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Pinnacle Fitness and Recreation Management LLC v. Jerry and Vickie Moyes Family Trust

United States District Court, Ninth Circuit

May 8, 2013

PINNACLE FITNESS AND RECREATION MANAGEMENT, LLC, a Delaware limited liability company, Plaintiff,
v.
THE JERRY AND VICKIE MOYES FAMILY TRUST, an Arizona trust, Defendant, AND RELATED COUNTERCLAIMS

ORDER: (1) GRANTING IN PART AND DENYING IN PART THE TRUST'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW (ECF NO. 309); (2) DENYING AS MOOT THE TRUSTS'S MOTION FOR RELIEF PURSUANT TO RULE 62(b) (ECF NO. 316); AND (3) GRANTING IN PART AND DENYING IN PART PINNACLE'S MOTION TO CORRECT JUDGMENT (ECF NO. 313)

GONZALO P. CURIEL, District Judge.

INTRODUCTION

Before the Court are three post-trial motions, each of which has been fully briefed: the Trust's Renewed Motion for Judgment as a Matter of Law or, Alternatively, a New Trial ("Renewed JMOL"), (ECF Nos. 309, 332, 338); Pinnacle's Motion to Correct the Judgment ("Motion to Correct the Judgment"), (ECF Nos. 313, 334, 336); and the Trust's Motion for Relief Pursuant to Federal Rule of Civil Procedure 62(b) ("Motion to Stay Execution of the Judgment"), (ECF Nos. 316, 327, 333). The Court finds each of these motions suitable for disposition without oral argument. See CivLR 7.1.d.1. For the reasons that follow, the Court hereby GRANTS IN PART AND DENIES IN PART the Trust's Renewed JMOL, DENIES AS MOOT the Trust's Motion to Stay Execution of the Judgment, and GRANTS IN PART AND DENIES IN PART Pinnacle's Motion to Correct the Judgment.

BACKGROUND

After a ten-day trial, a jury returned verdicts in favor of Pinnacle on its claims for Breach of Contract (Buy-Out), Breach of Implied Covenant of Good Faith and Fair Dealing (Buy-Out), Promissory Estoppel (Buy-Out), Breach of Contract (Operating Agreement), Breach of Implied Covenant of Good Faith and Fair Dealing (Operating Agreement), Breach of Fiduciary Duty, Fraud (by Intentional Misrepresentation and by Concealment), Constructive Fraud, and Civil Conspiracy to Defraud.

The jury awarded Pinnacle $1, 632, 495.72 in compensatory damages on its first, second, and/or third claims ("Buy-Out Claims"). The jury awarded Pinnacle zero damages on its fourth and/or fifth claims and $905, 242.00 in compensatory damages on its sixth, seventh, eighth, and/or ninth claims ("Non-Buy-Out Claims"). The jury further awarded Pinnacle $1, 100, 000 in punitive damages based on a finding that the Trust acted with an evil mind.

After considering the parties' proposed judgments, the Court entered judgment on March 21, 2013.

The Trust then filed its Renewed JMOL, asserting substantially the same arguments asserted in its initial JMOL.[1] The Trust further moves to stay execution of the judgment pending disposition of these post-trial motions. Pinnacle, on the other hand, moves to correct the language of the judgment to conform with what it asserts are the jury's findings.

DISCUSSION

I. Judgment as a Matter of Law

A. Legal Standard

Under Federal Rules of Civil Procedure, Rule 50(a)(1):

If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may... resolve the issue against the party; and... grant a motion for judgment as a matter of law against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.

"A motion for judgment as a matter of law may be made at any time before the case is submitted to the jury. The motion must specify the judgment sought and the law and facts that entitle the movant to the judgment." Fed.R.Civ.P. 50(a)(2).

"If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), 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." Id . 50(b).

No later than 28 days after the entry of judgment... 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. 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.

Id.

"Judgment as a matter of law is proper if the evidence, construed in the light most favorable to the non-moving party, allows only one reasonable conclusion and that conclusion is contrary to that reached by the jury." Acosta v. City & Cnty. of San Francisco , 83 F.3d 1143, 1145 (9th Cir.1996). The jury's verdict is reviewed to determine whether it is supported by substantial evidence. Murray v. Laborers Union Local No. 324 , 55 F.3d 1445, 1452 (9th Cir.1995). "Substantial evidence is such relevant evidence as reasonable minds might accept as adequate to support a conclusion.'" Mockler v. Multnomah Cnty. , 140 F.3d 808, 815 n.8 (9th Cir. 1998) (citing Murray , 55 F.3d at 1452).

A. Analysis

The Trust argues it is entitled to judgment as a matter of law on all of Pinnacle's claims or, in the alternative, a new trial.

1. Buy-Out Claims

The Trust argues it is entitled to judgment as a matter of law on Pinnacle's Buy-Out Claims because (1) Nevada's statute of frauds bars enforcement of the contract; (2) the parties' preliminary negotiations did not result in contract formation; (3) promissory estoppel is unavailable where the parties' relationship is governed by a contract; and (4) Pinnacle did not introduce any evidence demonstrating it was damaged by the Trust's breach of the Buy-Out Agreement.

a. Statute of Frauds

The Trust argues the Buy-Out Agreement found to exist by the jury is subject Nevada's statute of frauds because Term 3 of the Buy-Out Agreement requires the Trust to pay Pinnacle "4 equal semi-annual installments of [$]307, 104.68." The Trust argues this term results in a contract that, "from the terms used, " could only be performed over the course of two years. The Trust thus argues that, because there is no writing that contains the substantial parts of the contract, and that is signed by the trustees of the Trust, the statute of frauds has not been satisfied.

In response, Pinnacle asserts the statute of frauds does not apply because the Trust could have made the four payments of $307, 104.68 in less than a year. Specifically, Pinnacle notes that the second sentence of Term 3 requires that Pinnacle "be repaid in full prior to any splits on profits with Xeptor." Pinnacle thus argues "if the gyms had been profitable in the first year such that the Trust would be required to pay Xeptor a portion of those profits, the Trust would first be required to pay Pinnacle the entire $1.2 million." Pinnacle asserts that nothing in the Buy-Out Agreement precludes payment of the full amount within a year.

Pinnacle argues that, even if the statute of frauds applies, "the email exchanges between Shumway and Fournier from April 2 through April 7, when considered together, satisfy the Statute of Fraud writing requirement." Pinnacle argues the statute of fraud is satisfied because those email exchanges included the "names of the parties, the interests affected, and the consideration paid for those interests." Pinnacle further argues that, under Nevada's Electronic Transactions Uniform Act ("ETUA"), Nev. Rev. Stat. § 719 et seq., Shumway's typed name at the bottom of his emails constitutes a valid signature for purposes of the statute of frauds.

In reply, the Trust argues the statute of frauds applies despite the second sentence of Term 3 regarding repayment before any splits on profits with Xeptor. The Trust argues that the "mere possibility" that it could repay Pinnacle in less than a year does not preclude application of the statute of frauds. Assuming the statute of frauds applies, the Trust argues the ETUA does not alter the requirement that the trustees of the Trust sign the agreement-something the trustees did not do.[2] The Trust further argues that, in light of the parties' 23-page draft acquisition agreement, the email exchanges between Shumway and Fournier do not contain all the promises that were to constitute the contract.

Every agreement that, by its terms, is not to be performed within one year from the making thereof is void unless the agreement, or some note or memorandum thereof expressing the consideration, is in writing and subscribed by the person charged therewith. Nev. Rev. Stat. § 111.220.

"Where the manifest intent and understanding of the parties, as gathered from the words used and the circumstances existing at the time, are that the contract shall not be executed within the year, the mere fact that it is possible that the thing may be done in a year, will not prevent the statute [of frauds] from applying." Stanley v. A. Levy & J. Zetner Co. , 112 P.2d 1047, 1052-53 (Nev. 1941).

In Center of Hope v. Wells Fargo, the court concluded that an alleged oral loan modification appeared to fall within the statute of frauds because the loan could not be repaid within one year at the agreed monthly rate; thus, the agreement could not, by its terms, be completed within one year. 781 F.Supp.2d 1075, 1080 (D. Nev. 2011). Similarly, in Corchado v. BAC Home Loan Servicing, the court concluded an oral loan modification fell within the statute of frauds because the plaintiff did not "aver" that the five payments she made pursuant to the alleged modification "would have discharged the loan within one year from the time she claim[ed] to have executed the oral modification contract." 2011 WL 4573905, at *2 (D. Nev. Sept. 29, 2011).

On the other hand, in Atwell v. Southwest Securities, the Supreme Court of Nevada concluded that an oral real estate brokerage agreement was not subject to the statute of frauds where there was "nothing to indicate it could not be performed within one year." 107 Nev. 820, 825 (1991). Similarly, in Girton v. Daniels, the Supreme Court of Nevada held that a two-year lease was not subject to the statute of frauds because "[w]hile the lease by its terms, if fully complied with, may have extended for two years and even longer, " it nevertheless "could have ...


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