Court Opinion

ID: 2996736
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:31:04.150468+00
Date Added: 2024-06-11T09:00:50.589840
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

Nos. 02-3551 & 02-3665
ABM MARKING, INC.,
                                           Plaintiff-Appellant,
                               v.

ZANASI FRATELLI, S.R.L. and MARCODE INC.,
                                         Defendants-Appellees.
                        ____________
          Appeals from the United States District Court
               for the Southern District of Illinois.
           No. 97 C 863—David R. Herndon, Judge.
                        ____________
 ARGUED OCTOBER 28, 2003—DECIDED DECEMBER 23, 2003
                    ____________

 Before BAUER, POSNER and WILLIAMS, Circuit Judges.
  BAUER, Circuit Judge. This procedurally complicated case
revolves around a contract entered into by appellant ABM
Marking, Inc. (“ABM”) and appellee Zanasi Fratelli
(“Zanasi”) for the sale of ink-jet printers and ink. In the
spring of 1993, ABM and Zanasi entered into an oral
distributorship agreement whereby Zanasi, an Italian
corporation, would sell its printers to ABM, an American
corporation, and ABM would sell its ink to Zanasi. As part
of the agreement, Zanasi agreed to sell its printers to ABM
at a 30% discount, and ABM agreed to pay Zanasi a royalty
of $1.00 per gallon of ink used in Zanasi printers sold by
2                                    Nos. 02-3551 & 02-3665

ABM. A final element of the agreement was that debts owed
to each other would be offset prior to any payment. This
arrangement continued for approximately four years;
during this time Zanasi ordered more than $240,000 worth
of ink, and ABM bought $160,000 worth of Zanasi printers.
ABM sold ink both directly and indirectly to the end users
of the printers. In October of 1997, when Zanasi failed to
pay for ink it had ordered, ABM filed suit against Zanasi,
for, among other things, breach of contract; Zanasi filed
counterclaims.
  The case went to trial in 2000. The jury was instructed on
ABM’s claims and Zanasi’s counterclaims. In rendering its
verdict, the jury found for both the plaintiff and the defend-
ant, a result the district court found to be legally incompati-
ble given the instructions. For this reason, the district court
judge granted Zanasi’s motion for a new trial. In the second
trial, the jury returned a special verdict, finding that Zanasi
owed ABM $23,000 for ink shipped, but that ABM breached
the contract first by failing to pay royalties. In a separate
action, the district court determined that Zanasi was
entitled to an accounting by ABM of the royalties due on
the ink.
  ABM disagrees with these various results for various
reasons.

                       DISCUSSION
    A. New Trial
  ABM first takes issue with the decision by the district
court ordering a new trial. We review decisions to grant
new trials for abuse of discretion. United States v. Bishawi,
272 F.3d 458, 461 (7th Cir. 2001). We will reverse only if no
reasonable person could agree with the district court.
United States v. Henderson, 337 F.3d 914, 918 (7th Cir.
2003). The district court’s grant of a new trial is governed
by the parameters of Rule 59(a) of the Federal Rules of Civil
Nos. 02-3551 & 02-3665                                              3

Procedure. Rule 59(a), in a bit of a circular way, allows new
trials in cases where new trials have been traditionally
allowed at law.1 Luckily, for clarity’s sake, we have previ-
ously held that one situation calling for a new trial is when
“a jury returns a factually inconsistent general verdict.”
Turyna v. Martam Constr. Co., 83 F.3d 178, 181 (7th Cir.
1996). This was what happened at the first trial.
  In the first trial, the jury returned verdicts favoring
ABM’s claims and Zanasi’s counterclaims. Specifically, the
jury found for ABM on Count I (claim for money owed by
Zanasi for ink) in the amount of $18,240; and for ABM on
Count IX (claim for breach of contract) in the amount
of $137,000. The jury found for Zanasi on Count I of the
counterclaim (claim for breach of contract) and ordered
ABM to account for the ink royalties and pay Zanasi that
amount. Following the verdict, Zanasi moved for a new trial
contending that the jury verdicts were inconsistent; ABM
disagreed.
    As part of the instructions, the jury was told:
      If you find from your consideration of all the evidence
      that each of these propositions required of the plaintiff
      has been proved and that none of the defendant’s af-
      firmative defenses has been proved then your verdict
      should be for the plaintiff. If, on the other hand, you
      find . . . that any one of the defendant’s affirmative

1
    Rule 59. New Trials; Amendment of Judgments
      (a) Grounds. A new trial may be granted to all or any of the
      parties on all or part of the issues . . . in an action in which
      there has been a trial by jury, for any of the reasons for which
      new trials have heretofore been granted in actions at law in
      the courts of the United States . . . .
FED. R. CIV. P. 59(a).
4                                     Nos. 02-3551 & 02-3665

    defenses has been proved, then your verdict should be
    for the defendant.
ABM Marking, Inc. v. Zanasi Fratelli, S.r.l., No. 97-CV-
0863-DRH, slip op. at 6 (S.D. Ill. Nov. 9, 2000). Given these
instructions, it is clear that if the jury found for the plaintiff
on its claims, it could not simultaneously find for the
defendant on the counterclaims. To further illustrate the
inconsistency, in arriving at its verdict on Count IX, the
jury found that the “plaintiff substantially performed all
obligations required of it under the contract.” Id. This is in
direct contradiction to the jury’s finding on Count I of the
counterclaim that ABM breached the contract by failing to
pay royalties on the ink.
  ABM argues that the verdicts are not inconsistent be-
cause the jury could have found that ABM’s breach of the
contract was not “material.” ABM believes that the amount
of ink royalties due was insignificant when compared to the
total contract value. The district court considered this
argument, but ultimately decided against ABM. We have
previously stated that whether a breach is material “is
a complicated question of fact, involving an inquiry into
such matters as whether the breach worked to defeat the
bargained-for objective of the parties . . . .” Sahadi v. Cont’l
Illinois Nat. Bank and Trust Co. of Chicago, 706 F.2d 193,
196 (7th Cir. 1983). In its reasoning, the district court noted
that the contract between ABM and Zanasi had very few
provisions, but that the payment of royalties was one major
provision. The court also determined that the amount of
royalties due was substantial. Our review is for abuse of
discretion, a highly deferential standard, and we believe the
evidence presented at trial could support the district court’s
conclusion that ABM’s breach was material and the verdicts
were inconsistent.
Nos. 02-3551 & 02-3665                                        5

    B. Amount of Royalties
  Next, ABM asserts that the district court’s determination
of ink royalties due after the second trial was improper.
ABM’s argument is twofold: first, the trial court should not
have awarded an accounting, and second, the trial court’s
determination of royalties was erroneous.
  In the second trial, the issue of accounting was severed
from the other issues considered by the jury. The judge
determined the merits of the claim and found that Zanasi
was entitled to an accounting, an equitable remedy. Once
more we review the district court’s granting of an equitable
remedy for abuse of discretion. E.E.O.C. v. Laborers’
Int’l Union of N. Am., AFL-CIO, Local 100, 49 F.3d 304, 307
(7th Cir. 1995). In addition to this deferential review, we
also note that the district court has “broad discretion” in
deciding wether an accounting is appropriate. First Com-
modity Traders, Inc. v. Heinold Commodities, Inc., 766 F.2d
1007, 1011 (7th Cir. 1985).
  An accounting is appropriate if a legal remedy would
be inadequate. Mann v. Kemper Fin. Cos., 618 N.E.2d 317,
327 (Ill. App. Ct. 1992). Additionally, there must be present
a “(1) breach of a fiduciary relationship between the parties;
(2) a need for discovery; (3) fraud; or (4) the existence of
mutual accounts which are of a complex nature.” Id.
(quoting People ex rel. Hartigan v. Candy Club, 501 N.E.2d
188, 190 (Ill. App. Ct. 1986)). In this case, the district court
found that there was no adequate legal remedy available
because ABM failed to keep records of the royalties owed.
The evidence at trial reveals a disturbing disparity between
estimates of the royalties owed and an absence of solid
evidence of the actual amount.2 Additionally, the district
court found that by failing to keep accurate records of

2
  ABM claims the royalties totaled approximately $138.00,
whereas Zanasi approximates royalties owed at $16,000.00. (Br.
for Appellant at 7 and 21.)
6                                  Nos. 02-3551 & 02-3665

royalties, ABM engaged in fraud. Given the lack of definite
evidence and the fact that the lack of evidence is due to
ABM’s poor record-keeping, we agree with the district court
and find that the court did not abuse its discretion in
allowing for an accounting.
  The district court determined the ink royalties to be
$16,000. It based its determination on a formula presented
at trial by one of ABM’s own witnesses. ABM argues that
the formula was misapplied, because they sold fewer gal-
lons of ink than assumed. The district court was within its
discretion in finding that ABM’s assertion of the amount of
ink sold lacked credibility. In sum, we determine that the
estimate that ink royalties were $16,000 was supported by
the evidence.

    C. Costs
  Because we affirm the district court’s award of royalties,
the additional award of costs pursuant to Federal Rule of
Civil Procedure 54(d) is appropriate.

    D. ABM’s Post-Trial Motion
  Lastly, ABM complains that the district court should not
have denied its motions for a new trial following the second
trial. As we noted above, motions for a new trial are
reviewed for abuse of discretion. Bishawi, 272 F.3d at 461.
A party seeking to reverse a district court’s denial of a
motion for a new trial bears a “particularly heavy burden.”
Lowe v. Consol. Freightways of Del., Inc., 177 F.3d 640, 641
(7th Cir. 1999). A motion for a new trial should succeed
“only if the verdict is against the manifest weight of the
evidence.” Id.
  Here, ABM argues that the jury verdicts are contrary to
the evidence because ABM could not have breached the
Nos. 02-3551 & 02-3665                                      7

contract so long as Zanasi owed ABM more money than
ABM owed Zanasi. ABM cites the offset provision in the
contract to support this, arguing that under the contract
ABM’s debt for the royalties was automatically offset by
Zanasi’s debt for ink. However, under the contract, regard-
less of who owed what money, ABM had a duty to keep
track of the royalties owed on ink sold to purchasers of the
Zanasi printers. ABM made no effort to do this during the
life of the contract. Because this is a reasonable interpreta-
tion of the evidence, we find that the district court did not
err in denying the motion.
  For all the above reasons, we AFFIRM.

A true Copy:
       Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—12-23-03