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Viasphere International Inc. v. Vardaryan

United States District Court, N.D. California, San Jose Division

March 21, 2017



          HOWARD R. LLOYD United States Magistrate Judge.

         In this diversity action, Viasphere International, Inc. (Viasphere) sued Aram Vardanyan, alleging fraud, breach of fiduciary duty, and breach of contract. Viasphere claimed that Vardanyan (a shareholder and former director of Viasphere's Technopark complex in Armenia) used Viasphere's personnel and resources for his own personal interests and that he was also involved in other ventures that conflicted with his obligations to Viasphere.

         The case proceeded to a 10-day, two-phase trial.[1] During trial, Vardanyan made Fed.R.Civ.P. 50(a) motions for judgment as a matter of law, arguing lack of sufficient evidence to support Viasphere's claims. Both motions were denied. The jury rendered a verdict in Viasphere's favor and against Vardanyan on six claims: intentional misrepresentation, negligent misrepresentation, conversion, breach of fiduciary duty, breach of contract, and breach of the implied covenant of good faith and fair dealing. Viasphere was awarded $72, 500 in compensatory damages, and the jury found that Vardanyan acted with oppression, fraud, or malice. (Dkt. 215). The case immediately proceeded to a punitive damages phase, and Viasphere was awarded $1, 001, 713 in punitive damages. (Dkt. 218).

         After post-trial briefing, the court issued its memorandum of decision on the two remaining equitable matters: Viasphere's request for imposition of a constructive trust and for rescission based on fraud. (Dkt. 232). The court found in Vardanyan's favor on the request for constructive trust and ruled in Viasphere's favor on rescission. Because rescission of a contract and damages for breach of contract are alternate remedies, Viasphere was invited to choose between the two. (Id.). Viasphere chose rescission.

         At the court's direction, the parties then submitted further briefing on the jury's damages award. The court determined that any damages awarded for the breach of contract claim must be removed in order for Viasphere to rescind the contract. But because the contract and tort claims were submitted to the jury on a general verdict form (submitted by Viasphere), the damages were not allocated across the different claims. Finding no principled way to allocate the compensatory damages award, the court did not apportion the verdict amongst Viasphere's different claims or assume that the entire amount of damages was based on the tort claims alone. No compensatory damages were awarded. And, the court therefore did not award any punitive damages. (Dkt. 244). Judgment was entered accordingly. (Dkt. 245).

         Pursuant to Fed.R.Civ.P. 59(e), Viasphere then moved to alter the judgment. It did not seek to resurrect the jury's compensatory damages award. It asked that only the punitive damages award be reinstated. This court granted that motion, essentially concluding that “Viasphere gave up the right to a compensatory damages award; but Viasphere did not give up the punitive damages award that was based on the jury's finding that Viasphere suffered actual damage as a result of Vardanyan's tortious conduct.” (Dkt. 257 at 3). An amended judgment was entered accordingly. (Dkt. 258).

         Vardanyan then filed the present renewed motion for judgment as a matter of law (JMOL) pursuant to Fed.R.Civ.P. 50(b). Alternatively, he asks the court to remit damages or for a new trial. Viasphere opposes the motion. Upon consideration of the moving and responding papers, as well as the arguments presented at the motion hearing, this court grants Vardanyan's motion for JMOL in part and denies it in part; denies as moot his alternate request for remittitur; and conditionally grants his alternate request for a new trial pursuant to Fed.R.Civ.P. 50(c).


         A. Motion for JMOL

         Fed. R. Civ. P. 50(b) provides, in relevant part:

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. 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.

         On a renewed motion for JMOL following a jury verdict, the court may (1) allow judgment on the 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 appropriate when the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, which is contrary to the jury's verdict.'” Hagen v. City of Eugene, 736 F.3d 1251, 1256 (9th Cir. 2013) (quoting Omega Envtl., Inc. v. Gilbarco, Inc., 127 F.3d 1157, 1161 (9th Cir.1997)). The party seeking judgment as a matter of law must show that the verdict is not supported by “substantial evidence, ” that is, “such relevant evidence as reasonable minds might accept as adequate to support a conclusion even if it is possible to draw two inconsistent conclusions from the evidence.” Maynard v. City of San Jose, 37 F.3d 1396, 1404 (9th Cir.1994). In ruling on the motion, the court must draw all reasonable inferences in favor of the nonmoving party and may not make any credibility determinations or reweigh the evidence. Experience Hendrix LLC v. Ltd., 762 F.3d 829, 842 (9th Cir. 2014). “If the court grants a renewed motion for judgment as a matter of law, it must also conditionally rule on any motion for a new trial by determining whether a new trial should be granted if the judgment is later vacated or reversed.” Fed.R.Civ.P. 50(c).

         B. ...

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