Opinion ID: 426287
Heading Depth: 1
Heading Rank: 3

Heading: CCOM's Claims.

Text: 53
54 CCOM asserts that the district court erred in directing a verdict for Fuller on Count II, claiming the evidence at trial established a prima facie case of fraud. 14 Count II, alleges that Fuller devised a scheme to defraud CCOM of substantial sums of money by intentionally underbidding the project to assure obtaining the contract, and then extracting money in excess of the contract amount by demanding payment for unwarranted delay claims, overcharging for extra work, and encouraging its subcontractors to make delay claims even though unfounded. 55 According to Illinois law, verdicts ought to be directed ... only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand. Pedrick v. Peoria & Eastern Railroad Co., 37 Ill.2d 494, 510, 229 N.E.2d 504, 513-14 (1967). 56 The essential elements of fraud 15 which the plaintiff must affirmatively establish are: (1) the representation must be a statement of a material fact, rather than a mere promise or opinion; (2) the representation must be false; (3) the person making the statement must know or believe that the representation is false; (4) the person to whom the representation is made must reasonably rely on the truth of the statement; (5) the statement must have been made for the purpose of causing the other party to affirmatively act; and (6) the reliance by the person to whom the statement was made led to his injury. Merit Insurance Co. v. Colao, 603 F.2d 654, 658 (7th Cir.1979), cert. denied, 445 U.S. 929, 100 S.Ct. 1318, 63 L.Ed.2d 763 (1980); Roda v. Berko, 401 Ill. 335, 339-40, 81 N.E.2d 912, 914 (1948); Bissett v. Gooch, 87 Ill.App.3d 1132, 1139, 42 Ill.Dec. 900, 904, 409 N.E.2d 515, 519 (2d Dist.1980). 57 The only evidence concerning Fuller's bid figure came from the deposition testimony of Robert Fullington, a Fuller estimator who had compiled numbers for submission to his superior, John Hessmer, for determination of a bid price. Fullington estimated the cost to be $10,273,536 (not including profit). After Fullington gave the estimate to Hessmer, Hessmer reduced the estimate without consulting Fullington and bid the project for $9,991,100 (which included a $200,000 profit). This bid proved to be about $500,000 below the next lowest bid. According to Fullington, Hessmer sometimes obtained cost figures different from those he originally submitted causing the total cost figure to increase or decrease. On the occasions that the bid price was less than the total cost figure which Fullington obtained, Fullington said that it was not his understanding that Fuller's bid was below its projected total cost. 58 Although Fuller's bid price was lower than Fullington's preliminary estimate, this alone is insufficient evidence to support a finding of the element of knowledge or belief of falsity. 16 Hessmer did not testify. Fullington gave a reasonable explanation of Hessmer's action in reducing the bid and, since his testimony was by way of deposition, the jury could not observe anything further from his demeanor. Despite evidence suggesting that Fuller knew some of the delay claims were unfounded, this does not sufficiently create an inference that Fuller intentionally underbid the contract and then sought to somehow make a profit on the project. Rather, most of the million dollars in delay claims were for the benefit of Fuller's subcontractors. Furthermore, even if the delay claims were material misrepresentations, CCOM points not to evidence showing it relied upon such claims but instead to evidence indicating it steadfastly refused to pay such demands. Finally, with regard to the June 25, 1975 compromise agreement, while this court perceives sufficient evidence in the record to establish fraud (save for injury to CCOM), 17 it is not the fraudulent scheme alleged in Count II. The result of this compromise is not even alleged in Count II as one of the particular circumstances of the fraud. See generally Fed.R.Civ.P. 9(b). We, therefore, affirm the order directing the verdict on Count II. 59
60 CCOM next argues that the district court erred in directing a verdict for Fuller on Count III of the complaint. 18 CCOM alleges in Count III that Fuller told CCOM it paid unlawful bribes to employees of the Building Department of the City of Chicago, that Fuller demanded reimbursement from CCOM, and that Fuller delayed construction attempting to coerce reimbursement when CCOM refused to pay. According to CCOM, these acts establish that Fuller is liable in tort for breaching its duty to act in good faith. 19 In response, Fuller contends that Illinois law does not recognize CCOM's legal theory. We agree with Fuller and affirm the district court because no Illinois case or statute supports a cause of action for bad-faith dealing outside the areas of insurance and employment law. 20 61
62 CCOM asserts that the trial court erred in denying CCOM's motion for a new trial. According to CCOM, four errors compel the granting of a new trial, either individually or cumulatively. These alleged errors are: (1) the erroneous admission of Fuller's exhibit 68; (2) incorrect jury instructions; (3) undue limitations on closing argument; and (4) the jury verdict is against the manifest weight of the evidence as to Counts I and IV. 63
64 CCOM points to four aspects of the jury instructions which it considers incorrect. First, CCOM contends that the district court misstated CCOM's contractual duties in an issue instruction which required CCOM to prove it had substantially performed its contractual obligations for it to prevail on its claim for breach of contract. CCOM asserts that the court included four obligations which in fact were not contractual duties owed to Fuller. Second, CCOM contends that the instruction included terms which were vague, argumentative, and calculated to mislead the jury. Third, CCOM argues that the district court erred in refusing to give CCOM's tendered Instruction 41 and omitting to read Instruction 39. Fourth, CCOM assigns error to the instruction informing the jury that Aetna Casualty and Surety Company (Aetna) was entitled, as a matter of law, to all defenses available to Fuller even though Aetna never raised these defenses in its pleadings. 65 CCOM waived its objection that the issue instruction contained non-contractual duties. Pursuant to Fed.R.Civ.P. 51, [n]o party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection. At trial, CCOM objected only to the alleged argumentative style and complexity of the instruction. 21 The objection did not inform the court that CCOM objected to the inclusion of four particular obligations or precisely which four CCOM considered objectionable. 22 Therefore, CCOM waived this objection. 66 Similarly, we conclude that CCOM waived any objection with respect to the vagueness or misleading language, if any, contained in the instruction. Although CCOM renews its objection that the instruction was argumentative, CCOM does nothing to embellish this assertion in its brief by way of explanation and this court does not consider the instruction to be unduly argumentative. 23 67 CCOM next contends that the district court erred in refusing to give CCOM's Instruction 41 and in failing to give CCOM's Instruction 39, both addressing the scope of SGE's role as CCOM's representative. CCOM Instruction 39, relating to SGE's roles as an independent contractor and as CCOM's representative agent, defined the terms agent and independent contractor, and further provided: 68 One who engages an independent contractor is not liable to others for the negligence of the independent contractor. A principal is liable to third persons for the negligence of his agent in the transaction of the business of the principal, if the agent himself is liable. 69 The court agreed this instruction should be given but omitted giving it. CCOM did not object to this omission or raise this matter in its motion for a new trial. 24 CCOM Instruction 41 provided: 70 [SGE] as architect on the clinic project, acted as an independent contractor in preparing the plans and specifications for the building and acted as the representative of the College only during actual construction of the clinic and until the termination of Fuller. The architect as representative of the College pursuant to the contract among the parties could only authorize an addition to the contract amount provided the architect had written authority from the College to do so. 71 The court rejected this instruction as argumentative because it argues CCOM's contention that SGE acted as CCOM's representative or agent only during the actual construction of the clinic. The court told the parties that they could modify and resubmit the instruction. 25 72 CCOM contends that the court's refusal to give Instruction 41 and failure to give Instruction 39 substantially prejudiced CCOM by allowing the jury to believe CCOM was liable for any defects in SGE's plans and specifications when, in fact, SGE acted as an independent contractor. 26 73 Although we agree that the district court should have given Instruction 39, CCOM failed to object to this omission and therefore waived this error. With respect to Instruction 41, the court committed no reversible error in refusing it because no substantial right of CCOM was thereby affected. Fed.R.Civ.P. 61. Despite CCOM's professed fear that the jury would consider CCOM liable for SGE's purported negligence in preparing the plans, we note that Fuller lost on its negligence suit against SGE. Thus, even if the jury believed CCOM was liable for any negligence of SGE's, the jury found no actionable negligence. Furthermore, CCOM does not outline any meaningful difference--in the circumstances of this case where the plaintiff is the contractor--between the scope of liability presented by a tort claim of negligent preparation of plans and specifications, and a contractual breach of supplying defective plans. Contrary to CCOM's assertions, Illinois law recognizes that the building owner impliedly warrants to the contractor that the plans and specifications provided by the owner are free from defects which would cause the contractor to incur additional, unanticipated costs. W.H. Lyman Construction Co. v. Village of Gurnee, 84 Ill.App.3d 28, 36-37, 38 Ill.Dec. 721, 403 N.E.2d 1325 (2d Dist.1980); Bulley & Andrews, Inc. v. Symons Corp., 25 Ill.App.3d 696, 704-05, 323 N.E.2d 806 (1975); see also Williston on Contracts Sec. 1966 at 189 (3d ed. 1978). Thus, even if the jury considered SGE to be CCOM's agent for purposes of preparing the plans and specifications, the error was harmless both because the jurors found SGE not to have been negligent in its preparation and because the negligence grounds did not expose CCOM to greater accountability than did the contract grounds. 74 CCOM's fourth argument also fails. None of its rights were affected when the district court instructed the jury that Aetna was entitled, as a matter of law, to all defenses available to Fuller in determining whether Aetna had breached any duty owed to CCOM under the performance bond. According to CCOM, this instruction improperly permitted Aetna to rely on Fuller's affirmative defenses which Aetna never raised in its pleadings. CCOM states that even if a surety is entitled to rely on the defenses of its principal, the surety must nonetheless plead those defenses. 75 In response, Fuller points out that none of its affirmative defenses were presented to the jury; rather, only those defenses framed by the instructions on CCOM's contract claim against Fuller were presented to the jury. Fuller then correctly notes that Aetna has no liability on its bond unless Fuller is in fact in default of its contract obligations and CCOM in fact performed its obligations. 76 As a practical matter, CCOM does not indicate how this lack of pleading prejudiced it. By virtue of Fuller's answer and assertion of defenses, CCOM was not surprised at trial or unprepared to meet the defenses of Aetna. Error not affecting the substantial rights of the parties must be disregarded. Fed.R.Civ.P. 61. 77
78 CCOM urges that the district court erred in denying its motion for a new trial based upon the court's error in admitting Fuller exhibit 68, a 77-page document dated June 10, 1975, which CCOM prepared in connection with its bond issue. We disagree. 79 At trial, CCOM objected that the document was not offered through a witness, it was prepared before June 10, 1975, and, contrary to Fuller's argument, CCOM did not make an implied admission in the document to the effect that CCOM found no fault with Fuller's work. In response, Fuller argued that the document was relevant because (1) it showed CCOM's motivation for handling itself like it did, (2) the document does not discuss any problems with Fuller, although CCOM now claims there were numerous problems with Fuller, (3) Fuller's expert witness had considered the document in rendering his opinion on certain elements of damages to which he testified, and (4) the projection by the accountants in the document concerning what the clinic would earn when in operation proved inconsistent with other testimony in the case. At the end of this argument, the court ruled: 80 It has been executed by Dr. Kawalik, president of the plaintiff, and it's an assertion, public assertion made by the plaintiff concerning the subject matter at issue in this case. Namely, its relationship with Fuller and the point that's made is ... that in 1975 up to June or July or May, when it was printed but prior thereto, I think it's relevant. It's admissible, certainly. 81 It's a statement made by the plaintiff. It can be admitted. I don't think it's necessary to ask a plaintiff whether he made a statement when there's evidence that he made it. 82 At trial, in Fuller's opening argument to the jurors, counsel argued that exhibit 68 made no reference to problems caused by Fuller because SGE and CCOM, not Fuller, were to blame. 27 CCOM made no objection to such argument. Rather, CCOM met this argument in its closing argument to the jurors. 28 83 We agree with CCOM that, properly, a witness should have been called to establish a sufficient foundation for deeming CCOM to have made an admission by silence in this document. It is unclear whether CCOM had a duty to provide such information in this document; whether the customary practice, if not the duty, is to provide such information; or whether CCOM considered providing such information, but decided not to for the reason which Fuller imputes. In light of these ambiguities, a witness should have been called to testify as to such matters. See, e.g., Zenith Radio Corp. v. Matsushita Electric Industrial Co., 505 F.Supp. 1190, 1242 (E.D.Pa.1980). We conclude, however, that CCOM waived its objection by failing to object during opening argument, electing instead to address the issue in its closing argument. 29 84 The district court's ruling that the document was admissible indicated only that the court found the document relevant because it was a statement by CCOM concerning the subject matter of the case. The court did not specifically address CCOM's argument that the document did not embody an admission by silence. Moreover, CCOM's original objection that the document was not introduced through a witness was not sufficiently clear to apprise the court of the nature of its objection; rather, the court apparently understood this objection to go to authenticity rather than foundation as the court stated it was unnecessary to ask a plaintiff whether he made a statement when there's evidence that he made it. Thus, in light of the lack of specificity of the objection and the absence of a clear ruling on CCOM's objection, CCOM was obliged to repeat, and with greater specificity, its objection during Fuller's argument. See generally M. Graham, Handbook of Federal Evidence Sec. 103.2 at 14 (1981). As to the date the document was prepared, this goes to the weight of the evidence rather than its admissibility and, furthermore, CCOM pointed this fact out to the jurors in its closing argument. Finally, as the document was admissible on other grounds and because CCOM's counsel aptly met the admission by silence argument, we perceive no substantial prejudice to CCOM, particularly as the jury was aware that the argument of counsel is merely that and is not to be accorded the deference given to the court's instructions. Fed.R.Evid. 103. 85
86 CCOM asserts that a new trial should be granted because the trial court erred in prohibiting CCOM's counsel from arguing to the jurors that they should infer from Fuller's failure to call Hessmer that his testimony would have been unfavorable to Fuller. 30 Questions as to the propriety of comment by counsel in argument upon the failure to produce a witness rest largely in the discretion of the trial court, 31 but the court should not preclude such argument when the case presents a significant question on this point, United States v. Mahone, 537 F.2d 922, 928 (7th Cir.), cert. denied, 429 U.S. 1025, 97 S.Ct. 646, 50 L.Ed.2d 627 (1976). Unless sufficiently prejudicial, the exclusion of permissible comment will not warrant the granting of a new trial. Mahone, 537 F.2d at 928. 87 According to the missing witness rule, when a party has it peculiarly within his power to produce witnesses whose testimony would elucidate the transaction, but chooses not to call them, an inference arises that the testimony, if produced, would be unfavorable. Id. at 926 (quoting Graves v. United States, 150 U.S. 118, 121, 14 S.Ct. 40, 41, 37 L.Ed. 1021 (1893)). Thus, before a party can properly argue to the jury the possibility of drawing such an inference from the absence of a witness, the party must establish that the missing witness was peculiarly within the adversary's power to produce by showing either that the witness is physically available only to the opponent or that the witness has the type of relationship with the opposing party that pragmatically renders his testimony unavailable to the opposing party. 88 CCOM contends that, as Hessmer was a former employee of Fuller, Hessmer was not equally available to CCOM despite the fact that Hessmer was subject to subpoena and CCOM listed Hessmer as one of its anticipated witnesses. An employee-employer relationship is such that  'where an employee who could give important testimony relative to issues in litigation is not present and his absence is unaccounted for by his employer, who is a party to the action, the presumption arises that the testimony of such employee would be unfavorable to his employer.'  Zuber v. Northern Pacific Railway Co., 246 Minn. 157, 74 N.W.2d 641, 649 (1956) (quoting Ellerman v. Skelly Oil Co., 227 Minn. 65, 70, 34 N.W.2d 251, 254 (1948)), see also Annot., In Argument of Civil Case, on Adversary's Failure to Call Employee as Witness, 68 A.L.R.2d 1072 (1959). Some courts qualify this rule in various ways. In Erie Railroad Co. v. Kane, 118 F. 223, 238-39 (6th Cir.1902), the Sixth Circuit ruled that it was error to instruct the jury that an inference unfavorable to a party to a civil suit might be drawn from his failure to place on the witness stand an employee who was present in court in obedience to a subpoena issued by the opposing party. The Supreme Court of Errors of Connecticut, in Secondino v. New Haven Gas Co., 147 Conn. 672, 674, 165 A.2d 598, 600 (1960), indicated that no such inference should be drawn against the defendant until, in addition to meeting other requirements of the test, the plaintiff has made out a prima facie case. Finally, in Zuber, 74 N.W.2d at 649, the Minnesota Supreme Court held that no unfavorable inference could be drawn where the witness is no longer in the employ of the party to the litigation. 32 89 Here, Hessmer was physically available to both parties. His relationship with Fuller was very tenuous and perhaps unfriendly as Hessmer was asked to resign from the company for alleged misdeeds. Furthermore, at least with respect to Count II, CCOM failed to establish a prima facie case. Arguably, Fuller decided to avoid any possibility of unleashing potentially vicious testimony from a disgruntled former employee. 33 Furthermore, CCOM had led Fuller to believe it would call Hessmer as a witness. Perhaps the best solution would have been to permit both Fuller and CCOM to argue the matter to the jury, however, given the facts here, any error was not prejudicial. 90
91 CCOM claims that the jury verdict on Counts I and IV are against the manifest weight of the evidence. In Zuckerman v. Berg Manufacturing and Sales Co., 279 F.2d 904, 905 (7th Cir.1960), this court held that a new trial should be granted if the verdict is wholly unwarranted and contrary to the clear preponderance or manifest weight of the evidence. On appeal, the prevailing party is entitled to the benefit of all the facts which the evidence tends to prove and all just inference which can be drawn therefrom. 92 As to Count I, there is sufficient evidence that CCOM breached its duty to provide necessary information about the job site, and to make timely and appropriate payments to present a question of fact for the jury. With respect to Count IV, even assuming that Aetna failed to properly investigate the dispute between Fuller and CCOM, such failure did not proximately cause the injury to CCOM as the jury found Fuller not liable to CCOM and therefore Aetna cannot be liable to CCOM. CCOM is not entitled to a new trial on this ground, or any other. The judgment against CCOM on its claim against Fuller is affirmed. 93