Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-06079/USCOURTS-ca10-90-06079-0/pdf.json

Parties Involved:
B. C. Danner
Appellee
International Medical Marketing, Inc.
Appellant

Document Text:

PUBLISH 

F 1 L Ert PAp!'Pals . ted States Cou <?1. -,.- Unt Tent.'l Circutt 

B. C. DANNER, 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

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SEP 1 ~ 1991 

ROBERT L. HOECKER 

Clerk 

Plaintiff-Appellee, 

vs. No. 90-6079 

INTERNATIONAL MEDICAL 

MARKETING I INC. I 

Defendant-Appellant. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. CIV-88-160-W) 

Gary W. Gardenhire (Stanley M. Ward and Gary w. Williams 

on the brief), Norman, Oklahoma, for Plaintiff-Appellee. 

Harry A. Woods, Jr. (Brian E. Shipp with him on the brief), Crowe 

& Dunlevy, Oklahoma City, Oklahoma, for Defendant-Appellant. 

Before LOGAN, Circuit Judge, 

BALDOCK, Circuit Judge. 

BRIGHT, Senior Circuit Judge. 

. . . * BRIGHT, sen1or C1rcu1 t Judge , and 

International Medical Marketing, Inc. (IMM) appeals from the 

final judgment of the district court entered after a jury trial in 

a suit brought by B.C. Danner (Danner), alleging IMM defaulted on 

a promissory note. IMM denied defaulting on the note and 

counterclaimed, alleging that Danner had wrongfully repossessed the 

securing collateral and then failed to preserve it. The jury 

*Honorable Myron H. Bright, United States Senior Circuit Judge for 

the Eighth Circuit Court of Appeals, sitting by designation. 

Appellate Case: 90-6079 Document: 01019293525 Date Filed: 09/12/1991 Page: 1 
returned verdicts in favor of both parties. The district court 

determined that the verdicts were irreconcilably inconsistent. The 

district court then accepted the jury verdict for Danner on his 

default claim and granted Danner judgment notwithstanding the 

verdict ( j . n. o. v. ) with respect to IMM' s wrongful repossession 

counterclaim. 

On appeal, IMM argues that the district court erred by: (1) 

failing to grant its motion for directed verdict; (2) granting 

Danner j.n.o.v. rather than ordering a new trial once it determined 

that the jury verdicts were inconsistent; and (3) refusing to 

instruct the jury upon two of its theories of the case. Although 

we reject IMM's contention in issue 1, we hold that the district 

court erred by refusing to grant a new trial in light of the 

conflicting jury verdicts. We therefore reverse and remand the 

case to the district court for a new trial. 

I. 

In 1984, Danner, the sole owner of Bio-Cide International, 

Inc. (Bio-Cide), agreed to sell all of the stock of Bio-Cide to IMM 

for $3 million. IMM paid $300,000 as a down payment and issued the 

promissory note at issue to Danner in the amount of $2.7 million. 

The promissory note formed part of the purchase and sale 

agreement between Danner and IMM. A security interest in the BioCide stock, among other things, secured the note. The parties 

placed the Bio-Cide stock in escrow with the Security National 

Bank, pending full payment of the note. 

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After the sale, IMM experienced cash flow problems. Between 

1984 and 1987, IMM often failed to make timely payments of amounts 

due. On each occasion, Danner accepted the late payment. As a 

result of the continual late payments by IMM, the parties modified 

the stock purchase agreement three times. In each case, the 

modification revised the schedule of payments due under the 

promissory note. All other provisions of the stock purchase 

agreement remained in effect. Danner received consideration for 

the first two modifications. The final modification expressly 

reaffirmed Danner's right to exercise the default remedies 

contained in the original stock purchase agreement if IMM did not 

make timely payments pursuant to the new schedule. The final 

payment schedule required IMM to make a $20,000 payment on October 

1, 1987. 

IMM tendered the October payment to Danner's office on October 

20, 1987, in the form of two checks for $10,000 drawn on IMM's 

account. At the time his office received the checks, Danner was 

traveling overseas. The checks were deposited in Danner's account 

at Friendly Bank in Oklahoma City on the day received. IMM's bank 

refused to honor one of the checks due to insufficient funds and 

the other check did not clear until October 27, 1987. 

On October 30, Gerard Grosof, an IMM shareholder, endorsed a 

$10,000 check payable to him by a New York brokerage firm (the 

"replacement check") and sent the check by Federal Express to 

Friendly Bank for deposit into Danner's account. The replacement 

check was drawn on Bankers' Trust, New York and represented good 

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funds. Danner 's bank received the replacement check on October 31, 

1987. Following the instruction on the back of the replacement 

check, Danner's bank immediately forwarded it for collection to the 

issuing bank. However, due to the absence of a necessary 

endorsement by Danner's bank, the collection of this check was 

delayed. Ultimately, the endorsement was added and the check 

cleared, making funds available on December 7, 1987. 

In the interim, Danner discovered the situation upon his 

return from overseas regarding the insufficient check and contacted 

his bank. Danner did not inquire as to whether the insufficient 

check had been replaced and the bank failed to inform Danner of the 

replacement check. Danner testified that he operated on the 

assumption that IMM had done nothing to cover the $10,000 

insufficient check. 

On November 2, Danner declared a default. Danner took an 

affidavit and notice of default to Security National Bank, the 

escrow agent, obtained the Bio-Cide stock and returned to his 

office with the stock. Danner did not give IMM notice that he was 

declaring default and repossessing the Bio-Cide stock. 

Danner learned of the replacement check after declaring the 

default, but refused to place the stock back in escrow. On 

December 2, Danner sent a letter to his bank instructing the bank 

not to accept the funds for the replacement check. Thus, on 

December 7, when the funds representing the replacement check 

arrived at Danner's bank, the bank refused to accept the funds. 

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Danner then brought this action to collect on the promissory 

note. IMM counterclaimed for wrongful repossession of the Bio-Cide 

stock and for failure to preserve the value of the stock. The case 

was tried before a jury. The jury returned a verdict (Verdict 1) 

in favor of Danner on his claim for default. The jury also 

returned verdicts (Verdict 2) in favor of IMM on both its 

counterclaims and awarded IMM $120,000 in total damages without 

apportioning the loss between the two claims. 

Because the district judge was temporarily away from the 

courthouse when the jury returned its verdict, it was accepted by 

a United states Magistrate Judge. Upon returning, the district 

judge questioned the consistency of the default and wrongful 

possession verdicts and directed the parties to submit post-trial 

briefs on the consistency of the verdicts and related issues. 

After receiving the briefs and hearing oral argument, the 

district court determined that the verdicts irreconcilably 

conflicted. The court then granted a j.n.o.v. in favor of Danner 

on IMM's counterclaim for wrongful repossession. The court left 

undisturbed the verdict in favor of Danner for default on the note 

and the defendant's verdict in the sum of $120,000, covering the 

damages for misuse of the collateral. This appeal followed. 1 

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Verdict 2 consisted of three parts: Part A asked the jury to 

determine whether Danner wrongfully repossessed the collateral; 

Part B asked the jury to determine whether Danner misused the BioCide assets; and Part c asked the jury to specify the amount of 

damages if it found Danner liable on one or both of the 

counterclaims. The jury found Danner liable on both the 

counterclaim for wrongful repossession and the counterclaim for 

misuse of Bio-Cide assets. The district court, ·in entering 

judgment, however, awarded IMM the entire $120,000 for "misuse of 

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II. 

A. Directed Verdict 

Initially, IMM argues that the district court should have 

directed a verdict in its favor. When reviewing whether a verdict 

should have been directed, this court applies the same standard as 

applied by the trial court in passing on the motion initially. 

Motive Parts Warehouse v. Facet Enters., 774 F.2d 380, 385 (lOth 

Cir. 1985). 

The trial court may direct a verdict only where the 

evidence and all inferences to be drawn therefrom are so 

clear that reasonable minds could not differ on the 

conclusion. The evidence must be viewed in the light 

most favorable to the party against whom the directed 

verdict is sought, and if, on the basis of the evidence 

and inferences to be drawn therefrom, reasonable and 

fair-minded persons might form different conclusions as 

to the facts in issue, a directed verdict is improper. 

Id. at 385-86. 

The trial court properly denied IMM's motion. The evidence 

and all inferences to be drawn therefrom are not so clear that 

reasonable minds could only conclude that IMM had not defaulted on 

the payment of the promissory note. Danner presented evidence at 

trial upon which a jury could have found that IMM was in default 

at the time Danner declared the default and repossessed the BioCide stock. Accordingly, IMM was not entitled to a directed 

verdict. 

Bio-Cide assets." Unless the district court mistakenly labelled 

"misuse of assets" to include damages for wrongful repossession, 

that award should stand. Otherwise, the district court may 

reconsider the amount of the counterclaim in part. 

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B. Conflicting Jury Verdicts 

Alternatively, IMM argues that the district court erred in 

granting Danner j.n.o.v. rather than ordering a new trial. 

According to IMM, once the district court concluded that Verdict 

1 and Verdict 2 irreconcilably conflicted, it should have granted 

a new trial. We agree and remand for a new trial. 

A j.n.o.v., like a directed verdict, should only be granted 

where the evidence is such that a reasonable jury could only reach 

one conclusion. Brown v. McGraw-Edison Co., 736 F.2d 609, 612-13 

(lOth Cir. 1984). Here, the district court initially determined 

that the contractual language defining default was ambiguous and 

assigned to the jury the task of determining when and if a default 

occurred. Implicitly, the district court recognized that a 

reasonable jury could reach more than one conclusion. 

The district court determined, and we agree, that the jury 

responded by giving irreconcilably conflicting verdicts. Under the 

jury instructions, in order for Danner to prevail, he had to show 

that IMM defaulted on the note. In contrast, in order for IMM to 

prevail on its counterclaim for wrongful repossession, it had to 

prove that it had not defaulted on the promissory note. The jury 

could not properly find for both parties, although that is what it 

did. 

After determining that the jury's verdicts conflicted, 

however, the district court proceeded to grant Danner j.n.o.v. on 

the basis of the jury's determination in Verdict 1 that IMM had 

defaulted. According to the district court, "(o]nce the jury 

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determined that a default had occurred and resolved that issue in 

the plaintiff's favor, the jury could not then find for the 

defendantfcounterclaimant on its counterclaim for wrongful 

repossession since the plaintiff once a default had occurred had 

the right to take possession of the stock." B.C. Danner v. 

International Medical Mktg., No. CIV-88-160-W, Order at 3-4 (W.D. 

Okla. Jan. 26, 1990). 

Although the verdicts were numbered sequentially, neither the 

district court judge nor the judges on this court can know how or 

in which order the jury reached its verdicts. Thus, the resolution 

of this issue cannot depend merely on the numbering of the verdict 

forms. Accordingly, the verdicts do not justify the granting of 

a j.n.o.v. for Danner. 

When the two verdicts, as well as the jury instructions, are 

read together, the inconsistencies in the verdicts become 

undeniably apparent and irreconcilable. Therefore, the district 

court should have ordered a new trial. See Bonin v. Tour West, 

Inc., 896 F.2d 1260, 1263 (lOth Cir. 1990) (per curiam); Jarvis v. 

Commercial Union Assur. Co., 823 F.2d 392, 395-96 (lOth Cir. 1987). 

c. Failure to Give Requested Jury Instructions 

IMM argues that the district court's failure to instruct the 

jury on two theories of its case entitles it to a new trial. In 

light of our resolution of the above issue, we decline to reach 

these issues. On remand, the district court should renew its 

consideration of the proposed jury instructions in the context of 

the new trial. 

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III. 

Accordingly, the judgment of the district court is reversed, 

except to the extent the court upheld the jury's imposition of 

liability against Danner for misuse of the collateral, and the case 

is remanded to the district court for action consistent with this 

opinion. 

IT IS SO ORDERED. 

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