377 F.3d 266 | 3rd Cir. | 2004
PROFESSIONAL CORPORATION; ROTH, Circuit Judge:
DONALD COW AN; JOSEPH A judge may overturn a jury verdict GUNTESKI; only when, “as a matter of law, ‘the record COWAN & GUNTESKI AND CO., A is critically deficient of that minimum BUSINESS ENTITY; quantity of evidence from which a jury EDWARD F. LISTON, JR., ESQ. might reasonably afford relief.’” Dudley ________________ v. S. Jersey Metal, Inc., 555 F.2d 96, 101 (3d Cir. 1977) (quoting Denneny v. Siegel, Appeal from the United States 407 F.2d 433, 439 (3d Cir. 1969)). In this District Court for the District of New case, the District Court overturned two Jersey awards granted by the jury. The jury (D.C. Criminal Action Nos. 98-cv-02892) awarded plaintiff, Dr. Gary Raiczyk, District Judge: Honorable Anne E. $113,431, for monies owed to him for sale Thompson of his shares in a professional corporation and an additional $22,500 to repay unpaid officer loans that Dr. Raiczyk had made to
Argued on October 14, 2003 the corporation. The District Court ruled Before: SLOVITER, ROTH and that, as a matter of law, Dr. Raiczyk was CHERTOFF, Circuit Judges not entitled to either amount. We do not agree with the District an integration clause, stating that it was the
Court’s conclusion that, as a matter of law, final and only document memorializing the there was insufficient evidence in the agreement. There was no mention in the record to support the finding that Dr. sales agreement of the outstanding loans Raiczyk was entitled to the $22,500 for the that Dr. Raiczyk claimed were owed to unpaid officer loans. We do agree, him by the corporation. however, that there was insufficient The doctors conducted various evidence to support the jury’s verdict of negotiations on the timing and final $113,431 for Dr. Raiczyk’s shares of payment amount for the buyout. On April stock. We will therefore affirm the 17, 1997, pursuant to the sales agreement, District Court’s disallowance of the award Dr. Raiczyk was faxed a closing statement for the sale of the shares in the veterinary that set a total price of $206,975.21 for his hospital, but we will reverse the District shares. Dr. Raiczyk initialed this amount Court’s judgment against Dr. Raiczyk on in two places, signed the document, faxed the $22,500 in officer loans, and we will the closing statement back to the remand this case to the District Court with defendants’ attorney that same day, and instructions to reinstate the jury’s verdict later had his signature on the document for that amount. notarized. I. Factual Background and Procedural Approximately six months later, Dr.
History Raiczyk concluded that he was owed more The plaintiff, Dr. Gary Raiczyk, and money under the agreement. On June 18, the defendants, Dr. Albert Pagani and Dr. 1998, Dr. Raiczyk filed suit, asking that Peter Falk, practiced veterinary medicine the court reform the contract due to at Ocean County Veterinary Hospital. The mistake. He sued his former partners, hospital was owned by OCVH, Inc., a demanding to be paid an additional professional corporation, in which Drs. $114,131.14 for the sale of his shares of Raiczyk, Pagani, and Falk were stock. Dr. Raiczyk claimed that he was in shareholders. The shareholder agreement a hurry on the day that he signed the between the parties called for a mandatory closing statement, did not have the buy-out if one of the doctors wanted to document reviewed by a lawyer or leave the practice. On July 1, 1996, Dr. accountant, and thus only later caught the Raiczyk informed the other doctors that he mistake. In addition, Dr. Raiczyk sought wished to leave the practice and was the money owed him for the still unpaid exercising his option to sell his shares of officer loans in the amount of $45,000. stock in the corporation. A fter Defendants responded that Dr. Raiczyk negotiations, all parties signed a sales was paid the full amount agreed upon for agreement on December 31, 1996, which his shares and that the officer loans were included arguably ambiguous terms as to included in the sales price. They argued how the final price for the shares would be that the integration clause in the sales calculated. The sales agreement contained agreement clearly covered those loans.
The matter was tried before a jury, “the record is critically deficient of that and on September 13, 2001, the jury minimum quantity of evidence from which returned a verdict in favor of Dr. Raiczyk a jury might reasonably afford relief.” Id. on both issues. On December 3, 2001, (quoting Powell v. J.T. Posey Co., 766 however, the District Court ruled as a F.2d 131, 133-34 (3d Cir. 1985)). matter of law under Federal Rule of Civil Furthermore, in reviewing the District Procedure 50(b) that the jury verdict was Court’s ruling, we “must expose the set aside and that the cause of action evidence to the strongest light favorable to dismissed with prejudice. The District the party against whom the motion is made Judge explained in her ruling that Dr. and give him the advantage of every fair R a i c z y k h a d n o t o f f e r e d a n y and reasonable inference.” Dudley v. S. documentation of the officer loans, Jersey Metal, Inc., 555 F.2d 96, 101 (3d including when the loans would be paid Cir. 1977) (quoting Fireman’s Fund v. back or if interest would accrue; she Videofreeze Corp., 540 F.2d 1171, 1178 concluded that there was not enough (3d Cir. 1976)). evidence in the record to support existence III. Discussion of the loans. The District Judge also ruled We must decide whether the that even though the sales agreement may District Court was correct in concluding have been unclear as to the final price of that there was not a minimum quantity of the shares of stock, the April 17th closing evidence to support the jury’s verdict with respect to the sale of Dr. Raiczyk’s shares letter was unambiguous. Dr. Raiczyk’s argument that he had mistakenly signed and his claim of unpaid officer loans. As the closing letter in a hurry did not qualify discussed more fully below, because the language of the closing statement is so for application of the doctrine of unilateral mistake and did not warrant reformation of clear, we conclude that the District Court the contract. was correct in overturning the jury’s
Dr. Raiczyk appealed. verdict with respect to the sales amount. II. Jurisdiction and Standard of Dr. Raiczyk should not be paid more than the price listed in the closing statement. Review Jurisdiction in the United States However, we find there is enough District Court for the District of New evidence to support the verdict with Jersey was based on 28 U.S.C. §1332. We respect to Dr. Raiczyk’s unpaid officer have jurisdiction over the appeal pursuant loans and we will reverse on that issue. to 28 U.S.C. §1291. A. The Purchase Price
Our review of a district court’s In the April 17, 1997, closing grant of a judgment as a matter of law statement, the amount Dr. Raiczyk was to under Fed.R.Civ.P. 50(b) is plenary. receive for his shares was clearly stated as Trabal v. Wells Fargo Armored Serv. $206,975.21. Dr. Raiczyk initialed this Corp., 269 F.3d 243, 249 (3d Cir. 2001). amount, initialed the net total on the Such a judgment should only be granted if second page, signed the bottom of the two- page document, and had the document Lowenschuss v. Resorts Int’l, Inc., 181 notarized. Dr. Raiczyk claimed that he F.3d 505, 512 (3d Cir. 1999) (requiring made a mistake when he initialed and that the mistake must have occurred signed this document, arguing that he did “notwithstanding the exercise of so in a hurry, without the aid of a lawyer or reasonable care”) (quoting Intertech, 604 accountant. The jury was persuaded, and A.2d at 632). We see from the facts as awarded him $113,431 in compensation stated above that Dr. Raicyzk’s mistake for his shares. The District Court, does not rise to this very high standard. however, ruled that Dr. Raiczyk did not Dr. Raiczyk cites a number of satisfy his legal burden of establishing why contract bidding cases where rescission or the contract should be reformed. The reformation based on unilateral mistake court found that there was no evidence of was granted, but the harried and urgent fraud and that Dr. Raiczyk’s mistake did nature of those situations is not present not fall under the doctrine of unilateral here. For example, in Intertech, 604 A.2d mistake. 628, the court did reform the contract due
When considering a document that to mistake, but that was only because the is as clear as is the closing statement in office was short-staffed, the language in this case, it is rare that such a document the contract was ambiguous, the bid had to will be reformed by a court. First and be completed in a very short amount of foremost, it is well settled that signing a time, and the head of the office, the mayor, contract creates a “conclusive presumption had just died. None of these factors that the signer read, understood, and parallels Dr. Raiczyk’s situation. In a less assented to its terms.” Fleming Cos. Inc. extreme case, a court also granted v. Thriftway Medford Lakes, Inc., 913 F. reformation in Cataldo Construction Co. v. Supp. 837, 842-43 (D.N.J. 1995). If the County of Essex, 265 A.2d 842 (N.J. terms of the contract are clear, a court’s Super. Ct. Ch. Div. 1970), where the only interference could undermine the stability excuse was the time pressure of compiling of contract negotiations. For that reason, a complex bid quickly. Id. at 846-47. if one of the parties has made a mistake, However, Dr. Raiczyk was not in a similar reformation is not automatically granted, time-pressured situation, despite his but is available only at a court’s discretion. counsel’s dramatic remark that one of the Intertech Assocs., Inc. v. City of Paterson, defendants “put a gun to his head.” As 604 A.2d 628, 631 (N.J. Super Ct. App. noted by the District Court in ruling on the Div. 1992). The power of reformation post-trial motions, Dr. Raiczyk admitted should be used only when the mistake is on the stand that he did not have to sign material, when there would not be the settlement sheet for seven more days prejudice to the other party (besides the and could have simply put off the closing. loss of the bargain), and upon a showing In addition, unlike a company bidding for that the plaintiff exercised reasonable care. a contract, Dr. Raiczyk did not have to Fleming Cos. Inc., 913 F. Supp. at 843; make multiple calculations in a short amount of time. Dr. Raiczyk knew what invoked the parol evidence rule. Id. The the amount should be, and all he had to do parol evidence rule is applicable only if we was read the amount on the closing find as a matter of law that the integration statement and see if it matched the amount clause clearly covers the officer loans. with which he had previously agreed. We The loans are not mentioned anywhere in will therefore affirm the District Court’s the sales agreement. Defendants argue ruling setting aside the jury’s award with that, because the loans are not mentioned, respect to the sale of Dr. Raiczyk’s shares. they should not be considered separately
from the sales agreement. Usually, B. The Officer Loans however, when a contract does not The District Court also set aside the mention a subject, it is because the jury’s award of $22,500 to Dr. Raiczyk for contract was not meant to cover that unpaid officer loans. The District Court subject. At the very least, a reasonable ruled that the plaintiff “offered no jury could have found that the loans were documentation of his own with respect to not meant to be included in the the loan[s],” noting in particular that there computations of the sales agreement. was nothing in the record to indicate Because the jury could reasonably “when the money was to be paid back” or have held that the integration clause does “whether there was interest on the loan.” not end the inquiry, we turn to the ruling of Alternatively, the defendants also argued the District Court that there was no in the District Court that the integration evidence in the record of when the loans clause in the sales agreement clearly were to be repaid or at what interest rate. covered the loans. Thus, even if the loans While this may be true, we know of no did exist, they were included in the agreed authority under New Jersey law that voids upon sales price for the shares. We a loan if it does not have these two conclude, however, that the integration characteristics. An officer who lends clause does not clearly cover the loans and money to a corporation has the same rights that there is ample evidence in the record and obligations as any other person who for a jury to find that Dr. Raiczyk is still lends it money. The fact that Dr. Raiczyk owed these amounts. did not earn any interest on the loans does
We consider first the defendants’ not void them and, in fact, erases any argument that the integration clause in the questions regarding the propriety of an sales agreement precludes us from looking officer lending money to his corporation. at other evidence in the record. Additionally, the fact that there is not a Defendants rely on Filmlife, Inc. v. Mal document evidencing the loan does not “Z” Ena, Inc., 598 A.2d 1234, 1235 (N.J. defeat Dr. Raiczyk’s case as the Statute of Super. App. Div. 1991), to argue that, Frauds does not apply to such a loan. See given the integration clause, non- N.J. Stat. § 25:1-5(f) (2003) (stating that documentary evidence of the loans cannot only loans in excess of $100,000 and made be considered. Filmlife, however, merely by a person whose business it is to extend credit or loans fall under the Statute of Court with respect to the sale of the Frauds). [1] In short, there is nothing wrong
partnership interest, but we will reverse with proving the existence of Dr. and remand the case with respect to the Raiczyk’s officer loans through testimony unpaid officer loans with instructions to and the corporation’s books, both of which reinstate the jury’s verdict of $22,500 for were offered into evidence. the unpaid loans.
In light of the entire record in this case, the jury had ample evidence to conclude that the officer loans were due Dr. Raiczyk. In his testimony, Dr. Raiczyk specifically averred that he personally lent $45,000 to Ocean County Veterinary Hospital over a long period of time beginning in 1992. Furthermore, he testified that he paid taxes on those loans. Dr. Raiczyk said unequivocally that he was never repaid those amounts. He also testified that they were bona fide loans and not a result of creative bookkeeping. Finally, Ocean Cou nty Veterinary Hospital’s books and records were put into evidence, which clearly showed the loans’ existence. This evidence certainly surpasses the “minimum quantity of evidence” necessary to uphold a jury verdict on the issue. Trabal, 269 F.3d at 249. Therefore we will reverse the District Court’s disallowance of recovery of these loans and we will remand the case with instructions to reinstate the $22,500 jury award for the unpaid officer loans.
IV. Conclusion For the reasons stated above we will affirm the judgment of the District
NOTES
[1] Moreover, the Statute of Frauds is an affirmative defense, and there is no indication that it was pled or formed the basis of the District Court’s decision.
