Opinion ID: 1184357
Heading Depth: 2
Heading Rank: 2

Heading: damages and the defense of unclean hands

Text: Ficke's second point on appeal is that he was improperly prevented from introducing evidence of the plaintiffs' unclean hands and the damages he suffered in attempting to build condominiums under the June agreement. Following the parties' opening statements, the trial judge ruled that testimony would be first limited to breach of the June agreement and the appropriateness of specific performance. The number of other claims raised in the lengthy opening statements indicate that the judge wished to avoid mixing evidence of other contractual issues with the central question of specific performance. Ficke had asked in a counterclaim and in his opening statement for declarations that the lease had been reinstated, that a default on the lease had occurred, that the airline was liable on a 1968 occupancy guarantee and on the employment contract, and that the plaintiffs were obligated to undertake certain repairs to the hotel. The court responded: THE COURT: But after hearing opening statements, I'm going to ... limit the testimony to the breach of the terms of the agreement of June 5, 1970 ... and as to what has been done towards the consummation of this agreement ...; if it has to go further then [it may] very well be necessary to broaden the testimony... . . . . . . . THE COURT: Well, in other words, you want to show this to show previous dealings with the parties. Well, it might very well be admissible. . . . . . . THE COURT: But generally speaking, I'll allow you to put in anything that tends to explain something that is not clear or tends to impeach the testimony of the parties. By this and other rulings, we conclude that the trial court was willing to hear all evidence bearing on specific performance but wished to postpone any questions of money damages until all evidence going to the former issue had been adduced. After hearing evidence on specific performance, the court took the issue under advisement and adjourned to allow the parties to prepare for a second stage of the trial at which Ficke's claim for damages was to be heard. Before court reconvened, however, the judge issued a decision in favor of the appellees and declined to allow further proceedings. Ficke moved to reopen the case to present evidence of the appellees' unclean hands and the damages he sustained in attempting to build the condominiums. This motion was denied.
Ficke's counsel briefly noted in his opening statement that he intended to support a defense of unclean hands with evidence of an alleged signing and repudiation of an occupancy guarantee and by evidence of appellees' breaches of the accords. Both the guarantee and the breaches of the accords were also relevant to other issues barred by the court's ruling that only evidence going to specific performance was to be heard first. For example, under Ficke's counterclaim, the occupancy guarantee was in issue to determine damages Ficke suffered by the airline's repudiation. If specific performance in favor of the plaintiffs was warranted, then the question of liability on the guarantee and the nature of rights arising would not have been reached by the trial court. Thus, despite the brief mention of a connection between the guarantee and the accords with a defense of unclean hands, their relevance to the appropriateness of specific performance rather than the question of damages was not always apparent. Three times in the course of the trial, Ficke's counsel offered the guarantee in evidence. On the first occasion, the following exchange occurred: MR. LENNIHAN [counsel for Ficke]: I'll offer at this time in evidence ... a lease contract, personal guarantee and occupancy guarantee. . . . . . . THE COURT: What's the relevancy of these, Mr. Lennihan? . . . . . . MR. LENNIHAN: ... As to the relevance of this question ... the opening statements and the reliefs sought all concern the lease contract as amended by the June 5 agreement in paragraph 8 thereof concern the liability of the airline on the occupancy guarantee and so forth. [ sic ] These are totally relevant, and whether they are beyond the scope of direct  in view of my remarks, I don't know  but if the court prefers me not to go into it at this time, it's all right with me. THE COURT: Well, I don't think there's any question it's relevant to be under paragraph [8](a) if paragraph [8](a) ever comes into effect... . MR. LENNIHAN: You want to limit it... . THE COURT: ... in my ruling to limit this initially to see whether or not there was substantial breach and whether or not... . MR. LENNIHAN: I'll be glad to do that. The offer of the guarantee into evidence was withdrawn. When it was offered a second time, there was a similar exchange: MR. LENNIHAN: I want to introduce into evidence exhibit I, the occupancy guarantee... . . . . . . . THE COURT: ... What's the relevancy of it? MR. LENNIHAN: Yesterday we ... reviewed the pleadings and the contentions of the parties, and we wanted judgment against Alaska Airlines, that it is liable on the incon  on the occupancy guarantee.... That is the relevance of the document. I had thought that we were proceeding with our counterclaim, the plaintiff having rested on his suit for specific performance. . . . . . . THE COURT: Let me ask you this, Mr. Lennihan: does this go toward the June 5 agreement, do you contend it goes toward the June 5 agreement relative to any breach or the carrying out of it ...? MR. LENNIHAN: In the event the court should decide that the June 5 agreement is reinstated ... the court will then have to decide under the pleadings in the case whether or not the airline is bound by the occupancy guarantee... . THE COURT: Well, this... . MR. LENNIHAN: ... now or later, I don't care (indiscernible). THE COURT: So you contend this is a part of the June 5 agreement from the standpoint if specific performance is not granted, then revert back to [the lease]. MR. LENNIHAN: Then the airline is bound under the occupancy guarantee because the  under the June 5 agreement, the leases are reinstated and it's one of the guarantees applicable to the leases. . . . . . . THE COURT: Let me ask you this, Mr. Lennihan: can you first, without upsetting your plan of your case, put on the evidence in regard to the  against specific performance? MR. LENNIHAN: Yes. I could proceed that way. THE COURT: Why don't you do that and then let's face this other matter when it comes? MR. LENNIHAN: All right, but then I will still require the answer ... to admission of exhibits. Again, the offer was withdrawn until the issue of damages arose. On both occasions, the guarantee was offered as relevant only to the issue of liability not to any inequitable behavior on the part of the airline amounting to unclean hands. The third time the guarantee was raised, the defense of unclean hands was discussed as well; but still no connection between the two was made: MR. LENNIHAN: ... I am now in the position to go in  to question Mr. Cheek on matters relating to the occupancy guarantee... . THE COURT: Well, do you have any more witnesses ... on the June 5 agreement first? . . . . . . THE COURT: I thought we  you indicated that you could, without interfering too much with your plan of your case, go into the specific performance issue and whatever the breach, whether they were entitled to specific performance or damages... . MR. LENNIHAN: The only thing I  and I don't know quite whether I'm tracking the ... court right or not  I have a little more evidence on the failure of the airline to use its best efforts to register. I have a little more evidence on the interference by the airline with Mr. Ficke's efforts to use due diligence as a selling stockholder to see to it that what was being done in the registration complied with the law. We have evidence on the question of the occupancy guaranty which I understand the court does not at this time wish to hear. THE COURT: I want to complete if we could, the specific performance part of his complaint, and your defense on it. MR. LENNIHAN: All right, but ... the reason I'm enumerating these things ... [is] so I can find out which ones you do not want to hear at this time; and with that in mind we have evidence on  we have some further evidence on their interference with our construction of the condominiums. That's  that relates somewhat, but hardly, to the  it has to do with unclean hands and so forth, but there's enough in on that in my judgment, for this purpose. We'll have evidence on Mr. Ficke's damages and I believe that is what we have. Now if the court wants to hear no more ... on those matters, well, I'll be glad to have Mr. Camarot [counsel for plaintiffs] proceed with his motion. Ficke makes the same argument that the court excluded relevant evidence with respect to the appellees' breach of the accords; but does not direct us to any instances in the record where the court refused to hear this evidence on the question of specific performance. Our examination of the record shows the contrary: THE COURT: Well, he says on this theory, that you people in the accord and satisfaction agreed to do certain things. MR. CAMAROT: No, he goes beyond. THE COURT: And you didn't do it and therefore that tends to show that you were dragging your feet all along. . . . . . . THE COURT: Isn't the course of conduct admissible? MR. CAMAROT: All right. Just as long as it's clear that we can both have the same prerogative. . . . . . . THE COURT: ... [I]t would go to show a course of conduct though, would it not? MR. LENNIHAN: It would go to show a course of conduct. It would go to show the lack of clean hands of the plaintiff in coming to this court of equity. .. . THE COURT: Well, I'm going to admit it for the purpose of showing a course of conduct, but not for any purpose of showing that either party claims any rights under the accord and satisfaction, but only for the purpose of showing course of conduct for both parties. MR. CAMAROT: So there's no question in my mind and as I understand it, Your Honor, we have the full right to show a course of conduct also of Mr. Ficke under the accord and satisfaction. THE COURT: Well, sure, that's right. We are not persuaded that evidence of breaches of the accords was not admitted on the issue of unclean hands. Nor do we believe that it was the court's ruling which kept evidence of the occupancy guarantee from bearing on whether the appellees were entitled to specific performance. Despite passing mention in opening and closing argument, whenever facts concerning the guarantee were offered in evidence their relevance to unclean hands was never set out. On the other hand, the appellees repeatedly presented evidence which they openly contended showed Ficke's overreaching in the sale. Other evidence before the court bore on the appellees' unclean hands, and, at one point, Ficke's counsel seemed satisfied that enough evidence on the issue had been admitted. We believe he was not foreclosed by the trial court from showing that the guarantee evidenced unclean hands. From our reading of the record, counsel regarded the guarantee as primarily relating to the question of damages; only secondarily was it intended to show unclean hands. The fact that he did not take advantage of opportunities to introduce it for this purpose must be ascribed to his own plan for managing the complexities of the case.
When the court limited testimony to the question of breach of the June agreement and the propriety of specific performance, it intended to postpone but not foreclose introduction of evidence showing Ficke's damages. One part of Ficke's damages allegedly arose from prior agreements with appellees which would terminate upon consummation of the sale. These included damages under the occupancy guarantee, obligations to pay lease rentals and taxes, to make repairs to the hotel, and to pay wages to Ficke. The decree of specific performance mooted any question of damages on these issues. However, Ficke counterclaimed for other damages allegedly suffered by the appellees' interference with his attempts to construct the sixty condominiums. These damages, flowing from one of the purchase covenants, survive the court's decree. It is evident from the record that the trial court believed that adjudication of the specific performance issue would resolve every claim for damages. Acting on this belief, the court refused, after it had decreed specific performance, to reconvene for the damages stage of the trial. This was error. A party is entitled to an opportunity to be heard on every cognizable claim properly presented to the court. [17] However, because the parties were in agreement at oral argument that these claims, although pleaded in this action, could still be asserted in a separate suit, we do not think it necessary to delay resolution of the sale any longer by remanding this case to the superior court for a hearing on the extent, if any, of Ficke's damages. If the appellant wishes, the allegations of damages in his Amendment to Counterclaim filed September 29, 1971, may be reasserted in a separate action against the appellees.