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Valley Air Service v. Southaire

September 15, 2009

VALLEY AIR SERVICE, PLAINTIFF,
v.
SOUTHAIRE, INC., ET AL., DEFENDANTS,



The opinion of the court was delivered by: Blanche M. Manning United States District Judge

MEMORANDUM AND ORDER

In July of 2009, this court presided over a one-week jury trial in this case centering on the efforts of defendants Southaire and Edward Brunner (Southaire's President) to provide plaintiff Valley Air Service with a rebuilt, refurbished, and customized airplane. Both sides filed post-trial motions, which are presently before the court. For the following reasons, Valley Air's motion for judgment consistent with special interrogatories and for a new trial on damages is granted to the extent that Valley Air is entitled to a new trial as to its fraud claim against Southaire/Brunner; Valley Air's motion for additur is denied but its request for a new trial on direct damages in connection with its breach of contract claim is granted; and the defendants' motions to amend judgment in their favor on Valley Air's breach of contract claim and to amend the judgment to allow for setoff are denied.

Background

The court will assume familiarity with its prior orders in this case. In short, Valley Air contracted to purchase an airplane from defendant Southaire that was to be repaired, refurbished, and customized by defendant Central Flying pursuant to a contract between Central Flying and Southaire. Dissatisfied with the plane's condition, Valley Air sued Southaire, Edward Brunner (Southaire's President), Central Flying, and William Englert (Central Flying's Director of Light Jet Maintenance). Valley Air settled with Central Flying and Englert shortly before trial, leaving Valley Air's claims against Southaire and Brunner. The jury found in favor of Valley Air on its breach of contract claim and awarded Valley Air $40,696.00, which was substantially less than the damages Valley Air sought.*fn1 The jury then found in favor of the defendants on Valley Air's fraud claims, but nevertheless answered special interrogatories in a manner (discussed more fully below) that Valley Air contends is inconsistent with the general verdict in favor of Southaire/ Brunner as to the fraud count.

Fraud -- Valley Air's Motion for Judgment Consistent with Special Interrogatories

Under Rule 49(b), the court may allow the jury to complete a general verdict form as well as written interrogatories on particular issues of fact. Turyna v. Martam Const. Co., Inc., 83 F.3d 178, 181 (7th Cir. 1996). Noting that "this almost invites contradictory and inconsistent answers," the Seventh Circuit has stated that: the rule also addresses what the court should do when the general verdict and the answers to the interrogatories are not harmonious. If the answers are internally consistent, but one or more is inconsistent with the general verdict, the court has a choice among entering judgment in accordance with the answers (and disregarding the general verdict), returning the case to the jury for further deliberation, or ordering a new trial. When the answers are not internally consistent, and one or more also conflicts with the general verdict, the court has only two choices: return the case to the jury, or order a new trial. When faced with interrogatories that might conflict with a general verdict, the court must take the view of the case that reconciles the interrogatories with the general verdict.

Id.

The court begins by considering whether the jury's verdict in favor of Southaire and Brunner on Valley Air's fraud claim and its answers to the special interrogatories are inconsistent. To prevail on its fraud claim under Illinois law, Valley Air was required to establish that: (1) Southaire/Brunner made a false statement of material fact; (2) Southaire/Brunner knew the statement was false or made the statement in reckless disregard of the truth; (3) the statement was made with the intent to induce action; (4) Valley Air reasonably believed the statement and justifiably acted in reliance on it; and (5) Valley Air suffered damages as a result. See Kapelanski v. Johnson, 390 F.3d 525, 530-31 (7th Cir. 2004), citing Soules v. Gen. Motors Corp., 79 Ill.2d 282, 286 (Ill. 1980).

The jury found that Brunner made false representations of material fact when he told Valley Air that the plane had no damage history and had never suffered any structural or corrosion damage, except as noted in the logbooks. See Special Interrogatories IV-VI. It also found that Valley Air reasonably believed and justifiably relied upon Brunner's statements, and that Brunner made false statements of material fact with the knowledge or belief that the statements were false, or with reckless disregard for whether the statements were true or false. Id. at VII through VIII). It nevertheless found in favor of the defendants as to Valley Air's fraud claim.

The defendants assert that the special interrogatories and the general verdict can be read together because the question "Did Valley Air Services reasonably believe and justifiably rely upon statements made by Ed Brunner" does not mean that Valley Air believed and justifiably relied on Brunner's false and material statements about the plane's alleged lack of any damage history or structural or corrosion damage, except as noted in the logbooks. The defendants thus appear to be arguing that the jury found, at best, that Valley Air relied on some of Brunner's statements, but not his representations about damage history or structural/corrosion damage. The defendants also assert that the jury's answer "yes" in response to the special interrogatory stating "Did Ed Brunner make any false statements of material fact with the knowledge or belief that the statements were false, or with reckless disregard for whether the statements were true or false?" does not necessarily mean that it found that Brunner made the statements about prior damage and structural/corrosion damage knowing they were false or with reckless disregard for their truth or falsity.

The court rejects these arguments because they rely on revisionist history. The court recently presided over the jury trial in this case, following three years of litigation, numerous motions to dismiss, and motions for summary judgment from all of the defendants. It is not an exaggeration to state that no rational person reading the special interrogatories in light of the evidence presented at trial could agree with the defendants' position, as their reading of the special interrogatories is tortured and simply untenable in light of the facts and circumstances of this case.

Because the court finds that the answers are internally consistent but inconsistent with the general verdict, it may enter judgment in accordance with the answers, return the case to the jury, or order a new trial. Turyna v. Martam Const. Co., Inc., 83 F.3d at 181. As a practical matter, it cannot return the case to the jury as the jury has been discharged. In this regard, it notes that it has the utmost respect for the work of juries. Nevertheless, after it read the verdict as to the fraud count and the answers to the special interrogatories, it considered whether to return the case to the jury and then rejected this option based on its conclusion that the verdict was fatally inconsistent and the defect was so serious that further deliberations would result in a miscarriage of justice.*fn2 See id. at 181-82.

Valley Air does not seek judgment in accordance with the answers because the jury did not consider punitive damages. Thus, ordering a new trial is the only viable option based on the facts and circumstances of this case. Accordingly, in an exercise of its discretion, and to ensure that the ends of justice are served, the court finds that ...


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