[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUGUST 12, 2005
No. 04-12465 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 02-80527-CV-KLR
SEB S.A.,
Plaintiff-
Appellee,
versus
SUNBEAM CORPORATION,
SUNBEAM PRODUCTS, INC.,
Defendants-
Cross-Claimants-
Third-Party
Plaintiffs-
Appellants-
Cross-Appellees,
WING SHING INTERNATIONAL, LTD. (BVI),
Defendant-
Counter-Claimant-
Third-Party
Defendant,
Appellee,
PENTALPHA ENTERPRISES, LTD.,
Defendant-
Counter-Claimant-
Third-Party
Defendant-
Appellee-
Cross-Appellant,
GLOBAL-TECH APPLIANCES, INC.,
Counter-Claimant-
Third-Party
Defendant-
Appellee-
Cross-Appellant.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(August 12, 2005)
Before BIRCH, CARNES and HILL, Circuit Judges.
BIRCH, Circuit Judge:
This appeal presents a number of issues arising from a Product Supply
Agreement entered into by Pentalpha Enterprises, Ltd. (“Pentalpha”), and Sunbeam
Products, Inc. (“Sunbeam Products”). Sunbeam Products and its parent company,
Sunbeam Corporation, Inc. (collectively, “Sunbeam”), sued Pentalpha and its
2
parent company, Global-Tech Appliances, Inc. (“Global-Tech”), for
indemnification. Pentalpha brought a crossclaim against Sunbeam and alleged
breach of contract and fraudulent inducement. After a trial in district court, a jury
awarded Sunbeam $2,450,948.91 on its indemnification claims against Pentalpha
and Global-Tech and Pentalpha $6,600,000 on its breach of contract claim against
Sunbeam. On appeal, Sunbeam argues that the district court erred in refusing to
grant it judgment as a matter of law on Pentalpha’s breach of contract claim and in
declining to order a new trial because of the admission of allegedly improper
testimony. On cross-appeal, Pentalpha argues that the district court erred in
denying Pentalpha pre-verdict interest on its breach of contract award, in admitting
certain evidence which could have resulted in increased damages for Pentalpha,
and in denying Global-Tech judgment as a matter of law on Sunbeam’s breach of
contract claim. We AFFIRM in part, REVERSE in part, and REMAND for
proceedings consistent with this opinion.
I. FACTUAL BACKGROUND
Global-Tech, formerly named Wing Shing International, (BVI) Ltd. (“Wing
Shing”),1 is a publicly-traded holding company incorporated in the British Virgin
Islands. Global-Tech is the parent company of Pentalpha. Pentalpha is based in
1
Global-Tech changed its name from Wing Shing International (BVI) Ltd. in 1997. For
clarity, we refer to the entity as Global-Tech throughout this opinion.
3
Hong Kong and designs, manufactures, and sells household appliances for resale to
retail customers. Pentalpha Enterprises U.S., Inc. (“Pentalpha U.S.”), was owned
by Eyal Lior and Joe Sasso in 1997.
Sunbeam Products, Inc., a company located in Boca Raton, Florida, sells
household appliances. In the early 1990s, Pentalpha began selling certain small
household appliances to Sunbeam, who then resold the appliances to retail
customers.
A. The June Product Supply Agreement
Pentalpha, Pentalpha U.S., Wing Shing Marketing (BVI) Ltd.,2 and
Sunbeam entered into a Product Supply Agreement (“June PSA”) dated 27 June
1997. Lior, part owner of Pentalpha U.S., negotiated the June PSA on behalf of
Pentalpha, Pentalpha U.S., and Wing Shing Marketing.
Under the terms of the June PSA, Pentalpha became the exclusive supplier
for Sunbeam of certain appliances, listed in Schedule A to the PSA, “so long as
Sunbeam continues to market similar or like products of the type listed in Schedule
A . . . .” R4-201, Exh. 103 ¶ 2. Sunbeam did not guarantee “to purchase any
specific quantity of product at any time.” Id. As long as Sunbeam gave Pentalpha
ninety days notice, Sunbeam could change or discontinue its product line so that it
2
Wing Shing Marketing dissolved at the end of 1997.
4
would not need to purchase any appliances from Pentalpha.
The June PSA also provided a process by which Pentalpha would begin
manufacturing for Sunbeam any Schedule A products that it did not already
manufacture:
All items not currently being manufactured by Pentalpha
will be quoted by Pentalpha as soon as possible. If the
quoted prices from Pentalpha are equal to or lower than
Sunbeam’s existing pricing, a project will be started to
move tooling from the current supply source to Pentalpha
no later than by April 1, 1998. Sunbeam and Pentalpha
agree that time is of the essence and will strive to move
as much tooling as possible before the Chinese New Year
holiday. If Sunbeam does not own the tooling, Pentalpha
will begin new tooling construction when pricing is
agreed upon.
Id. ¶ 3.B. The June PSA did not explicitly require Sunbeam to provide to
Pentalpha specifications or samples of Schedule A Products that Pentalpha did not
already manufacture. Further, the June PSA did not explicitly require Pentalpha to
provide project plans to Sunbeam before the transfer of tooling could take place.
Additionally, the June PSA provided that “Pentalpha’s supply rights and
Sunbeam’s purchase requirements obligation” were subject to “Pentalpha’s
continued delivery of product in accordance with all terms and conditions of
Sunbeam’s purchase orders for product and product specific manufacturing and
distribution agreements.” Id. ¶ 2. The parties agreed that the law of Florida would
5
govern the June PSA. Id. ¶ 5. The term of the June PSA ran from 1 July 1997 to
30 June 2001. Id. ¶ 1.
A Rider to the June PSA, signed only by Lior, President of Pentalpha U.S.,
“supplement[ed] the Product Supply Agreement dated June 27, 1997 by and
between Sunbeam Products, Inc. and Pentalpha Enterprises US, Ltd.” R4-201,
Exh. 104 ¶ 1. It specified that “Pentalpha” would pay Sunbeam a rebate of one
million dollars “in consideration of the exclusive supply commitments contained
in” the PSA. Id. ¶ 2. At trial, John Sham, CEO of Pentalpha and Global-Tech,
testified that he did not see the Rider to the agreement until October 1997 and that
Lior did not have the authority to commit Pentalpha to pay a one million dollar
rebate to Sunbeam.
B. The October Product Supply Agreement
In October 1997, George Timchal, Vice President of Procurement at
Sunbeam, told Sham that the June PSA contained the Rider. Sham was “kind of
shocked” and “not happy,” and after discussions with Global-Tech’s investment
bank, concluded that the supply agreement had to be changed. On 22 October,
Sham met with Sunbeam’s representatives to discuss the one million dollar rebate
and other matters. At the meeting, Sham and Sunbeam’s representatives discussed
entering into a new Product Supply Agreement between Pentalpha and Sunbeam
6
Products, Inc. Under the agreement proposed by Sunbeam, Pentalpha would give
Sunbeam a one million dollar rebate immediately. Sham was initially reluctant to
enter into the agreement, but after Timchal and other Sunbeam representatives
indicated to Sham that Sunbeam was a strong, growing company, Sham decided to
sign it on behalf of Pentalpha.
On 23 October 1997, Sham executed the revised Product Supply Agreement
(“October PSA”) on behalf of Pentalpha. The October PSA, entered into between
Pentalpha and Sunbeam Products, Inc., differed from the June PSA in two main
ways. First, the October PSA contained the million dollar rebate provision, which
had been in a rider to the June PSA, in its main body. Second, the October PSA
included a merger clause. The provisions of the October PSA and June PSA were
identical in all other respects. The term of the October PSA was 1 July 1997 to 31
June 2001. Additionally, Sunbeam and Pentalpha executed an agreement which
stated that “Sunbeam accepts and agrees that the [June PSA] was never effective
and that it is of no force or effect.” R4-201, Exh. 113 ¶ 2.
C. Pentalpha and Sunbeam’s Conduct Under the October PSA
On 28 October 1997, Pentalpha submitted bids to Sunbeam on 27 Schedule
A products models, including certain coffee-makers, garment steamers, irons, rice
cookers, and rotisserie ovens. Pentalpha did not bid on the air filters, toaster
7
ovens, hand mixers, ultrasonic humidifiers, or other coffee-makers listed in
Schedule A. According to Sham’s testimony at trial, Pentalpha did not bid on the
air filters, coffee makers, or toaster ovens because it could not meet Sunbeam’s
existing prices. Pentalpha did not bid on the hand mixers because Sunbeam did not
provide Pentalpha samples of those items. Pentalpha did not bid on the ultrasonic
humidifiers because Sunbeam informed Pentalpha that they had been discontinued.
Sham testified that Pentalpha needed the samples to determine the products’
specifications with certainty.
Sunbeam did not respond to Pentalpha’s bids on irons. Sunbeam responded
to its bids on rice cookers only by communicating that the bid was higher than a
bid Pentalpha had submitted in 1996 on a different model of rice cooker.
Sunbeam accepted Pentalpha’s bids for a series of coffee makers identified on
Schedule A, two models of garment steamers, and rotisserie ovens. However,
Sunbeam never transferred tooling for these items.3 On 16 March 1998, Pentalpha
3
According to Sunbeam, it did not order the series of coffee makers from Pentalpha
because Pentalpha failed to “submit a project plan that met the minimum criteria for a
reasonable transfer of those products.” R9 at 174. On 24 December 1997, Nugent sent a
memorandum to Pentalpha which stated that, for the coffee makers, “Pentalpha needs to provide
project plan and provide Sunbeam with UL/CUL approval plan (dates) as well. . . . We will
agree to a tooling transfer date that fits in with your project plan.” R4-201, Exh. 127 at 1.
Pentalpha responded on 30 December 1997: “Yes, you are right, we need to prepare a UL
samples [sic] for approval under Pentalpha’s name. . . . But, we still need your tooling.
Otherwise, no sample (manufactured by Pentalpha) for UL approval.” R4-201, Ex. 128 at 1. In
its response, Pentalpha included a schedule indicating that the tooling for the coffee makers
should have been transferred completely by 28 February 1998.
8
submitted lower bids on the rice cookers. Sunbeam did not respond to the
renewed bids.
D. Sunbeam’s Indemnification Claims Against Pentalpha
At some point during Sunbeam’s relationship with Pentalpha, the Rival
Company (“Rival”) filed a lawsuit against Sunbeam and asserted that a food
steamer manufactured by Pentalpha for Sunbeam infringed Rival’s patent. Soon
after, Black & Decker, Inc. (“Black & Decker”) filed a lawsuit against Sunbeam.
Black & Decker similarly claimed that a food steamer manufactured by Pentalpha
for Sunbeam infringed Black & Decker’s patent. On 5 February 1998, Sunbeam
wrote to Pentalpha and demanded reimbursement of approximately $850,000 of
legal fees spent defending successfully the Rival and Black & Decker lawsuits.
Sunbeam stated that “[e]ffective today there will not be any communications from
Sunbeam to Pentalpha on any issues on ongoing business until such time as you
personally contact Sunbeam to resolve the litigation expenses.” R9 at 12.
According to the parties’ pre-trial stipulations, Pentalpha did not deny its
responsibility to reimburse Sunbeam but rather “questioned the amount and nature
of the expenditures.” R9 at 20.
E. Sunbeam’s Solicitation of Rebates from Other Manufacturers
In 1997, Sunbeam solicited and received a $240,000 rebate from Tsann
9
Kuen, its existing supplier of Schedule A hand mixers. In March 1998, Tsann
Kuen offered Sunbeam a one million dollar rebate in response to a request from
Sunbeam. Sunbeam also solicited a one million dollar rebate from Chiaphua
Industries, Ltd., another supplier. Sunbeam attempted to secure rebates from
other suppliers but was unsuccessful.
F. Pentalpha’s 16 July 1998 Memorandum
On 16 July 1998, Pentalpha wrote to Sunbeam and asserted that Sunbeam
had not fulfilled its obligations under the PSA:
Since the agreement has not been fulfilled by
Sunbeam, our auditor has forced Pentalpha to write off
the paid deposit, one million US dollars.
We have no choice but to issue the debit note to
Sunbeam for this one million. Please kindly
acknowledge by fax return. The original will be sent to
you and you’re [sic] A/C department by FedEx.
R4-201, Ex. 152 at 1. Attached to the memo was a debit note from Pentalpha to
Sunbeam for one million dollars. According to Sham, Sunbeam did not respond
to the 16 July 1998 memo.
II. PROCEDURAL BACKGROUND
On 10 March 1998, SEB, S.A. (“SEB”), a French corporation, initiated an
action in district court4 and claimed that a deep fryer manufactured by Pentalpha
4
SEB commenced the action in United States District Court for New Jersey. The action
was later transferred to the Southern District of Florida.
10
for Sunbeam infringed SEB’s patent. In its amended complaint, SEB named
Sunbeam, Global-Tech, and Pentalpha as defendants. Sunbeam asserted a third-
party claim and cross-claim against Pentalpha and Global-Tech for
indemnification.
The district court dismissed SEB’s amended complaint against Global-Tech
and Pentalpha for lack of personal jurisdiction, and around July 1998, SEB and
Sunbeam settled for $2 million. In its amended complaint, Sunbeam claimed
rights to indemnification from Pentalpha and Global-Tech for costs arising from
prior litigation over the Rival and Black & Decker food steamer patents and for
the SEB litigation and settlement. Pentalpha asserted counterclaims against
Sunbeam for breach of contract and fraudulent inducement.
A. Summary Judgment
Sunbeam moved for summary judgment on its indemnification claims and
Pentalpha’s fraudulent inducement and breach of contract counterclaims. The
district court granted Sunbeam’s motion in part. First, the district court granted
Sunbeam’s motion for summary judgment as to Pentalpha’s liability to indemnify
Sunbeam for attorneys’ fees from the Rival and Black & Decker food steamer
litigation but denied the motion as to the amount of damages. The district court
noted that Pentalpha conceded its obligation to indemnify Sunbeam but concluded
11
that there existed material issues of fact as to the amount of fees owed. Second,
the district court granted Sunbeam’s motion as to Pentalpha’s liability to
indemnify Sunbeam for the SEB settlement but denied summary judgment as to
damages. Again, there existed material issues of fact as to the amount of
Sunbeam’s attorneys’ fees. The district court held that Pentalpha’s obligation to
indemnify Sunbeam arose out of U.C.C. § 2-312(3) and was thus independent of
Sunbeam’s purchase orders or the October PSA. Third, the district court granted
Sunbeam’s motion as to Pentalpha’s fraudulent inducement claim. Finally, the
district court ruled that there existed material issues of fact as to which party
breached the PSA first and denied Sunbeam’s motion as to Pentalpha’s breach of
contract claim. The case proceeded to trial.
B. The District Court’s 15 December Order
Before trial, on 14 November 2003, Sunbeam filed a motion in limine to
exclude any evidence of Sunbeam’s receipt of rebates from vendors other than
Pentalpha (“rebate evidence”) from 1997to 1999. Sunbeam argued that Pentalpha
offered the rebate evidence to prove Sunbeam’s motive in allegedly breaching the
October PSA. The district court ruled that the rebate evidence was admissible for
two purposes. First, any rebate evidence which showed that Sunbeam committed
a material breach of the October PSA was admissible. Pentalpha could offer, for
12
example, evidence relevant to a claim that Sunbeam could not perform under the
October PSA because, in accepting a particular rebate, it became contractually
bound to another vendor. Second, Pentalpha could introduce rebate evidence to
rebut any explanation offered by Sunbeam of its failure to perform under the
agreement. The rebate evidence could not be admitted for any other purposes.
C. The District Court’s 17 December Order
On 14 November 2003, Pentalpha moved to preclude Sunbeam from
offering evidence that Pentalpha breached the October PSA by failing to
indemnify Sunbeam for the SEB litigation and settlement and Rival and Black &
Decker food steamer lawsuits. Pointing to the merger clause in paragraph 8 of the
October PSA, Pentalpha argued that the October PSA did not require
indemnification. In response, Sunbeam contended that paragraph 2 of the October
PSA required indemnification because it incorporated into the PSA the terms of
Sunbeam and Pentalpha’s purchase orders and manufacturing and distribution
agreements, both of which required indemnification. The district court agreed
with Sunbeam. It held that Paragraph 2 of the October PSA incorporates the
terms and conditions of the purchase orders, which required Pentalpha to
indemnify Sunbeam for the SEB litigation and settlement, and the terms and
conditions of the manufacturing and distribution agreements, which required
13
Pentalpha to indemnify Sunbeam for the Rival and Black & Decker food steamer
litigation attorneys’ fees. Accordingly, the district court ruled that evidence
concerning Pentalpha’s failure to indemnify Sunbeam for the SEB litigation and
settlement and Rival and Black & Decker food steamer lawsuits was admissible to
prove prior breach by Pentalpha.
D. Trial
1. Sunbeam’s Case-in-Chief
Trial began on 12 January 2004. In its case in chief on its indemnification
claims, Sunbeam called Steven Berreth, the former intellectual property counsel of
Sunbeam Corporation; John Sham, the CEO of Global-Tech and Pentalpha;
Donald Jackson, a former employee in Sunbeam’s accounting department; and
Peter Howell, a Director of Global-Tech.
2. Global-Tech’s Motion for Judgment as a Matter of Law
Global-Tech moved for a directed verdict after Sunbeam had called all of its
witnesses. Global-Tech argued that Sunbeam had offered no evidence showing
that Global-Tech should be held directly liable for indemnification. The district
court denied Global-Tech’s motion:
[W]ith a complicated structure like that I’m not going to grant that
motion. We may revisit this issue again, but it’s very clear even from
their own filed statement that they’re making it very hard for
anybody to sue them and get jurisdiction. They’ve got all these
14
different companies. I don’t know how anybody dealing with them is
supposed to know which company to deal with. In fact, they even
sell the same product through different companies.
. . . I’m not letting anybody out at this time. Maybe later on,
but not at this time.
R8 at 199. Pentalpha did not renew this motion at the close of all of the evidence.
3. Pentalpha’s Defense and Case-in-Chief
In defense of Sunbeam’s indemnification claims, and in its case in chief on
its breach of contract claim, Pentalpha called seven witnesses, including George
Timchal, Sunbeam’s former Vice president of Procurement; John Sham; James
Nugent, Sunbeam’s Vice-President of Asian Sourcing Operations; David Wiggins,
Sunbeam’s Rule 30(b)(6) witness; and Glenn Newman, Pentalpha’s forensic
accountant.
a. Pentalpha’s Rebate Evidence
Before Wiggins’s deposition was read, Sunbeam argued that Wiggins’s
testimony was inadmissible under the district court’s 15 December order and
urged the district court to prevent Pentalpha from calling him. In response,
Pentalpha contended that Wiggins’s testimony would (1) create an inference that
Sunbeam breached the October PSA in soliciting and accepting rebates from
Schedule A product vendors with the understanding that Sunbeam would give
them additional business in return and (2) rebut Sunbeam’s contention that it did
15
not buy Schedule A products from Pentalpha because of Pentalpha’s failure to
create proper project plans or prior breach of the PSA. Sunbeam replied that
Wiggins’s testimony did not provide evidence that Sunbeam committed to buy
Schedule A products from another vendor. The court allowed the testimony
because “it ha[d] some bearing and under proper instructions the jury [would]
resolve it.” R10 at 12-13.
Wiggins testified to the following facts concerning the rebate evidence. In
1997, Sunbeam solicited and received a rebate of $240,000 from Tsann Kuen.
The rebate was a volume rebate for purchases made in 1997 and had “no future
commitments [by Sunbeam or Tsann Kuen] tied to [it].” Id. at 44. However,
Wiggins stated that he did not believe, but did not know with certainty, whether
“there was any wink or nod between the person who negotiated [the rebate] on
behalf of Sunbeam and the person who negotiated it on behalf of Tsann Kuen that,
‘if you paid this rebate we are going to do our best to treat you right in the
future.’” Id. at 50-51.
In March 1998, Tsann Kuen offered Sunbeam a one million dollar rebate in
response to a request from Sunbeam. Sunbeam later reversed the rebate. In
March 1998, Sunbeam also solicited a one million dollar rebate from Chiaphua
Industries, Ltd., another supplier. Wiggins stated that he believed that the rebate
16
was given in connection with a defective product manufactured for Sunbeam by
Chiaphua. Additionally, Sunbeam unsuccessfully attempted to secure rebates
from other suppliers. For example, Sunbeam possibly attempted to secure a rebate
from Simatlex, another manufacturer.
After a recess, Sunbeam renewed its objection to Wiggins’s testimony.
Arguing that Wiggins’s testimony revealed that “there was no double dipping” by
Sunbeam, that Sunbeam had decided that rebates were “bad business,” and that
there were no supply agreements or commitments associated with any of the
rebates, Sunbeam contended that his testimony was irrelevant. Id. at 81. The
district court declined to strike Wiggins’s testimony and stated that Sunbeam
could argue the relevance of Wiggins’s testimony to the jury.
b. Pentalpha’s Damages Evidence
During discovery, Sunbeam produced data from its computer system (“the
computer printouts”) which, according to Sunbeam, showed all of its its purchases
of Schedule A Products for resale from vendors other than Pentalpha during the
term of the PSA. At trial, Pentalpha attempted to offer into evidence testimony
and documents which purportedly demonstrated that the computer printouts were
incomplete and underrepresented Sunbeam’s Schedule A purchases from other
vendors.
17
First, Pentalpha offered the expert testimony of Glenn Newman,
Pentalpha’s forensic accountant. According to Pentalpha, Newman “ha[d] the
expertise to analyze [the data provided by Sunbeam] and break it into parts and
compare it to other pieces of data and form an opinion with a reasonable degree of
professional certainty about whether or not that data which has been produced is
complete or incomplete.” R10 at 141. The district court refused to allow
Newman’s testimony. The court concluded that the jury could determine the
completeness of the data without Newman’s assistance. The court advised
Pentalpha’s counsel that he could “argue that [the data] is not complete and you
can bring in any witnesses you want – factual witnesses regarding the
completeness of it, but I am not going to let an expert testify to that.” Id. at 143.
Second, Pentalpha offered the affidavit of Alan LeFevre, Sunbeam’s Chief
Financial Officer, marked as Trial Exhibit 156, and a chart, marked as Trial
Exhibit 182I. In the affidavit, LeFevre testified that he understood that, “from the
years 1998 to 2000, Sunbeam’s total domestic [h]ousehold manufacturing
purchases remain[ed] relatively steady.” R4-201, Ex. 156 at 1 ¶ 2. Trial Exhibit
182I compared the total number of household products purchased by Sunbeam,
according to data provided in LeFevre’s affidavit, with Sunbeam’s purchases of
Schedule A products, according to data in the computer printouts. R10 at 175;
18
R4-201, Ex. 182I. Pentalpha’s counsel contended that he could reasonably argue
that the significant increase in Sunbeam’s purchases of Schedule A products from
1998 to 2000, as represented by the computer printouts, did not make sense when
viewed in light of Sunbeam’s relatively stable purchases of other household
appliances. The court stated that the conclusions Pentalpha wished to draw from
the graph and affidavit were “wildly speculative” and refused to admit the
evidence. R10 at 179.
Third, Pentalpha offered two more graphs prepared by Newman. The first,
Trial Exhibit 182J, was a graphical representation of Sunbeam’s purchases for the
first five months of 1997, 1998, 1999, 2000, and 2001, based on the data in the
computer printouts. R4-201, Ex. 182J. Pentalpha’s counsel stated that the graph
helped suggest that the data provided by Sunbeam was incorrect because the data
showed that no purchases of Schedule A products were made in the first five
months of 1999. The court ruled that Exhbit 182J was inadmissable. It
concluded:
[W]ithout any further indication, if you have a witness from
Sunbeam who is going to come in and say, “You know, we gave
them phony figures, and I know that we are ordering during that
period[] of time,” you might have some basis for it.
But without any testimony to the contrary – I mean, all of this
deals with circumstantial evidence that the Eleventh Circuit has said
on [a] number [of] occasions that when a witness comes in and
testifies something is thus and so, you can’t draw circumstantial
19
evidence to the contrary.
I mean, I thought it was a rather astounding statement from the
Court of Appeals . . . I even wrote an opinion saying that the Court of
Appeals [] now . . . has inconsistent opinions with regard to whether
it is an employee discrimination case or whether it is an SEC case.
But I will assume that their last pronouncement is the one that they
intend to follow, and that if somebody denies that that is true unless
you have evidence to the contrary you can’t make circumstantial
evidence to the contrary.
R10 at 182.
The second, Trial Exhibit 182K, was a chart comparing the number of
Sunbeam vendors from 1 July 1997 to 8 May 1999 to the number of Sunbeam
vendors from 9 May 1999, when Sunbeam converted its computer system, to 9
August 1999. According to Pentalpha’s counsel at trial, the chart showed that the
number of vendors increased two or threefold during the thirty day period after 9
May 1999, which in turn suggested that Sunbeam’s data was incorrect. Id. at 183.
The district court refused to admit Trial Exhibit 182K because it was “not proper
evidence to establish [Pentalpha’s conclusion].” Id. at 183-84.
4. Sunbeam’s Motion for a Judgment as a Matter of Law
At the close of Pentalpha’s case in chief, Sunbeam moved for a judgment as
a matter of law as to Pentalpha’s breach of contract claim. Sunbeam argued that
Pentalpha had presented no evidence by which a reasonable jury could conclude
that Sunbeam breached the PSA before Pentalpha. According to Sunbeam, the
20
evidence showed that Pentalpha breached the PSA by (1) failing to bid on all the
Schedule A products, as required by paragraph 3.B in the October PSA, and
submit project plans; and (2) failing to indemnify Sunbeam for its food steamer
patent infringement expenses. In support of its indemnification argument,
Sunbeam cited the district court’s 17 December order which concluded that the
PSA incorporated manufacturing and distribution agreements requiring Pentalpha
to indemnify Sunbeam for those expenses. The district court denied Sunbeam’s
motion.
5. Pentalpha’s Closing Argument
In his closing argument, counsel for Pentalpha argued:
[W]ith respect to the hand mixers . . . . Sunbeam also breached the
supply agreement by telling its existing supplier of the hand mixers,
that’s the company in Asia called Tsann Kuen, that it could keep that
existing business either through its conduct or through its words if it
paid Sunbeam a $240,000 rebate
....
Now, we need to put two and two together. Pentalpha never
got a sample. Tsann Kuen paid a rebate and got some wink and nod
agreement from Sunbeam. Would Tsann Kuen [have] paid a rebate
just because Sunbeam are nice people? Doubt it. They are getting
something going forward.
Then back in March of 1998, there [are] documents showing
that Tsann Kuen paid another one million dollar rebate to Sunbeam.
Mr. Nugent didn’t tell us that in his deposition, but the testimony of
Sunbeam’s representative is really clear. These other vendors are
paying these rebates because they think they are getting something in
return. What they are getting is, is more business, and that starts with
keeping their old business.
21
Is there really any doubt that to obtain a rebate from Tsann
Kuen Sunbeam promised Tsann Kuen that it could keep its existing
hand mixer business.
R11 at 104-05. Later in his closing argument, Pentalpha’s counsel responded to
Sunbeam’s arguments that Pentalpha breached the October PSA in failing to bid
on certain Schedule A products. He explained that Pentalpha did not bid on the
toaster ovens, coffee markers, and air filters because it could not submit a
competitive bid. Next, he stated that Pentalpha did not bid on a certain model of
hand mixer and an ultrasonic humidifier because Sunbeam indicated to Pentalpha
that the product was obsolete. He then argued:
What was really going on was that Sunbeam was discouraging
Pentalpha from bidding. If Sunbeam wanted a bid on the hand
mixers it would have sent Pentalpha a sample of the hand mixers.
I guess it was too busy soliciting its rebate from its existing
supplier of hand mixers, Tsann Kuen.
Id. at 117.
In his rebuttal, Pentalpha’s counsel again mentioned the rebates:
Now, the only important event that [Sunbeam’s counsel] notes
on his time line [of events] is the memorandum of Mr. Nugent
saying, “You didn’t bid on this. Where is your project plan?”
Communications. That’s it.
[Sunbeam’s counsel] does not attempt to demonstrate that
Sunbeam did anything to perform the contract. Didn’t move any
tooling. Didn’t try to move – didn’t try to move any other tooling.
But, boy, was it good at hitting up its other suppliers for rebates.
What would have happened if it told its existing suppliers that they
were going to have to transfer their tooling to Pentalpha? You think
22
they would have gotten a rebate out of Tsann Kuen? Think they
would have gotten a rebate out of Chiaphua?
Id. at 157-58.
6. The Verdict and Judgment
On 16 January 2004, the jury returned its verdict. The jury awarded
Sunbeam $2,450,948.91 against Pentalpha and Global-Tech on its claims for
indemnification. R12 at 3. Additionally, the jury found that “Pentalpha and
Global-Tech [wer]e alter-egos of each other,” id.; “Sunbeam failed to perform its
material obligations under the terms of the supply agreement,” id.; Sunbeam’s
failure to perform its obligations was not excused, id. at 3-4; the parties did not
abandon the PSA, id. at 4; and Sunbeam did not prove by a preponderance of the
evidence that the 16 July 1998 memo constituted a termination of the October
PSA, id. The jury awarded Pentalpha damages of $6,600,000 against Sunbeam on
its breach of contract claim. Id.
On 27 January 2004, Pentalpha moved for entry of judgment based upon
the jury’s verdict and prejudgment interest of $2,485,299, calculated from 1
January 1999. Sunbeam opposed Pentalpha’s interest calculation and argued that,
under Florida law, prejudgment interest could not be awarded without a “fixed
date of loss,” which was not provided by the jury’s verdict. Pentalpha replied that
Florida law allowed the district court to examine the evidence to determine the
23
date of loss and award prejudgment interest accordingly. Pentalpha provided the
district court with four methods of determining when prejudgment interest should
begin.
On 11 February 2004, the district court entered final judgment. It awarded
Sunbeam $979,744.90 in prejudgment interest and Pentalpha $32,909.59 in
interest. R3-166 at 5. The district court refused to award Pentalpha interest
before the 16 January 2004 verdict because it concluded that it could not ascertain
conclusively an exact date on which Pentalpha sustained its damages.
E. Sunbeam’s Post-Trial Motions
Following trial, Sunbeam renewed its motion for judgment as a matter of
law. Alternatively, Sunbeam moved for a new trial. The district court denied
Sunbeam’s motions.
F. Claims on Appeal and Cross-Appeal
On appeal, Sunbeam advances three main arguments. First, Sunbeam
argues that the district court erred in denying Sunbeam’s motion for judgment as a
matter of law because Pentalpha breached the PSA first by failing to indemnify
Sunbeam. Second, Sunbeam argues that the district court erred in denying
Sunbeam’s motion for judgment as a matter of law because Pentalpha’s 16 July
1998 memorandum to Sunbeam constituted either a breach of a dependent
covenant in the October PSA, which freed Pentalpha of its contractual obligations,
24
or a binding election of the remedy of rescission which foreclosed Pentalpha from
suing for damages for breach. Third, Sunbeam argues that the district court erred
in denying its motion for a new trial because the district court erroneously
admitted rebate evidence in violation of its 15 December order.
On cross-appeal, Pentalpha asserts four arguments. First, Pentalpha
contends that the district court erred in refusing to award Pentalpha pre-verdict
interest on its breach of contract award. Second, it argues that the district court
erred by excluding Pentalpha’s circumstantial evidence that Sunbeam had
purchased more products from other suppliers in breach of the PSA than
represented by Sunbeam’s computer printouts. Third, Pentalpha avers that the
district court erred in granting summary judgment on Pentalpha’s fraudulent
inducement claim because Pentalpha could have relied justifiably on Sunbeam’s
misrepresentations as to its financial condition. Finally, Pentalpha and Global-
Tech contend that the district court erred in denying Global-Tech’s motion for a
directed verdict because Sunbeam did not produce sufficient evidence to prove
that Global-Tech is Pentalpha’s alter ego.
III. DISCUSSION
A. Sunbeam’s Renewed Motion for Judgment as a Matter of Law
We review de novo the district court’s denial of a motion for judgment as a
matter of law. Brochu v. City of Riviera Beach, 304 F.3d 1144, 1154 (11th Cir.
25
2002). We view all facts in the light most favorable to the nonmovant, and we
recognize that “[i]t is the jury’s task– not ours–‘to weigh conflicting evidence and
inferences, and determine the credibility of witnesses.’” Id. (citation omitted).
Accordingly, we will not reverse the denial of a motion for judgment as a matter
of law unless “the evidence is so overwhelmingly in favor of the moving party
that a reasonable jury could not arrive at a contrary verdict.” Middlebrooks v.
Hillcrest Foods, Inc., 256 F.3d 1241, 1246 (11th Cir. 2001).
1. Prior Material Breach
First, Sunbeam argues that it was entitled to judgment as a matter of law
because, as a matter of law, Sunbeam could not have breached the October PSA
first. Sunbeam contends that Pentalpha breached the PSA by failing to indemnify
Sunbeam for its legal fees arising from the Rival and Black & Decker lawsuits and
for its settlement with SEB.5 Sunbeam contends that this breach occurred on 5
February 1998,6 the date on which Sunbeam demanded that Pentalpha reimburse it
5
Sunbeam concedes that it purchased a Schedule A bread maker from a vendor other
than Pentalpha before 5 February 1998 but avers that this purchase would entitle Pentalpha to at
most $13,000 in lost profit damages.
6
Sunbeam’s brief did not specify clearly a particular date on which Pentalpha breached
its indemnification obligations. At oral argument, Sunbeam’s counsel argued that the breach
occurred on 5 February 1998 because (1) the parties stipulated that Sunbeam demanded
indemnification from Sunbeam on that date; (2) the jury determined that Sunbeam was entitled
to legal fees as of that date; (3) the parties do not dispute that Sunbeam was entitled to
indemnification; and (4) the district court calculated prejudgment interest beginning at 5
February 1998. We do not address Sunbeam’s argument. Even assuming arguendo that
Pentalpha breached the PSA on 5 February 1998, Sunbeam’s argument fails for the reasons
26
for its legal fees from the Rival and Black & Decker lawsuits. In response,
Pentalpha argues that a reasonable jury could have concluded that Sunbeam
materially breached the PSA by 28 January 1998, the beginning of the Chinese
New Year holiday, by failing to transfer any tooling to Pentalpha.7
Florida law states that “[w]hen a contract is breached by one of the parties,
the other party is released from any obligation to perform the contract.” Miller v.
Reinhart, 548 So.2d 1174, 1175 (Fla. Dist. Ct. App. 1989). Accordingly, if we
determine that, as a matter of law, Pentalpha breached the October PSA first, we
must conclude that Sunbeam was thereby released of its obligations to perform
under the agreement.
After reviewing the trial record, we cannot conclude that the evidence
presented “[i]s so overwhelmingly in favor of [Sunbeam] that a reasonable jury
could not” have determined that Sunbeam breached the October PSA before 5
February 1998. See Middlebrooks, 256 F.3d at 1246. Paragraph 3.B of the
October PSA required Sunbeam to “strive to move as much tooling as possible
explained in this section.
7
At oral argument, Sunbeam responded that Sunbeam could not have breached the
October PSA by 5 February 1998 by failing to transfer tooling to Pentalpha because (1) the PSA
required Sunbeam to complete the transfer of tooling by 1 April 1998, not by the beginning of
the Chinese New Year; and (2) Sunbeam continued to recognize the PSA past the beginning of
the Chinese New Year. Because Sunbeam did not raise these arguments in its initial or reply
briefs, we will not consider them on appeal. See Bond v. Moore, 309 F.3d 770, 774 n.5 (11th
Cir. 2002).
27
before the Chinese New Year holiday” on 26 January 1998. R201, Exh. 112 ¶
3.B. The PSA also explicitly provided that time was “of the essence.” Id. The
evidence presented at trial indicated that, despite these provisions, Sunbeam never
transferred tooling for the coffee makers, garment steamers, or rotisseries to
Pentalpha after Pentalpha submitted competitive bids on these products.
Additionally, as of the 26 January deadline, Sunbeam had not provided samples
for one product or responded to competitive bids on two others.8 At best, the
evidence presented by Sunbeam in its initial and reply briefs suggests that the jury
evaluated conflicting evidence in returning a verdict in favor of Pentalpha. It does
not, as is required for us to reverse the district court, compel a finding for
Sunbeam. See Middlebrooks, 256 F.3d at 1246. Accordingly, we conclude that
the district court did not err in denying Sunbeam’s renewed motion for judgment
as a matter of law.
8
In its reply brief, Sunbeam points out that Sham testified that he knew, when entering
the October PSA, that Sunbeam owned tooling for certain appliances, but not others; that before
signing the agreement, he made no attempt to determine which tooling was available from
Sunbeam “because the tooling cost is not that important . . . compared to . . . the business that we
are getting;” and that he knew that Pentalpha would be required to obtain any tooling that
Sunbeam did not own from other vendors or develop the tooling itself. Reply/Cross Answer
Brief for Appellants Sunbeam Corporation and Sunbeam Products, Inc. at 2 (citing R9 at 121-
22). Sunbeam argues that this testimony indicates that Sunbeam could not have committed a
prior breach of the October PSA by failing to transfer tooling. Given the provision of the
October PSA which required Sunbeam to “strive to move as much tooling as possible before the
Chinese New Year holiday,” R201, Exh. 112 ¶ 3.B, and Sham’s testimony that he had a
conversation about the ownership of the tooling after entering the October PSA, R9 at 120, 122,
we do not credit the relevance of the testimony highlighted by Sunbeam.
28
2. 16 July 1998 Memorandum
Second, Sunbeam argues that it is entitled to a judgment as a matter of law
because Pentalpha’s 16 July 1998 memorandum to Sunbeam (1) breached a
dependant covenant in the October PSA by reversing the one million dollar rebate,
and thereby relieved Sunbeam of its contractual obligations; and (2) constituted an
election of rescission by Pentalpha as the remedy for Sunbeam’s breach. In
response, Pentalpha contends that (1) the jury could have reasonably found that
Sunbeam committed a material breach of the October PSA by 26 January 1998,
thereby freeing Pentalpha of any obligation to further perform under the October
PSA; and (2) that Pentalpha did not, in the 16 July 1998 memorandum, elect to
accept return of the one million dollars in full satisfaction of its claims.
a. Breach of a Dependant Covenant
Under Florida law, “[a] breach of a [dependent] covenant amounts to a
breach of the entire contract; it gives to the injured party the right to sue at law for
damages . . .” or to rescind the contract in equity. Steak House, Inc. v. Barnett, 65
So.2d 736, 738 (Fla. 1953). In a different context, we have noted that
‘[a] covenant is dependant where it goes to the whole consideration
of the contract; where it is such an essential part of the bargain that
the failure of it must be considered destroying the entire contract; or
where it is such an indispensable part of what both parties intended
that the contract would not have been made with the covenant
omitted. . .’
29
Hibiscus Assocs., Ltd. v. Bd. of Trustees of Policemen & Firemen Retirement
Sys. of City of Detroit, 50 F.3d 908, 916 (11th Cir. 1995) (citation omitted).
In this case, regardless of whether the July 16 Memorandum and debit
memo can be deemed “to go[] to the whole consideration of the contract,”
Hibiscus Assocs., Ltd., 50 F.3d at 916, we agree with Pentalpha that the jury could
have reasonably found that Sunbeam materially breached the October PSA by 26
January 1998. See supra section II.A.1. Accordingly, Pentalpha was relieved of
any remaining obligations to perform under the October PSA, see id., and
Sunbeam’s argument fails.
b. Election of Remedies
Florida’s enactment of the Uniform Commercial Code provides that,
“[u]nless the contrary intention clearly appears, expressions of ‘cancellation’ or
‘rescission’ of the contract or the like shall not be construed as a renunciation or
discharge of any claim in damages for antecedent breach.” F.S.A. § 672.720. The
purpose of this section, according to a comment to the Code, is to “safeguard a
person holding a right of action from any unintentional loss of rights by the ill-
advised use of such terms as ‘cancellation’, ‘rescission’, or the like . . . .” Id., cmt.
(“Purpose”). Accordingly, “unless the cancellation of a contract expressly
declares that it is ‘without reservation of rights’, or the like, it cannot be
considered to be a renunciation of this section.” Id. As this Comment indicates,
30
this UCC provision abrogates any former election of remedies doctrine that would
have applied under these circumstances.9 Under F.S.A. § 672.720, an innocent
party to a breached contract can both cancel the contract and, so long as he does
not clearly indicate that he is waiving his right to assert breach of contract, claim
damages for the breach. See F.S.A. § 672.720; see also Roth Steel Prods. v.
Sharon Steel Corp., 705 F.2d 134, 151 n.36 (6th Cir. 1983) (applying UCC § 2-
720 to hold that plaintiffs’ cancellations did not operate as a waiver of their right
to assert damages for breach); National Cash Register Co. v. Unarco Indus., Inc.,
490 F.2d 285, 287 (7th Cir. 1974) (applying UCC § 2-720 and noting that
“[p]laintiff is surely correct in saying that in order for the language to be found a
waiver or renunciation [of any claim against defendant], such intention must
clearly appear”).10
In this case, the district court, in discussing the jury instructions with
Pentalpha and Sunbeam, stated that F.S.A. § 672.720 governed Sunbeam’s
election of remedies claim. The district court then charged the jury that Sunbeam
could establish an election of remedies defense only by demonstrating that the
9
We are mindful that F.S.A. § 2-720 does not apply to a mutual rescission by the parties
to a contract. United States ex rel. Vulcan Materials v. Volpe Constr., 622 F.2d 880, 884 (5th
Cir. 1980). In this case, however, Sunbeam argues that Pentalpha’s alleged termination of the
contract was unilateral.
10
Although Sunbeam cites several cases which discuss the election of remedies doctrine
generally, it cites no case that indicates that F.S.A. § 672.720 does not apply here.
31
memorandum and accompanying debit memo “constituted a clear expression on
the part of Pentalpha that it was terminating the Supply Agreement and accepting
the return of the one million dollar rebate it had previously paid to Sunbeam in
full satisfaction of any claims under the Supply Agreement.” R11 at 176. After
deliberations, the jury found that Sunbeam did not prove that Pentalpha clearly
elected the return of the one million dollars in satisfaction of its claims.
We find that the district court correctly concluded that F.S.A. § 672.720
supercedes Florida’s election of remedies doctrine in this case. Moreover, there
exists sufficient evidence to support the jury’s verdict that the July 16
Memorandum did not constitute a clear expression that Pentalpha elected to
rescind the contract and waive its rights to assert a claim for breach. The July 16
Memorandum and accompanying debit memo indicate only that Pentalpha
believed that “the agreement ha[d] not been fulfilled by Sunbeam” and that it was
issuing a debit note to Sunbeam for the one million dollars. R4-20, Ex. 152 at 1,
4. It does not contain language that “expressly declares that [the memorandum] is
‘without reservation of rights’, or the like.” F.S.A. § 672.720, cmt. (“Purpose”).
Accordingly, the district court did not err in denying Sunbeam’s renewed motion
for judgment as a matter of law.
B. Admission of Pentalpha’s Rebate Evidence
Third, Sunbeam argues that it is entitled to a new trial because the district
32
court allowed Pentalpha to introduce evidence concerning rebates Sunbeam
received from other manufacturers (“the rebate evidence”), allegedly in violation
of the district court’s 15 December evidentiary order. According to Sunbeam, the
rebate evidence could not support Pentalpha’s contention that Sunbeam breached
the October PSA by explicitly or implicitly promising other vendors that they
could continue to manufacture Schedule A products in exchange for giving
Sunbeam rebates. Sunbeam further avers that Pentalpha relied on the rebate
evidence to imply unfairly that Sunbeam had an improper or unscrupulous motive
in failing to perform under the October PSA. In response, Pentalpha argues that
the admission of rebate evidence conformed to the district court’s 15 December
order and was neither irrelevant nor unfairly prejudicial.
We review a district court’s evidentiary ruling for abuse of discretion. Ad-
vantage Tel. Directory Consultants, Inc. v. GTE Directories Corp., 37 F.3d 1460,
1463 (11th Cir. 1994). Abuse of discretion exists if the district court committed a
clear error of judgment or applied an erroneous legal standard. Alexander v.
Fulton County, Ga., 207 F.3d 1303, 1326 (11th Cir. 2000) (en banc). If we find
error, we will not overturn the erroneous ruling and order a new trial unless the
objecting party has demonstrated that the ruling produced a substantial prejudicial
effect. Id.; Fed. R. Civ. P. 61 (erroneous evidentiary rulings should not be
reversed unless refusal to do so is “inconsistent with substantial justice”). To
33
determine if a party’s substantial rights were affected, we analyze factors
including “the number of errors, the closeness of the factual disputes, the
prejudicial effect of the evidence, the instructions given, and whether counsel
intentionally elicited the evidence and focused on it during trial.” Ad-vantage Tel.
Directory Consultants, Inc., 37 F.3d at 1465 (citation omitted). In sum, we may
conclude that the party’s substantial rights were not affected so long as we can
“‘say, with fair assurance, . . . that the judgment was not substantially swayed by
the error.’” Id. (citation omitted).
We conclude that the district court did not abuse its discretion in admitting
the rebate evidence. A party’s motive is irrelevant to a breach of contract claim
under Florida law, see Southern Bell Tel. & Tel. Co. v. Hanft, 436 So.2d 40, 42
(Fla. 1983) (motive or reasons for breach are irrelevant); see also J.J. Gumberg v.
Janis Servs., Inc., 847 So.2d 1048, 1049 (Fla. Dist. Ct. 2003) (per curiam) (proof
of valid contract, material breach, and damages required for breach of contract in
Florida), and in its 15 December order, the district court ruled that Pentalpha
could not introduce rebate evidence to prove Sunbeam’s motive in breaching the
October PSA. Consistent with Florida law, however, the district court’s order
allowed Pentalpha to introduce rebate evidence tending to show that Sunbeam
breached the October PSA or rebutting any evidence Sunbeam offered as to why it
did not perform the October PSA.
34
We conclude that the district court did not abuse its discretion in admitting
Wiggins’s testimony. The testimony is arguably relevant11 on either ground
allowed by the district court’s order and Florida law. Wiggins testified that he
could not say with certainty whether there were any “wink and nod” agreements
associated with the rebates from Sunbeam’s existing suppliers of Schedule A
products, R10 at 50-51, and that the suppliers were willing to give Sunbeam
rebates because they wanted more business from Sunbeam. From this testimony,
the jury could have inferred that the Sunbeam promised its suppliers that they
could keep their Schedule A business if they paid a rebate.
Further, the rebate evidence tended to prove that Sunbeam failed to perform
under the October PSA for reasons other than deficiencies in Pentapha’s
performance. During Pentalpha’s reading of Nugent’s deposition testimony,
Sunbeam read into the record portions of Nugent’s testimony in which he
explained Sunbeam’s failure to purchase certain Schedule A products from
Pentalpha. For example, Nugent testified that Sunbeam did not purchase coffee
makers or garment steamers from Pentalpha, even though Pentalpha bid
successfully on those products, because Pentalpha never submitted an acceptable
11
Under the Federal Rules of Evidence, “all relevant evidence is admissible.” Fed. R.
Evid. 402. Rule 401 defines “relevant evidence” as that which “ha[s] any tendency to make the
existence of any fact that is of consequence to the determination of the action more probable or
less probable than it would be without evidence.” Fed. R. Evid. 401.
35
project plan for a tooling transfer. Nugent also testified that Sunbeam did not
purchase rotisseries before January or February of 1998 because it had current
outstanding orders that needed to be filled. Under the district court’s 15
December order, Pentalpha was thus then allowed to rebut the explanations
offered by Sunbeam.
Even assuming the rebate evidence was irrelevant on both grounds allowed
by the district court’s order, Sunbeam cannot prove that it suffered a substantial
prejudicial effect from the district court’s ruling. First, Pentalpha offered
evidence beyond Wiggins’s testimony that Sunbeam materially breached the
October PSA with regard to each relevant Schedule A Product. See Maiz v.
Virani, 253 F.3d 641, 668 (11th Cir. 2001) (concluding that evidentiary error did
not affect substantial rights in part because verdict could be supported “without
considering the challenged testimony”); see also Ad-vantage Tel. Directory
Consultants, Inc., 37 F.3d at 1465 (weighing “closeness of evidence” in
determining effect of erroneous evidentiary ruling on party’s substantial rights).
For the hand mixers, supplied to Sunbeam by Tsann Kuen, Pentalpha offered
evidence that Sunbeam failed to provide Pentalpha with product samples. R9 at
60. For the rotisseries, supplied to Sunbeam by Chiaphua, Pentalpha offered
evidence that Sunbeam did not transfer any tooling in response to Pentalpha’s
36
successful bid. Id. at 89. Thus, the verdict can be supported even without
considering Wiggins’s testimony. See Maiz, 253 F.3d at 668.
Second, contrary to Sunbeam’s argument on appeal, Pentalpha’s counsel
appears to have elicited the evidence for the two purposes permitted by Florida
law and the district court’s 15 December order. See Ad-vantage Tel. Directory
Consultants, Inc., 37 F.3d at 1465 (noting that counsel’s purpose in eliciting
evidence is a factor in a substantial rights evaluation). In his closing argument, for
example, Pentalpha’s counsel argued that Sunbeam solicited rebates from Tsann
Kuen by promising, implicitly or explicitly, that Tsann Kuen could keep its
existing business of Schedule A products and that Sunbeam thereby breached the
October PSA. Sunbeam points to two specific sections in his closing argument in
which, Sunbeam contends, he improperly argued that Sunbeam had an
unscrupulous motive in breaching the October PSA. First, Sunbeam points out
that Pentalpha’s counsel argued:
What was really going on was that Sunbeam was
discouraging Pentalpha from bidding. If Sunbeam wanted a bid on
the hand mixers it would have sent Pentalpha a sample of the hand
mixers.
I guess it was too busy soliciting its rebate from its existing
supplier of hand mixers, Tsann Kuen.
Id. at 117. Viewed in context, the first paragraph appears to have been offered to
rebut Sunbeam’s evidence that it breached the October PSA because of
37
deficiencies in Pentalpha’s performance. The last sentence, although arguably not
related to the purposes permitted by the district court’s order, is not clearly related
to an improper purpose either. The prejudicial nature of this remark is minimal, at
most.
Second, Sunbeam cites a section of the closing in which Pentalpha’s
counsel stated:
Now, the only important event that [Sunbeam’s counsel] notes
on his time line [of events] is the memorandum of Mr. Nugent
saying, “You didn’t bid on this. Where is your project plan?”
Communications. That’s it.
[Sunbeam’s counsel] does not attempt to demonstrate that
Sunbeam did anything to perform the contract. Didn’t move any
tooling. Didn’t try to move – didn’t try to move any other tooling.
But, boy, was it good at hitting up its other suppliers for rebates.
What would have happened if it told its existing suppliers that they
were going to have to transfer their tooling to Pentalpha? You think
they would have gotten a rebate out of Tsann Kuen? Think they
would have gotten a rebate out of Chiaphua?
Id. at 157-58. In these paragraphs, Pentalpha’s counsel seemingly refers to the
memorandum from Nugent to Pentalpha sent on 24 December 1997. Sunbeam’s
counsel cited this memorandum in his closing argument apparently to argue that
Pentalpha had failed to submit the project plans required for Sunbeam to begin
transferring tooling. R9 at 135. Thus, Pentalpha’s counsel there employed the
rebate evidence to rebut Sunbeam’s argument that it did not purchase Schedule A
products from Pentalpha because of Pentalpha’s failure to fulfill its obligations.
38
This purpose is permitted by the district court’s 15 December order.
Because Pentalpha offered evidence beyond Wiggins’s testimony that
Sunbeam materially breached the October PSA with regard to each relevant
Schedule A Product, and Pentalpha’s counsel apparently elicited the rebate
evidence for purposes required by the district court’s 15 December order, we can
conclude “‘with fair assurance, . . . that the judgment was not substantially swayed
by [any] error’” in admitting Wiggins’s testimony. Ad-vantage Tel. Directory
Consultants, Inc., 37 F.3d at 1465 (citation omitted). Any error in admitting
Wiggins’s testimony thus did not affect Sunbeam’s substantial rights.
Accordingly, we decline to order a new trial because of the admission of this
testimony.
C. Pentalpha’s Claim Regarding Prejudgment Interest
On cross-appeal, Pentalpha first argues that the district court erred in failing
to award Pentalpha pre-verdict interest. The district court awarded interest from
the date of the verdict because “an exact date [could not] be ascertained by th[e]
Court as to Pentalpha’s damages.” R3-166 at 5. Noting that Florida courts award
prejudgment interest to compensate completely the prevailing party for its loss,
Pentalpha contends that the district court should have determined the date
Pentalpha incurred damages based on evidence in the record and awarded pre-
39
verdict interest accordingly. In response, Sunbeam argues that Florida law allows
pre-verdict interest only if the verdict liquidates damages as of a fixed date, which
did not occur in this case.
State law determines whether a successful litigant is entitled to prejudgment
interest. Venn v. St. Paul Fire & Marine Ins. Co., 99 F.3d 1058, 1066 (11th Cir.
1996). We review de novo the district court’s determination of the proper legal
standard under which to compute damages, and we reverse the district court’s
factual findings only if they are clearly erroneous. A.A. Profiles, Inc. v. City of
Fort Lauderdale, 253 F.3d 576, 581 (11th Cir. 2001).
Florida’s seminal case concerning prejudgment interest is Argonaut Ins. Co.
v. May Plumbing Co., in which the Florida Supreme Court resolved a split in the
Florida District Courts of Appeal over the circumstances under which
prejudgment interest could be awarded. 474 So.2d 212 (Fla. 1985). In one line of
authority, represented by Chicago Ins. Co. v. Argonaut Ins. Co., Florida appellate
courts refused to award prejudgment interest in cases where, before trial, the
amount of damages was disputed by the parties. 451 So.2d 876, 877 (Fla. Dist.
Ct. App. 1984). Because of the dispute, the amount of damages could be
determined conclusively only by a fact finder at trial. Id. at 877 (noting that claim
of comparative negligence made damages uncertain before trial and that the
40
“‘dispute was settled only by the jury’”) (citation omitted); accord McCoy v.
Rudd, 367 So.2d 1080, 1082 (Fla. Dist. Ct. App. 1979). Accordingly, the liable
party had no way to determine the amount of damages he owed before trial, and
he could not be found in default on a debt so as to be required to pay interest. See
Tampa Elec. Co. v. Nashville Coal Co., 214 F. Supp. 647, 657 (M.D. Tenn. 1963)
(applying Florida damages law). In the competing line of authority, represented
by Bergen Brunswig Corp. v. State Dep’t of Health and Rehabilitative Servs.,
Florida appellate courts awarded prejudgment interest in cases where the “verdict
ha[d] the effect of fixing damages as of a prior date.” 415 So.2d 765, 767 (Fla.
Dist. Ct. App. 1982); accord Tech Corp. v. Permutit Co., 321 So.2d 562, 563-64
(Fla. Dist. Ct. App. 1975). Under this rule, liable parties were subject to
prejudgment interest whether or not they contested the amount of damages.
Bergen Brunswig Corp., 415 So.2d at 767.
The Florida Supreme Court resolved the conflict in favor of the line of
authority represented by Bergen Burnswig Corp. Adopting the “loss theory” of
prejudgment interest, the court concluded that prejudgment interest is “merely
another element of pecuniary damages.” Argonaut Ins. Co., 474 So.2d at 214-15.
The certainty of the amount of damages before trial does not affect the award, and
“[w]hen a verdict liquidates damages on a plaintiff’s out-of-pocket, pecuniary
41
losses, [the prevailing party] is entitled, as a matter of law, to prejudgment interest
at the statutory rate from the date of that loss.” id. at 215.
Notably, the Florida Supreme Court did not conclude in Argonaut Ins. Corp.
that every verdict liquidates a claim so as to allow an award of prejudgment
interest. Instead, it concluded that a claim would be subject to prejudgment
interest “when” it did so. Id. The issue we must decide here is what standard
Florida law dictates we apply to determine if a verdict liquidated a claim as to a
date certain.
Sunbeam argues that the Florida Supreme Court provided the standard in
Argonaut Ins. Corp. when it stated:
Once a verdict has liquidate[] the damages as of a date certain,
computation of prejudgment interest is merely a mathematical
computation. There is no ‘finding of fact’ needed. Thus, it is purely
ministerial duty of the trial judge or clerk of the court to add the
appropriate amount of interest to the principle amount of damages
awarded in the verdict.
Id. at 215. According to Sunbeam, this language indicates that a verdict has not
liquidated a claim when the record does not conclusively support any one date of
loss, as choosing between the dates would constitute fact finding that goes beyond
“mere[]. . . mathematical computation.” Id. According to Pentalpha, our refusal
to grant prejudgment interest where the preponderance of the evidence supported
three alternative dates would undermine Florida’s purpose to compensate fully the
42
prevailing party for its loss.12 Because we conclude that the dicta cited by
Sunbeam does not establish conclusively the standard to apply, we examine cases
in which the Florida District Courts of Appeal determined whether to award
damages where the jury verdict did not specify a certain date. See Flintkote Co. v.
Dravo Corp., 678 F.2d 942, 945 (11th Cir. 1982) (noting that, absent some
“persuasive indication” that the state supreme court would decide the issue
differently, federal courts must adhere to state intermediate courts’ decisions in
diversity cases if the state supreme court has not addressed an issue).
Florida District Courts of Appeal applying Argonaut have held that
prejudgment interest cannot be awarded unless there is a pecuniary loss and a date
of that loss. See Glover Distrib. Co., Inc. v. F.T.D.K., Inc., 816 So.2d 1207, 1213
(Fla. Dist. Ct. App. 2002). “In other words, prejudgment interest attaches as an
incident of damages when it is ascertained that money ought to have been paid at a
particular time.” Florida Jurisprudence § 92 (2d ed. 2005) (citing Reilly v. Barrera,
12
Pentalpha also argues that the Florida Supreme Court expressly disavowed the standard
applied by the district court. Pentalpha notes that, in Argonaut Ins. Co., the Florida Supreme
Court explicitly rejected the rule that, “‘where the judgment is for damages, interest may not be
added to the principal award unless there can be a conclusive determination of an exact amount
due and a date from which interest can be computed.’” 474 So.2d at 214 (citation omitted).
Viewed out of context, this language seems to indicate that the Supreme Court determined that
prejudgment interest can be awarded from dates prior to the verdict even if there is no
“conclusive determination of an exact. . . date.” Id. As explained above, however, the Florida
Supreme Court was rejecting a rule that prejudgment interest could not be awarded where
“[b]oth liability and the amount of loss were disputed at trial,” which made the amount and date
inconclusive. Id. Viewed in context, then, this language simply reiterates that rejected rule and
does not indicate when a verdict liquidates damages, which is the crucial issue here.
43
620 So.2d 1116, 1118 (Fla. Dist. Ct. App. 1993) (citation omtited)). Preverdict
interest may be awarded even if the jury did not specify a particular date of loss, so
long as a date is clear from the record. RDR Computer Consulting Corp. v.
Eurodirect, Inc., 884 So.2d 1053, 1055 (Fla. Dist. Ct. App. 2004); but see Neva,
Inc. v. Christian Duplications Int’l, Inc., 743 F. Supp. 1533, 1543 (M.D. Fla. 1990)
(concluding that damages were unliquidated because jury verdict did not fix
damages as of a date prior to the verdict). In breach of contract cases, Florida
courts have awarded prejudgment interest where the jury awarded damages of
precisely the amount asked for by the plaintiff through a specific date, the end of
the contract’s term, see RDR Computer Consulting Corp. at 1054-55, and where
the record indicated that “the parties’ contractual relationship was terminated by
formal notice prior to commencement of [litigation],” Bergen Brunswig Corp., 415
So.2d at 767. In a tort case involving damage to a farmer’s fields, a Florida court
held that the trial court erred in refusing to award prejudgment interest because the
date of loss could not be determined, where the record indicated that an accounting
report made the loss apparent to the plaintiff on a specific date. See Charles
Buzbee & Sons, Inc. v. Falkner, 585 So.2d 1190, 1191 (Fla. Dist. Ct. App. 1991).
In a case involving theft and conversion, a Florida court held that prejudgment
interest should have been awarded from the date of the theft, even though there
44
was no date certain specified on the verdict form. Vining v. Martyn, 660 So.2d
1081, 1082 (Fla. Dist. Ct. App. 1995).
In its order denying Pentalpha prejudgment interest, the district court
determined that an exact date of loss was obvious from the facts of the above cases,
whereas in this case, Pentalpha provided the court with a choice of dates from
which to award prejudgment interest. Citing Checkers Drive-In Rests., Inc. v.
Tampa Checkmate Food Serv., 805 So.2d 941 (Fla. Dist. Ct. App. 2001), and
Perdue Farms Inc. v. Hook, 777 So.2d 1047, 1055 (Fla. Dist. Ct. App. 2001), the
district court then concluded that this difference prevented it from awarding pre-
verdict interest. We disagree.
First, Checkers Drive-In Rests., Inc., and Perdue Farms Inc., can be
distinguished from the case here. Checkers Drive-In Rest., Inc. involved damages
based on future anticipated profits. 805 So.2d at 945. Under Florida’s loss theory
of damages, the prevailing party could not be awarded prejudgment interest to
compensate him for a past loss because there was no past loss. Perdue Farms Inc.,
although more similar to the case before us, concerned a claim for
misappropriation and involved a record from which it was “impossible to
determine any date upon which [the plaintiff’s] ability to market his process was
lost by reason of the presence of [the defendant’s allegedly copied product] in the
45
marketplace.” 777 So.2d at 1055 (emphasis added). Thus, Perdue can be
distinguished because in this case, the record conclusively supports at least one
date, the last day of the October PSA’s term, upon which Pentalpha suffered an
out-of-pocket loss. Further, unlike in this case, the plaintiff’s damage expert in
Perdue Farms Inc. had failed to provide the jury with a precise value of the
plaintiff’s allegedly misappropriated trade secret on any particular date. Id. at
1051. Finally, Perdue Farms Inc. involved misappropriation, a tort. Florida courts
generally do not allow prejudgment interest on tort claims because damages are
often too speculative to liquidate before final judgment. Lumbermens Mut. Cas.
Co. v. Percefull, 653 So.2d 389, 390 (Fla. 1995).
Second, Florida law supports the proposition that prejudgment interest can
be awarded properly from the latest possible date of loss. See Pine Ridge at
Haverhill Condo. Assoc., Inc. v. Hovnanian of Palm Beach II, Inc., 629 So.2d 151,
151 (Fla. Dist. Ct. App. 1993) (per curiam) (in a case involving construction
defects to an association’s condominium complex , holding that “[t]he jury finding
. . . had the effect of fixing the damages at no later than the turnover date of the
condominium property to the association. . . .” and awarding prejudgment interest
from that date); see also Glover Distrib. Co., Inc., 816 So.2d at 1213 (affirming
trial court’s award of prejudgment interest because damages were liquidated “at
46
least as of” a certain date, where liable party conceded that damages could not have
accrued beyond that date). The record conclusively indicates that the last date of
the term of the October PSA was 30 June 2001. Accordingly, Pentalpha suffered a
loss for Sunbeam’s breach of contract no later than 30 June 2001.
Florida awards prejudgment interest to compensate the prevailing party for
its loss. Argonaut Ins Co., 474 So.2d at 215. We conclude that the verdict
liquidated Pentalpha’s damages as of 30 June 2001, the last date of the October
PSA’s term, and prejudgment interest should be awarded from that date.
D. Exclusion of Pentalpha’s Evidence that Sunbeam Purchased More Schedule
A Products than it Admitted
Pentalpha next contends that the district court erred in excluding certain
evidence offered to prove the alleged incompleteness of the computer printouts
provided by Sunbeam which purportedly disclosed all of Sunbeam’s purchases of
Schedule A products from other vendors during the October PSA’s term.
Pentalpha argues that Sunbeam changed its computer system on 9 May 1999 and
that a programming error prevented Sunbeam from retrieving complete data before
that date. This exclusion is significant to Pentalpha because Pentalpha calculated
its damages by multiplying its lost profit per product by the number of units of
Schedule A products that Sunbeam purchased in breach of the PSA. If Pentalpha
could have introduced evidence indicating Sunbeam’s alleged mistake, says
47
Pentalpha, it could have argued to the jury that the computer printouts reported
only some of Sunbeam’s purchases in breach of the PSA, and the jury could have
awarded Pentalpha more damages.
To remedy the district court’s alleged error in excluding the evidence
concerning the inaccuracies in the computer printouts, Pentalpha requests in
supplemental briefing that we remand its breach of contract claim for a limited new
trial. In the limited new trial that Pentalpha proposes, Pentalpha would be allowed
to keep its contract damages award of $6.6 million, and the jury would determine
only the amount of additional damages, if any, Pentalpha deserves based on its
consideration of the excluded evidence. If we decline to grant this limited new
trial, however, Pentalpha wishes to withdraw its challenge entirely. In response,
Sunbeam contends that Pentalpha failed to preserve its “limited trial” argument,13
13
Sunbeam avers that Pentalpha failed to preserve its request for a new trial on account
of the alleged evidentiary error because it did not seek post-trial relief or ask the district court to
grant a limited new trial on this ground. In federal court, however, “‘the settled rule . . . is that a
party may assert on appeal any question that has been properly raised in the trial court. Parties
are not required to make a motion for a new trial challenging the supposed errors as a
prerequisite to appeal.’” Rand v. Nat’l Fin. Ins. Co., 304 F.3d 1049, 1052 (11th Cir. 2002) (per
curiam) (citation omitted). To preserve a challenge to an evidentiary ruling, a party need only
timely object to the alleged error and “state ‘the specific ground of objection, if the specific
ground was not apparent from the context.’” Wilson v. Attaway, 757 F.2d 1227, 1242 (11th Cir.
1985). Pentalpha has met that requirement here.
Additionally, Sunbeam contends that Pentalpha’s argument in supplemental briefing is
improper because Pentalpha did not request the remedy of a limited new trial in its initial brief.
However, on 28 March 2005, we granted Pentalpha’s motion to file supplemental briefing to
address this issue. Sunbeam did not respond to Pentalpha’s motion to supplement and thus
cannot attempt to revisit the propriety of supplemental briefing now.
48
or, alternatively, that Pentalpha should be permitted to withdraw its argument
because it is not entitled to a limited new trial.
Under Federal Rule of Civil Procedure 59(a), a court may grant a new trial
“on all or part of the issues” so long as “it clearly appears that the issue to be
retried is so distinct and separable from the others that a trial of it alone may be had
without injustice.” Federal Rule of Civil Procedure 59(a); Gasoline Prods. Co. v.
Champlin Refining Co., 283 U.S. 494, 500, 51 S. Ct. 513, 515 (1931).14
Applying this standard, we conclude that Pentalpha has not established that
we may properly grant a new trial limited to additional damages here. Although
any additional award would be based on the same, underlying conduct as the
existing award of $6.6 million, we have no way of knowing from the jury’s verdict
how and in what ways the jury found Sunbeam liable. We can speculate as to the
14
We note that in all of the cases Pentalpha cites in support of its argument that we grant
a limited new trial for additional damages while preserving its original $6.6 million breach of
contract award, the issue in question was separate and distinct from the other issues in the case.
See Atkinson v. Dixie Greyhound Lines, 143 F.2d 477, 479-80 (5th Cir. 1944) (preserving actual
damages but granting limited new trial to determine punitive damages ); Rice v. Community
Health Ass’n, 203 F.3d 283, 290 (4th Cir. 2000) (preserving award for breach of contract
damages but ordering limited new trial to determine consequential damages “for loss of
identifiable professional opportunities” after concluding that questions were “distinct and
separable” because they involved different time frames and had distinct elements of proof)
(internal quotations omitted); Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 n.3, 23 (2d
Cir. 1996) (per curiam) (preserving awards for medical expenses and pain and suffering but
granting new trial to determine award for lost past and future earnings where jury had “answered
special interrogatories directed precisely to the issue in question”).
49
jury’s conclusions based on the damages evidence presented by Pentalpha,15 but we
cannot know for sure. At trial, the jury grappled with a complicated set of factual
and legal arguments in which each party contended that the other breached the
PSA at various points during the PSA’s term. Pentalpha requested $14.7 million in
damages on its breach of contract claim, but the jury returned a verdict for only
$6.6 million. The jury gave no indication of its method of calculating damages,
how its damages calculation related to Sunbeam’s liability, or any specific finding
as to the moment or moments in the PSA’s term on which Sunbeam breached the
PSA. The jury may have awarded damages for lost profits based on the entire term
of the PSA, parts of the term, or on certain Schedule A products but not others.
Accordingly, we cannot say with assurance that the issue of additional damages,
based on the excluded evidence spanning the entire term of the October PSA, is
sufficiently “distinct and separable” from the jury’s calculation of $6.6 million in
damages without the excluded evidence so that we may order a trial without
15
At trial, Pentalpha introduced an exhibit summarizing its alleged damages. This
exhibit indicates that from July 1997 to June 2001, Pentalpha suffered lost profits of $9,449,858
from Schedule A products. R4-201, Ex. 182GG. Included in this total are lost profits of
$6,600,735 for four particular Schedule A Products: $553,773 for the garment steamers,
$545,315 for the hand mixers, $663,904 for the rice cookers, and $4,837,743 for the ultrasonic
humidifiers. Id. On appeal, Pentalpha argues that the jury awarded Pentalpha lost profits for
these four products by taking Pentalpha’s figures and rounding them down to the nearest
thousand.
50
risking injustice. See Gasoline Prods. Co., 283 U.S. at 500, 51 S. Ct. at 515.16 The
only relief Pentalpha would be entitled–a full new trial, or at least a new trial
limited to the issue of damages only–is a remedy it has specifically rejected.
Accordingly, we need not address the underlying merits of Pentalpha’s argument,
and we decline to reverse on account of the district court’s exclusion of the
additional damages evidence.
E. Pentalpha’s Fraudulent Inducement Claim
We review de novo the district court’s grant of summary judgment in favor
of Sunbeam on Pentalpha’s fraudulent inducement claim. Velten v. Regis B.
Lippert, Intercat, Inc., 985 F.2d 1515, 1519 (11th Cir. 1993). Under Florida law,
fraud in the inducement can be established if (1) there was a false statement
concerning a material fact; (2) the representor knew or should have known that the
representation was false; (3) the representor intended to induce another party to act
in reliance on the false statement; and (4) that the party acted in reliance on the
representation and was injured as a result. See Johnson v. Davis, 480 So. 2d 625,
627 (Fla. 1985). Additionally, the party’s reliance must have been justifiable.
Johnson Enters. of Jacksonville, Inc., v. FPL Group, Inc., 162 F.3d 1290, 1315
16
Because we conclude that the issue of additional damages cannot be separated from the
jury’s calculation of the $6.6 million award, we offer no view on the propriety of a “stop loss”
new trial in other circumstances.
51
(11th Cir. 1998).
In this case, Pentalpha argues that the district court erred in (1) reasoning
that because Pentalpha entered into the June PSAwithout relying on any alleged
misrepresentations by Sunbeam, that it must also have entered into the October
Supply Agreement without relying on any alledged misrepresentations;17 and (2)
concluding that Pentalpha could not have justifiably relied on misrepresentations
not contained in the October PSA, where the misrepresentations were consistent
with the Agreement. In response, Sunbeam contends that (1) both the June PSA
and the October PSA required Pentalpha to pay Sunbeam one million dollars; and
(2) Pentalpha was not justified in relying on the alleged misrepresentations because
they were not contained in the subsequent written October PSA and because the
October PSA was inconsistent with the alleged misrepresentations.
Florida law consistently recognizes that “a basic tenet of contract law that
reliance on representations by a contracting party in a suit based on the contract is
unreasonable where the representations are not contained in the subsequent written
agreement between the parties.” Barnes v. Burger King Corp., 932 F.Supp. 1420,
17
Specifically, Pentalpha contends that the October PSA required Pentalpha to pay one
million dollars to Sunbeam, whereas the June PSA did not. Pentalpha argues that the Rider to
the June PSA which stated that “Pentalpha” would pay Sunbeam one million dollars bound
Pentalpha U.S., not Pentalpha. In support of this argument, Pentalpha contends that the June
PSA’s Rider was signed only by Lior, acting as President of Pentalpha U.S., that Lior did not
disclose the Rider to John Sham, and that Pentalpha voided the June PSA, with Sunbeam’s
consent, after learning of the Rider.
52
1428 (S.D. Fla. 1996); accord Johnson Enters. of Jacksonville, Inc., 162 F.3d at
1315. Applying Florida law, courts have held that parties could not rely justifiably
on representations that explicitly contradicted provisions of the contract. See
Barnes, 932 F.Supp. at 1428. Courts have also held that a party could not rely
justifiably on representations not contained in the contract where the party helped
draft the agreement and relinquished opportunities to reduce the representations to
writing. See Johnson Enters. of Jacksonville, 162 F.3d at 1315.18
Even assuming arguendo that Pentalpha correctly argues that the October
PSA imposed significant financial obligations on Pentalpha, whereas the June PSA
did not, we conclude that, under Florida law, Pentalpha could not have relied
justifiably on Sunbeam’s misrepresentations regarding its financial condition.
Pentalpha’s CEO, John Sham, participated in the negotiation of the October PSA.
There is no evidence that suggests he attempted to include a provision about
18
Pentalpha argues that Golden v. Mobil Oil Corp., 882 F.2d 490, 495 (11th Cir. 1989),
and Gilchrist Timber Co. v. ITT Rayonier, Inc., 127 F.3d 1390, 1395 (11th Cir. 1997), establish
that in Florida, a party can justifiably rely on fraudulent misrepresentations that are not contained
in the written agreement. Neither case is dispositive here. In Golden, we held that a district
court erred in granting a directed verdict for defendant on plaintiff’s fraud claim, where
defendant’s “offer of a three year lease instead of a trial franchise, . . . promise that [the plaintiff]
would have a ‘tremendous future’ with the company, and . . . referral to the proposed
relationship as a ‘marriage’” satisfied the first three prongs of the test for fraud. 882 F.2d at 495.
However, we did not address whether the plaintiff justifiably relied on the defendant’s
representations. Id. at 494 (omitting justifiable reliance in elements of fraud). In Gilchrist, we
concluded that a fact not included in the contract could be material for purposes of a fraudulent
inducement claim. 127 F.3d at 1395. We did not explicitly address justifiable reliance.
53
Sunbeam’s financial condition. In light of these facts, we conclude that the district
court did not err in concluding that, as a matter of law, Pentalpha could not have
relied justifiably on Sunbeam’s alleged misrepresentations. See Johnson Enters. of
Jacksonville, 162 F.3d at 1315.
F. Denial of Judgment as a Matter of Law for Global-Tech
Finally, Global-Tech contends that the district court erred in denying Global-
Tech’s motion for judgment as a matter of law at the close of Sunbeam’s case-in-
chief. Citing Johnson Enters. of Jacksonville, Inc., Global-Tech argues that
Sunbeam offered no evidence to support a finding that Global-Tech used Pentalpha
to engage in improper conduct. In response, Sunbeam asserts that Global-Tech
waived its argument by failing to renew its motion for a directed verdict at the
close of all of the evidence. Alternatively, Sunbeam contends that it made a prima
facie case of Global-Tech’s liability sufficient to submit the question to the jury.
Under Federal Rule of Civil Procedure 50(b), a movant must file a directed
verdict motion at the close of all of the evidence in order to challenge the
sufficiency of the evidence on appeal. Fed. R. Civ. Pr. 50(b); Rand, 304 F.3d at
1051. We have declined to examine the sufficiency of the evidence supporting a
jury’s verdict where a defendant moved for a directed verdict at the close of the
plaintiff’s case but failed to renew the motion at the conclusion of all of the
54
evidence. Coker v. Amoco Oil Co., 709 F.2d 1433, 1437 (11th Cir. 1983),
superceded by statute on other grounds; Special Promotions, Inc. v. Southwest
Photos, Ltd., 559 F.2d 430, 432 (5th Cir. 1977).19 In such cases, “our inquiry is
limited to whether there was any evidence to support the jury’s verdict, irrespective
of its sufficiency, or whether plain error was noted which, if not noticed, would
19
Citing Perceptron, Inc. v. Sensor Adaptive Machs., Inc., 221 F.3d 913, 918
n.3 (6th Cir. 2000), Global-Tech argues that it did not need to renew its motion at the close of all
of the evidence because testimony introduced after the motion related only to Pentalpha’s
counterclaim against Sunbeam and not to Pentalpha or Global-Tech’s defense of Sunbeam’s
indemnification claim.
In related contexts, we have overlooked technical deviations from Rule 50(b)’s
requirements so long as the parties’ actions satisfied the purpose of the Rule, i.e., alerting the
court and opposing counsel of any insufficiencies before submitting the case to the jury. See
Rankin v. Evans, 133 F.3d 1425, 1432 (11th Cir. 1998) (listing cases). In Coker, however, we
declined to excuse the defendant’s failure to renew its motion at the close of all of the evidence
even though it presented only one witness who testified briefly. Coker, 709 F.2d at 1437-38.
Noting that “[Rule] 50(b) clearly requires a movant to file a directed verdict motion at the end of
all of the evidence in order to challenge the sufficiency of the evidence on appeal” we concluded
“[t]he length of a movant’s evidentiary presentation or demonstration, after the fact, that
compliance probably would have been futile does not satisfy the rule’s requirement.” Id. at
1437-38.
In this case, our review of the record indicates that the defendants did offer evidence
relating to Global-Tech’s relationship with Pentalpha after Global-Tech’s motion for a directed
verdict. In a portion of Nugent’s deposition testimony read to the jury by Global-Tech’s
counsel, Nugent described his understanding of the relationship between Pentalpha, Wing Shing,
and Global-Tech. Nugent testified:
My understanding is Pentalpha and Wing Shing are practically synonymous,
same corporation. And Global-Tech is a – I’m not sure where they’re registered,
but a listed company on the New York Stock Exchange as a parent company of
Pentalpha Wing Shing. In Hong Kong, Wing Shing and Pentalpha, the names are
used interchangeably.
R9 at 167. Although this testimony has little probative value, it arguably constitutes evidence in
defense of Sunbeam’s alter ego claim. It tends to show that a representative of Sunbeam
understood that Global-Tech and Pentalpha were separate entities. Applying Coker, we thus
conclude that Global-Tech failed to satisfy Rule 50(b), and Pentalpha’s argument is without
merit. See Coker, 709 F.2d at 1437-38.
55
result in a ‘manifest miscarriage of justice.’” Wilson, 757 F.2d at 1237.
As we have recognized, Florida law allows a party to pierce the corporate
veil and hold a parent corporation liable for its subsidiary’s actions if it can
demonstrate first, “that the subsidiary was a ‘mere instrumentality’ of the parent,”
and second, “that the parent engaged in ‘improper conduct’ through its
organization or use of the subsidiary.” Johnson Enters. of Jacksonville, Inc., 162
F.3d at 1320 (citing Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114, 1117-21
(Fla. 1984)). A parent has engaged in the requisite “‘improper conduct’” only
where “‘the corporation was a mere device or sham to accomplish some ulterior
purpose . . . or where the purpose is to evade some statute or to accomplish fraud or
illegal purpose.’” Id. (citation omitted). Applying this standard, a Florida District
Court of Appeal indicated that improper conduct exists where a subsidiary
corporation was utilized to shield its parent from liability for a transaction that was,
in actuality, between the parent and an uninformed third party. USP Real Estate
Inv. Trust v. Disc. Auto Parts, Inc., 570 So.2d 386, 392-93 (Fla. Dist. Ct. App.
1990); cf. Riley v. Fatt, 47 So.2d 769, 773 (Fla. 1950) (refusing to pierce corporate
veil where plaintiff had not alleged or submitted proof that a corporation’s
“members fraudulently used the corporation as a means of evading liability with
respect to a transaction that was, in truth, personal and not corporate”).
56
In this case, Global-Tech does not dispute that Pentalpha was a “mere
instrumentality” of Global-Tech, and we must determine only whether there was
any evidence introduced to support a finding that Global-Tech engaged in
improper conduct through its organization or use of Pentalpha. See Wilson, 757
F.2d at 1237. We find that there was such evidence. Sunbeam argues that Global-
Tech’s corporate veil should be pierced because, after representing in public filings
that Global-Tech–not its subsidiary Pentalpha–had a long term supply agreement
with Sunbeam, and that Global-Tech–not its subsidiary Pentalpha–engaged in the
business of designing and manufacturing home appliances for Sunbeam, Global-
Tech asserted its separate corporate status in this action to avoid liability. To
support this argument, Sunbeam cites testimony of John Sham concerning
statements in Global-Tech’s Annual Reports. Sham’s testimony constitutes some
evidence of improper conduct by Global-Tech through its organizational structure,
which is all that is required under this standard of review. We thus conclude that
the district court did not commit plain error in failing to grant judgment as a matter
of law in favor of Global-Tech.
IV. CONCLUSION
On appeal, Sunbeam argues that the district court erred in refusing to grant it
judgment as a matter of law on Pentalpha’s breach of contract claims or order a
57
new trial because of allegedly improperly admitted rebate evidence. On cross-
appeal, Pentalpha contends that the district court erred in denying Pentalpha pre-
verdict interest on its breach of contract award, in excluding certain evidence
which could have resulted in increased damages for Pentalpha, and in denying a
directed verdict for Global-Tech, its parent company. We conclude that the district
court did not commit error in denying Sunbeam’s motions for judgment as a matter
of law on Pentalpha’s breach of contract claim and for a new trial based on
improperly admitted rebate evidence. Additionally, we determine that the district
court committed error in denying Pentalpha pre-verdict interest on its breach of
contract claim and conclude that interest should have been awarded from 30 June
2001, the last date of the October PSA’s term. We also conclude that the district
court did not err in excluding Pentalpha’s evidence that Sunbeam’s damages
computer printouts were incomplete or in denying a directed verdict for Global-
Tech. Accordingly, we AFFIRM in part, REVERSE in part, and REMAND for
proceedings consistent with this opinion.
58
SEB S.A. v. Sunbeam Corporation
Court: Court of Appeals for the Eleventh Circuit
Date filed: 2005-08-12
Citations: 148 F. App'x 774
Copy CitationsCombined Opinion