Court Opinion

ID: 1005207
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:53:00.927345+00
Date Added: 2024-06-11T13:19:44.389835
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

G. M. GARRETT REALTY,                  
INCORPORATED; GREG GARRETT,
Individually,
               Plaintiffs-Appellees,
                 v.                             No. 00-1747

CENTURY 21 REAL ESTATE
CORPORATION,
             Defendant-Appellant.
                                       
           Appeal from the United States District Court
        for the Eastern District of Virginia, at Alexandria.
            Albert V. Bryan, Jr., Senior District Judge.
                           (CA-99-841)

                      Argued: January 24, 2001

                      Decided: August 28, 2001

       Before NIEMEYER and KING, Circuit Judges, and
      David A. FABER, United States District Judge for the
     Southern District of West Virginia, sitting by designation.

Affirmed in part, vacated in part, and remanded by unpublished per
curiam opinion.

                            COUNSEL

ARGUED: Ellen Ruth Lokker, HOGAN & HARTSON, L.L.P.,
Washington, D.C., for Appellant. Thomas E. Lacheney, DEAL &
2               G. M. GARRETT REALTY v. CENTURY 21
LACHENEY, P.C., Richmond, Virginia, for Appellees. ON BRIEF:
Christopher L. Killion, HOGAN & HARTSON, L.L.P., Washington,
D.C., for Appellant.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

  Century 21 Real Estate Corporation ("Century 21") appeals a jury
verdict against it and in favor of G.M. Garrett Realty, Inc. ("Garrett
Realty"). For the reasons adduced below, we affirm in part, vacate in
part, and remand for further proceedings consistent with this opinion.

                                  I.

   In July of 1994, Century 21 and Garrett Realty entered into a five-
year franchise agreement under which Garrett Realty was allowed to
use the Century 21 name in return for a percentage of Garrett Realty’s
gross revenues. On February 4, 1999, Century 21 sent to Garrett
Realty a notice of intent to terminate the franchise agreement, citing
failure to pay certain fees owed under the franchise agreement. On
February 22, 1999, Century 21 sent to Garrett Realty a notice of ter-
mination of the franchise agreement. Garrett Realty did not recognize
the attempted termination and continued operating under the Century
21 name. The franchise agreement expired by its own terms on May
31, 1999.

   In April of 1999, Garrett Realty sued Century 21 in the United
States District Court for the Eastern District of Virginia, alleging a
breach of the franchise agreement by wrongful termination and a
breach of the Virginia Retail Franchising Act ("VRFA") by termina-
tion of the franchise agreement without reasonable cause. Garrett
Realty admitted in its complaint that it did owe certain monies to Cen-
                G. M. GARRETT REALTY v. CENTURY 21                    3
tury 21, but alleged that the amount owed was less than the amount
claimed by Century 21. Century 21 counterclaimed for trademark
infringement and breach of contract. The jury found for Garrett
Realty on the principal claim and awarded damages in the amount of
$56,836.05; the jury found against Century 21 on the counterclaims.
After the verdict was returned, Century 21 moved, under Rule 50(b),
for judgment as a matter of law on all counts, and the trial court
denied the motion. The trial court granted Garrett Realty’s motion for
attorney fees under the VRFA and the franchise agreement.

                                  II.

   Century 21 frames four issues on appeal: (1) Was the jury’s finding
that Century 21 unreasonably terminated its franchise agreement with
Garrett Realty incorrect as a matter of law in view of the fact that the
jury also found Garrett Realty owed Century 21 money at the time of
termination? (2) Was the jury incorrect in awarding damages to Gar-
rett Realty, given that Garrett Realty continued to operate as a Cen-
tury 21 franchisee until the expiration of the agreement by its own
terms? (3) Was the jury incorrect in refunding certain fees Garrett
Realty paid after the notice of termination? and (4) Did the jury give
inappropriate credits to Garrett Realty in determining the amount Gar-
rett Realty owed Century 21?

                                  A.

   We turn first to the question of whether the jury incorrectly found
that Century 21 unreasonably terminated its franchise agreement with
Garrett Realty. At the close of all the evidence, Century 21 moved for
judgment as a matter of law pursuant to Federal Rule of Civil Proce-
dure 50(a) on the VRFA unreasonable termination claim, citing the
fact that the uncontroverted evidence showed that Garrett Realty
owed Century 21 monies due under the franchise agreement. J.A. at
608. Century 21 argued then, as it does now, that the admission on
Garrett Realty’s part that some fees were owed provides reasonable
cause for termination of the franchise agreement as a matter of law.
The trial court denied the motion and submitted the claim to the jury.
After the jury found for Garrett Realty on this claim, Century 21
renewed its motion pursuant to Rule 50(b) on the same grounds, and
the motion was again denied. J.A. at 703-04.
4               G. M. GARRETT REALTY v. CENTURY 21
   We review a district court’s denial of a Rule 50(b) motion for judg-
ment as a matter of law de novo. See Konkel v. Bob Evans Farms,
Inc., 165 F.3d 275, 279 (4th Cir. 1999). The question here is a purely
legal one: will any failure to pay fees due under a franchise agreement
support a franchisor’s termination of that agreement without violating
the VRFA?

   The provision at issue is Virginia Code § 13.1-564, which pro-
vides, in pertinent part, that "[i]t shall be unlawful for a franchisor to
cancel a franchise without reasonable cause." The parties have not
offered, nor has this court found, a reported interpretation of the rea-
sonableness requirement of the Virginia statute.

   The trial court instructed the jury that, "in determining . . . whether
there was reasonable cause, you may also consider whether there was
a genuine dispute as to the amount owed," as there was in this case.
J.A. at 688-89. Century 21 objected to this instruction. J.A. at 640.
However, Century 21 did not offer any legal basis for the objection
and does not now contest the propriety of the instruction.

   There was ample evidence before the jury to indicate that Garrett
Realty disputed the amount owed to Century 21, that Garrett Realty
continued to pay certain sums to Century 21 during the term of the
franchise agreement, and that Garrett Realty engaged in continued
negotiations with Century 21 to determine the correct amount owed.
The court finds no legal error in the jury’s finding that Century 21 did
not have reasonable cause to terminate the franchise agreement. The
flaw in Century 21’s argument is that it equates "reasonable cause"
with "any cause." Failure to pay disputed fees may represent a cause
for termination, but the court finds no error in the jury’s determination
that Century 21’s termination was unreasonable.

                                   B.

   The final three issues framed by Century 21 in essence ask the
court to find that the jury’s award of damages was not supported by
sufficient evidence. Century 21 moved at the close of plaintiff’s case
in chief for judgment as a matter of law on the issue of plaintiff’s
damages pursuant to Rule 50(a)(1), arguing that no evidence of dam-
ages had been presented. J.A. at 608-10. Century 21 did not, however,
                G. M. GARRETT REALTY v. CENTURY 21                     5
renew the damages element of this motion pursuant to Rule 50(b)
immediately after the return of the verdict. J.A. at 703-04. On the
tenth judicial day after the entry of judgment against it, Century 21
did file a "Motion for Remittitur of Judgment." See District Court
Docket Sheet, doc. # 59.

   The federal courts have a longstanding practice of resolving exces-
sive verdicts through conditioning the denial of a Rule 59 motion
upon the acceptance by the plaintiff of a remittitur in a stated amount.
See, e.g., Wright, Miller & Kane, 11 Federal Practice and Procedure
§ 2815 (2d ed. 1995); Linn v. United Plant Guard Workers of Amer-
ica, Local 114, 383 U.S. 53, 65-66 (1966); Cline v. Wal-Mart Stores,
Inc., 144 F.3d 294, 305 (4th Cir. 1998). Though Century 21 failed to
cite any provision of the Federal Rules of Civil Procedure in its initial
motion, later filings indicate that Century 21 viewed the motion as
one to alter or amend the judgment under Rule 59(e). See "Century
21 Real Estate Corporation’s Reply to Plaintiff’s Objection to Cen-
tury 21’s Motion for a Remittitur," District Court Docket Sheet # 66.
There is no specific provision for a remittitur under the Federal Rules
of Civil Procedure, but the practice has long been approved as an
alternative to a new trial. Justice Story, writing as a Circuit Judge in
Blunt v. Little, 3 Fed. Cas. 760 (C.C.D. Mass. 1822), apparently first
employed the remittitur, and the practice has been in use ever since.
See 11 Wright, Miller & Kane, Federal Practice and Procedure,
§ 2815 (2d ed. 1995). Under the practice, the trial court does not order
the damage award reduced; the court gives the plaintiff the option of
accepting a reduced amount or trying the case over. A remittitur is
therefore, in every case where it is employed, an alternative to a new
trial which the court may order under Rule 59(a). It would seem,
therefore, that Century 21’s characterization of its Motion for Remitti-
tur as a motion to alter or amend the judgment under Rule 59(e) is
inappropriate. The trial court denied the motion for remittitur.

   Because Century 21 moved under Rule 50(a) for a directed verdict
at the close of the evidence, the court may still review the sufficiency
of the evidence supporting the award. See Benner v. Nationwide
Mutual Ins. Co., 93 F.3d 1228, 1234 (4th Cir. 1996). However, Cen-
tury 21’s failure to renew the damages elements of that motion pursu-
ant to Rule 50(b) limits this court’s remedial power to vacating the
judgment and remanding. See id. Our review of the Rule 50 motion
6               G. M. GARRETT REALTY v. CENTURY 21
is, as noted above, de novo. See Konkel v. Bob Evans Farms, Inc., 165
F.3d 275, 279 (4th Cir.), cert. denied, 528 U.S. 877 (1999). However,
on such a motion, we are constrained to view the evidence in the light
most favorable to the prevailing party at trial and to draw all reason-
able inferences in that party’s favor. See id. Insofar as Century 21
contested the damages award in its motion for remittitur which it
characterized as a Rule 59(e) motion, the court reviews denial of that
motion for abuse of discretion. See Temkin v. Frederick County Best
Section End Comm’rs, 945 F.2d 716, 724 (4th Cir. 1991). If the
motion for a remittitur is viewed as a motion for a new trial under
Rule 59(a) on the ground that the verdict is excessive, the standard for
review is, again, abuse of discretion. Cline v. Wal-Mart Stores, Inc.,
144 F.3d 294 (4th Cir. 1999), Konkel v. Bob Evans Farms, Inc., 165
F.3d at 280.

   The jury awarded Garrett Realty $56,836.05 plus actual attorney’s
fees. J.A. at 35. The jury verdict form sets Garret Realty’s damages
at this amount through the following notation: "$50,000, plus
$46,357.89 net of $39,521.84 due to Century 21 for franchise fees
through 2/99." J.A. at 35. It appears to the court that the jury deter-
mined Garrett Realty’s actual damages to be $96,375.89 and then
awarded to Century 21 a setoff of $39,521.84 for certain franchise
fees it determined that Garrett Realty owed to Century 21 but had not
paid ($50,000 + $46,375.89 - $39,521.84 = $56,854.05). The only
element of the jury’s calculation addressed in Century 21’s Rule 59(e)
motion is the $46,375.89 figure. See "Memorandum in Support of
Century 21 Real Estate Corporation’s Motion for Remittitur of Judg-
ment," District Court Docket Sheet # 60.

   The court begins by reviewing the record for substantial evidence
to support the jury’s finding that Garrett Realty’s actual damages
were $96,375.00.

   The transcript reveals little evidence of damages sustained by Gar-
rett Realty as a result of Century 21’s conduct. The court finds only
one reference to direct losses sustained by Garrett Realty. That refer-
ence occurs in the testimony of Garrett Realty’s accountant, Glen
Moschler, who testified during rebuttal as follows:

    Q: After you were terminated, after your franchise was
    terminated by Century 21 on February 22nd, 1999, the
                  G. M. GARRETT REALTY v. CENTURY 21                 7
    period after that, and we can only talk about March, April
    and May, did Greg Garrett Realty make any profit?

    A: No.

    Q: Did you have sales?

    A: We had sales, yes.

    Q: Then how did you not make any profit?

    A: Well, we had a lot of expenses, a lot of new expenses.
    We had to change, go through the process of changing the
    way we did business, and a lot of our energy was directed
    toward changing our name.

    ....

    Q: Do you have any idea how much money you lost in
    those three months?

    A: $30,000, $40,000, $50,000, probably.

J.A. at 642-43.

   In closing argument, plaintiff’s counsel argued that Garrett Realty
paid Century 21 roughly $50,000 after the February notice of termina-
tion and requested that Garrett Realty be refunded that amount. J.A.
at 658. The $46,357.89 figure that the jury entered on the verdict form
matches the total of all checks tendered to Century 21 by Garrett
Realty during 1999 as calculated on a chart by Garrett Realty’s
expert. However, there was no evidence adduced at trial to suggest
that this amount corresponded to damages incurred by Garrett Realty.

   Therefore, it appears to the court that the largest award of damages
that can be sustained on the evidence adduced at trial is $50,000.00.
This figure is based solely on the testimony of Glen Moschler. This
testimony is slender proof on which to base an award of damages.
However, Century 21 offered no competing evidence, and, after view-
8                G. M. GARRETT REALTY v. CENTURY 21
ing the evidence in the light most favorable to the prevailing party and
drawing all reasonable inferences in its favor, the court finds, without
weighing the evidence or considering credibility, that this testimony
supports a jury award of $50,000 in favor of Garrett Realty. Ample
evidence exists to support the jury’s apparent determination that Gar-
rett Realty owed fees to Century 21 of $39,521.84. However, the
court finds no evidence to support the remainder of the jury award to
Garrett Realty. Because no evidence exists in the record to support the
$46,357.89 figure as a measure of damages sustained by Garrett
Realty, the court finds that the trial court’s denial of Century 21’s
Rule 59 motion was an abuse of discretion.

   From the foregoing analysis, we conclude that the jury’s total
award is excessive insofar as it exceeds the amount of $10,478.16
($50,000-$39,521.84). If there is no evidence to support a portion of
the verdict, the duty of the trial court is to require a remittitur or order
a new trial. Similarly, when a reviewing court concludes that a verdict
is excessive, it is that court’s duty to require a remittitur or order a
new trial. Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 305 (4th Cir.
1998). Accordingly, we vacate the damages award and remand for a
new trial unless Garrett Realty agrees to a remittitur reducing the
$56,836.05 damages award to $10,478.16.

                          AFFIRMED IN PART, VACATED IN PART,
                                              AND REMANDED