the control, if any, exercised by Nationwide over Charts rose to the level of a prescribed marketing plan or system. You should consider whether it was Nationwide or Charts that had the power to set the retail prices charged to Charts’ customers. Price is perhaps the most fundamental aspect of a marketing plan, and the ability to set prices is quite indicative of a franchisor’s control. However, fixing prices alone may not be determinative of a franchisor’s control. You also should consider, for example, whether Nationwide had the power to control other aspects of operation of Charts’ insurance agency, including its hours of operation, its days of operation, its advertising, its lighting, its sales quotas and its hiring. In addition, you should consider whether Nationwide provided Charts with such things as financial support and management training.
There is no precise formula as to how many of these factors must be present to find the level of control indicative of a franchise, or as to the weight each factor should be given in each case. Instead, you should consider these factors and give each the weight you believe it deserves, considering the significance of each factor to the business relationship betiveen Nationwide and Charts. (Emphasis added).
As evidenced by that charge, the second step of the first factor is a balancing test, and the jury had considerable discretion to consider evidence concerning the business relationship between the parties. After reviewing the transcripts and the parties’ memoranda of law, the Court is unable to find that, when exercising this discretion, the jury employed “sheer surmise and conjecture.”
Hernandez,
iii) “Good Cause” Shown
Finally, Nationwide argues that, even if Charts was a franchise, it had “good cause” to terminate that franchise. See Conn. Gen.Stat. 42-133f(a). Specifically, Nationwide contends that Charts violated the Connecticut Insurance Code by paying for the policies of at least two individuals, and, therefore, they had “good cause” to terminate him. As Charts notes in response, however, at no time during the trial did Nationwide introduce the appropriate provisions of the Insurance Code into evidence, or elicit testimony from any witness stating that the reasons underlying the termination of the franchise were violations of state law. Indeed, in the opening statement made by Nationwide’s counsel, the jury was told that Nationwide “investigated the allegations that the Charts had engaged in [rebating]” and “conclud[ed] that he had violated company policy and practice. ” In conformance with this opening statement, Nationwide failed to present any evidence to the jury that Charts had violated the provisions of the Insurance Code, and that this was the reason for his termination. It was not until after the evidence was concluded and when Nationwide filed a proposed supplemental jury instruction on the Insurance Code and rebating that this issue was raised before the Court. For that reason, the Court denied the supplemental request, and the provisions of the Insurance Code were never presented to the jury.
Moreover, the jury could have found that the evidence submitted by Nationwide on this ground was not persuasive. Nationwide’s argument essentially is that because Alex Charts paid the premiums on policies for the policy holder, he engaged in illegal “rebating,” and, therefore, it had “good cause” to terminate his franchise. There appear to be three incidents in which Alex Charts initially paid the premiums for the policy holder. In the first incident, Charts paid the $54 premium for the first year of a policy issued to Anne Elizabeth Turoczi, the niece of Missy Brayton, a woman who worked for CIAI. Although Brayton testified at trial that Charts had paid the premium on her niece’s policy, she admitted on cross-examination that .she was unaware that her niece’s parents had reimbursed Charts the full premium amount a short time thereafter, and a copy of the Turoczis’ check to
In the second incident, it appears that Charts paid some premiums on a $1,000,000 life insurance policy issued to Mario Boccarossa, his Nationwide Agency Manager at the time. At trial, Alex Charts testified that: “[W]hen [Boccaros-sa] came to me, I reminded him that I didn’t want to get involved in paying any premiums. Okay. He was responsible for all the premiums. Okay. Like even when we started the policy, and he assured me that would be the case.” (Trans.12/01/04, pg.61). Charts further testified that, although Boccarossa had paid some of the premiums a “few months” later, he was then replaced by Kapatoes as Agency Manager. Boccarossa asked Charts to pay some of the outstanding premiums, in the amount of $6,000, and “he would make it up as soon as he could.” (Id). Although Boccarossa failed to pay that money back, Charts testified that he did not sue for the money because he didn’t think he was at the “stage” to sue “his manager,” and, moreover, “[it] wasn’t enough money for me to bother pay[ing] a lawyer and going after.” (Id. at 62).
In the third incident, Charts paid the first year premiums for two policies issued for the twin sons of Linda Mello, soon after Mello’s husband had died. Mello was a secretary in Nationwide’s district office, and she worked for both Kapatoes and Boccarossa when those individuals served as the Agency Manager for the Charts franchise. The total amount advanced by Charts’ for those policies totaled $250. Although Mello never repaid that amount, she has kept those policies active and has paid all of the remaining premiums herself. Charts testified that he expected to receive the advanced premium back from Mello, but that he did not “see any reason to chase her for it” and that he considered it a “charitable gift.” (Trans.12/1/04, pg.45-46).
Nationwide may be correct in arguing that the evidence concerning these three incidents could provide the jury with enough evidentiary support for a finding that Nationwide had “good cause” terminate the franchise. However, the jury also had enough evidentiary support to find that there was not “good cause” for termination. For example, the termination letter sent by Nationwide to Charts, which was entered into evidence, fails to mention the “rebating” incidents as a ground for the termination. (Plaintiffs Ex. 49). In addition, other Nationwide employees testified that they had engaged in similar actions when selling Nationwide policies. Because a court “cannot assess the weight of conflicting evidence” at this stage of the litigation,
Samuels,
In sum, Nationwide’s post-verdict Rule 50 motion for judgment as a matter of law on the Franchise Act count is denied.
C) Connecticut Unfair Trade Practices Act
Nationwide challenges the jury’s finding on the CUTPA count on several grounds.
i) Applicability of CUTPA
CUTPA provides that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Conn. Gen.Stat. § 42-110b(a). Nationwide first argues that it is entitled to judgment as a matter of law on the CUTPA count because the acts complained of by Charts did not occur “in the conduct of any trade
CUTPA defines trade and commerce as “the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state.” Conn. GemStat. § 42-110a(4). Again, one of the facts stipulated to by the parties was that “Alex Charts was the President of Charts Insurance Associates, Inc. (‘CIAI’),
which ivas a Connecticut corporation
engaged in the business of
selling
and
servicing
Nationwide insurance policies and other related products within the State of Connecticut.” (emphasis added). This stipulation demonstrates that the plaintiffs are a Connecticut corporation and its president, not employees of Nationwide or similar to employees of Nationwide. Indeed, the jury specifically found that they were not employees when it found that the plaintiffs were Nationwide franchisees. Therefore, there was sufficient evidence from which the jury could have found that the acts complained of occurred in the conduct of trade or commerce. In so finding, the Court notes that the Connecticut state courts read CUTPA broadly, and the Connecticut Supreme Court has rejected the argument that CUTPA claims may only be brought by a consumer, and not a business.
See, e.g., Larsen,
ii) Evidentiary Support
Nationwide’s next argument can be summarized as follows: (1) for the reasons set forth in its memorandum, it is entitled to judgment as a matter of law on both the Franchise Act count and the good faith and fair dealing count; (2) the CUTPA count is derivative of those two other counts; and, therefore (3) it is also entitled to judgment as a matter of law on the CUTPA count, as there is no other, independent basis for the jury’s verdict. This argument is flawed, however, because the Court has found that Nationwide is not entitled to judgment as a matter of law on the Franchise Act claim. The jury was instructed that in order for it to find that Nationwide engaged in unfair or deceptive trade practices, it may find that “[t]he practices proved by Charts, without necessarily having been previously considered unlawful,
offend public policy as it has been established by statutes,
the common law, or otherwise — in other words, it is within at least the penumbra of some common law,
statutory,
or other established concept of unfairness.” (emphasis added).
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In sum, Nationwide’s motion for judgment as a matter of law on the CUTPA count is denied.
D) Good Faith and Fair Dealing
The jury found that Nationwide had violated the covenant of good faith and fair dealing implied into the parties’ contracts. As with the previous counts, Nationwide advances several grounds upon which it claims it is entitled to judgment as a matter of law on this count. Each will be addressed in turn.
i) Good Cause for Termination
Nationwide first argues that the evidence adduced at trial conclusively demonstrates that it terminated its relationship with Charts for good cause, and, therefore, it is entitled to judgment as a matter of law. More specifically, Nationwide argues that, because it had good cause to terminate the franchise relationship under the Franchise Act, it also had good cause to terminate the parties’ relationship for purposes of the implied covenant of good faith and fair dealing. The Court has rejected, however, Nationwide’s argument that it is entitled to judgment as a matter of law on the issue of “good cause” under the Franchise Act. Consequently, its related argument concerning “good cause” under the implied covenant of good faith and fair dealing must also be rejected.
ii) No Good Cause Requirement
Nationwide next argues that it did not need to demonstrate good cause to terminate its contracts with Charts and CIAI, as both contracts provided that they were terminable “at any time after written
In Connecticut the implied covenant of good faith and fair dealing cannot be used “to achieve a result contrary to the clearly expressed terms of a contract, unless, possibly, those terms are contrary to public policy.”
Verrastro v. Middlesex Ins. Co.,
Charts presented the following evidence in support of the argument that, despite the plain language of the agreements, there was an implied promise that the agency would not be terminated without good cause: Gainey, who worked for Nationwide for over thirty-five years, testified; “I do not recall any agent being terminated without cause.” (Trans.11/19/04, pg.100). Helena Charts testified that, in her experience, the types of things that lead to agents being terminated were taking clients’ money or stealing. (Trans.11/30/04, pg.134).
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Finally, Charts entered Nationwide’s Agency Administration Handbook (the “Handbook”) into evidence, which provides that company-initiated termination of an agency would be “primarily limited” to circumstances involving, .
inter alia,
“criminal acts,” “dishonesty or fraud” and “breach of contract,” and that termination on non-enumerated grounds would be “rare.” (Plaintiffs’ Ex. 83, pg. 21). This Handbook also sets forth the procedure for the Agency Review Board, which was an internal Nationwide procedure for agents to appeal “problems which have not been solved to the agent’s satisfaction.” (Id. at 154).
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None of this evidence, however, altered or amended the plain language of the parties’ agency agreements, which provide that they are terminable “at any time- after written notice.”' The testimony of Gainey and Helena Charts was based on their general experience, and failed to address the specific agreements between the Charts and Nationwide. Although the Handbook does seem to imply that a heightened standard will apply to possible agency terminations, it also states in bold type on the cover page that: “The contents of the Handbook are presented as a matter of information only. The only contractual matters are those expressed in your Agent’s Agreement and specifically incorporated by reference made within that contract.” (Id. at cover). It also provides that “[the] language used in this handbook is not intended to create nor it is
The Court finds that this evidence is insufficient to alter or amend the plain language of the parties’ agreements. Consequently, Nationwide is entitled to judgment as a matter of law on this count.
E) Conclusion
Nationwide’s motion for judgment as a matter of law [Doc. # 254] is GRANTED as to the implied covenant of good faith and fair dealing count, and DENIED as to the Franchise Act count and the CUTPA count.
II Motion for a New Trial
Nationwide next argues that it is entitled to a new trial pursuant to Rule 59.
A) Standard of Review
Fed.R.Civ.P. 59 provides, in relevant part, that: “A new trial may be granted to all or any of the parties and on all or part of the issues ... in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.... ” Thus, a motion for a new trial may be based on,
inter alia,
an argument that “the trial was not fair to the party moving,” or on “questions of law arising out of alleged substantial errors in admission or rejection of evidence or instructions to the jury.”
Montgomery Ward & Co. v. Duncan,
“A motion for a new trial should be granted when, in the opinion of the district court, ‘the jury has reached a seriously erroneous result or ... the verdict is a miscarriage of justice.’ ”
Song v. Ives Labs., Inc.,
Nationwide sets forth several arguments in support of its request for a new trial, each of which will be addressed in turn.
B) Failure to Preclude Expert Testimony
Nationwide first argues that the Court erred in permitting Charts’ damages expert to testify as to the damages allegedly sustained by Charts. This argument, which was set forth in a footnote to its memorandum in support of its motion, merely cites to objections it raised previ
C) Insufficiency of the Evidence Concerning Damages
Nationwide next argues that Kosowsky’s testimony was insufficient to establish Charts’ damages to a reasonable degree of certainty, and, therefore, it is entitled to a new trial on damages at the least.
See Expressway Associates II v. Friendly Ice Cream Corp. of Connecticut,
D) Insufficiency of Jury Instructions
Nationwide next argues that the Court’s final instruction to the jury was insufficient because it: (1) failed to instruct the jury that Charts’ admitted payment of the premiums for insurance policies for unrelated persons constituted “good cause” for termination; (2) failed to instruct the jury as to “the proper standard for finding the existence of a franchise” under the Franchise Act; and (3) failed to instruct the jury as to the “proper standard for ‘good cause’” under the Franchise Act. These claims are all without merit. Nationwide was accorded ample time to review the Court’s proposed jury instructions and was allowed to make objections to such instructions at the charging conference. See Fed. R.Civ.P. 51(b)(2). To the extent that Nationwide already raised some of these objections at the charging conference, the Court considered them before issuing the final jury instruction and believes that they were properly decided at that time. As to the new objections to the jury instruction raised in Nationwide’s Rule 59 motion, the Court believes that it fairly and accurately charged the jury on the appropriate law in this case and, therefore, finds the new objections to be without merit. Accordingly, Nationwide is not entitled to a new trial on the ground of improper jury instruction.
E) Inconsistent Verdicts
Finally, Nationwide argues that it is entitled to a new trial because the jury’s verdict was inconsistent in that it found: (1) that Nationwide had acted in bad faith when it violated the implied covenant of good faith and fair dealing; yet also found (2) that Nationwide should not be held liable for punitive damages under CUTPA. Once again, any substantive merit to Nationwide’s argument is precluded from consideration by the Court due to Nationwide’s failure to raise a proper objection at an earlier stage of the litigation. Although not phrased as an attack on the sufficiency of the Court’s instructions and verdict form, it is properly construed as such because both the instructions and the verdict form allowed the jury to find as it did. The Second Circuit recently construed a similar argument as an attack on the sufficiency of the instructions and verdict form:
Although defendants frame their challenge to the verdict as a challenge to the sufficiency of the evidence, any problem with the verdict is a result of the charge and verdict sheet, which allowed the jury to find in favor of defendants on all of the common law claims, but also in favor of plaintiffs on the CUTPA claim.
Fabri v. United Technologies Intl., Inc.,
Even if this argument were properly before the Court, however, it would be rejected. The Court instructed the jury that, in order to award punitive damages, it must find that “Nationwide acted with reckless indifference to the rights of others or an intentional and wanton violation of those rights.” As to “bad faith,” however, the Court instructed the jury that: “Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive. Bad faith means more than mere negligence; it involves a dishonest purpose.” The Court does not interpret these standards as being harmonious, and believes that a jury could properly find that Nationwide’s actions met the standard for “bad faith,” yet did not meet the standard for punitive damages.
Moreover, as Charts notes in its opposition memorandum, the Court instructed the jury that if it found in favor of Charts on any of the claims, it
“may
also make a separate and additional award of punitive damages.” (emphasis added). Consequently, even if Nationwide is correct that the standard for a finding of “bad faith” under the implied covenant of good faith and fair dealing and the standards for awarding punitive damages under both CUTPA and the common law are substantially similar, the jury’s discretion to award punitive damages renders its inconsistency challenge meritless.
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See Wright v. Hoover,
Consequently, to the extent the motion for a new trial claims that the jury’s verdict was inconsistent, it is denied.
F) Remittitur
Rule 59(e) also provides that a party may move “to alter or amend a judgment____” Therefore, “[wjhen a defendant’s Rule 59 motion contests the size of a damage award, a court must decide whether or not the verdict is excessive ... If a district court finds that a verdict is excessive ... under the practice of remittitur [it] may condition a denial of a motion for a new trial on the plaintiffs accepting damages in a reduced amount ... It may not, however, reduce the damages without offering the prevailing party the option of a new trial.”
Id.
(quotations and citations omitted). “A jury verdict is excessive if it
Although Nationwide briefly requested that this Court order a remittitur in its original Rule 59 motion, it has failed to address this issue in its subsequently filed memoranda of law. Rather, it has only challenged the damages award on the ground that Kosowsky’s testimony failed to prove Charts’ damages with reasonable certainty. Nationwide has not explained why, in the event that the Court finds that damages were proved with reasonable certainty, that the amount awarded was excessive. Consequently, Nationwide’s request for remittitur is denied.
See Broadnax v. City of New Haven,
Even if it were properly briefed and presented, however, the Court finds that the amount awarded by the jury had a proper factual basis and was not excessive as a matter of law. “It is well settled that calculation of damages is the province of the jury.”
Lee,
Nationwide’s motion for judgment as a matter of law or, in the alternative, motion for a new trial [Doc. # 254] is DENIED in part and GRANTED in part.
CHARTS’ MOTION FOR ATTORNEY’S FEES
Charts has moved for attorney’s fees based on the provisions for such fees set forth in the Franchise Act and CUT-PA. More specifically, Charts seeks attorney’s fees in the amount of $1,283,013.55 for work performed through December 31, 2004 and in the amount of $98,204 for subsequent work performed on the post-trial motions. Finally, Charts requests that the Court increase the award by doubling it due the nature and complexity of this case. In response, Nationwide contends that Charts’ attorneys should be limited to the amount of attorney’s fees established by the contingency fee agreement they entered into with Charts, and that no additional fees are warranted. In the event that the Court decides that Charts is not limited to the contingency fee amount, Nationwide argues that the fees submitted by Charts’ attorneys are excessive.
1) Statutory Fee Provisions
Connecticut follows the American Rule for attorney’s fees, awarding fees only where explicitly permitted by the terms of a contract or a statute.
See, e.g., Doe v. State,
2) The Franchise Act
A
franchisee bringing an action under the Franchise Act, “if successful, shall be entitled to costs, including, but not limited to, reasonable attorneys’ fees.” Nationwide concedes that, if its post-trial Rule 50 motion is denied, Charts is entitled to attorney’s fees under the Franchise Act.
See, e.g., Virzi Subaru, Inc. v. Subaru of New England, Inc.,
In
Sorrentino v. All Seasons Services, Inc.,
[W]hen a contingency fee agreement exists, a two step analysis is required to determine whether a trial court permissibly may depart from it in awarding a reasonable fee pursuant to statute or contract. The trial court first must analyze the terms of the agreement itself ... If the agreement is, by its terms, reasonable, the trial court may depart from its terms only when necessary to prevent “substantial unfairness” to the pai’ty, typically a defendant, who bears the ultimate responsibility for payment of the fee ... By contrast, if the trial court concludes that the agreement is, by its terms, unreasonable, it may exercise its discretion and award a reasonable fee in accordance with the factors enumerated in rule 1.5(a) of the Rules of Professional Conduct.
Id.
at 270-72,
Therefore, pursuant to the teachings of
Schoonmaker
and
Sorrentino,
Nationwide argues that an award of attorney’s fees to Charts under the Franchise Act is capped by the amount established by the contingency fee agreement. This argument was rejected previously by a judge in this District, however, in
Fabri v. United Techs, International, Inc.,
Accordingly, the bottom range of the award the Court “shall” make to Charts pursuant to the Franchise Act is the amount established by the contingency fee agreement Alex Charts entered into with his attorneys, which provides that his attorney’s fee “will be one quarter (25%) of any recovery obtained in the case, after deduction of expenses, either by way of settlement, trial or appeal.” At a minimum, this provisions requires an award of $575,000 ($2,300,000 x .25) pursuant to the
As recounted in the introductory portion of this ruling, this case has a long and protracted history. Charts successfully challenged an adverse summary judgment ruling before the Second Circuit, obtained a favorable ruling on a second motion for summary judgment in this Court and obtained a favorable jury verdict at a trial conducted eight years after the case was initially filed. Given these factors, the Court finds that Charts is entitled to an attorney’s fee award that is greater than the one provided for by the contingency fee agreement. In determining what amount is warranted, the Court has considered the twelve factors generally relevant to an award of reasonable attorney’s fees that were first set forth in
Johnson v. Georgia Highway Express, Inc.,
(1) the time and labor required;
(2) the novelty and difficulty of the questions;
(3) the skill requisite to perform the legal service properly;
(4) the preclusion of other employment by the attorney due to acceptance of the case;
(5)the customary fee for similar work in the community;
(6) whether the fee is fixed or contingent;
(7) time limitations imposed by the client or the circumstances;
(8) the. amount involved and the results obtained;
(9) the experience, reputation and ability of the attorneys;
(10) the “undesirability” of the case;
(11) the nature and length of the professional relationship with the client; and
(12) awards in similar cases.
See Hernandez v. Monterey Village Associates Ltd. Partnership,
As the Court noted in
Fabri,
“[a] fee award is an obligation of a defendant to a plaintiff. A contingent fee agreement is an agreement between a plaintiff and his or her counsel, an agreement to which a defendant is not a party, and which should not be permitted to alter the purpose of the statutory award.” The Franchise Act is a remedial statute, and courts read it accordingly.
See, e.g., Hartford Electric Supply Co.,
2) CUTPA
Charts also has moved for attorney’s fees under CUTPA, which provides: “In any action brought by a person under this section, the court may award, to the plaintiff, in addition to the relief provided in this section, costs and reasonable attorneys’ fees based on the work reasonably performed by an attorney and not on the amount of recovery.” Conn. Gen.Stat. § 42-110g(d). As both parties recognize, an award of attorney’s fees under CUTPA is discretionary.
See, e.g.,; Riggio v. Orkin Exterminating Co., Inc., 58
Conn.App. 309, 317,
CUTPA explicitly provides that an award of attorney’s fees must not be based on “the amount of recovery.” § 42-110g(d). Thus, a contingency fee agreement does not limit the amount a court may award to a successful CUTPA plaintiff.
See, e.g., Fabri,
In the section of this ruling addressing attorney’s fees under the Franchise Act, the Court determined that an award of $750,000 accurately reflects the reasonable hours worked by Charts’ attorney, and is based on a reasonable billing rate that is adjusted for present value, as well as affected by the other factors. Such an award limits billings submitted for duplica-tive, excessive or unrelated work, while at the same time recognizes that the complex and novel legal issues presénted by this case required a significant amount of effort and billings. In sum, the Court finds that an award of $750,000 provides compensation for work “reasonably performed by [Charts’] attorney[s]” on this case.
C)Multiplier
Charts’ counsel also requests that the award of attorney’s fees be adjusted upwards by a multiplier of 2.0 due to the “extreme risk” they undertook in this case, the “superior” representation they provided and the “exceptional” results they achieved through the “unprecedented” jury verdict.
See Hensley,
D) Conclusion on Attorney’s Fees
In sum, whether made pursuant to the provision in the Franchise Act for attorney’s fees, to the provision in CUTPA for attorney’s fees or pursuant to both provisions, the Court finds that an award of $750,00Ú in attorney’s fees to Charts is reasonable and appropriate.
E) Costs
Charts also has requested $30,341.41 in expenses incurred in the prosecution of this action, covering expenses such as copying costs, messenger fees and expert witness fees. Nationwide objects, to the amount of expenses claimed by Charts, maintaining that there is" no statutory basis for particular expenses submitted by Charts. As the Connecticut Supreme Court has explained: “It is a
Both the Franchise Act and CUTPA allow the Court to award Charts “costs,” with the only difference being that the Court “shall” make such an award under the Franchise Act, and “may” make such an award under CUTPA. Of the $30,341.41 requested, $26,618.63 related to expenses incurred for items such as messenger services, copies, travel and court reporter services. Reviewing those expenses, the Court finds that they should be reduced by one third to eliminate duplicative, unrelated or unnecessary expenses.
22
Therefore, the Court awards Charts $17,745.75 in costs pursuant to the Franchise Act and CUTPA.
See Gerner v. Applied Industrial Materials Corp.,
The Court will not award Charts the requested $1,579.78 fee for Kitty Koenig, a “trial analyst” employed by the law firm representing Charts. The remaining portion of the requested amount, $2,143, was a fee paid to Kosowsky for his expert witness testimony. There is some dispute about whether fees paid to an expert accountant are recoverable under statutes such as the Franchise Act and CUTPA, as both of those statutes fail to define what “costs” are recoverable. More specifically, there is a dispute over whether any expert fee may be awarded under such statutes, or only fees paid to an expert listed in Connecticut’s general fee provision statutes, Conn. Gen.Stat. §§ 52-257 and 52-260.
23
The Connecticut Appel
In sum, the Court awards Charts $750,000 in attorney’s fees and $17,745.75 in costs.
CHARTS’ MOTION FOR PREJUDGMENT INTEREST
Charts also has moved for prejudgment interest on the jury’s award of $2.3 million in damages. It is well settled that “[w]hen the court’s jurisdiction is based upon diversity, an award of prejudgment interest is governed by state law.”
Brandewiede v. Emery Worldwide,
CONCLUSION
1) Nationwide’s motion for judgment as a matter of law or, in the alternative, motion for a new trial [Doc. # 254] is DENIED in part and GRANTED in part.
2) Charts’ motion for attorney’s fees [Doc. # 262] is GRANTED, and Charts is awarded $750,000 in attorney’s fees and $17,745.75 in costs.
3) Charts’ motion for prejudgment interest [Doc. # 260] is DENIED.
SO ORDERED.
Notes
. The defendants are Nationwide Mutual Insurance Company, Nationwide Mutual Fire Insurance Company, Nationwide Life Insurance Company, Nationwide Property and Casualty Insurance Company, Nationwide Variable Life Insurance Company, and Colonial Insurance Company of California. They will be referred to collectively as "Nationwide.”
. “On December 14, 1992, Alex Charts and his wife Helena filed their voluntary petition under Chapter 7 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Connecticut. On February 13, 1996, the. Bankruptcy Court issued an Order of Discharge of Debtor, and the bankruptcy case was closed on March 1, 1996.”
Charts v. Nationwide Mut. Ins. Co.,
. Judge Garfinkel also recommended that the action be dismissed on the basis of judicial estoppel, but that ground was not adopted by the District Court.
. Nationwide filed its post-verdict motion for a judgment as a matter of law or, in the alternative, for a new trial, within the ten-day limitation set forth in Fed.R.Civ.P. 50(b). At that time, however, the transcript of this trial had not been completed. Consequently, the Court allowed the parties additional time beyond the date when the transcript was completed to file their memoranda.
. Nationwide does make one argument directed at all three counts, however: renewing the argument that it presented in its summary judgment papers, Nationwide's post-verdict Rule 50 motion argues that it is entitled to judgment as a matter of law on all three counts on the ground that Charts lacked standing because the claims were part of the bankruptcy estate. The Court rejected that argument when ruling on Nationwide’s second motion for summary judgment. The Court need not revisit that decision at this time, however, because Nationwide failed to make this argument in its original pre-verdict Rule 50 motion for judgment as a matter of law. As the Second Circuit recently has noted, a party may only “renew” an earlier "request for judgment as a matter of law” in a post-verdict Rule 50 motion.
Broadnax v. City of New Haven,
The Second Circuit has indicated, however, "a [post-verdict] Rule 50(b) motion should not be granted [on a ground not raised previously] unless it is required to prevent manifest injustice.”
Broadnax,
. Because the jury demand did not specify which counts should be submitted to the jury,
. Nationwide also requests that the Court certify this question to the .Connecticut Supreme Court. This request is also rejected as untimely, as this is the first time that Nationwide has made such a request.
. In addition, the Court notes that the pretrial order indicated that this case would be a jury trial, and that the jury would be comprised of nine jurors. At no time did Nationwide object to the pretrial order, or otherwise seek clarification that the Franchise Act claim would not be submitted to the jury.
See
Fed. R.Civ.P. 16(e) ("[a pretrial order] shall control the subsequent course of the action unless modified by a subsequent order”);
Cross & Cross Properties, Ltd. v. Everett Allied Co.,
. The Connecticut legislature subsequently amended CUTPA to provide a right to jury trial in such actions.
See
Conn. Gen.Stat. § 42-1 lOg ("In any action brought by a person under this section there shall be a right to a jury trial....”);
Lorenzetti v. Jolles,
. Gainey was initially unavailable to testify at trial, and, therefore, his deposition transcript was read into evidence, absent objection. At that time, the Court instructed the jury as follows: "Ladies and Gentlemen of the jury, you will now be read a transcript of testimony given previously by a witness in this case who is now unavailable to testify in person at this trial. You are not to speculate as to why this witness is unavailable and you are to regard this testimony in the same way as if it were given at trial in person before you.” Gainey testified by deposition during the Plaintiffs' case, and personally appeared to testify during the Defendants' case. (Trans. 11/29/04, pg.62).
. Kapatoes was unavailable to testify at trial, and, therefore, his deposition transcript was read into evidence, absent objection.
. Further, the Court instructed the jury that it could find that Nationwide engaged in unfair or deceptive trade practices if "the practices proved by Charts are immoral, unethical, or unscrupulous” and "the practices proved by Charts cause unjustified, substantial injury to consumers, competitors, or other businessmen." The Court also instructed the jury that "a practice can be unfair under CUTPA because of the degree to which it meets one of the criteria or because, .to a lesser degree, it meets all three.”
. Because the Court has found that the Franchise Act violation provides a sufficient evidentiary basis for the jury finding in regard to CUTPA, it need not reach the question of whether the jury's finding in regard to the implied covenant of good faith and fair dealing also could support a finding that Nationwide violated CUTPA.
Alex Charts also alleged in his complaint that Nationwide discriminated against him on the basis of age and disability when it terminated his agency, thereby violating CUTPA. In its post-verdict Rule 50 motion, Nationwide argues that this claim was either abandoned by Charts or not supported by sufficient evidence. Because the Court has found that the jury's CUTPA verdict was supported by its finding on the Franchise Act, Nationwide’s argument need not be addressed. The Court notes, however, that the instruction given to the jury did not include age or disability discrimination references. Finally, Nationwide claims that the allegations of "computer crimes” by Nationwide employees should not have been considered because that alleged conduct was outside of the limitations period. However, in its portion of the jury charge concerning unfair trade practices, the Court specifically instructed the jury that it could not consider "any actions taken by Nationwide or its employees prior to August 11, 1994 [three years before the suit was brought] on Charts’ CUTPA claim.” The evidence presented at trial of the "computer crime” concerned events in May, 1994. Thus, the jury could not have based its CUTPA decision on that evidence, in light of the charge.
. Helena Charts was unavailable to testify at trial, and, therefore, her deposition testimony was read into evidence, absent objection.
. More specifically, the Handbook provides that: "The purpose of the Agent Administrative Review Board is to ensure mutual understanding and good communication between the agents and the Companies. To this end, the Review Board only hears one party at a time, does not permit attorneys for the Companies or the agent to attend, not is there any written or electronic record kept. These procedures have been developed over time to enhance and freely encourage the open communication by all participants as well as involvement of the members of the Review Board.” (Plaintiffs' Ex. 83, pg. 156).
. For example, Nationwide argues that Ko-sowsky was unqualified as an expert on lost future earnings for Mr. Charts, and his resulting calculations of lost future earnings were flawed, because Kosowsky's experience primarily involved valuing businesses. Nationwide had an opportunity to present this argument to the jury, which was free to use it when determining what weight to give Ko-sowsky's testimony.
See, e.g., Bohus v. Beloff,
. Nationwide did not provide its own expert at trial.
. The Supreme Court has instructed that a facially inconsistent verdict in a civil action is not an automatic ground for vacating the verdict,
Fairmount Glass Works v. Cub Fork Coal Co.,
.
See also Broadnax v. City of New Haven,
. Nationwide has not argued that, pursuant to Schoonmaker, the Court should award less than that amount in order to prevent it from suffering "substantial unfairness.” For example, Nationwide has not argued that, because this was a three count complaint, an award of the full contingency fee under the Franchise Act fee provision would include fees for time that was not spent on the Franchise Act count, but rather was spent on either the CUTPA or the implied covenant of good faith and fair dealing count.
. Nationwide’s argument that the current fees submitted by Charts are excessive, how
. For example, there are numerous entries for "Westlaw research,” however there is no indication as to what this research was related to, which count it was related to or for what motion or stage of the litigation it related.
. Generally, Connecticut courts interpret "cost” provisions narrowly.
See M. DeMatteo Construction Co. v. New London,
. Charts also moved for prejudgment interest pursuant to 28 U.S.C. § 1961(a). As Nationwide notes in its memorandum in opposition, however, § 1961 only provides for postjudgment interest.
See
§ 1961(a) (providing that "interest shall be calculated from the date of the entry of the judgment”);
Mobil Exploration & Producing North America, Inc. v. Graham Royalty Ltd.,
. Nationwide also argues that prejudgment interest is not appropriate in this case because the jury’s award of damages was not an award of "damages for the detention of money after it be[came] payable .... ” § 37-3a. Rather, Nationwide claims it was an award for lost profits, as argued by Charts, and, therefore, it cannot support an award of prejudgment interest pursuant to § 37-3a. Because the Court has found that the question of prejudgment interest was not properly submitted to the jury, and such an award is therefore inappropriate, this argument need not be addressed.