*

The Honorable Herman J. Weber, Senior United States District

Judge for the Southern District of Ohio, sitting by designation.

1

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

ELECTRONIC CITATION: 2004 FED App. 0163P (6th Cir.)

File Name: 04a0163p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

JGR, INC.,

Plaintiff-Appellee/

Cross-Appellant,

v.

THOMASVILLE FURNITURE

INDUSTRIES, INC.,

Defendant-Appellant/

Cross-Appellee.

X

-

-

-

-

>

,

-

-

-

-

-

-

N

Nos. 02-3640/3731

Appeal from the United States District Court

for the Northern District of Ohio at Cleveland.

No. 96-01780—Ann Aldrich, District Judge.

Argued: January 29, 2004

Decided and Filed: June 3, 2004 

Before: MARTIN and MOORE, Circuit Judges; WEBER,

Senior District Judge.*

2 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

_________________

COUNSEL

ARGUED: Michelle J. Sheehan, REMINGER &

REMINGER, Cleveland, Ohio, for Appellant. Marvin L.

Karp, ULMER & BERNE, Cleveland, Ohio, for Appellee.

ON BRIEF: Michelle J. Sheehan, Roy A. Hulme,

REMINGER & REMINGER,Cleveland,Ohio,for Appellant.

Marvin L. Karp, ULMER & BERNE, Cleveland, Ohio, for

Appellee.

_________________

OPINION

_________________

BOYCE F. MARTIN, JR., Circuit Judge. In this diversity

breach of contract action, Thomasville Furniture Industries,

Inc. appeals a $1,500,000 judgment in favor of JGR, Inc., and

JGR cross-appeals the denial of pre-judgment interest. We

note at the outset that although it is unclear whether “JGR,

Inc.” is the actual, formal name of the plaintiff company – as

opposed to an abbreviation – we refer to it as such because

the parties have done so. For the reasons discussed below, we

hold that the district court abused its discretion in permitting

a JGR witness to give lay opinion testimony about JGR’s lost

profits and loss of business value, and that the improper

admission of this testimony requires vacature of the damages

award and remand for a new trial solely on the issue of

damages.

I. FACTUAL AND PROCEDURAL BACKGROUND

The contract at issue in this case is a written agreement

called the “Thomasville Furniture Industries, Inc.

‘Thomasville Gallery’ Program” – which we will refer to as

the “Gallery Agreement” – that governs the relationship
Nos. 02-3640/3731 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

3

between Thomasville, a furniture manufacturer, and furniture

retail establishments that Thomasville approves as

“Thomasville Galleries.” Pursuant to the Gallery Agreement,

Thomasville Galleries were “expected to” abide by certain

rules and requirements, such as maintaining a high quality

store, allowing Thomasville to exercise control over

personnel training, signage and other aspects of the business,

and – most importantly for purposes of this appeal –

displaying Thomasville products in an area that conformed to

detailed specifications. In exchange, Thomasville offered its

Thomasville Galleries assistance with interior design,

advertising and research, as well as a non-exclusive license to

use Thomasville trademarks in connection with product

promotions. 

If a retailer wished to be designated a Thomasville Gallery

and agreed to the terms set forth in the Gallery Agreement, its

representative would sign the last page of the program

description and submit it to Thomasville for approval. This

is what Gerald Yosowitz, JGR’s main principal, did on behalf

of JGR in April 1990, and Thomasville approved JGR as a

Thomasville Gallery the following month. The version of the

Gallery Agreement that was in effect at that time provided,

among other things, as follows:

2. Expectations of Retailers. Retailers designated as

Thomasville Galleries will be expected to:

(a) Set aside a physically separate and distinct area of

its selling floor space with a minimum of 5,000

square feet for the sole and exclusive purpose and

function of arranging, selling, and displaying

Thomasville furniture products, including both

Thomasville wood furniture and Thomasville

upholstery. 

On September 15, 1990, JGR opened a furniture store in

Mentor, Ohio, called “Gerald’s,” with a 5,000-square foot

4 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

1

Prior to forming the JGR business, Yosowitz worked with Baker at

Furniture Land. According to Yosowitz, his relationship with Baker

deteriorated following his departure from Furniture Land.

display area devoted solely to Thomasville products, as

specified in the 1990 Gallery Agreement. Gerald’s was

located across the street from another furniture store, called

“Furniture Land,” which was owned and operated by an

individual named Mike Baker.1 Despite a promising

beginning, Gerald’s eventually began to lose money and JGR

became unable to pay Thomasville for the products that it

purchased for its Gerald’s store. Thomasville provided credit

counseling services to JGR, but was forced to begin holding

orders until JGR could pay for them. 

In March 1992, Thomasville revised itsGallery Agreement.

The most significant change, for purposes of this case, was

the addition of an “expectation” that Thomasville Galleries

would “[d]isplay Thomasville product covering at least 7,500

sq. ft. of selling floor space of which a physically separate and

distinct area of no less than 5,000 sq. ft. (the “Gallery”) is set

aside for the sole and exclusive purpose and function of

arranging, selling, and displaying Thomasville wood,

upholstery, and other Thomasville home furnishings

products.” (Emphasis added.) A March 10, 1992, letter

written by Thomasville Vice President Daniel Grow

highlights this change and states that Thomasville Galleries

“should establish a plan to be at this new minimum square

footage level of 7,500 sq. ft. by January 1, 1993. Any new

Galleries will be at the 7,500 sq. ft. level when they open.” 

Yosowitz, on behalf of JGR, signed and returned the

revised Gallery Agreement to Thomasville with handwritten

notes on the back. These notes state, in relevant part:

. . . I sign this agreement under the condition that all

other Thomasville dealers in my marketing area are held
Nos. 02-3640/3731 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

5

to the same conditions . . . . If I correctly understand the

letter from Dan Grow (dated 3/10/92) which spells out

Thomasville’s new guidelines (including square footage

requirements) all Thomasville dealers existing or new

will be held to the same requirements. If this is in fact

the case my concearns [sic] have been addressed . . . .

In a letter dated August 4, William Carrico, also a

Thomasville Vice President, acknowledged Yosowitz’s notes

and stated that Thomasville would “review the matter by

July 1, 1993,” after letting “matters settle out.” 

In the meantime, in the fall of 1992 Thomasville negotiated

with Furniture Land, JGR’s competitor, a different marketing

agreement, called the “Thomasville Home Furnishings Store

Agreement.” Pursuant to this agreement, the name of the

Furniture Land chain would be changed to “Baker’s” and the

chain would carry the Thomasville line in seven stores,

including the one across the street from Gerald’s, as well as

in a brand new 10,000 square foot store devoted solely to

Thomasville products. In November 1992, pursuant to the

Home Furnishings Agreement, Furniture Land changed the

name of all its stores in the Cleveland area to “Baker’s” and

kicked off a “grand re-opening” of the store across the street

from Gerald’s. Baker’s advertised this grand opening with a

circular featuring its new “Thomasville Gallery” line of

furniture. JGR alleges that Baker’s displayed only a few

isolated pieces of Thomasville furniture at its grand opening.

According to JGR, Baker’s employees urged its customers to

view the entire line of Thomasville furniture at Gerald’s, but

to purchase the items at Baker’s. Baker’s customers allegedly

were handed cards that stated: “Go to Gerald’s. Bring back

a price and we’ll beat it by five percent.”

The day after the Baker’s grand opening, in light of JGR’s

mounting financial problems and debts, Thomasville placed

JGR’s credit on hold and refused to process or ship any orders

from Gerald’s until JGR sent full payment for those orders.

6 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

2

On July 1, 1996, Thomasville filed suit in the district court against

JGR to collect approximately $665,000 for furniture and service charges

that JGR owed to Thomasville. JGR subsequently filed suit against

Thomasville in Ohio state court, alleging that Thomasville’s breach of the

1992 Gallery Agreement and fraudulent misrepresentation caused JGR to

go out of business. Thomasville removed that suit to federal court and

filed a motion for summary judgment on all of JGR’s claims. On

September 7, 1999, the district court granted Thomasville’s motion for

summary judgment in its entirety. JGR then filed a motion for

reconsideration, arguing that the district court had misinterpreted the

nature of its claim for breach of the 1992 Gallery Agreement. The district

court denied the motion and JGR appealed. On appeal, this Court

reversed and remanded the case for further proceedings with respect to

that claim. This appeal relates solely to the proceedings on remand

concerning that breach of contract claim. 

Ultimately, no longer able to continue doing business,

Gerald’s closed its doors on October 2, 1993. 

Although each party in this case has asserted various claims

against the other,2 the sole claim with which we are

concerned in this appeal is JGR’s claim that Thomasville

breached the 1992 Gallery Agreement. The essence of that

claim is that Thomasville breached the Agreement by

permitting Baker’s to sell Thomasville furniture without

requiring Baker’s to “[d]isplay Thomasville product covering

at least 7,500 sq. ft. of selling floor space of which a

physically separate and distinct area of no less than 5,000 sq.

ft. (the “Gallery”) is set aside for the sole and exclusive

purpose and function of arranging, selling, and displaying

Thomasville wood, upholstery, and other Thomasville home

furnishings products.” This claim was the subject of a jury

trial featuring the testimony of several witnesses. JGR

presented the only damages witness, a certified public

accountant and lawyer named James Gornik. Gornik testified

as to the amount of lost profits and loss of business value that

JGR suffered as a result of Thomasville’s alleged breach of

the 1992 Gallery Agreement. Thomasville filed a motion in

limine to exclude Gornik’s testimony on the ground that it
Nos. 02-3640/3731 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

7

was properly the subject of expert testimony, not lay opinion

testimony, but that he was not qualified to give expert

testimony. The district court denied Thomasville’s motion,

and Gornik proceeded to testify about projections that he had

prepared showing what JGR’s net income would have been in

each year from 1991 through 2005 and what the net worth and

value of the business would have been at the end of each of

those years.

The jury determined that Thomasville had, in fact, breached

the 1992 Gallery Agreement and that JGR was entitled to a

damages award of $0 for lost profits and $1,500,000 for loss

of business value. Thomasville subsequently filed a Rule 50

motion for judgment as a matter of law, arguing that the jury

verdict had no basis for an award of loss of business value.

The district court denied the motion. JGR filed a motion for

pre-judgment interest pursuant to Ohio Revised Code section

1343.03(A). While the district court initially granted the

motion and awarded pre-judgment interest at the rate of

3.73%, Thomasville filed a motion for reconsideration of that

award, which the district court granted. On reconsideration,

the district court changed its original ruling and declined to

award any pre-judgment interest. Judgment was entered for

JGR in the amount of $1,500,000. Thomasville appealed the

district court’s $1,500,000 judgment in favor of JGR, and

JGR cross-appealed the denial of its motion for pre-judgment

interest.

II. ANALYSIS

A. Testimony of James Gornik

The primary issue in this case concerns the admissibility of

testimony by JGR witness James Gornik, a certified public

accountant and lawyer who testified about the amount of lost

profits and loss of business value that JGR allegedly suffered

as a result of Thomasville’s breach of contract. We review a

district court’s evidentiary rulings for abuse of discretion.

8 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

3

The district court’s apparent assumption that Gornik was a “factual

witness” who “does [JGR’s] books” is false. In fact, Gornik was never an

accountant for JGR and never did its books. His first experience with

JGR was in March 1999, when he was contacted by JGR’s trial counsel

for the purpose of “putting down on paper what the financial statements

of Gerald’s Furniture would have looked like had the Thomasville support

to the business continued and had the owners been able to carry through

on how they planned to operate the business.” 

Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999); Barnes

v. Owens-Corning Fiberglass Corp., 201 F.3d 815, 822 (6th

Cir. 2000). Thomasville argues that the district court abused

its discretion in permitting Gornik to testify as a lay witness.

JGR, on the other hand, argues that the district court in fact

permitted Gornik to testify as an expert witness, not a lay

witness, and that although no formal hearing was conducted

pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc.,

509 U.S. 579 (1993), the district court nevertheless properly

determined that he was qualified to give expert testimony.

The first issue that we must resolve is whether the district

court permitted Gornik to testify as a lay witness or as an

expert witness. Fortunately, the record is replete with explicit

statements by the district court indicating that Gornik was a

lay witness and was permitted to testify as such. For

example, in a colloquy with counsel regarding Thomasville’s

motion to exclude Gornik’s testimony, the court reasoned:

“But I don’t remember having Daubert extended to a CPA

who basically is, in this case, a factual witness. He does their

books.”

3

 The following morning, after conducting additional

research, the district court confirmed that Gornik would not

be characterized as an expert witness and, therefore, “there is

no Daubert analysis to be done.” Moreover, the district court

explicitly stated: “I’m glad nobody is asking me to call this

man an expert . . . I wouldn’t want to have a Daubert hearing

on his methodologies.” 
Nos. 02-3640/3731 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

9

4

Rule 702 provides:

If scientific, technical, or other specialized knowledge will assist

the trier of fact to understand the evidence or to determine a fact

in issue, a witness qualified as an expert by knowledge, skill,

experience, training, or education, may testify thereto in the

form of an opinion or otherwise, if (1) the testimony is based

upon sufficient facts or data, (2) the testimony is the product of

Thus, the record unequivocally indicates that the district

court permitted Gornik to testify as a lay witness, not an

expert witness, and that no inquiry was made as to Gornik’s

qualifications to testify as an expert witness. Therefore, the

question to which we now turn is whether the district court

abused its discretion in permitting Gornik to testify as a lay

witness. See United States v. Anderskow, 88 F.3d 245, 249

(3d Cir. 1996) (“we review the admission of . . . opinion

testimony under Rule 701 for abuse of discretion”); Doddy v.

Oxy USA, Inc., 101 F.3d 448, 459 (5th Cir. 1996) (admission

of lay testimony under Rule 701 is reviewed for abuse of

discretion). 

A lay witness – i.e., one who “is not testifying as an expert”

– may only testify as to:

opinions or inferences which are (a) rationally based on

the perception of the witness, (b) helpful to a clear

understanding of the witness’ testimony or the

determination of a fact in issue, and (c) not based on

scientific, technical, or other specialized knowledge

within the scope of Rule 702. 

FED. R. EVID. 701. Subsection (c) was added to this rule in

2000 in order to “eliminate the risk that the reliability

requirements set forth in Rule 702 will be evaded through the

simple expedient of proffering an expert in lay witness

clothing.” FED.R.EVID. 701, Advisory Committee Notes for

the 2000 Amendments.

4

 

10 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

reliable principles and methods, and (3) the witness has applied

the principles and methods reliably to the facts of the case. 

FED. R. EVID . 702. 

The Advisory Committee Notes for the 2000 Amendments

further explain that:

[M]ost courts have permitted the owner or officer of a

business to testify to the value or projected profits of the

business, without the necessity of qualifying the witness

as an accountant, appraiser, or similar expert. Such

opinion testimony is admitted not because of experience,

training or specialized knowledge within the realm of an

expert, but because of the particularized knowledge that

the witness has by virtue of his or her position in the

business. The amendment does not purport to change

this analysis.

Id. (emphasis added) (citation omitted). 

The explanation set forth in the Advisory Committee Notes

is reflected in the recent Fifth Circuit case of Dijo, Inc. v.

Hilton Hotels Corp., which is strikingly similar to the case

sub judice. In Dijo, the Fifth Circuit held that the district

court abused its discretion in permitting a “a financial

consultant” to testify as a lay witness regarding the plaintiff

company’s lost profits. 351 F.3d 679, 685-87 (5th Cir. 2003).

Although the witness was the plaintiff’s “primary contact” at

a commercial lending facility with which the plaintiff had a

business relationship, he had not served as an owner or officer

of the plaintiff company. Id. at 685. Additionally, the

witness’s “opinion . . . was based on preliminary income

figures and other information that he had received from [the

plaintiff’s founder],” and his “appraisal was not based upon

his own independent knowledge or observations.” Id. at 686.
Nos. 02-3640/3731 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

11

5

Gornik testified: “Our role was not to verify a whole lot of things

. . . I only verified them against my own experience.”

In considering whether the witness was properly permitted

to give lay opinion testimony concerning lost profits, the Fifth

Circuit reasoned:

It is telling that DIJO responds . . . not with evidence of

[the witness]’s involvement with [the plaintiff] or the

Project, but only emphasizing [his] substantial business

experience. . . Such generic industry experience does not

pass Rule 701 scrutiny. [The plaintiff] never attempted

to qualify [the witness] as an expert; and a lay witness

who was never employed by or directly involved in a

business is unlikely to have the type of first-hand

knowledge necessary to provide reliable forecasts of

future lost profits. The further removed a layman is from

a company’s day-to-day operations, the less likely it is

that his opinion testimony will be admissible under Rule

701.

Id. Thus, in light of the witness’s lack of “the requisite firsthand, personal knowledge” of the company about which he

testified, the Fifth Circuit held that the district court abused its

discretion in permitting the witness to give lay opinion

testimony under Rule 701. Id. at 686-87.

The same is true in this case. Like the witness in Dijo,

Gornik has never been an owner, officer or director of JGR.

Additionally, the information upon which he relied in making

his calculations of lost profits and loss of business value came

primarily from Yosowitz, and Gornik admitted that he did not

independently verify much of that information.

5

 Therefore,

Gornik had no basis upon which to offer lay opinion

testimony about JGR’s lost profits or loss of business value,

and the district court abused its discretion in admitting that

testimony. 

12 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

Moreover, the improper admission of Gornik’s testimony

affected Thomasville’s substantial rights. See id. at 687. For

whatever reason, Gornik was the only witness called by either

party to testify as to the issue of damages, and – although he

was subject to cross-examination – Gornik’s testimony about

the amount of JGR’s damages was unchallenged by any other

witness.

For these reasons, we hold that the improper admission of

Gornik’s lay opinion testimony requires vacature of the jury’s

damage award and remand for a new trial solely on the issue

of damages. See id. at 687. In light of this holding, we need

not consider Thomasville’s other arguments concerning the

damages award or JGR’s cross-appeal regarding the denial of

pre-judgment interest. We must, however, consider two

additional arguments that Thomasville has raised.

B. Evidence of Alleged Oral Contract

Thomasville’s remaining two arguments concern the

admission of evidence about an alleged oral contract between

JGR and Thomasville. JGR had previously alleged that

Thomasville orally promised JGR that it would not sell

Thomasville furniture to Baker’s. This alleged oral promise

was the subject of a prior breach of contract claim that is not

at issue here. Nevertheless, the district court permitted

Yosowitz to mention this alleged oral promise in his trial

testimony, over Thomasville’s objection. Thomasville later

submitted proposed jury interrogatories that it claimed were

necessary to ensure that the jury did not focus upon the

testimony concerning the alleged oral contract, but the district

court declined to submit the interrogatories to the jury.

Thomasville argues that the admission of Yosowitz’s

testimony about the alleged oral contract was irrelevant under

Rule 401 and unfairly prejudicial under Rule 403, and that the

district court abused its discretion in refusing to submit

Thomasville’s proposed interrogatories to the jury. 
Nos. 02-3640/3731 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

13

The district court recognized that the oral promises at issue

were “not part of the [1992 Gallery Agreement],” but

admitted some evidence of the alleged oral contract as

“background testimony regarding the relationship between

JGR and Thomasville Furniture prior to the 1992 agreement.”

The district court cautioned JGR’s counsel not to “dwell” on

the evidence and explicitly instructed the jury that:

the sole issue in this case is whether Thomasville

breached the 1992 agreement. Should you consider

evidence regarding written or oral statements or acts of

JGR, Thomasville Furniture, or other parties prior to the

1992 agreement, consider it only to the extent that it

helps you understand the intentions of JGR and

Thomasville Furniture with regard to that 1992

agreement.

Based upon our thorough review of the record, we conclude

that the district court committed no abuse of discretion in

admitting some evidence relating to the alleged oral contract

for the limited purpose of background information,

particularly in light of its instruction to the jury, which we

must presume was followed. 

We also conclude that the district court did not abuse its

discretion in declining to submit Thomasville’s proposed

interrogatories to the jury. Federal Rule of Civil Procedure

49(b) permits a trial court to submit interrogatories to a jury

on issues of fact that are necessary for a verdict, but the rule

does not require the court to do so. It is well established that

it “is in the [trial] court’s discretion whether to submit written

interrogatories in connection with a general verdict.” Portage

II v. Bryant Petroleum Corp., 899 F.2d 1514, 1520 (6th Cir.

1990). In this case, the district court instructed the jury to

determine whether “Thomasville Furniture breached their

1992 agreement by breaching a representation, or

understanding, that any new Thomasville dealer would be

held to the same square footage requirements that were being

14 JGR, Inc. v. Thomasville

Furniture Industries, Inc.

Nos. 02-3640/3731

imposed on JGR.” This instruction – particularly in

combination with the court’s other jury instructions – was

proper and served the purposes that Thomasville’s proposed

interrogatories were intended to serve.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s

judgment insofar as it reflects the jury’s verdict as to liability,

but we VACATE the jury’s damages award and REMAND

for a new trial solely on the issue of damages.