United States District Court, E.D. California
ARIEL ELIA, individually and as Successor Trustee to the Alan Elia Declaration of Trust Dated March 18, 2002, Plaintiff
v.
JOHN ROBERTS, and individual; TEXAS ENVIRONMENTAL PRODUCTS, INC., a Texas corporation; and TEXAS ENVIRONMENTAL PRODUCTS, a partnership, joint venture or other form of business organization unknown, and DOES 1 through 20, inclusive, Defendants
ORDER RE: MOTION FOR INTERLOCUTORY APPEAL (Doc.
145)
I.
Background
Defendant
John Roberts (“Roberts”) founded and owned Texas
Environmental Products, Inc. (“TEP Inc.”) which
manufactured and sold fertilizer. Alan Elia (“Alan
Elia”) sold fertilizer in the Fresno area on behalf of
Defendants starting in 2004. Defendants assert that Alan Elia
was an independent contractor who worked on commission.
Plaintiff asserts that Alan Elia formed a partnership with
Roberts; the partnership conducted business as a new entity
also named Texas Environmental Products (“TEP
Partnership”). Throughout their business relationship,
Roberts handled the manufacturing of the fertilizer and Alan
Elia handled all of the sales. Defendants and Alan Elia
roughly split the profits from the business each year. Alan
Elia died at the end of February 2015. Roberts continued the
sale of fertilizer in this area and sold TEP Inc. in December
2015.
Alan
Elia created a trust in 2002 (“Trust”) whose
beneficiaries are his children Ariel and Britz Elia
(“Beneficiaries”). Alan Elia's interest in
the business relationship with Defendants belongs to the
Trust. Alan Elia was the original trustor/trustee. Robyn
Esraelian was the attorney who represented the Trust. After
Alan Elia's passing, Harold Zinkin (“Zinkin”)
became the trustee. In 2015, Zinkin and Esraelian
communicated with Roberts about monies owed to the Trust.
They attempted to reach a settlement based on an
understanding that Alan Elia was an independent contractor.
However, the Beneficiaries opposed the settlement, arguing
that Alan Elia was a partner. Based on this difference of
opinion, the Beneficiaries and Zinkin agreed that Ariel Elia
would replaced Zinkin as the trustee.
In
February 2016, Plaintiff Ariel Elia, both in her personal
capacity and as the trustee for the Trust, filed suit against
Defendants on claims of accounting, breach of fiduciary duty
(to the partnership), and declaratory relief. Plaintiff
contends that the December 2015 sale also encompassed TEP
Partnership. Defendants contend that TEP Partnership does not
exist. Additionally, Plaintiff sought an additional double
damages penalty under Cal. Prob. Code § 859 for a bad
faith breach of fiduciary duty to a trust. Plaintiff
proceeded under two theories of monetary relief. First, under
the theory that Alan Elia was a partner, Plaintiff sought 50%
of the profits from fertilizer sales in 2015 and 50% of the
proceeds from the sale of TEP Partnership. Second, under the
theory that Alan Elia was an independent contractor,
Plaintiff sought the commission on any sales. The second
theory was not clearly part of Plaintiff's complaint or
joint pretrial statement. See Docs. 1 and 32. The court
permitted Plaintiff to amend claims to conform to evidence.
An
eight day jury trial was held, starting October 31, 2017. The
jury found that Alan Elia and Roberts did not have a
partnership agreement but that Alan Elia was in a contractual
relationship with TEP Inc. and was owed commission on sales
made; the jury awarded Plaintiff $452, 937.64. Doc. 105. That
amount is roughly equivalent to 50% of the profits from the
entirety of 2015. In post trial motions, both parties made
motions to amend judgment. Docs. 108, 117, and 118. In key
part, Defendants' motion for remittitur was granted.
Plaintiff's monetary award was reduced by five-sixth to
$75, 489.61 to correspond to a 50% share of profits from
January and February 2015; Plaintiff was given the option of
accepting the reduced award or the option of a new trial on
the issue of damages from breach of sales commission
contract. Doc. 132. Plaintiff opted for a new trial and made
a motion for reconsideration. Docs. 133 and 134. The motion
was denied. Doc. 141. Plaintiff has now made a motion seeking
interlocutory appeal. Doc. 145. Defendants oppose the motion.
Doc. 146.
II.
Legal Standard
Title
28 U.S.C. § 1292(b) states “When a district judge,
in making in a civil action an order not otherwise appealable
under this section, shall be of the opinion that such order
involves a controlling question of law as to which there is
substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation, he shall so state in
writing in such order. The Court of Appeals which would have
jurisdiction of an appeal of such action may thereupon, in
its discretion, permit an appeal to be taken from such order,
if application is made to it within ten days after the entry
of the order: Provided, however, that application for an
appeal hereunder shall not stay proceedings in the district
court unless the district judge or the Court of Appeals or a
judge thereof shall so order.” The Ninth Circuit has
listed the requirements for such a certification as:
“(1) that there be a controlling question of law, (2)
that there be substantial grounds for difference of opinion,
and (3) that an immediate appeal may materially advance the
ultimate termination of the litigation.” In re
Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th
Cir. 1982). Overall, Congressional legislative history
“indicates that [interlocutory appeal] was to be used
only in extraordinary cases where decision of an
interlocutory appeal might avoid protracted and expensive
litigation. It was not intended merely to provide review of
difficult rulings in hard cases.” United States
Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966).
III.
Discussion
Remittitur
was granted because the jury did not follow the jury
instructions and verdict form correctly. The jury was
directed to determine the amount of commissions Alan Elia
earned for sales made in January and February 2015. As stated
in prior orders, the parties agree that the jury decided to
award Plaintiff approximately 50% of the profit for the full
2015 year instead of commissions limited to January and
February of that year. See Doc. 117-1, 6:23-7; Doc. 122,
3:26-6:18. Plaintiff disagrees with the court's ruling on
two points. First, Plaintiff argues that the instructions and
verdict form do not limit the damages award to January and
February 2015. Plaintiff's interpretation is that
“everywhere the phrase January and February 2015 is
used in the instructions or verdict form the instruction or
questions relates to a description of a claim being made by
Plaintiff, not to how damages are calculated or to
determining what the terms of the implied-in-fact contract
are which, as noted, necessarily determines the amount of
damages available.” Doc. 146, 9:27-10:3. Second,
Plaintiff argues the court used the wrong standard to find
that remittitur was appropriate. Plaintiff is correct that
this court relied on out of circuit authority to come to this
conclusion. “Failure by the jury to follow the
court's instructions, which results in prejudice to the
moving party, is a proper ground for a new trial.”
AlphaMed Pharm. Corp. v. Arriva Pharm., Inc., 432
F.Supp.2d 1319, 1356 (S.D. Fla. 2006), citing Shushereba
v. R.B. Industries, Inc., 104 F.R.D. 524, 529 (W.D. Pa.
1985); Anderson v. Breazeale, 507 F.2d 929 (5th Cir.
1975); Thomas v. Stalter, 20 F.3d 298, 303 (7th Cir.
1994); J.A. Jones Constr. Co. v. Steel Erectors,
Inc., 901 F.2d 943, 944 (11th Cir. 1990). This precedent
seems to fit within the Ninth Circuit standards which state
that a court “will not reverse the jury's
assessment of the amount of damages unless the amount is
grossly excessive or monstrous, or unless the evidence
clearly does not support the damage award. A damage award
also cannot stand if it could only have been based on
speculation or guesswork.” Blanton v. Mobil Oil
Corp., 721 F.2d 1207, 1216 (9th Cir. 1983), citations
omitted. In this case, because the jury did not follow the
instructions and verdict form, the damage award was not
supported by the evidence.
Defendants
argue that the grant of remittitur is not a controlling
questions and that it is a mixed question of law and fact
which renders it inappropriate for interlocutory appeal. This
court disagrees. If the Ninth Circuit were to find that
remittitur was improperly granted, no new trial would need to
be held. An issue which could immediately end the case is a
controlling question of law. See Nat'l Ass'n of
African-American Owned Media v. Charter Communs., Inc.,
2016 U.S. Dist. LEXIS 185867, *11 (C.D. Cal. Dec. 12, 2016).
Such a ruling would clearly advance the ultimate termination
of this suit. The question of remittitur is also an issue of
law in this case. “[W]hile the Ninth Circuit has
apparently not had occasion to address the issue, many courts
have found the question of law must be a ‘pure question
of law,' not a mixed question of law and fact or an
application of law to a particular set of facts.”
Aldapa v. Fowler Packing Co., 2016 U.S. Dist. LEXIS
115064, *3 (E.D. Cal. Aug. 26, 2016), citing Ahrenholz v.
Board of Trustees of the Univ. of Ill., 219 F.3d 674,
675-77 (7th Cir. 2000); but see Dalie v. Pulte Home
Corp., 636 F.Supp.2d 1025, 1028 (E.D. Cal. 2009)
(“the Ninth Circuit Court of Appeals has never embraced
the rule that only pure legal questions are controlling
questions of law under § 1292(b)”). Here, the
parties have agreed to that the jury's award was based on
sales for the full 2015 year; there is no dispute in that
regard. The relevant jury instructions and verdict form
constitute approximately a dozen pages of text. They
constitute an extremely limited record for review. What the
instructions and verdict form required of the jury and the
appropriate standard for remittitur constitutes a compact
question suitable for interlocutory appeal review. Whether to
adopt precedent from outside the circuit can qualify as a
substantial difference of opinion. See Rancheria v.
Salazar, 2010 U.S. Dist. LEXIS 23317, *38-39 (N.D. Cal.
Feb. 23, 2010) (“substantial grounds for difference of
opinion may exist where there is ‘a dearth of precedent
within the controlling jurisdiction and conflicting decisions
in other circuits'”). The grant of remittitur
qualifies for interlocutory appeal certification.
The
scope of the new trial was limited to a consideration of
damages under the breach of contract claim. Doc. 132,
11:10-13. Plaintiff's request for a new trial on all
issues, including liability for breach of partnership
agreement, was denied. Doc. 141, 8:2. In opposition,
Defendants assert that “Plaintiff further requests that
the Appellate Court be able to review the limitations placed
on the new trial - permitting only a trial on the amount of
damages.” Doc. 147, 4:9-10. The court does not find
such a request to be encompassed in either the notice, the
moving brief, or the reply brief. See Docs. 145, 146, and
148. Plaintiff does not make a direct request for review of
that aspect of the orders or brief how that issue would meet
the interlocutory appeal standard. Therefore, the court does
not address Defendants' arguments in opposition with
respect to the scope of the new trial.
IV.
Order
Plaintiffs
motion for certification of an interlocutory ...