UNITED STAT ES DIS TRICT COURT F OR THE DIS TRICT OF COLUM BIA

____________________________________) C&E SERVICES, INC., and ) CARL L. BIGG S, ) ) P laintif fs, )

) v. ) Civil Action No. 03-1857 (JM F ) ) ASHLAND INC., ) ) Defendan t. ) ____________________________________) MEMORAN DUM OP INION Plaintiff C&E Servic es, Inc. (“ C&E” ) broug ht suit aga inst defenda nt Ashland Inc. alleg ing that Ashland committed fra ud, brea ch of f

iduciary duty and bre ach of

the duty of g ood faith and f

air de aling when it fa iled to disclose information about a g overnme nt audit. Ashland counter claimed a g ainst C&E c laiming that C& E brea ched the contra ct, its duty of g ood faith and fair de alingand that Ashland is entitled to equitable inde mnification for a settlement that it paid to the g overnme nt. A jury trial was he ld in April 2008, and the jury conclude d that Ashland had brea ched its fiducia

ry duty and the duty

of g ood faith and f

air de aling to C&E, but had not committed a fra

ud. The jury

also found that C& E brea ched its duty of g ood faith and f

air de aling to Ashland but had not brea ched the contra ct. The issue of equitable indemnific ation was

rese rved f or this Court’s decision. Prior to submissi on of this case to the jury , both parties filed motions for judgme nt as a matter of law unde r F eder al Rule of Civil P roce dure 50( a). Those motions were de nied from the be nch on May 1, 2008. Now pendingare the par ties’ re newe d motions for judgme nt as a matter of law f iled pursuant to Rule 50(b).I. Background .

Ashland and C& E are both manufac turers of water trea tment products. I

n 1987, the parties e ntere d into an ag ree ment wher eby C&E would pur chase products fr om Ashland and

rese ll them to the public. The ag ree ment expli citly stated that C&E would serve as Ashland’ s ag ent. B oth Ashland and C& E sold products to the fe dera l gove rnment in ac corda nce w ith approve d Gene ral Servic es Administration (“GSA” ) sche dules. In 1997, the g overnme nt audited Ashland’s GSA sche dule and a lleg ed that Ashland ha d not made discounts ava ilable to g overnme nt customers that had be en made available to other customer s, i.e. that its prices we re “def ective,” a ser ious alleg ation that could lead to its disbarment. Ashland, how ever , enter ed into a settlement ag ree ment with the g overnme nt that resolved its conc erns a nd decide d not to

rene w its GSA schedule. At that time, Ashland and C& E neg otiated an amendment to their 1987 agree ment. Where in the pa st C&E sold Ashland’s produc ts under Ashland’ s GSA schedule, the amendment provided that C& E would add Ashland pr oducts to its own GSA schedule a nd sell them directly throug h that schedule . C&E a rgues that Ashland did not tell C&E that the g overnme nt had found Ashland’s pric es to be de fec tive, leadingC&E to use the same pric es that the g overnme nt had found to be de fec tive when use d by Ashland. C&E took ef

forts to try

and add A shland’s produc ts to it s GSA schedule, a nd, in the meanwhile, be g an sellingAshland’s produc ts to gove rnment customer s. I n its application to the GSA, C&E c ertified that the price s it charg ed g overnme nt buy ers we re the same a s the lowest price s it charg ed its private c lients. C&E continued to c harg e the same price s that Ashland had char g ed and that the g overnme nt claimed we re de fec tive. The g overnme nt investigated C&E a nd

2Ashland. Ashland se ttled with the gove rnment for $350,000. Duringthe neg otiation process, the question arose whether

the settlement would absolve C& E of any liability , but the g overnme nt repr esentative insisted on more money befor e he w ould ag ree to absolve C&E as we ll. Meanwhile, C&E a

nd two of its executives were suspended f rom g overnme nt contrac ting. C&E c laims that it would have neve r cha rg ed the “ defe ctive” pr ices ha d Ashland told it that a g overnme nt audit had found the pr ices to be “ defe ctive” a nd that C&E wa s suspended beca use of the de fec tive price s. Ashland, howeve r, cla ims that the suspension arose out of C&E’ s decision to sell products that we re not on their G SA schedule w ithout dis closing that fac t. This case went to trial for 14 day s in April and May of 2008. B oth parties moved f or judgme nt as a matter

of law pur suant to Rule 50 of the F eder al Rules of Civil P roce dure a t the close of the ir ca ses in chief . Both motions were denied f rom the benc h on May

1, 2008 and the issues were submitt ed to the jury . The jury awa rded C& E $219,000 in damag es for brea ch of the implied covenant of

g ood faith and f

air de aling and $45,000 in pre judgme nt interest; $340,000 in damag es for

brea ch of f

iduciary duty and $100,000 in pre

judgme nt interest. The jury also

awa rded A shland $3,200 for br eac h of the duty of g ood faith and f

air de aling . A judg ment was enter ed consistent with the jury ’s ver dict, and the pa rties now re new their

motions for judgme nt

as a matter of law

under Rule 50. II. Legal Stand ard. Fe dera l Rule of Civil Procedur e 50(a ) provides, in pe rtinent part, that “ [i ]f . . . a court finds that a re asonable jury would not have a

signific ant evidentiar

y basis to find for a

party on that issue, the cour

t may (A) r esolve the issue a g ainst the party .” F ed. R. Civ. P. 50(a). There fore , judgme nt as a matter of law is first a

ppropriate when “ no rea sonable juror could re ach

3the ver dict rende red in the c ase.” Athridg e v. Rivas, 421 F. Supp. 2d 140, 145 (D .D.C. 2006)

(quoting U.S. ex rel. Yesudian v. Howa rd Univ., 153 F .3d 731, 735 (D.C. Cir. 1998)); see Fe d. R. Civ. P . 50(a) . When decidinga motion for judg ment as a ma tter of law , the Court must “conside r[] the evidenc e in the lig ht most favorable to the non-movingparty and mak[e] all

rea sonable infe renc es in its favor.” I d. (quoting Pitt v. District of Columbia, 404 F. Supp. 2d 351, 353 (D.D.C. 2005), a ff’ d in part, re v’d in part on other g rounds, 491 F.3d 494 ( D.C. Cir. 2007)). Judgment a s a matter of law in favor of the movingparty is only proper if, under those circ umstances, “ there is no leg ally sufficie nt evidentiary

basis for a

rea sonable jury

to have f ound in [ the non-movingparty ’s] favor unde r controllinglaw.” Pitt, 404 F. Supp. 2d at 353. The Court is not permitted to weigh the evidenc e or a ssess the cr edibility of witnesses. Ha

y man v. Nat’l Ac ad. of Scis., 23 F .3d 535, 537 (D.C. Cir. 1994). Thus, “e ven if the Court finds the evidenc e that led to the jury verdic t unpersuasive , or that it would have r eac hed a dif fer ent re sult if it were sitti ng as fa ct-finde r, that is not a basis for ove rturningthe jury ’s ver dict and g ranting judgme nt as a matter

of law.” Pitt , 404 F. Supp. 2d at 354 (c iting 9 James Wm . Moore e t al., M O O R E ’ S F E D E R A L P R A C T I C E § 50.60[1] at 50-87 (3d e d. 2002)). I f, as oc curr ed her e, a motion for judg ment as a matter of law is not gra nted, the cour

t is deeme d to have submitted “the a ction to the jury subject to the cour

t’s later de ciding the leg al questions raised by

the motion.” Fe d. R. Civ. P . 50(b). I n such a situation, the movant may , afte r

a ver dict ag ainst her, “ file a r enew ed motion for judg ment as a matter of law .” I d. The movant seekingjudgme nt as a matter of law is ar g uing that, even if the jury wer e to re solve issues of fa ct in her oppone nt’s favor , the movant is still entitled to preva il. Wit h one exception wher e it claims that there was insuffic ient evidenc e of pr ox imate

4cause for the da mag es the jury

awa rded, A shland proce eds on this basis, insist ing tha t, even if there was a

sufficie nt evidentiary

basis for the jur

y ’s ver dict, the law doe s not entitle plaintiff to the ver dict it secure d beca use (1) principals, like Ashland, do not owe ag ents any fiduciar y duty ; (2) e ven if such a

duty was owe d at one point, it could not pertain to or c ontrol the relationship betwee n Ashland and C& E when the y wer e neg otiating a

modification of their r elationship; (3) their newrelationship di d not constitute a joint venture in which the pa rties owed e ach othe r fiduciar y duties; (4) C&E ’s damag es, as a matter of la

w, could not have been pr ox imately cause d by Ashland’s c onduct; (5) ther e is no independe nt cause of ac tion for bre ach of the implied duty of g ood faith and f

air de aling , whether

the contra ct at issue is g overne d by the Uniform Commercial Code or the common law; (5) r ecognizi ng such an a ction duplicates the a war d C&E

rec eived on its brea ch of f iduciary duty claims and (6) C&E’ s rec overy is barre d by

what Ashland say s is the principle expressed a s “ in pari delicto .” III. Analysi s. A. Breac h of

F idu ciary Duty. C&E a lleg es that it was in a f iduciary relationship wit h Ashland whe reby Ashland owe d C&E a fiduciar y duty at the time that the par

ties entere d into the 1998 amendment. In support, C&E sa y s that the 1987 ag ree ment cre ated a principal-a g ent re lationship, with C &E actingas the ag ent and Ashla

nd as the princ ipal. I t argues that Ashland owe d C&E a fiduciar y duty by virtue of that re lationship, and the relationship endured until the execution of the 1998 ame ndment. Fur ther, in 1998, C&E alleg es that the re lationship chang ed to a joint venture , which also c arr ies fiduciar y duties. The jury

was instructe d that if it found that the par ties were either in a principal-a g ent re lationship, or were joint venturers, then A shland owed a fiduciar y duty to C&E.

5Ashland re sponds with severa l arguments. First, Ashland sa y s that, while it is “black letter law ” that ag ents owe f iduciary duties to their principals, ther e is no authority for the proposition that principals owe f iduciary duties to their ag ents. Second, Ashland a rgues that the parties c ould not have bee n in a fiducia ry relationship during the c ourse of the neg otiations leadingup to the 1998 amendment. Third, A shland argues that the pa rties wer e not joint venture rs, but instead ente red into a ma nufac turer- distributor relationship, which does not ca rry fiduciar y duties. The jury was pre sented with two indepe ndent base s for findingthe exist ence of a fiduciar y duty : (1) a pr incipal-a g ent re lationship and (2) a joint venture. Even if

Iwer e to find in Ashland’s fa

vor on the princ ipal-ag ent re lationship argument, for e x ample, suff icient evidenc e may still exis t to support the jury ’s findingthat Ashland bre ache d a fiduc iary duty based on the alternate theory

that the par

ties were joint venturers. The jury ’s ver dict should only be set a side if Ashland pre vails on all of its arguments, and I will address e ach of

these a rguments in turn. 1. Whether A shlan d could have owed C&E a f idu ciary duty by virtue of its status as a principal in an agency re lationsh ip. Ashland ar g ues that it cannot owe C&E a fiduciar y relationship by

virtue of a

nyprincipalag ent re lationship because principals do not owe f iduciary duties to their ag ents. In support, Ashland cites Multicom, Inc. v. The Chesapea ke and Potomac T elephone Co., No. 88-CV-1886, 1988 WL118411, at *4 (D.D .C. Oct. 27, 1988), whe re Judge Gasc h held that “[a]lthough it is well established that a

n ag ent owes a

fiduciar y duty to his principal, no corr espondingfiduciar y duty is owed by

a princ ipal to an ag ent.” I d. J udg e Ga sch’s opinion stands alone in this Circuit, and the D.C. Court of Appe als has not yet ruled, but va rious courts nationwide that have r ece ntly

6been c onfronted w ith this issue have a g ree d with J udg e Ga sch. E.g ., Fidelity Nat’l Title Ins. Co. v. Title First Ag ency , Inc., No. 06- CV-13961, 2008 WL4371838, at *6 (E.D. Mic h. Sept. 22, 2008); Warre ntech Auto. Inc. v. He ritag e Warra nty Ins. Risk R etention Group, Inc., Nos. 07-C3539, 07-C-6977, 2008 WL4876936, at *5 (N.D . I ll. Aug. 12, 2008) ; MDM Group Assocs., Inc. v. CX Reinsurance Co. L td., U.K., 165 P.3d 882, 888 (Colo. Ct . App. 2007); Metro. Ente rs. Corp. v. United Tec hs. I nt’l, No. 03-CV-1685, 2006 WL522384, at *4 (D. Conn. F eb. 27, 2006). Acc ording ly , Iwould be inclined to agree with Ashland’s position that the D.C. Court of Appea ls would follow those other cour ts had this issue been ra ised prior to the c ase be ing submitt ed to the jury . See Tidler v. E li L ibby Co., I nc. 851 F .2d 418, 423-25 (D.C. Cir. 1988). After revie w of the ma

ny filings a nd arguments that Ashland has ra ised in this case, howeve r, my

initial suspi cion was c onfirmed – that I had y et to hear

this argument. There is no discussion of this concer

n in the summary

judgme nt briefing

befor e Judge Sullivan, in Ashland’s Rule 50 Motion for J udg ment as a Matter of L aw, in the va rious e-ma ils and filings re g arding jury instructions, or in the arguments I presided ove r re g ardingthe Rule 50 motions and jury instructions. The initial jury

instruction that plaintiff proposed c ontained the f ollowing se ntence : I f you find that C&E a

nd Mr. B igg s entere d into a relationship wit h Ashland by virtue of whic h C&E and Mr. B igg s were to be the ag ents of Ashland, then Ashland owe d C&E a nd Mr. B igg s a fiducia

ry duty of g ood faith and f

air de aling in the incidents of their r elationship. Plaintiff’s Proposed J ury

Instruction No. 7 [#128-A]. At no poi nt in the proce ss of draf ting the instructions did Ashland object to that statement. Instead, Ashland obje cted to the sc ope of the

7principal’s duty to its age nt. See Def

endant Ashla

nd Inc.’s Obje ctions to the Court’s I nitial Deter minations as to J ury

Instructions [#176] at 5 (“ Ashland objec ts to P laintiff’s Jury Instruction No. 7 bec ause it misstates the principa l’s fiduciar y duty to an ag ent. D.C. adopts the Restatement of A g ency , which states that a principal’s g ood faith duty extends only

to information ‘mate rial’ to the a g ent’s ac tions ‘on the principal’s be half.’ Plaintiff’ s Proposed Instruction conce rns duties owed by a par ent company

to a subsidiary

under D .C. law.”). Ashland then re quested that the Court a dd the followingdefinition of ag ency : “An ag ency is the fiduciar y relationship which results from the manife station of consent by one per son to another that the other sha ll act on his behalf a nd subject to his control.” Ashland’ s Proposed Revisions to the Court’s Proposed Jury Instructions [#238-14] at 17. I t also sought to add the word “ materia l” to qualify the principa l’s duty

to disclose fac ts to the ag ent. I d. Ashland did not, howeve r, objec t in any way to the sentenc e that cle arly instructs the jury

that principals owe fiduciar y duties to their ag ents. Thus, the final instruction that wa s rea d to the jury contained that languag e. Simi larly , in oral ar g ument on the jury instructions and Rule 50 motions, bot h parties focuse d on whether

a princ ipal-ag ent re lationship ex isted, and Ashland did not object to the underlying a ssumption t hat the existence of the relationship was important beca use the relationship i tself imposed a fiduc iary duty on Ashland. See g ener ally Transc ript of Proce eding s (5/1/08) (“ 5/1/08 Tr.”) [#231] at 61:3-66:8, 68:11-24, 70:15-71:25, 74:3-16, 105:9-25, 106:13- 111:13. Finally , in its Rule 50 motion, captioned De fenda nt Ashland, Inc.’s Motion for J udg ment as a Ma

tter of L aw [#174], Ashl and spec ifically say s “to the extent a fiduciar y relationship ex isted betwee n plaintiff and Ashla nd, it solely

exis ted by

rea son of the princ ipalag ent re lationship.” I d. at 17. At no point does it object to the proposition that Ashland, if found

8to be in a princ ipal-ag ent re lationship with C &E while neg otiating the c ontrac t, would also owe

C&E a fiduciar y duty

. This motion i s brought pursuant to Rule 50(b), whic h provides that, whe n the Court denies a motion for judgme nt as a matter of law br oug ht at the close of the evidenc e, it is considere d to submit the ca se to the jury subject to the Court’s later decidingthose leg al issues. Fe d. R. Civ. P . 50(b). Ac cording ly , “the posttrial motion is li mited to those gr ounds that were specific ally

raised in the pr ior motion for judg ment as a matter of law , . . . [and] the movant is not permitted to add newg rounds af ter trial.” Thomas v. Mineta, 310 F . Supp. 2d 198, 204 (D.D.C. 2004) ( quoting Tolbe rt v. Quee ns Coll., 242 F.3d 58, 70 (2d Cir. 2001)); see also David v. District of Columbia, 436 F. Supp. 2d 83, 90 n.2 (D.D.C. 2006) ( “B eca use def endants did not raise this ar g ument in their orig inal motion, the argument is deemed w aived a nd will not be considere d.”), a

ppeal dismissed, No. 06-CV-7131, 2006 WL 3086931 (D.C. Cir. Oct. 17, 2006). As Ashland did not raise this ar g ument in its Rule 50 motion, or in argument on the Rule 50 motion, and specifica lly

did not object to a jury

instruction dealingwith this ex act c ontroversy , I find that this argument is waived. 2. Whether A shlan d ow ed C&E a fid uciary duty w hile they w ere negotiating the 1998 am endm ent. Whil e maintainingthat Ashland owe d no fiduciar y duty to C&E at a

ny time, Ashland alludes to two other theor ies why , even if it once had a

fiduciar y duty to C&E, that duty

was not operative duringthe proc ess of ne g otiating the a mendment to the 1987 contra ct. Ashland is saying that it is impossibl e for parties, de spite their pre vious relationship as principa l and ag ent, to maintain their fiducia ry relationship whil e they

are neg otiating a

new r elationship,

9even when the ne w re lationship may also impose fiduciar

y duties. This is so because, by definition, eac h party

is pursuing its own individual interest, re nderingit impos sible for their relationship t o be a f

iduciary one duringthe neg otiations. All of this is premised on the proposition that an ag ent bre ache s his fiduciary relationship when he tries to serve two masters in the same transac tion. I t then follows, appar ently , that when the ag ent is pursuing his own interest in neg otiations leading up to a modification of the relationship t here cannot be a fiduc iary relationship between the pr incipal and the a g ent. I am not sure how A shland would dea l with the fac t that there must be a rela tionship for there to be a brea ch. I am also unper suaded by

Ashland’s a

naly sis. First, an a g ent ca

n repr esent both sides to a tra nsaction provided he makes c omplete disclosure. Ur

ban Invests. Inc v. B ranha m, 464 A.2d 93, 96 (D.C. 1986). In such a situation, he has a f iduciary obliga tion to both m asters. Second, fr om the (incorr ect) premise that a n ag ent ca

n never serve two parties to a transac tion, does not flow the proposition that his fiduciary relationship t o the other pa rty has ended me rely

beca use they are neg otiating its termination or modification. That an ag ent ca n be liable to one princ ipal if he ser ves that principa l and another does not mean that the ag ent is somehow disqualified fr om neg otiating with his principal, let a lone that he is re lieved of his fiduciar y relationship during neg otiations with hi s principal. While there is no D.C. Court of Appea ls case dir ectly

on point, this Court has deter mined that “District of Columbia law ha s deliberately

left the de finition of ‘fiduciar y relationship’ flex ible, so that the relationship m ay chang e to fit new c ircumstance s in which a spec ial relationship of trust may proper ly be implied.” Hig h v. McL ean F in. Corp., 659 F. Supp. 1561, 1568 (D.D.C. 1987) ( internal

10quotation omitt ed). The re is no re ason to suppose that the D.C. Court of Appe als would

conclude that the re lationship between a n ag ent and a

principal is stripped of its fiducia ry nature

mere ly beca use they are neg otiating a

modification or eve n the termination of their rela tionship. To the contra

ry , this Court, i nterpre ting District of Columbi a law, ha s stated that the ag ent’s obligation to treat his principal fa irly survives eve n the ag ent’s makingplans to g o into direct competition with his principal. Merc er Mg mt. Consul ting Inc. v. Wilde, 920 F. Supp. 219, 233 (D.D.C. 1996) ( “[T] he law is clea r that an a g ent ca

n make a rra ng ements or plans to g o into competition with hi s principal befor e ter minating his ag ency , provided no unfa ir ac ts are c ommitt ed or injury done his principal.” ). Indeed, it is relatively

easy to understand why , as a matter of soc ial policy , a fiduc iary relationship would continue to ex ist during ne g otiations leading up to its t ermination or modification. In such neg otiations, the person owe d the fiducia ry relationship m ay

be at he r most vulnera ble such a s when a

lawy er se eks to withdraw f rom her r elationship with her client or a trustee se eks to be re lieved of a ny further trust relationship. There is simpl y nothing in District of Columbia law that could per mit the conclusion that the District of Columbia Court of Appea ls would conclude that a fiduc iary relationship does not persist int o the neg otiations that seek a modification or ter

mination of that relationship. Second, Ashland a

rgues that if a f

iduciary relationship persisted, then the par ties were actingoutside the scope of their re lationship when they wer e neg otiating the a

mendment. Ashland direc ts the Court to S ind v. Poll in, 356 A.2d 653, 655 (D.C. 1976), whe re the D.C. Court of Appea ls held that the fiduciar y duty betwee n former

joint venturers did not extend to

11activities outside the scope of the joint venture, inc luding the pr ocess of neg otiating a

n ag ree ment that terminated the joint venture. Whether the pa rties wer e ac ting within the scope of the fiduciar y relationship i s a question of fa ct for the jury to decide, not a

question of law f

or the court. See Adams v. Ve rtex, I nc., No. 04- CV-1026, 2007 WL1020788, at *6 (D.D .C. Mar. 29, 2007); Merr ill L y

nch, Pierc e, F enner

& Smith, I nc. v. Cheng , 697 F. Supp. 1224, 1226 (D.D .C. 1988). In Sind, itwas a lso clear that the par

ties intended to terminate the ir relationship. Provided there is a minimal level of evidenc e fr om which a r easona ble jury could deter

mine that C&E a nd Ashland we re a cting within the scope of a fiduciar y relationship when they

ag ree d to modify their re lationship, then the jury ’s deter mination on the issue must st and. He re the re w as evidenc e that the pa

rties wer e ac ting within the scope of their pr evious arr ang ement bec ause the purpose of

the ag ency

relationship was to sell Ashland’s products, throug h C&E, to g overnme nt customers, a s was the pur pose of their

new a g ree ment. The a

mendment to the 1987 ag ree ment unquestionably

deals with the sale of Ashland’ s products, through C&E, to g overnme nt customers a lbeit under diff ere nt terms. A re asonable jury could have conclude d that the par ties continued to ca

rry out the same duties while amending their agree ment. Whil e the jury could have r eac hed a c ontrary

conclusion, it cannot be said that a re asonable person ha d to conclude that a fiduc iary

rela tionship ex isted up to the neg otiations, ended duringthe neg otiations, and resumed unde r the ne w ag ree ment. 3. Whether A shlan d and C&E ente red into a joint venture by virt ue of the 1998 am endm ent. Ashland ar g ues that under D.C. law, par

ties cannot be joint venturers unless they share profits. Thoug h Ashland tries va liantly to ext rapolate a se ries of pr ere quisites to a joint venture

12under D .C. law similar to those one might f ind in Maryland or Virg inia, the ca ses simply are n’t there . See Mar ine Eng ineer s Be nefic ial Assoc. Dist. Two v. Cunard L ine L td., No. 91-CV-654, 1993 WL141069, at *2 (D.D .C. Apr. 19, 1993) (“ Def endant initially

argues that plaintiffs have failed to show e ach of

the cr iteria that c ourts have r equire d for the e x istence of a joint venture ag ree ment. Howeve r, as plaintiffs point out, courts in the District of Columbia appe ar not to have be en so strict about the e lements of a joint venture ag ree ment . . . and have permitted the infere nce of

such an a g ree ment from the c onduct of the pa rties.”) . In fac t, the main case Ashland cites for its propositi on that a joint venture c annot exist without profit sharing , Thomas v. Hycon, Inc., 244 F . Supp. 151 (D.D.C. 1965), wa s decide d under Ma ryland law. In D.C., “[t] wo or more persons who join in a pa rticular busine ss enterpr ise for pr ofit

cre ate a ‘joint adventure ’ or ‘ joint venture.’” J onathan Woodner Co. v. L aufe r, 531 A.2d 280, 286 n.8 (D.C. 1987) (quotingL ibby v. L .J . Corp., 247 F.2d 78, 81 ( D.C. Cir. 1957)). The question of whethe r a g iven re lationship is a joint adventur e is one for the trier of

fac t. I d. at 287 (“The exis tence vel non of a joint venture is a fa ctual issue prope rly rese rved f

or the . . . trier

of fac t.”). Thus, in orde r for Ashland to succe ed on its motion for judgme nt as a matter of law, it must demonstrate that, viewingthe evidenc e in the lig ht most favorable to C&E, no re asonable juror could have dete rmined that Ashland a nd C&E joined in a busine ss enterpr ise for the purpose of

making a prof

it. However , there is ample evidenc e in the re cord to sug g est that Ashland and C& E joined forc es for the purpose of

selling A shland’s produc ts to gove rnment customers a

nd making profits for both pa rties involved.

134. P roxim ate c ause.

Ashland also ar g ues that, eve n if there was a brea ch of f

iduciary duty , that brea ch wa s not a proximate cause of C&E ’s damag es. I nstead it argues that C&E ’s damag es we re br oug ht about by its own decision to sell products that wer e not on its GSA schedule a nd repr esent that the products we re on the schedule . There was e vidence prese nted to the jury at trial fr om which the jury could conc lude that the use of the alleg edly

defe ctive pric es ca

used C&E to incur dama g es. Thus, as ca

usation is a question of fa ct for the jury , I will not second g uess the jury ’s view of the evidenc e. B. Breach of the Duty of Good Faith and FairDealing. C&E a rgues that Ashland br eac hed its duty of g ood faith and f

air de aling by

withholding information about the g overnme nt audit, which pre vented C& E from c arr ying out its contra ctual obligation to add Ashland’s produc ts to it s GSA schedule. C& E focuse s on reque sts it m ade to Ashland for

specific information re quested by the GSA. Ashland make s sever al claims in response . First, Ashland c laims that there is no independe nt cause of ac tion in D.C. for brea ch of the duty of g ood faith and f

air de aling , and there fore , to preva il, C&E was r equire d to bring a bre ach of contra ct claim. Ashland ma intains that there is no independent c ause of action re g ardle ss of whethe r the c ontrac t is gove rned by the Uniform Commercia l Code (“UCC”) or the c ommon law, but that the contra ct should be g overne d by

the UCC. Second, Ashland a rgues that the c ause of

action for

brea ch of the duty

of g ood faith and f

air de aling is duplicative of the c ause f or bre ach of

fiduciar y duty beca use C&E bases its claims on the same conduct. Third, A shland argues that the e vidence is insufficient to support C&E’ s claim. Four th, Ashland invokes the doctr ine of in pari delicto to argue that

14beca

use the jury

found both parties ha d brea ched the duty of g ood faith and f

air de aling , the bad actions should canc el ea ch other out. 1. Whether t here is an ind ependent cause of action, un der D.C. law, f or breac h of

the duty of good f aith and fai r dealing. a. UCC. The UCC duty

of g ood faith and f

air de aling , codified in D.C. Code § 28:1-103, states 1 that “[e]very

contra ct or duty

within this subtitl e imposes an oblig ation of g ood faith in its perf ormanc e or e nforc ement.” T he comment e x plains that the section should not be re ad to mean that failure to act in g ood faith or de al fa irly is itself actionable, but fa ilure to ac t in good f aith or deal f airly while per formingor enf

orcinga spec ific contra ctual duty or oblig ation constitutes a brea ch. See c omment to D.C. Code § 28:1-103. C&E did not plead “ brea ch of c ontrac t” in its Second Amende d Complaint [ #54]. Thus, Ashland say s the claim should be dismissed. Count Five of the Sec ond Amended Complaint is entitled “B rea ch of I mplied Covenant of Good F aith and F air De aling .” While the title does not include the words “ Br eac h of Contract” C& E does alleg e in par ag raph 89 w ithin C ount Five that “ Ashland bre ache d its duty of g ood faith and f

air de aling under that ag ree ment in a number of way s, including . . . impeding CES’ ability

to perfor m its obl igations under the ame ndment by failingto provide cor

rec t and full information.” Sec ond Amended Complaint at 19-20. While Ashland cla ims that C&E was trying to pur sue a c laim that sounded in tort, in reality , C&E pled spe cifica lly a bre ach of

an implied duty

that arises out of a

contra ct. Under

the UCC, the duty

is to be treate d as thoug h it

wer e a te rm of the c ontrac t, and there fore , to brea ch the duty is to breac h the contra ct. See In re
All refe renc es to statutes in this opini on ref er to the ve rsions available on Westlaw or 1 L exis

. 15Be itz ell & Co., 163 B .R. 637, 649-50 (B ankr. D .D.C. 1993) (“ A provision implied as a matter of

law in eve ry

loan agree ment should be treated as a ppear ing on the fac e of the ag ree ment.”); D.C. Code § 28:1-203, comment (“ This section does not support an indepe ndent ca use of a ction for failure to perfor

m or enfor ce in g ood faith. Rather , this section means that a f ailure to pe rfor

m or enfor ce, in g ood faith, a spe cific duty or oblig ation under the contra ct, constitutes a bre ach of that contra ct . . .”) ; see a lso I n re F annie Ma e Secs. L itig., 552 F .3d 814, 820-21 (D.C. Cir. 2009) ( all contra cts include a

n obligation of g ood faith and f air de aling ). I t may be true that C&E did not entitle its claim “Count V Br eac h of Contrac t,” but plaintiff’s evide nce, if

acc epted by

the jury , tended to esta

blish that Ashland acted in ba d faith or unfairly in the enfor ceme nt of the contra ct by withholding information from C&E that Ashla nd knew that C& E nee ded in orde r to satisfy its contractua l obligation to add Ashla nd’s produc ts to its GSA schedule. Ashland w ould have me a cce pt the proposition that, despite the fac t that the parties ba rg ained f or C&E ’s obligation to get the pr oducts on the sche dule, Ashland should not be re quired to g ive information to C&E that is necessa ry to car ry out C&E’s oblig ation beca use the contra ct does not explicitl y say that Ashland has to provide that information. Der iving a n obligation to provide information that only Ashland possesses a

nd is nece ssary

for C& E to perf orm the contra ct flows natur ally and nec essar ily

from an oblig ation to act in g ood faith and not to prevent the othe r par ty from re nderingthe consider ation that is due that party under the contra ct. Since that proposition flows so natura lly from the implied cove nant, one c annot be sa id to be re adingadditional terms into the contra ct that the par ties did not barg ain for. Whether the action about whic h C&E c omplains is labeled as a brea ch of the duty

of g ood faith and f

air

16dealingor a br eac h of the implied cove nant of g ood faith and f air de aling that is read into the contra ct is rea lly

just a matter of se mantics. Fur ther, Ashland did not ar g ue for the application of the UCC until it filed its Rule 50 motion in t he middle of the tria l. Accor dingly , to the extent thi s contrac t is gove rned by the UCC, Iwill permit C&E to confor m the pleading s to fit the proof. Rule 15(b) of the Fe dera l Rules of Civil Procedur e per mits a “party

to move –at any

time,

even a fter judgment– to amend the plea dings to c onform them to the evide nce a nd to raise a

n unpleade d issue.” F ed. R. Civ. P. 15(b); see also B aker v. J ohn Morre ll & Co., 382 F.3d 816, 830-31 (8th Cir. 2004). L eave to amend is to be fr eely g iven when justice so require s. Fe d. R. Civ. P . 15(a) (2); see I slamic Am. Relief Ag ency v. Gonzales, 477 F.3d 728, 738 ( D.C. Cir. 2007) (“L eave to amend one’ s complaint is liberally permitted.”) , cer

t. denied, 128 S. Ct. 92 (2007). The only impediment to the gr antingof such lea ve now that the tr ial has ende d would be a showing that there would have be en a significant diff ere nce be tween the way

in which the ca se was tried a

nd the way

it would have bee n tried had C& E moved to amend its complaint bef ore trial to assert that Ashla

nd’s bre ach of

the duty of g ood faith and f

air de aling brea ched the contra ct. In no other wa

y , can A shland establish prejudice which mig ht prec lude the libera l amendment of

pleading s, even a fter judg ment, that Rule 15 require s. See 3 James W m. Moore et al., M O O R E ’ S F E D E R A L P R A C T I C E , ¶ 15.18 (3d e d. 1997) (“ [A court should be liberal in allowing amendments to conf

orm [the pleading s] t o the evidenc e.”) (citingFirst Nat’l Ba nk of L ouisvill e v. Cont’l Nat. Ba

nk and Trust, 933 F .2d 466, 469 (7th Cir. 1991) and Cotton Br os. Baking Co., Inc. v. Indus. Risk I nsurer s, 690 F. Supp. 1541, 1548 (W.D. L a. 1988)) . Also, it would seem that a showingof such pr ejudice is e ssential for Ashla nd to establish that my

g rantingthe motion to

17amend now is a n abuse of

discretion. Cf. Cotton Bros. B akingCo, I nc., 690 F . Supp. at 1548 (interpr eting Rule 15(b) to re quire ser ious showing of prejudice , such as surprise; if no showing , ref using to pe rmit leave to amend to permit asser tion of unpleade d issues at trial is abuse of discretion). Icannot think of a

ny differ ent fa cts that C&E w ould have put for th in support of this claim if it were titled a brea ch of c ontrac t claim. Nor c an I see howAshland would have proce eded dif

fer ently . This is not t he first time Ashland ha s flirted with this defense ; Ashland proce eded be fore and at tria l upon the theory that Virg inia law contr olled, and Virg inia does not permit an indepe ndent claim. See Eplus Tech. Inc. v. Nat’l RR P asseng er Corp., 407 F . Supp. 2d 758, 762 (E.D. Va . 2005). Ashland did not re st on that defense alone, howe ver. I n these motions and in pre vious filings, Ashland ha s fully defe nded the mer its of C&E’s c laim, not just whether it should be permitted to bringit. I t is not as though Ashland put a ll of its egg s in this basket and would now be pr ejudiced be cause it would not have an oppor tunity to defe nd itself fully

. Since there would have be en no diffe renc e betwe en the c ase that was tried a nd the one that would have be en tried ha d C&E c alled its claim “bre ach of contra ct” be fore and at tria l, it would be an a

buse of discr etion for me to r efuse it leave to ame nd its complaint to conform to the proof of fer ed at tria l. b. Com m on law . Ashland ar g ues that eve n under the common law ther e is no independe nt cause of ac tion for br eac h of the duty

of g ood faith and f

air de aling in D.C. C&E vehe mently opposes this contention, ar g uing that the law cle arly allows such a c laim. I

disag ree with both parties’ c laims that the law c lear ly

takes one position or another. Ashland, f or one, c ites primarily

case s decide d

18by

D.C. courts but applying othe r jurisdictions’ law. C& E, on the other ha nd, cites to languag e that does not addre ss the issue at bar and ar g ues it clea

rly favor s its posi tion. The only case I have f ound that is directly

on point specifica lly

conclude s that the are a of the law is not clea r befor e opining that D.C. courts would proba bly follow Ashland’s view . See Cry stal Prods., I nc. v. Doc Seve rinsen Or chestra s, No. 90-CV-932, 1994 WL507546, at *4 (D.D .C. Sept. 10, 1992). Whil e that opinion cer

tainly supports Ashland’s interpr etation, one unpublished opinion that is over 15 year s old and has not bee n cited by any other opinions hardly

rende rs the issue “c lear .” What is clear is that the duty must arise out of a c ontrac t betwee n the par ties. See Ke rrig an v. Br itches of Ge org etowne, I nc., 705 A.2d 624, 626- 27 (D.C. 1997) (holding that at-will employ ee could not have a

claim for br eac h of the implied cove nant of g ood faith and f air de aling beca

use there was no e mploy

ment contra ct to which the duty could be implied); see also Messina v. Nationwide Mut. Ins. Co., 998 F.2d 2, 5 (D.C. Cir. 1993). Also, the duty is not a means to add new ter ms to the ag ree ment; it merely require s that the parties be have f airly and re asonably

in the perf ormanc e and e nforc ement of the contra ct. Adler v. Abramson, 728 A.2d 86, 88 (D.C. 1999). Iam not prepa

red to dismiss C&E’s cla im, which was prove n to the satisfac tion of the jury at trial, without a showing that the law c lear ly prohibits bringingthe claim as a n independe nt cause of ac tion. Be cause Ifind that the distinction between how the bre ach of

the duty of g ood faith and fair de alingis treated unde r the c ommon law and the UCC is not important to my resolution of this case, I

will not address whe ther this contra ct should be consider ed to be one primarily for the sale of g oods or the sale of ser vices. 2. Whether t his cause of action is du plicative.

19Ashland ar g ues that C&E ’s ca use of a ction for br eac h of the duty of g ood faith and f

air dealingis cumulative of its action for brea ch of f

iduciary duty beca use both claims re ly

on the same fa cts. Whil e it is true that the basis of both c laims is that Ashland withheld information about the 1997 audit, both claims do not nec essar ily focus on the sa

me information or the same instance of

withholding. The brea ch of the duty of g ood faith and f

air de aling must necessa

rily arise out of

the per formanc e or e nforc ement of the contra ct, not out of the contra ct neg otiations. Ellipso, I nc. v. Mann, 541 F . Supp. 2d 365, 373-74 (D.D.C. 2008) ( “Althoug h this duty is implied in all contracts, the Court is awa re of no District of Columbia authority that would imply such a duty

in parties’ pr e-c ontrac t neg otiations.”). C&E a lleg es both that Ashland fa iled to disclose information about the a udit during the ir neg otiations and in response to C& E’s re quest for infor mation after

the contra ct was e x ecute d. I t is entirely possible that the jury

awa rded damag es to C&E f

or bre ach of

fiduciar y duty arisingout of the fa ilure to disclose information duringneg otiations, and for bre ach of the duty of g ood faith and f

air de aling for f

ailure to disclose information af

ter the c ontrac t was executed. This would re prese nt two separate instances of

wrong doing e ntitli ng C&E to dama g es. Ashland ar g ues that the fa ct that the jury was c oncer

ned that it might be a llowing double

rec overy and that I told it t o awa

rd the damag es it felt that C&E suf fer ed fr om eac h claim and the total would be re duced if

nece ssary

to avoid duplicative dama g es sug g ests that this verdict is duplicative. C& E argues that the jury was obviously

conce rned w ith preventingdouble re cover y and ther efor e this verdict must not allow for double rec overy . Ifind ea ch ar gument equally persua sive, which is to say , I don’t know what the jury did, but Ido know that there is enoug h

20evidenc e in the re cord f or the jury

to find two separ ate c auses of action ar ising out of se parate alleg ations. Acc ording ly , Iwill leave the ve rdict alone

. 3. Suf fi ciency of the evidence. In the District of Columbia, “all contr acts c ontain an implied duty of g ood faith and f

air dealing , which mea

ns that ‘neither

party shall do any

thing whic h will have the e ffe ct of destroying or

injuring the rig ht of the other pa rty to rec eive the f

ruits of the contra ct.” Allwor th v. Howar d Univ., 890 A.2d 194, 201 (D.C. 2006) ( quoting Paul v. Howa rd Univ., 754 A.2d 297, 310 (D.C. 2000)). L iability lies for bre ach of

the duty if a pa rty (1) e vades the spirit of the contra ct, (2) w illfully

rende rs imperfe ct per formanc e, or ( 3) interf ere s with perfor

mance by the other pa rty . I d. C&E pr esente d evidenc e at tria l to sugg est that the g overnme nt reque sted ce rtain information from C& E as par t of its petition t o add Ashland pr oducts to its GSA schedule, that C&E r equeste d that information from Ashla nd and that Ashland sa id it did not exis t or did not g ive it to C&E. Under

those circ umstances, a

rea sonable fa ct-finde r could de termine that Ashland interf

ere d with C&E’s a

bility to perfor m its contractual duty

to add Ashland produc ts to its GSA schedule. 4. In pari delicto . Ashland also ar g ues that bec ause the jury found that both parties br eac hed their duty of g ood faith and f

air de aling , neither should re cover under the doctrine of in pari delicto or uncle an hands. “[T]he leg al principle of in pari delicto . . . holds that if the parties a re in e qual fa

ult, the law will help neither

of them.” Wag er v. Pro, 575 F .2d 882, 884 (D.C. Cir. 1976). The doc trine is ge nera lly

only applied whe n the par

ties ag ree to undertake an illeg al ac tivity ; the Court will not enfor ce a contra ct betwe en two par ties to eng ag e in illeg al ac tiviti es. See United States v. Phil lip

21Morris USA, Inc., 300 F . Supp. 2d 61, 76 (D.D.C. 2004) (“ A par ty truly in pari delicto is one who has himself violated the law in coope ration with the def endant.” ) (quotingPinter v. Dahl, 486 U.S. 622, 636 (1988)). This a rgument was not pre sented in Ashland’ s Rule 50 brief, a nd there fore the Court need not a ddress it, but even if it we re pr operly prese rved, A shland has not demonstrated that the contra ct at issue her e wa s illega l. There fore , the def ense of in pari delicto will be of no assistance to Ashland here

. C. P re- judgme nt Intere st. The jury awa rded pr e-judg ment interest to C&E on both its claim for brea ch of f

iduciary duty and the duty

of g ood faith and f

air de aling . Ashland ar g ues that there is no leg al basis for the jury ’s awa

rd. F irst, with respec t to the interest awa rded f or the bre ach of

the duty of g ood faith and f

air de aling , D.C. Code §15-109 spec ifically authorizes the awa

rd of pr ejudg ment interest in contra ct ca ses, and that c laim undoubtedly arises out of the contra ct betwe en these parties. Thus, the jur

y ’s awa rd of pr ejudg ment interest on the c laim for bre ach of the duty of g ood faith and f

air de aling will stand. The bre ach of

fiduciar y duty claim sounds in tort, so it i s g overne d by § 15-108, which provides that the Court may awa rd pre judgme nt interest in an ac tion to recove r for a liquidated debt if such inter est is pay able by contra ct, law or

usag e. Ashland a

rgues that this debt is not liquidated beca

use it was not asc erta inable until the jury awa rded a specific amount in damag es. Howeve r, the c ourts of the District of Columbia have continued to move aw ay from strict adher ence to the liquidated-unliquidated distinction and instead foc us on whether the intere st is

nece ssary to fully compensate the par

ty for its loss. See Br ag don v. Twenty -F ive Twe lve Assocs., L P, 856 A.2d 1165, 1171 (D.C. 2004); District of Columbia v. Pierce A ssocs., Inc., 527

22A.2d 306, 310 (D.C. 1987). The jury was instructe d in acc ordanc e with these pr inciples and thus must have conc luded that the intere st awar ded wa s nece ssary to make the plaintiff whole. I will not disrupt its decision. D. Equ itable Ind em nif ication. Ashland asse rted a

claim for e quitable indemnification seekingrec overy from C& E for the $350,000 it paid in settlement with the g overnme nt following the second inve stigation. Si nce that claims sounds in equity , it was understood that the Court would re solve it after the jury returne d its verdict on all the other counts, including the counter claims Ashland had a sserted f or brea ch of c ontrac t and bre ach of the implied covena

nt of g ood faith and f

air de aling

. 1. P rinciples of

Ind em nif

ication. Under traditional principles, indemnity is available only

if the par ty seekingindemnity (ca lled the indemnitee) from the indemnitor ha s discharg ed the liability of both. R E S T A T E M E N T (T H I R D ) O F T O R T S , Apportionment of L iability ' 22, Reporter ’s Note a t 277 (2000). Indemnification ex ists to prevent unjust enrichment; such e nrichment oc curs only when the indemnitee = s pay

ment to the victim protected the indemnitor from any future liability . I d. I f, on the other ha

nd, the indemnitor rema ins liable to the party with whom the indemnitee settled, there is no unfairne ss that needs re ctification; the indemnitor was liable to the plaintiff bef ore the settlement and re mains liable afte r it. She has not been unjustly enric hed by

the settlement pay ment to the plaintiff. Henc e, it is fundamental that the inde mnitee must have discha rg ed the liability of the indemnitor for

there to be any

indemnification. “N o case has per mitted noncontra ctual indemnity ag ainst a per son still liable to the plaintiff.” I d.

232. District of Colu m bia L aw . The District of Columbia follows this principle to the letter a s perf ectly illust rate d by

the 2 differ ence in the two most significa nt case s, District of Columbia v. W ashing ton Hospital Center, 722 A.2d 332 (D.C. 1998) a nd Cag lioti v. Dis trict Hospital Partners, 933 A .2d 800 (D.C. 2007). In Washington Hospital Center, the District of Columbia, having settled with a pede strian who had be en injured dur ing a high spe ed police c ase, soug ht indemnification from the H ospital Center, c laiming that the Ce nter ha d ag g ravated the pede strian = s injuries by its malpractice when she wa s taken to the Center afte r the a ccide nt. Cit ing the principle discussed a bove, the cour

t of 3 appea ls held the District = s entitlement to indemnification was a function of whe ther its settlement with the pedestria

n was made and ac cepte d in full satisfaction of he r cla im and with the intention to relea se all par

ties who might be liable to the pede strian. Wash. Hosp. Ctr., 722 A.2d at 341 (quoting L amphier v. Wash. Hosp. Ctr., 524 A.2d 729, 735 (D .C. 1987)). The c ourt looked to the intention of the par

ties as to these two issues, conc luding that if the languag e wa s clea r and unambig uous, the plain languag e of the rele ase c ontrolled. I d. Since the re lease betwee n the District and the pe destrian r elea sed only the District of Columbia, its officer s, ag ents and employ ees a

nd contained no pr ovision for the re lease of any other individuals or entities ag ainst whom the pede strian had c laims, it was clear that there was no ba sis in the relea se to conc lude

After hearing a rgument from the pa

rties on May

1, 2008, Ideter

mined that D.C. law 2 applied to this case be cause no single state had a n overwhelming inter est in seeingits law applied and application of D.C. law would not impair the intere sts of the other state s who could cla im a rig ht to have their la

w applied. Note that the se ction of the RE S T A T E M E N T (S E C O N D ) O F T O R T S that addre ssed 3 indemnity , Section 886B, w as re place d with Section 22 of the R E S T A T E M E N T (T H I R D ) O F T O R T S . See R E S T A T E M E N T (T H I R D ) O F T O R T S ' 22 cmt. A. 24that the pede strian re lease d any claim she mig ht have ha d for medic al malpra ctice a g ainst the Hospital Center. I d. at 342. The plaintiff in Cag lioti, l ike the pede strian in Washington Hospital Center, c laimed to have be en victimized by

a hospital = s malprac tice af ter he was ser iously

injured by

a whe el cha ir malfunction that threw

him to the gr ound. Cag lioti s ettled with the whee l chair ma nufac turer but, unlike the pedestria

n, he sig ned a r elea se that expressly rele ased the manufa cture r and a ny person or entity that provided medic al ca re to him afte r the a ccide nt. Cag lioti, 933 A.2d at 804- 05. Additionally , the same r elea se indicate d that the settlement wa s in full compensation for a ll the injuries Cag lioti s uffe red, to include any ag g ravation of injuries cause d by the putative malprac tice of the hospital. I d. at 809-10. It theref ore f ollowed that the whe el cha ir manufa cture r could pursue (or a ssign) a cla im for indemnity ag ainst the hospital beca use it had discharg ed the hospital’s liability to Cag lioti. The diff ere nce in r esult in the two case s dictates the de termination of this case . Turning , as District of Columbia law re quires, to the cle ar la nguag e of the ag ree ment and the r elea se it 4 contained in pa

ragraph se ven, ther e is no expressed intention to relieve C&E of liability and no indication whatsoeve r that the pa rties wer e agree ing that the pay ment resolved e ntirely

the liability that C&E mig ht have to the g overnme nt. Moreove r, if par ole evidenc e we re a vailable, it promptly

defe ats Ashland = s claim. Peter Whit e, who r epre sented Ashland at trial, also repr esente d Ashland duringthe neg otiations that led to Ashland = s settlement with the g overnme nt for $350,000.

See Cag lioti, 933 A.2d at 808-09; W ash. Hosp. Ctr., 722 A.2d at 332. 4 25Whit e spec ifically testified that he discusse d whether the United States would also settle whateve r cla im it had ag ainst C&E but the idea was re jected. White also explicitl y acknow ledg ed in his testimony that “ther e wa s no relea se of C& E,” (4/30/08) A M Tr. at 59:22, and that the g overnme nt did not int end to re lease its claims ag ainst C&E. I d. at 59:13-15 (“ Q: All rig ht. But it suffice s to say that y ou did not resolve any of C&E ’s potential liability ; isn’t that rig ht? A: Mr. Mene [i .e. the Assistant United States Attorne y ] rejected the offe r to do so.”). I t would be har d to conce ive of a more obvious indication that White and the Assistant United States Attorney

wer e only

settling the g overnme nt’s claim ag ainst Ashland and not settling its claim ag ainst C&E. Since it is indubi tably

clea r that the settlement did not intend to relieve C&E of any further liability and that it was not desig ned to settle the e ntire cla im that the Untied States had ag ainst both of them, Ashland’s c laim for indemnification has to fail. 3. P rec lusi ve Eff

ect of the Jury’s Verdict . When, as occ urre d here , the Court resolves a n equitable c laim after

a jury verdic t, it mus t g ive pre clusive ef

fec t to the first resolution of any fac tual issue prese nted so that it follows the jury ’s fa ctual finding s with respec t to lega l claims when it resolve s the equitable c laims. Fog g v. Ashcrof t, 254 F.3d 103, 110 (D .C. Cir. 2001). In order to be g iven this preclusive e ffe ct, the issue of fa ct must have be en ac tually litigated a

nd deter mined by the jury ’s ver dict. I d. (quoting R E S T A T E M E N T (S E C O N D ) O F J U D G M E N T S ' 27 (1981)) ; see a lso Consol . Edison Co. v. Bodman, 449 F.3d 1254, 1258 ( D.C. Cir. 2006) (issue must have be en ac tually and nec essar ily

decide d in prior dec ision to be give n prec lusive eff ect in the se cond ca se).

26An examination of the trial evidenc e, the pa rties = argument and the Court = s instructions and the ve rdict for

m indicates bey

ond any argument that the jury

was not ca lled upon to make any fac tual finding as to the intention of the g overnme nt and of Ashland w hen they enter ed into the settlement agree ment that resolved the g overnme nt = s claim. Acc ording ly , the jury = s verdict has no pre clusive ef

fec t on the equitable indemnific ation claim. D. Ashland ’s Claim for Breach of Good F aith and F air Dealing. The jury found in favor

of Ashland on its claim that C&E brea ched its duty of g ood faith and fa ir dea ling a

nd awa rded $3,200 in damag es. C&E argues that the jury ’s ver dict must be set aside be cause there was no proof of dama g es adduc ed at tria l that could support the jury ’s verdic t. C&E cla ims that the only damag es Ashland pr esente d to the jury wer e the $350,000 that was the subjec t of Ashland’s r equest for indemnification that I

have just denie d. Thus, C&E alleg es that Ashland is trying to g et ar ound the fa ct that it must demonstrate an e ntitlement to indemnification to rec over tha t money by framing it as somethingelse. I am not persua ded by that argument, howeve r. In addition to evidence about the $350,000 that Ashland ultimately paid to settle, the jury hear d that Ashland incurr ed leg al fe es duringthe settlement proc ess. The jury could prope rly conclude that Ashland suffe red those da mag es as a

result of C& E’s bre achingthe implied duty of g ood faith and f

air de aling . Acc ording ly , C&E’ s Motion for J udg ment as a Matter of L aw on Ashland’s Counterc laim [ #198] wil l be denied. E. Costs. Both C& E and Ashland a rgue that they

are the pre vailing pa

rty in this l itigation for

the purpose of

rec overingcosts under F eder al Rule of Civil P roce dure 54( d). Rule 54(d) pr ovides

27that “unless a f eder al statute, these r

ules, or a c ourt order

provides other

wise, costs – other tha

n attorney ’s fe es – should be allowe d to the preva iling par ty .” F ed. R. Civ. P. 54(d). Whi le the Court has discre tion to determine whe ther they are appropr iate, costs should be a war ded as a matter of c ourse unless the Court articulate s a g ood rea son for de nying the m. Ba ez v. U.S. Dep’t of Justi ce, 684 F .2d 999, 1004 (D.C. Cir. 1982) (e n banc) . A pre vailing pa rty is “one who ha s been a

war ded some re lief by the cour t, or one who suc cee ds on any signific ant issue in litigation which a chieve s some of the bene fits they

soug ht in bringingsuit.” Stanley v. Proctor, 591 F . Supp. 2d 12, 15 (D.D.C. 2008). Unde r that def

inition, bot h Ashland and C& E could conc eivably be conside red to be preva iling par

ties beca use judg ment was e ntere d in favor of eac h of them. See Sele ct Milk Producer s, I nc. v. Johanns, 400 F.3d 939, 946-47 (D .C. Cir. 2005) (outlining three criter ia by which a pa

rty might demonstrate that it is a preva iling par ty); L opez v. District of Columbia, 383 F. Supp. 2d 18, 22 (D.D .C. 2005) (holding that a par ty can still be a pr evailingparty even if it does not g et all the re lief it seeks). I n a ca se such a s this, where the re a re multiple claims, the parties c an only

be compe nsated for

the claims on which the y preva iled. Br own v. B olge r, 102 F.R.D. 849, 856 (D .D.C. 1984). C&E initially broug ht six claims and judg ment was e ntere d in its favor on two of the m. Ashland broug ht four counte rcla ims and judgme nt was ente red in its favor on one of the m. Despite the f

act that this appe ars to put the par ties near ly

in equipoise, they

argue that I should weig h the importance of the c laims by looking at which claims we re r eally predominant, and the diff

ere nce be tween the amounts sought a nd the amounts rec overe d to determine which party rea lly won the ca se as a

whole. While Iunderstand A shland’s point that it prevailed on the

28fra

ud claim, which wa s the most significa nt monetary

claim – and a

rguably the most stringe ntly pursued at trial – “plaintiff ne ed not pre vail on the primary issue in the lawsuit” to be a 5 preva iling par

ty . L opez, 383 F. Supp. 2d at 22. Thus, I am not convince d that Ashland’s

succe ssful defe nse of the f raud c laim should automatically nullify any claim C&E ha s to preva iling par

ty status. Iam not alone in my confusion; in this sort of situation, courts have taken va rious positions, i ncluding decla ringthe par

ty who re cover ed more money the pre vailing party , holding that ther e is no preva iling par ty , holding that both ar e pre vailing pa rties and various other

permutations. Compare D an Carta g e Co. v. United States, 289 F.2d 623, 627 ( 6th Cir. 1961) (net judg ment winner pr evails) with Ennis v. Ring, 353 P.2d 950, 954 (Wash. 1959) (if exact off

set neither pr evails) a

nd Moran v. L ewis, 41 A.2d 905, 905 (Conn. 1945) ( both parties g et costs when de fenda nt preva iled on counter claim). Be cause both Ashland and C& E have arguably preva iled in this case, both ar e ar g uably entitled to costs on the claims that they succe ssfully

pursued or

defe nded. Howe ver, in re ality , lawy ers do not tra ck costs base d on individual claims and defe nses. I t would be extremely difficult if not impossibl e to diffe rentiate betwee n the var ious theories pursue d here in any meaning ful way . Fur

ther, the pur

pose of Rule 54(d) is to deter fr ivolous li tigation by impressing upon would be litiga

nts that failure to prove their ca se will result in their havingto pay for their opponents’ costs. That conce rn isn’t prese nt here , wher e both par ties advanc ed some mer itorious claims. Given the pr actica l difficulty and the f act that or deringthe par

ties to bear e ach othe r’s costs would not meaning fully advanc e the pur

pose of the r

ule, I will use my

discretion to leave

One c ould cer

tainly argue that since the bre ach of fiduciar y duty and duty of g ood faith 5 and fa ir dea ling c laims arose out of the same fa cts but require d a lower standard of

proof, the emphasis on fra

ud was at least partially

tactica l. 29them wher e they lie. Eac h party

shall bear

its own costs. Accor dingly , the plaintiff’s Motion to Strike Defe ndant Ashland’s B ill of Cost s [#209] will be g rante d. Plaintiff’s Motion for L eave to File B ill of Cost s [#208] will be denied. IV. Conclusion . For the re asons stated a

bove, plaintiff’ s Motion for J udg ment as a Matter of L aw on Ashland’s Counterc laims for B rea ch of Contra ct and B rea ch of the I mplied Covenant of Good Fa ith and Fa ir Dea ling [#183] wil l be denied. Plaintiff’ s Motion for J udg ment as a Matter of L aw on Ashla

nd’s Countercla im for B rea ch of the I mplied Covenant of Good F aith and F air Dea ling a nd Motion to Alt er or

Amend the Judgment Enter ed by the Clerk of the Court [ #198] will be denied. De fenda

nt’s Motion for J udg ment as a Matter of L aw, Rene wed Motion to Alter J udg ment [#200] will be denied. Plaintiff’s Motion for L eave to File B ill of Cost s [#208] will be denied. Plaintiff’s Motion to Strike [ 203] Bill of Cost s [#209] will be g rante d. Finally , plaintiff’s Unoppose d Motion to P ermit Plaintiff’s Reply in Support of Plainti ffs’ Re newe d Motion for J udg ment as a Matter of L aw F iled One Hour Out of Time [#206] will be g rante d as

conce ded. An Orde r ac companies this Memora ndum Opinion.

Date: Ma rch 9, 2009 /S/ J OHN M. F ACCI OLA U.S. MAGI STRATE J UDGE

30