F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUL 31 2000
TENTH CIRCUIT
PATRICK FISHER
Clerk
MIMACO LLC, a Colorado Limited
Liability Company,
Plaintiff - Appellee/ Cross
- Appellant, Nos. 99-2072, 99-2095,
99-2339, & 99-2357
v. (D. Ct. No. CIV-97-1468)
(D. N. Mex.)
MAISON FAURIE ANTIQUITIES, a
sole proprietorship operating in New
Mexico; ROBERT FAURIE,
Defendants - Appellants/
Cross - Appellees.
ORDER AND JUDGMENT *
Before TACHA, ANDERSON, and EBEL, Circuit Judges.
On February 4, 1999, a jury rendered a verdict in favor of plaintiff-appellee
Mimaco, LLC and against defendants-appellants Maison Faurie Antiquities
(“Maison Faurie”) and Robert Faurie. Defendants appeal several rulings made by
the district court during and after the trial, and plaintiff cross-appeals. We
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. This court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm. In addition, we
grant plaintiff’s request for attorney fees it incurred on appeal and remand this
case for the district court to determine the amount of fees plaintiff should be
awarded.
I. Background
Faurie, the owner of Maison Faurie, purchased a large number of books
from the estate of Catherine McChesney. He took a sample of the books to his
shop to sell. In the fall of 1995, Matthew VanBuren purchased two of the
McChesney books from Maison Faurie: a first edition book written by Jack
Kerouac and a book from the personal library of Robert Louis Stevenson. At that
time, Faurie told VanBuren that the books were from the McChesney estate.
Faurie indicated that he had an assistant at the McChesney residence packing the
rest of the books for storage and that he wanted to sell the books as a collection.
VanBuren left Maison Faurie with the impression that the McChesneys were
collectors of books from generation to generation and that there must be some
rare books in the collection.
Over the next several months, VanBuren telephoned Faurie at least three
times to inquire further about the McChesney books. Faurie stated that he had
taken the books directly from the McChesney residence to storage and had not
sold any of them. Eventually, VanBuren formed Mimaco with Michael Jansen, a
-2-
lawyer, in order to purchase and resell the books. Before they paid for the
collection, VanBuren and Jansen inspected some of the books, which were packed
in approximately 150 moving boxes. Both Faurie and Ward Glass, one of the
individuals who packed the books at the McChesney residence, indicated that the
boxes contained the entire McChesney book collection. VanBuren and Jansen
looked through approximately twenty of the boxes and told Faurie that they had
not found books of the quality and value they expected. They asked Faurie for
more time to look through the rest of the boxes, but Faurie could not
accommodate them.
Ultimately, VanBuren and Jansen, through Mimaco, agreed to pay Faurie
$18,000 for all of the books and let Faurie keep a couple of French books from
the collection. They went to Maison Faurie to complete the transaction and pick
up the McChesney books that they knew were still in the shop. While they were
there, they discovered several additional books in the bookcases that were from
the McChesney estate. Faurie allowed VanBuren and Jansen to take the
additional books and stated that they now had the entire McChesney collection.
VanBuren eventually went through all of the boxes and did not discover
any of the rare books he expected to find. VanBuren then called Faurie and tape
recorded their conversation. On the telephone, Faurie stated that he knew for a
fact that the McChesneys were rare book collectors. He further stated that he had
-3-
sold VanBuren and Jansen the entire McChesney collection, except for the books
they had permitted him to keep.
In November 1997, Mimaco filed an amended complaint against Faurie and
Maison Faurie, asserting seven causes of action: (1) breach of express and/or
implied contract and promissory estoppel, (2) breach of implied covenant of good
faith and fair dealing, (3) fraud, (4) violation of New Mexico’s Unfair Practices
Act (UPA), (5) interference with prospective and advantageous economic
relations, (6) civil conspiracy, and (7) prima facie tort. Mimaco sought both
compensatory and punitive damages. The trial court directed a verdict on all of
plaintiff’s claims except those for breach of contract and unfair trade practices.
The jury found that defendants breached an enforceable contract, violated
their duty of good faith and fair dealing, and engaged in unfair trade practices.
The jury awarded plaintiff approximately $20,000 in compensatory damages, and
the district court entered a final judgment on February 11, 1999.
Defendants appealed the trial court’s final order on March 12, 1999 (case
number 99-2072), and plaintiff cross-appealed (case number 99-2095) 1. Plaintiff
then filed a motion in the trial court for an award of attorney fees and expenses
1
In case number 99-2095, plaintiff cross-appeals the district court’s grant of
a directed verdict on its fraud claim. Plaintiff states that we need not reach its
cross-appeal if we affirm the judgment in case number 99-2072. Because we do
affirm the judgment in case number 99-2072, we do not further address cross-
appeal number 99-2095.
-4-
pursuant to the UPA. On August 3, 1999, the district court granted plaintiff’s
motion, but awarded a smaller amount of fees and expenses than plaintiff had
requested. Plaintiff filed a motion for clarification of the district court’s August
3, 1999 order, but did not challenge the amount of fees and expenses awarded by
the court. The district court granted plaintiff’s motion on October 20, 1999.
Defendants then appealed the award of fees and expenses (case number 99-2339),
and plaintiff cross-appealed (case number 99-2357).
We consolidated all four of these cases on January 12, 2000 for the purpose
of oral argument only. We now consolidate these cases in a single opinion
pursuant to Fed. R. App. P. 3(b).
II. Case No. 99-2072
A. Expert Testimony
Defendants first claim that the district court erred in admitting the
testimony of plaintiff’s expert witnesses, Bill Good and Carl Bartecchi. They
argue that the testimony is speculative and not scientific.
We review the district court’s decision to admit expert testimony for an
abuse of discretion. Smith v. Ingersoll-Rand Company, __ F.3d __, 2000 WL
728816, at *5 (10th Cir. June 7, 2000). Under Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993) and Kumho Tire Co. v. Carmichael,
526 U.S. 137 (1999), the trial court must ensure that expert testimony is both
-5-
relevant and reliable. Smith, __ F.3d __, 2000 WL 728816, at *5. This
“gatekeeping function is a flexible and commonsense undertaking in which the
trial judge is granted broad latitude in deciding both how to determine reliability
as well as in the ultimate decision of whether the testimony is reliable.” Id.
(internal quotation marks and citation omitted).
Good, a retired book dealer, testified that the McChesney collection should
have included books by several well-known authors. He further opined that the
collection should have contained an additional 400 to 600 books worth $200 to
$300 each. Good based his estimate in part upon receipts, auction slips,
references to certain books, and the books Faurie had in his shop. He also based
his estimate on the type of books he would have expected to find in a collection
like the McChesney collection.
Bartecchi, a physician who collects old medical books, testified that the
McChesney collection lacked certain medical books he would have expected it to
contain. He estimated that, at a minimum, 10% of the medical books in the
collection should have pre-dated 1900 and that such books would be worth $300
to $500 each. He also estimated that there should have been approximately 50
additional cardiology books in the collection worth about $60 each.
We find no abuse of discretion in the trial court’s decision to admit the
testimony of Good and Bartecchi. The trial judge permitted plaintiff’s experts to
-6-
testify about the types of books they would have expected to find in the
McChesney collection and the approximate value of those books. However, the
judge did not permit the experts to express any opinions about Faurie’s alleged
involvement in removing any books from the collection. In addition, defense
counsel had an opportunity to cross-examine the experts and convince the jury
during closing argument that their testimony was not credible.
It is true that neither Good nor Bartecchi personally knew the McChesneys
or had first-hand knowledge of their lives, “but firsthand knowledge is not
requisite to the admissibility of an expert opinion.” Id. at *6. Moreover, “to the
extent the lack of firsthand experience by either expert is relevant, it goes . . . to
the weight and not the admissibility of the testimony.” Id.
B. Tape Recording
Defendants next allege that the district court erred in admitting the tape-
recording of VanBuren’s telephone conversation with Faurie because plaintiff
failed to timely disclose the recording as required under Fed. R. Civ. P. 26(a).
This appears to be an argument that the district court should have sanctioned
plaintiff pursuant to Fed. R. Civ. P. 37(c)(1) for its alleged Rule 26 violation by
excluding the tape. We review the district court’s decision to admit the tape for
an abuse of discretion, affording it great deference. See Smith, __ F.3d __, 2000
WL 728816, at *9.
-7-
Plaintiff specifically stated in its initial Rule 26 disclosures, dated February
26, 1998, that it was identifying only non-privileged tangible materials. Thus,
plaintiff asserts, it did not initially disclose the recording because the tape was
privileged work product prepared in anticipation of litigation. During his April
1998 deposition, Faurie denied that he ever explicitly told VanBuren that Mimaco
had purchased the whole McChesney collection. Because the recording
contradicted Faurie’s testimony, plaintiff’s counsel decided to use it at trial.
Consequently, on July 15, 1998, plaintiff’s counsel produced the recording to
defendants’ counsel.
Under Rule 37(c)(1), a party that “without substantial justification” fails to
disclose Rule 26(a) information “shall not, unless such failure is harmless, be
permitted to use [the information] as evidence at a trial.” “The determination of
whether a Rule 26(a) violation is justified or harmless is entrusted to the broad
discretion of the district court.” Woodworker’s Supply, Inc. v. Principal Mut.
Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999) (internal quotation marks and
citation omitted). The district court should use the following factors to guide its
discretion: “(1) the prejudice or surprise to the party against whom the testimony
is offered; (2) the ability of the party to cure the prejudice; (3) the extent to which
introducing such testimony would disrupt the trial; and (4) the moving party’s bad
faith or willfulness.” Id.
-8-
Assuming that plaintiff violated Rule 26(a), we conclude that the district
court did not abuse its discretion in admitting the tape at trial. Plaintiff disclosed
the tape to defendants six months before trial, and defendants therefore were not
surprised by the admission of the tape at trial. Moreover, defendants have offered
no evidence that they were prejudiced by the admission of the tape or that
plaintiff acted in bad faith. Thus, plaintiff’s argument is without merit.
C. Motion for Directed Verdict
Defendants’ last contention in case number 99-2072 is that the district court
should have granted their motion for a directed verdict on plaintiff’s claims for
unfair trade practices and breach of implied covenant of good faith and fair
dealing. They assert that there was insufficient evidence for a jury to decide these
claims. We disagree.
We review de novo the district court’s denial of a motion for a directed
verdict. Knight v. Snap-On Tools Corp., 3 F.3d 1398, 1401 (10th Cir. 1993). “A
directed verdict is appropriate only if the evidence, viewed in the light most
favorable to the nonmoving party, points but one way and is susceptible to no
reasonable inferences supporting the nonmoving party.” Id. (internal quotation
marks and citations omitted).
1. Unfair Trade Practices
The New Mexico Unfair Practices Act “prohibit[s] misleading or deceptive
-9-
communications to consumers.” Woodworker’s Supply, Inc., 170 F.3d at 994. It
“applies to all misleading or deceptive statements, whether intentionally or
unintentionally made.” Id. (internal quotation marks and citation omitted); see
N.M. Stat. Ann. § 57-12-2(D) (Michie Supp. 1999) (“‘[U]nfair or deceptive trade
practice’ means any false or misleading oral or written statement . . . knowingly
made in connection with the sale . . . of goods or services . . . by any person in the
regular course of his trade or commerce, which may, tends to or does deceive or
mislead any person . . . .”).
Plaintiff presented evidence that defendant Faurie repeatedly assured
VanBuren that he was buying the entire private McChesney book collection,
except for the two books that VanBuren permitted Faurie to keep. Plaintiff also
demonstrated that Faurie in fact knew that VanBuren and Jansen were not
purchasing the whole collection. Faurie testified at trial that he filled and refilled
bookcases in his shop with books from the McChesney estate before plaintiff
made his purchase. Faurie further testified that many books from the McChesney
estate had been taken to a dump. Thus, we hold that there was sufficient evidence
for plaintiff’s UPA claim to go to the jury.
2. Breach of Implied Covenant of Good Faith and Fair Dealing
“Whether express or not, every contract imposes upon the parties a duty of
good faith and fair dealing in its performance and enforcement.” Bourgeous v.
- 10 -
Horizon Healthcare Corp., 872 P.2d 852, 856 (N.M. 1994) (internal quotation
marks and citation omitted). An implied covenant of good faith and fair dealing
“requires that neither party do anything that will injure the rights of the other to
receive the benefit of their agreement. Denying a party its rights to those benefits
will breach the duty of good faith implicit in the contract.” Id. (citation omitted).
Plaintiff offered evidence that Faurie injured its right to receive the benefit
of their contract. Specifically, plaintiff showed that Faurie knew VanBuren
wanted to purchase the complete McChesney collection. Plaintiff also
demonstrated that Faurie assured VanBuren repeatedly that Mimaco was
purchasing the entire collection, minus the two books that Faurie kept. Plaintiff
further showed that Faurie knew many books were removed from the collection
and sold or destroyed before Mimaco bought the collection. Thus, we hold that
there was sufficient proof for a jury to determine that Faurie breached the implied
covenant of good faith and fair dealing.
III. Case No. 99-2339 and Cross-Appeal No. 99-2357
A. Case No. 99-2339
Defendants argue that the trial court erred in awarding plaintiff attorney
fees pursuant to the UPA.
“We review the district court’s award of attorneys’ fees for an abuse of
discretion. Underlying factual findings will only be upset when clearly erroneous.
- 11 -
However, a district court’s statutory interpretation or legal analysis which
provides the basis for the fee award is reviewable de novo.” Knight, 3 F.3d at
1403. The UPA provides that a “court shall award attorneys’ fees and costs to the
party complaining of an unfair or deceptive trade practice . . . if he prevails.”
N.M. Stat. Ann. § 57-12-10(C) (Michie 1995).
Defendants contend that plaintiff should not be deemed a “prevailing party”
because it recovered only $20,000, an amount well below the $75,000
jurisdictional requirement of 28 U.S.C. § 1332(a). 2 They base their argument on
28 U.S.C. § 1332(b), which provides that a district court may deny costs to a
plaintiff if the plaintiff recovers less than $75,000. However, § 1332(b) applies
to costs, not attorney fees. In addition, § 1332(b) permits, but does not require, a
district court to deny costs when a plaintiff’s recovery is less than the
jurisdictional amount. Furthermore, we previously have awarded attorney fees
and costs under the UPA when the amount of compensatory damages awarded by
the jury was below the jurisdictional amount. See Knight, 143 F.3d at 1403
(finding that a plaintiff who recovered $23,116 on his UPA claim was a
prevailing party under New Mexico law).
2
Defendants also contend, in essence, that plaintiff is not entitled to
attorney fees because the district court should have granted a directed verdict on
plaintiff’s UPA claim. Since we have already rejected defendants’ directed
verdict argument, we also reject this corollary claim.
- 12 -
In this case, plaintiff won a jury verdict on its UPA claim and therefore is
entitled to attorney fees under N.M. Stat. Ann. § 57-12-10(C). Accordingly, we
affirm the district court’s decision to award attorney fees and expenses.
B. Case No. 99-2357
Plaintiff cross-appeals, claiming that it is now entitled to the attorney fees
it has incurred on appeal. “The New Mexico Supreme Court has ruled that [§ 57-
12-10(C)] applies to costs and fees incurred on appeal as well as at trial.”
Woodworker’s Supply, Inc., 170 F.3d at 996 (citing Hale v. Basin Motor Co., 795
P.2d 1006, 1013-14 (N.M. 1990)). Plaintiff therefore is entitled to such fees. On
remand, the district court should award plaintiff attorney fees for litigating this
appeal.
AFFIRMED and REMANDED.
ENTERED FOR THE COURT,
Deanell Reece Tacha
Circuit Judge
- 13 -