United States District Court, N.D. Mississippi, Aberdeen Division
MEMORANDUM OPINION AND ORDER
M. BROWN UNITED STATES DISTRICT JUDGE
action is before the Court on various post-trial motions
filed by the parties.
April 8, 2015, Kaiva, LLC filed a four-count complaint in
this Court against Michael and Debra Parker. Doc. #1. The
complaint asserted claims for breach of contract, breach of
the duty of good faith and fair dealing, promissory estoppel,
and unjust enrichment arising from an agreement for Kaiva to
purchase the Parkers' Subway sandwich franchise located
in Okolona, Mississippi.
claims for breach of contract and breach of the duty of good
faith and fair dealing were tried before a jury April 17-21,
2017. See Docs. #79, #80. At the close
of Kaiva's case in chief, the Parkers orally moved for a
directed verdict “on the basis that the plaintiffs have
failed to put in any evidence of Kaiva, LLC's
losses.” Doc. #92-1 at 4. The Court, construing the
motion as a Rule 50(a) motion for judgment as a matter of
law, denied the requested relief. The Parkers then presented
close of all evidence, Kaiva moved for a directed verdict on
its claims. Doc. #99. The Parkers opposed the motion on
multiple grounds, including on the issue of damages.
Regarding damages, the Parkers' counsel stated, “I
would incorporate my argument if that's allowed, from the
other day, that we don't think that there has been
sufficient evidence of damages presented. For that reason, we
feel that a directed verdict at this time is inappropriate
and that this matter should go to the jury.” Doc. #99
Court denied Kaiva's motion and the case went to the
jury. The jury found for Kaiva on both claims and awarded
$250, 000 in compensatory damages. Doc. #86. The jury also
awarded a total of $15, 000 in punitive damages-$7, 500
against Michael and $7, 500 against Debra. Id.
1, 2017, Kaiva filed a motion seeking attorney's fees.
Doc. #87. The Parkers responded in opposition on May 15,
2017, Doc. #89; and then one week later, filed a motion for
judgment as a matter of law or for a new trial, Doc. #92.
Kaiva replied in support of its motion on May 23, 2017, Doc.
#94, and responded in opposition to the Parkers' motion
on June 5, 2017, Doc. #101.
9, 2017, the Parkers filed a motion to exceed the page
limitation imposed by local rule for their reply in support
of their motion for judgment as a matter of law. Doc. #103.
Three days later, the Parkers filed their reply. Doc. #104.
Parkers' Motion to Exceed Page Limit
7(b)(5) of the Court's Local Civil Rules provides that a
“[m]ovant's original and rebuttal memorandum briefs
together may not exceed a total of thirty-five pages
….” “Page limitations are important, not
merely to regulate the Court's workload, but also to
encourage litigants to hone their arguments and to eliminate
excessive verbiage.” Fleming v. Cty. of Kane,
855 F.2d 496, 497 (7th Cir. 1988) (citation omitted).
Accordingly, leave to exceed a page limitation “should
only be sought in exceptional circumstances.”
their motion, the Parkers seek leave to exceed the page
limitation by three pages because Kaiva's response to the
motion for judgment as a matter of law:
asserts issues to which Defendants could not have reasonably
anticipated having to respond. Namely, Plaintiffs argue that
Defendants waived the right to seek a JMOL citing old law
that predates the 2006 Amendment to Rule 50 and Fifth Circuit
case law interpreting same, and Plaintiffs added a new claim
for lost profits to increase its damages beyond what it
sought at trial.
did not respond to the motion to exceed the page limitation;
therefore, the motion may be granted on this ground alone.
See L.U. Civ. R. 7(b)(3)(E) (“If a party fails
to respond to any motion, other than a dispositive motion,
within the time allotted, the court may grant the motion as
unopposed.”). Regardless, because the Parkers stated
adequate grounds to exceed the page limitation by three
pages, the motion is granted. The Parkers' reply brief,
which, together with their original brief, exceeds the page
limitation by three pages,  is deemed properly filed.
Parkers' post-trial motion seeks judgment as a matter of
law under Federal Rule of Civil Procedure 50 or, in the
alternative, a new trial under Rule 59.
to Federal Rule 50(a), a party may move for a judgment as a
matter of law “at any time before the case is submitted
to the jury.” Fed.R.Civ.P. 50(a)(2). Such a motion may
be granted on a claim or defense “[i]f a party has been
fully heard on an issue [necessary to the claim or defense
and] … 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)(1). In the event a
Rule 50(a) motion is not granted, Rule 50(b) provides:
No later than 28 days after the entry of judgment--or if the
motion addresses a jury issue not decided by a verdict, no
later than 28 days after the jury was discharged--the movant
may file a renewed motion for judgment as a matter of law and
may include an alternative or joint request for a new trial
under Rule 59.
Fed. R. Civ. P. 50(b). “In ruling on the renewed
motion, the court may: (1) allow judgment on the verdict, if
the jury returned a verdict; (2) order a new trial; or (3)
direct the entry of judgment as a matter of law.”
a case is tried to a jury, a motion for judgment as a matter
of law is a challenge to the legal sufficiency of the
evidence supporting the jury's verdict.” Cowart
v. Erwin, 837 F.3d 444, 450 (5th Cir. 2016) (quotation
marks omitted). To evaluate the sufficiency of the evidence,
a court must “draw all reasonable inferences and
resolve all credibility determinations in the light most
favorable to the nonmoving party.” Id. The
reviewing court must “uphold the verdict unless there
is no legally sufficient evidentiary basis for a reasonable
jury to find as the jury did.” Id. (quotation
59(a), unlike Rule 50, does not allow for a directed
judgment. Rather, it provides that a “court may, on
motion, grant a new trial on all or some of the issues--and
to any party-- … after a jury trial, 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). “Motions for a new trial … must
clearly establish either a manifest error of law or fact or
must present newly discovered evidence.” Naquin v.
Elevating Boats, L.L.C., 817 F.3d 235, 240 n.4 (5th Cir.
2016). In this regard, “[a] trial court should not
grant a new trial on evidentiary grounds unless the verdict
is against the great weight of the evidence.”
Seibert v. Jackson Cty., 851 F.3d 430, 439 (5th Cir.
under Rule 59 or Rule 50, federal courts in diversity cases
“apply federal standards of review to assess the
sufficiency or insufficiency of the evidence in relation to
the verdict, but in doing so … refer to state law for
the kind of evidence that must be produced to support a
verdict.” Hamburger v. State Farm Mut. Auto. Ins.
Co., 361 F.3d 875, 884 (5th Cir. 2004) (quotation marks
Relevant Trial Evidence
July 2010, Michael and Debbie Parker began negotiations with
Jennifer and Ray Bentley to sell their Subway franchise to
Kaiva, LLC, an entity owned by the Bentleys. During the
negotiations, Michael prepared for Ray a profit and loss
statement estimating that the Subway store would earn
approximately $103, 000 in profit for the 2010 fiscal year.
Michael separately stated that the store earned a net profit
of between 25% to 30% per year.
after these representations by Michael, the parties reached
an agreement for the sale of the Parkers' Subway
franchise to Kaiva. The basic terms of the agreement were
that the Parkers would sell Kaiva their Subway franchise for
a purchase price of $300, 000, to be paid with a $15, 000
down payment and then 120 monthly installments of $3, 309.09
at an interest rate of 7%, for a total sum of $406, 853.
Additionally, Kaiva agreed to rent from the Parkers the
building housing the Subway store for $800 per month.
parties further agreed that the Parkers would transfer
ownership of the Subway franchise to Kaiva after Kaiva paid
half of the purchase price and that, following full payment,
Kaiva would have ownership of “everything except the
building.” Doc. #92-7 at 61. According to the Bentleys,
the parties chose to structure the deal in this way because
the Bentleys could not obtain a loan to purchase the
business. According to the Parkers, the deal was organized in
this manner because the parties knew that, pursuant to the
Parkers' franchise agreement, Subway had to approve the
transfer and also had a right of first refusal for any
transfer of the franchise. The Bentleys, for their part,
testified that they knew they had to be approved to
ultimately take over the franchise but were never told that,
pursuant to the franchise agreement, Subway had a right of
first refusal or that the Parkers did not have the right to
lease the premises, or that the agreement itself violated the
franchise agreement and was thus voidable by Subway.
Bentleys began operating the Subway store in September 2010.
The Bentleys' tax returns for 2010 reflect that they
valued the franchise itself at $150, 000, and the store's
equipment at $150, 000.
April of 2011, the Bentleys learned that the store was
operating with an annual net profit of approximately $20,
000, far below the $103, 000 represented by Michael.
Additionally, following a 2011 interaction with a Subway
corporate representative, the Bentleys began to believe there
was “something” about the deal with the Parkers
that could result in Subway terminating the franchise.
Notwithstanding these discoveries, the Bentleys elected to
continue operating the franchise.
approximately the next four years, the Bentleys operated the
Subway under the terms of Kaiva's agreement with the
Parkers, including paying all sums due to the Parkers. While
operating the store, the Bentleys underwent monthly
inspections by Scott Stevens, a Subway corporate
representative. During these inspections, the Bentleys
presented themselves as managers who were considering buying
one such inspection, Stevens noticed a business license on
the wall of the Subway listing Kaiva as the store's
operator. Stevens reported the license to his supervisor,
Scott Sandifer, and sent a picture of the license to Sandifer
at his request.
December 6, 2013, Subway sent the Parkers a letter, addressed
to the store, requesting certain financial documents be
provided on or before January 6, 2014. The Parkers never
received the letter and, as such, were unable to respond. On
January 23, 2014, Subway sent a second letter to the store
notifying the Parkers that the franchise would be terminated
if the documents requested were not provided within sixty
days. The Parkers did not receive this notice either.
point in mid-2014, the Parkers learned of Subway's
requests for documents and requested an extension of the
deadline to respond. Michael asked Jennifer to prepare the
documents and Jennifer responded in “about 5
minutes.” Michael then sent the documents to Subway.
Subway and the Parkers subsequently entered arbitration
regarding the Parkers' alleged breach of the franchise
October 23, 2014, while arbitration was ongoing, Subway sent
the Parkers a “Termination of Franchise Agreement,
” which stated that “[i]t has come to our
attention that Subway® 31000 has transferred, although an
official transfer of the Franchise Agreement has not been
completed.” Doc. #105-8 at 1. The notice gave the
Parkers sixty days to cure the default and warned that
failure to do so would result in termination of the franchise
January 30, 2015, the Parkers and Subway agreed to a
“Stipulated Award” in the arbitration proceedings
in which they admitted that they failed to adhere to the
record review procedures of their franchise agreement and
also agreed to sell the franchise within 120 days of the
Stipulated Awards' execution. The Stipulated Award
further provided that “[i]f the Respondents fail to
transfer the Restaurant by the date set forth above, the
Franchise Agreement will be terminated on the one hundred
twenty-first (121st) day from the execution of
this award.” Doc. #105-10 at 4. As a part of the
arbitration process, Subway “reach[ed] in” to the
store account controlled by the Bentleys and removed $5, 000
in legal fees.
agreeing to the arbitration award, Michael asked Ray whether
he was interested in purchasing the store. Ray was not.
February 21, 2015, Michael agreed to sell the Subway to Doug
and Wanda Sweeney for $100, 000. The Sweeneys went through
Subway's approval process and received approval to
purchase the store. During the sale process, the Sweeneys
retained the accounting firm of Watkins, Ward, and Stafford
to evaluate the purchase price. On February 23, 2015, Wanda
Ellis, a CPA with the firm, issued a letter stating that
“it appears that the purchase price fairly reflects the
value of the Franchise agreement and related items.”
This opinion of value was lower than the $123, 190 value for
the store reflected in Kaiva's 2015 tax return, which
reported a $97, 500 value for the franchise and a $25, 690
value for the equipment.
February 23, 2015, Michael, referencing Mississippi's
requirements for terminating a month-to-month lease, sent the
Bentleys an e-mail notifying them that their tenancy would be
terminated in thirty days. At the time the lease was
terminated, Kaiva was contractually obligated to pay the
Parkers $181, 428 in outstanding principal. Under the
ten-year amortization agreement, this principal would have
produced $30, 443 in interest, for a total of $211, 781.
Following the eviction, Kaiva could not remove any of ...