Opinion ID: 2276842
Heading Depth: 1
Heading Rank: 5

Heading: excluded evidence and measure of damages

Text: [¶ 26] FAME contends that the court erred when it refused to allow FAME to present evidence that MKY would have chosen to purchase the mill even if it had known about the letters from the Attorney General that were not disclosed at the time of the sale. We agree. [¶ 27] We review evidentiary rulings for clear error and an abuse of discretion, see Kay v. Hanover Ins. Co., 677 A.2d 556, 558 (Me.1996), and we will only vacate a judgment if the evidence excluded `was relevant and material to a critical issue and if it can with reason be said that such evidence, if admitted, would probably have affected the result or had a controlling influence on a material aspect of the case.' See Minott v. F.W. Cunningham & Sons, 413 A.2d 1325, 1329 (Me.1980) (quoting Towle v. Aube, 310 A.2d 259, 264 (1973)); see also Todd v. Andalkar, 1997 ME 59, ¶ 7, 691 A.2d 1215, 1218. [¶ 28] The real issue in this case appears to be whether the failure of FAME's predecessor, the MGA, to notify MKY of the letters from the Attorney General was a sufficiently material breach of the contract that would allow Waterville to recover any damages as a result of the breach. As a way of determining that materiality, the trial court instructed the jury as follows: If you find that Waterville Industries' predecessor, MKY Realty, would not have purchased the property if not for a breach of contract on the part of the Maine Guaranty Authority or FAME, then you should award all damages which have arisen to date because the property was purchased. That instruction served as a kind of proxy for the issue of materiality. It essentially allowed the jury to determine materiality by focusing on MKY's intent at the time it purchased the property. If MKY would not have bought the property had it known of the contents of the letters from the Attorney General, the breach was material. If MKY would have purchased regardless of the knowledge, the breach was not material. Waterville presented evidence that the purchase price for the property was $655,000, and it also offered testimony from Mr. Salvadore, MKY's president, that MKY would not have bid on the property had it known of the letters from the Attorney General. [¶ 29] To rebut that testimony, FAME offered the following evidence: (1) the asking price for the property prior to the auction; (2) the amount of money FAME lost on the sale; (3) Waterville's income from the property in the years following the purchase; and (4) a statement by Mr. Salvadore regarding the tax assessment of the property at the time of sale and his statement that the property was worth substantially more than $655,000. The court excluded the evidence. [¶ 30] FAME contends that the purchase price for the Waterville mill was substantially less than its true value, and that the nondisclosure was not material because MKY would have purchased the property even if it had been made aware of the Attorney General's letters. Because the parties agreed that MKY's intent was crucial to this issue, the court erred in limiting FAME's cross-examination of Mr. Salvadore on the issue of whether MKY would have purchased the property with knowledge of the letters, see Pendleton v. Sard, 297 A.2d 889, 891 (Me.1972) (holding that deprivation of the right of cross-examination on a material issue constituted prejudicial error), and in excluding other relevant evidence regarding the value of the property at the time it was sold. Because FAME was deprived of introducing evidence on an issue critical to the case, we vacate the judgment and remand for a new trial. [¶ 31] We need not address the extent to which there is merit to FAME'S argument that the trial court applied the wrong measure of damages, allowing Waterville to recover the entire cost of cleanup if the jury found that MKY would not have purchased the property had it known of the letters from the Attorney General. It is sufficient to say that on remand. Waterville should be required to establish not only that the failure to disclose the letters from the Attorney General was a material breach of the purchase and sale agreement by MGA, but also that the damages it is seeking to recover would naturally flow from this breach of the contract, or were reasonably within the contemplation of the contracting parties when the agreement was made. [13] See Thoms v. Dingley, 70 Me. 100, 102-04 (Me. 1879). The entry is: Judgment vacated. Case remanded for further proceedings consistent with this opinion.