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United States, Pileco, Inc. v. Slurry Systems, Inc.

United States District Court, Seventh Circuit

December 11, 2013

UNITED STATES OF AMERICA, for the use and benefit of PILECO, INC., Plaintiff,
v.
SLURRY SYSTEMS, INC. and FIDELITY AND DEPOSIT INSURANCE COMPANY OF MARYLAND, Defendants. SLURRY SYSTEMS, INC., Third Party Plaintiff
v.
BAUER MASCHINEN GMBH, Third Party Defendant.

MEMORANDUM OPINION AND ORDER

ARLANDER KEYS, Magistrate Judge.

In this lawsuit, Pileco, Inc. sued Slurry Systems, Inc. ("SSI") and its surety, Fidelity and Deposit Company of Maryland ("F&D"), seeking to recover money allegedly owed on a contract executed in connection with a reservoir project undertaken by the Army Corps of Engineers in Willow Springs, Illinois. In its complaint, Pileco alleged two counts: a Miller Act claim seeking payment on a performance bond issued by F&D in connection with the project; and a breach of contract claim seeking monetary damages in excess of $4 million from SSI. SSI filed a counterclaim alleging that, in connection with the reservoir project, it subcontracted with Pileco and Bauer to provide certain equipment necessary to the job, that the equipment never worked properly, that Pileco and Bauer breached their agreement with SSI, and that SSI paid Pileco all that it was due under the contract. SSI's counterclaim included nine counts: (1) breach of contract; (2) breach of express warranty; (3) breach of implied warranty of merchantability; (4) breach of the implied warranty of fitness for a particular purpose; (5) promissory estoppel; (6) alternative breach of contract (Bauer); (7) alternative breach of contract (Pileco and Bauer); (8)alternative declaratory judgment; and (9) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. All are asserted against both Pileco and Bauer, except for count 6, which is asserted against Bauer alone.

After the Court denied the parties' motions for summary judgment, the case was set for trial. The parties tried the case, for the first time, in May of this year. After eight days of testimony and argument, the case went to the jury. The jury reached a verdict after deliberating for just four hours - not long, given that the parties had together introduced more than 6 binders of exhibits and given that the instructions were 57 pages long. The verdict was problematic in a number of respects. Most significantly, the jury awarded nothing in the way of compensatory damages on SSI's Consumer Fraud Act claim, but awarded $20 million in punitive damages on that claim. Additionally, the jury failed to consider (despite being explicitly instructed to do so) what everyone agreed was a key component of the parties' contractual claims - namely, the amount of the equitable adjustment due SSI on Pileco's breach of contract claim. The jury found for Pileco on its breach of contract claim and awarded $2, 000, 000, but left the equitable adjustment line completely blank, and awarded just $1, 000, 000 to Pileco on its Miller Act claim, when in theory the award under the Miller Act should have been the same as the award on the breach of contract claim. The jury also found for SSI on its breach of contract claims against Pileco and Bauer and awarded, respectively, $600, 000 and $3, 400, 000; found for SSI on its breach of warranty claims and awarded SSI $200, 000 from Pileco and $800, 000 from Bauer; and found for SSI on its Consumer Fraud Act claim, as already discussed.

After discussing the problems with the verdict, the Court and the parties met once again to attempt to resolve the parties' dispute. That attempt was unsuccessful. Accordingly, the Court, finding that the first verdict could not stand, sua sponte ordered a new trial.

The case was tried a second time in September. This time, the trial took nine days. The jury was given fewer documents and a much shorter, more concise set of instructions, and returned a verdict at the end of its first day of deliberations. The second jury found for Pileco on its breach of contract and Miller Act claims, and awarded Pileco $2, 230, 381.35 from both SSI and F&D (this award reflected an equitable adjustment of $357, 716.00). The jury found for Pileco on SSI's breach of contract claim, for Pileco/Bauer on SSI's warranty claim, and for Bauer on SSI's Consumer Fraud Act claim. To state the obvious, the second trial yielded a very different outcome from the first. In the Court's view, this may be explained, in part, by the fact that Pileco/Bauer tried a very different case the second time around; they were much better prepared and much better organized. They clearly benefited tremendously from the first jury's confused and inconsistent verdict. For its part, SSI tried essentially the same case, though it did attempt to streamline things a bit. That's not a bad thing; in the Court's estimation, SSI tried a great case both times. But, as all good lawyers know, juries are unpredictable and trying a case to a jury is risky; this case could be the poster child for juror unpredictability.

The case is currently before the Court on post-trial motions. SSI filed a motion to amend the final judgment or, in the alternative, for judgment as a matter of law or a new trial. F&D filed a motion for judgment as a matter of law or, in the alternative, for a new trial. Pileco and Bauer, who dodged a bullet with their "redo" and are understandably content with the second verdict, filed a motion for taxation of costs; Pileco also filed a motion seeking statutory interest. The Court considers each motion below.

A. SSI's Motion to Amend the Judgment

SSI has moved to amend the judgment or, in the alternative, for judgment as a matter of law or for a new trial. Federal Rule of Civil Procedure 59, which addresses both motions to alter and amend and motions for new trial, provides that, after a jury trial, the Court "may, on motion, grant a new trial on all or some of the issues - and to any party -... for any reason for which a new trial has heretofore been granted in an action at law in federal court...." Fed.R.Civ.P. 59(a)(1)(A). Generally, a court may order a new trial only if the jury's verdict is "against the manifest weight of the evidence, " or "if for other reasons the trial was not fair to the moving party." Willis v. Lepine, 687 F.3d 826, (7th Cir. 2012)(quoting Marcus & Millichap Inv. Servs. v. Sekulovski, 639 F.3d 301, 313 (7th Cir. 2011); Pickett v. Sheridan Health Care Ctr., 610 F.3d 434, 440 (7th Cir. 2010)). And, generally, the Court may alter or amend a judgment under Rule 59(e) "when there is newly discovered evidence or there has been a manifest error of law or fact." Harrington v. City of Chicago, 433 F.3d 542 (7th Cir. 2006)(citing Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 529 (7th Cir. 2000)). "Once judgment has been entered, there is a presumption that the case is finished, and the burden is on the party who wants to upset that judgment to show the court that there is good reason to set it aside." Young-Gibson v. Board of Education of the City of Chicago, No. 11 C 8982, 2013 WL 4598815 at *2 (N.D. Ill. Aug. 29, 2013)(quoting Hecker v. Deere & Co., 556 F.3d 575, 591 (7th Cir. 2009).

Federal Rule of Civil Procedure 50 addresses motions for judgment as a matter of law and provides that, once certain preliminaries are satisfied, the Court may enter judgment as a matter of law if it "finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue...." Fed.R.Civ.P. 50(a)(b). When deciding a motion for judgment as a matter of law that is filed after the jury has returned its verdict, "a court's review is limited to determining only whether any rational jury could have found for [the prevailing party], examining all evidence in the record to make that determination.'" Woods v. Von Maur, Inc., No. 09 C 7800, 2012 WL 2062400, at *4 (N.D. Ill. June 7, 2012)(quoting Hicks v. Forest Pres. Dist. of Cook County, Ill., 677 F.3d 781, 2012 WL 1324084 at *3 (7th Cir. 2012) and citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). And, importantly, the Court "may not step in and substitute its view of the contested evidence for the jury's.'" Woods, 2012 WL 2062400, at *4 (quoting Mathur v. Bd. of Trs. , 207 F.3d 938, 941 (7th Cir. 2000)).

Motions like SSI's are not lightly granted. "A civil jury trial involves the expenditure of substantial resources and requires citizen jurors to spend significant time away from their jobs and families; courts, not surprisingly, are especially reluctant to throw out the judgment of jurors absent overwhelming cause." Community First Credit Union v. United States, No. 08-C-57, 2009 WL 2058476, at *1 (E.D. Wis. July 14, 2009). Here, the people serving as jurors interrupted their lives for a combined total of almost four weeks to focus on this case. SSI bears a tremendous burden in persuading the Court to grant it the relief it seeks.

Initially, SSI argues that "[t]he law cannot be so fickle or capricious" as to allow the second verdict to stand, in light of the first; "such vagary" - the result of the "whims" of the second jury - "mocks the justice system" according to SSI. But, other than the change in the outcome, SSI has not identified any way in which the second trial was unfair. And, ironically, in its motion, SSI argues that the "[c]ourts should preserve a jury verdict when possible." Brief, p. 7. The Court ruled that it was not possible to preserve the first verdict, and SSI has given the Court no reason to reverse that ruling. It is possible to preserve the second verdict, however.

SSI argues that the swing in verdicts - from $3 million (not counting the $20 million in punitives) in SSI's favor on the first, to almost the same in Pileco's favor on the second, can only be described as a travesty of justice. But SSI's "reversal of fortune" does not necessarily reflect a manifest injustice as SSI contends; the outcome is simply a function of the risk inherent with a jury. Trying a case to a jury - as all experienced lawyers know - is a risky proposition; indeed, that risk is precisely why so many cases settle and so few actually go to trial. SSI's attorneys - experienced trial lawyers - knew the risk and certainly adequately conveyed that risk to their client; and SSI opted to roll the dice rather than settle its claims. Given the first verdict, the Court cannot say that was an unreasonable decision. But the outcome was by no means a sure thing. At trial, someone has to lose and someone has to win. Although SSI won the first time, it lost the second time. And everyone knew that was possible, even if it may have seemed improbable.

SSI argues that, after the original trial, the Court could simply have stricken the consumer fraud act portion of the verdict and entered judgment on the remainder of the claims. To be sure, the Court considered this, but opted not to do so for a couple of reasons: first, taking this action would have circumvented what the jury was trying to achieve with its verdict; and, second, striking the Consumer Fraud Act claim would not have fixed the problem with the jury's findings (or lack thereof) on the equitable adjustment. To fix this deficiency in the verdict, the Court would have had to make findings on an issue that was (all parties agreed) properly reserved for the jury. Taking this action would have been even more egregious if, as SSI argues, the jury actually did make implicit findings concerning the equitable adjustment by taking something off the breach of contract awards. A Court should not substitute its own judgment for that of the jury; nor should it toss out a jury's verdict simply because it disagrees with it. E.g., Tart v. Illinois Power Co., 366 F.3d 461, 478-79 (7th Cir. 2004); Harbor Motor Co. v. Arnell Chevrolet-Geo, Inc., 265 F.3d 638, 644 (7th Cir. 2001)(citing Place v. Abbott Labs., 215 F.3d 803, 809 (7th Cir. 2000)).

SSI argues that the Court should enter judgment in its favor on Pileco's breach of contract claim, notwithstanding the verdict, because Pileco did not introduce any evidence to show that the cutter and related equipment were new, which it argues was a requirement of the contract. In fact, most of the evidence that did come in showed that the equipment was not new; the evidence concerning the B-Tronic system showed that the cutter may have been operating since 2004, two years before it arrived at SSI's jobsite, and there was testimony that the cutter's wheels already reflected wear and tear when the cutter arrived on the scene. But the evidence also showed that the word "new" was written into the contract after the fact by SSI, and that it was added after SSI took possession of the equipment. Thus, by the time SSI signed the contract, it knew what it was getting. The jury was not required to believe SSI's argument that Pileco was contractually obligated to provide new equipment. The jury could reasonably have concluded that SSI accepted the equipment - whether or not it ...


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