Court Opinion

ID: 808986
Source: CourtListenerOpinion
Date Created: 2012-09-21 18:31:36+00
Date Added: 2024-06-11T18:00:32.747231
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 11-1947

                 LOAN MODIFICATION GROUP, INC.,

                      Plaintiff, Appellant,

                               v.

                           LISA REED,

                      Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

          [Hon. Leo T. Sorokin, U.S. Magistrate Judge]

                             Before

                   Boudin, Hawkins* and Dyk,**
                         Circuit Judges.

     Isaac H. Peres, for appellant.
     Thomas J. Gleason, for appellee.

                       September 21, 2012

___________
     *    Of the Ninth Circuit, sitting by designation.
     **   Of the Federal Circuit, sitting by designation.
            DYK,   Circuit     Judge.      Plaintiff-Appellant   Loan

Modification Group, Inc. (“LMG”) appeals from a jury verdict

awarding $414,000 in damages against LMG for breach of partnership

duties and responsibilities owed to Defendant-Appellee, Lisa Reed

(“Reed”).    On appeal, LMG urges that the jury verdict should be

overturned because (1) recovery on any express oral partnership

agreement is barred by the Statute of Frauds; (2) any partnership

agreement that arose by implication is at-will and does not support

a damages award; and (3) assuming liability, the amount of the

damages award is not supported by substantial evidence. We affirm.

                                    I.

            Given the favorable jury verdict, we recite the facts “in

the light most favorable to [Reed], giving [her] the benefit of

every favorable inference that may be fairly drawn.”         Dumas v.

MacLean, 404 F.2d 1062, 1064 (1st Cir. 1968).

            In 2008, this country was in the throes of a subprime

mortgage crisis, prompting Congress to pass the Emergency Economic

Stabilization Act of 2008 (“the Act”), Pub. L. No. 110-343, 122

Stat. 3765 (codified as amended at 12 U.S.C. § 5201, et seq.).    One

of the primary purposes of the Act was “to immediately provide

authority and facilities that the Secretary of the Treasury can use

to restore liquidity and stability to the financial system of the

United States” in order to “protect[] home values, college funds,

retirement    accounts,      and   life   savings   [and]   preserve[]

                                   -2-
homeownership.”     12 U.S.C. § 5201.           To further this purpose, on

March 4, 2009, the Treasury Department created the Home Affordable

Modification Program (“HAMP”).            See U.S. Dep’t of the Treasury,

Home Affordable Modification Program Guidelines (Mar. 4, 2009),

available at http://www.treasury.gov/press-center/press-releases/

documents/modification_program_guidelines.pdf. The aim of HAMP was

to assist homeowners on the verge of foreclosure to modify their

loans to an affordable level.             The government offered financial

incentives to mortgage servicers who agreed to such modifications

on behalf of the mortgage holders.             HAMP was scheduled to expire at

the end of 2012.1

           In    2008,    Reed     was   working      as   mortgage   broker   in

Massachusetts.    That same year she met David Zak (“Zak”), a lawyer

who ran a Massachusetts-based regulatory compliance consulting

practice for mortgage brokers and bankers known as Zak Law Offices

(“ZLO”).   In late 2008, Reed and Zak discussed the possibility of

entering   into    a     loan    modification        business,   apparently    in

anticipation of the creation of HAMP. The discussions between Reed

and Zak culminated in an oral agreement to enter into the loan

modification business together.           The planned business model was to

offer assistance to homeowners who were in danger of foreclosure.

An   analysis    would    be     conducted      to   determine   whether   those

homeowners were good candidates for loan modification under HAMP.

      1
           HAMP has since been extended to December 31, 2013.

                                         -3-
If they were, the homeowners would be provided assistance in

securing a modification.   The homeowners would pay a fee for this

service.

           Under the agreement, Zak agreed to supply the initial

funding for the business and Reed agreed to develop the client base

from her existing client database, which consisted of subprime

mortgagees (homeowners) with high interest mortgages who might

benefit from loan modification.    Although Reed requested a formal

written agreement detailing their partnership, Zak assured her that

a written agreement was not necessary.

           In February 2009, Zak created LMG, a company wholly owned

by Zak, as the entity that would conduct the partnership business

together with Reed. The niceties of LMG’s corporate existence were

largely ignored during briefing, the parties treating LMG and Zak

as interchangeable.    When LMG and Reed began operating the loan

modification business in early 2009, Reed was initially paid a “per

file fee” of approximately $400 to $450 for each loan modification

customer that she brought in.   However, in June 2009, the payment

arrangement was modified such that Reed and Zak would split the

profits from the business fifty/fifty, and each would also receive

a bi-weekly salary of $2,500.       Additionally, once the business

became profitable, at least once per month, Reed requested that Zak

put their partnership agreement in writing, but was unsuccessful in

obtaining a written partnership agreement.

                                  -4-
              On January 4, 2010, Zak approached Reed, told her that he

no   longer    needed    her in    the      loan    modification     business, and

directed her to leave LMG’s offices.                Reed was then escorted out of

the office by an armed police officer.                 On January 8, 2010, Reed,

through counsel, sent a letter to LMG requesting an immediate

inspection of the books and records of the partnership, a formal

accounting,     and     her    share   of     the   profits   as    required    under

Massachusetts law.            However, Reed never received the requested

inspection, accounting, or profits.                  In short, at no time after

Reed was ejected from the business in January 2010 was there any

winding up of the purported partnership between Reed and LMG.

Following Reed’s expulsion, LMG continued to operate the loan

modification business and retained all the profits.

              On February 25, 2010, LMG, ZLO, and another entity filed

a copyright infringement suit against Reed in the United States

District Court for the District of Massachusetts, alleging that

Reed unlawfully copied loan modification software created by a

third party for exclusive use by LMG and ZLO.                        Reed filed a

counterclaim,      alleging,      inter       alia,    that   she   had   formed   a

partnership with LMG and that LMG breached its obligations and

duties   to     the     partnership      by     attempting    to    terminate    the

partnership without providing Reed with records inspection, an

                                          -5-
accounting, or her share of the profits.2             Reed’s theory was that

LMG’s failure to do so meant that the partnership continued in

existence, entitling Reed to damages.3              The parties subsequently

settled the copyright dispute, and the case proceeded to trial only

on Reed’s partnership-related counterclaims based on this theory.

                  On June 20, 2011, a four-day jury trial commenced.

Following the presentation of several witnesses and documentary

evidence, the court instructed the jury that the “[p]arties may

form a partnership by oral agreement . . . or by the conduct in

which the parties engaged and the relationship the parties actually

created,” but if a partnership is based on an oral agreement, the

jury       must    consider   the   Statute   of    Frauds    which    “bars    the

enforcement of an oral agreement that, by the terms of the oral

agreement, cannot be performed within one year.”               J.A. 56, 58.     The

court      also     instructed   that   “[u]nless    the     parties   formed   an

enforceable agreement which specified the circumstances under which

       2
          Reed also alleged that a partnership was created with
ZLO, but the jury rejected this theory at trial, and Reed does not
press it on appeal.
       3
          Count Five (Breach of Partnership Agreement) and Count
Six (Breach of Contract) of Reed’s counterclaim also alleged that
LMG breached the partnership agreement, which was “intended to
exist for a specific length of time in order to accomplish a
particular purpose,” by refusing to share the profits from the
business.   J.A. 29-30.  These counts were based on the earlier
allegations that “[t]he partnership[] [was] intended to exist for
a specific length of time, until December 31, 2012, in order to
accomplish a particular purpose, specifically to provide loan
modifications to homeowners under [HAMP].” J.A. 27. We discuss
only Reed’s primary theory as presented at trial.

                                        -6-
the partnership could be dissolved, the partnership is ‘at-will’

and any partner may dissolve the partnership at any time.”              J.A.

60.     As to damages, the court stated that if the jury found the

existence of an enforceable partnership and that a partner had

breached the duties of that partnership, it could award Reed “her

share of the profits . . . of the partnership from the date of the

dissolution of the partnership until the date of the termination of

the partnership or, if . . . no such termination occurred, than

[sic] the present.”      J.A. 62.   The case was then submitted to the

jury.

              After deliberations, the jury returned a verdict finding

that Reed had formed an enforceable partnership with LMG, and that

LMG     had   breached   the   duties     and   responsibilities   of    the

partnership.      The jury’s verdict form was general, and did not

specify whether the jury found the existence of a partnership based

upon an oral agreement not barred by the Statute of Frauds (express

partnership agreement) or based on the actions of the parties

(implied partnership agreement). The jury awarded Reed $414,000 in

damages based on LMG’s breach. Although the damages portion of the

verdict form was also general, the jury noted at the bottom of the

form how the damages award had been calculated.         Specifically, the

jury indicated that it was awarding Reed $18,000 per month for

eighteen months as “partnership profit share” ($324,000 total), and

$5,000 per month for eighteen months as a “salary” ($90,000 total),

                                    -7-
for a total award of $414,000.   The eighteen-month period on which

the award was based encompassed the period of time from Reed’s

expulsion from LMG to trial.

          Following trial, LMG moved for judgment as a matter of

law, contending that any express partnership between Reed and LMG

was barred by the Statute of Frauds, and any implied partnership

agreement was terminable at-will and therefore could not support

the jury’s damages award.   The district court denied LMG’s motion

and entered final judgment.    LMG timely appealed.

                                 II.

          On appeal, LMG argues that the district court erred in

denying its motion for judgment as a matter of law.   We review the

district court’s denial of LMG’s motion for judgment as a matter of

law under Federal Rule of Civil Procedure 50(b) de novo.    See N.

Laminate Sales, Inc. v. Davis, 403 F.3d 14, 26 (1st Cir. 2005).

“The verdict must be upheld unless the facts and inferences, viewed

in the light most favorable to the verdict, point so strongly and

overwhelmingly in favor of the movant that a reasonable jury could

not have [returned the verdict].” Borges Colón v. Román-Abreu, 438

F.3d 1, 14 (1st Cir. 2006) (alteration in original) (quoting

Acevedo-Diaz v. Aponte, 1 F.3d 62, 66 (1st Cir. 1993)) (internal

quotation marks omitted).

                                 -8-
                                A.

          LMG first contends that any oral partnership agreement

between Reed and LMG is barred by the Statute of Frauds as a matter

of law because the partnership was designed to last for the entire

four-year duration of HAMP, and agreements which are not to be

performed within one year must be written in accordance with Mass.

Gen. Laws ch. 259, § 1.4

          At trial, Reed contended that the oral agreement was not

for a specific duration (and that therefore there was no Statute of

Frauds issue).   See Coughlin v. McGrath, 4 N.E.2d 319, 323 (Mass.

1936).   In particular, Reed testified that the partnership could

have terminated at any time if the business was unsuccessful.   To

support its contention that the agreement was for a partnership of

four years’ duration, and was thus barred by the Statute of Frauds,

LMG relied on Reed’s testimony on cross-examination that the

purpose of LMG’s business was to perform loan modifications in

accordance with HAMP, and that HAMP was supposed to last through

the end of 2012 (i.e., for four years).   Reed also testified that

she and Zak could not walk away from the partnership in LMG unless

one of them engaged in some dishonest conduct.     LMG argues that

     4
          Mass. Gen. Laws ch. 259 § 1 provides that “No action
shall be brought . . . [u]pon an agreement that is not to be
performed within one year from the making thereof; [u]nless the .
. . agreement upon which such action is brought . . . is in writing
and signed by the party to be charged therewith or by some person
thereunto by him lawfully authorized.”

                                -9-
Reed’s testimony brings the partnership agreement between LMG and

Reed within the Massachusetts Statute of Frauds.                      We disagree.

             Other than Reed’s own statements on cross-examination,

LMG presented no evidence that the partnership was of a fixed

duration (indeed, Zak testified that there was no partnership at

all).       When pressed on this issue on cross-examination, Reed

explicitly stated, “[the agreement] could have been a possibility

of four years; it could have been a possibility of two years; it

could have been a possibility of six or eight years.”                        Transcript

of Trial at 110, Loan Modification Grp., Inc. v. Reed, No. 10-cv-

10333 (D. Mass. June 21, 2011), ECF No. 67 (emphasis added). Based

on   this    testimony,    the    jury    was     entitled      to    find    that   the

partnership here was not of a fixed duration.

             Under   Massachusetts         law,     “if    an        agreement    whose

performance would otherwise extend beyond a year may be completely

performed within a year on the happening of some contingency, it is

not within the statute of frauds.”              See Coughlin, 4 N.E.2d at 323

(quoting Carnig v. Carr, 46 N.E. 117, 118 (Mass. 1897)); see also

Boothby     v.   Texon,   Inc.,   608     N.E.2d    1028,       1036    (Mass.    1993)

(“Because [the plaintiff’s] contract was for permanent employment,

it could have been performed within one year: . . . [the defendant]

could have discontinued its business, at which point its obligation

to employ [the plaintiff] would end.”).                   Given the ambiguity in

Reed’s testimony, the jury was entitled to find that although Reed

                                         -10-
and LMG’s partnership was formed in anticipation of and carried out

in accordance with HAMP, it could be fully performed within one

year and need not last for the entire four-year duration of HAMP.

Thus, the jury could have reasonably rejected application of the

Statute of Frauds.

                                 B.

           In addition to considering whether Reed and LMG had

formed a partnership by express oral agreement, the jury also

considered whether a partnership agreement was implied based upon

“the conduct in which the parties engaged and the relationship the

parties actually created.”     J.A. 56.        On appeal, LMG does not

challenge the sufficiency of the evidence to support a jury finding

that there was an implied at-will partnership agreement based upon

the conduct and relationship between the parties.            Thus, the

evidence clearly supported the jury’s finding that a partnership

existed, whether based on an express oral partnership agreement or

on an implied partnership agreement.

           Reed’s primary theory at trial and in her post-trial

filings was that although the partnership was dissolved, LMG never

provided   the   accounting   and     profit     sharing   required   by

Massachusetts law, that the partnership continued, and that Reed

was entitled to share in the profits even after the dissolution.5

     5
           Reed’s theory was stated clearly in her closing argument:

     There was no compliance with her requests as she made

                                -11-
To the extent that Reed also argued that LMG wrongfully dissolved

the partnership, we do not understand Reed to press that theory on

appeal.   Rather her theory is that Zak’s conduct was wrongful even

if the partnership was at will.6

                                  C.

           LMG claims that an at-will partnership cannot support the

jury’s damages award.      Although an at-will partnership can be

dissolved by any partner at any time, see Meehan v. Shaughnessy,

535 N.E.2d 1255, 1260 (Mass. 1989), under Massachusetts law, the

dissolution   of   the   partnership    does   not   end   the   matter.

Dissolution is merely “the change in the relation of the partners

     those requests pursuant to law, and the business
     continued; there’s no doubt about that, even though she
     was wrongfully excluded from it, and that she’s entitled
     to a share of the profits of the business when it
     continued after the time he wrongfully excluded her. He
     continued on with the business and refused to acknowledge
     her demands as a partner, so that’s what we say our
     theory of the case is.

Transcript of Trial at 45, Loan Modification Grp., Inc. v. Reed,
No. 10-cv-10333 (D. Mass. June 24, 2011), ECF No. 69. In other
words, because there was no proper termination of the partnership,
Reed continued as a partner and could not be excluded from sharing
in the partnership profits.
     6
          On appeal, Reed contends that “in order to have found the
existence of a partnership, based on the evidence, it must have
been under a theory of partnership by implication because all of
the initial partnership discussions were with ZLO prior to the
legal existence of LMG . . . There was sufficient evidence
introduced at trial for the jury to conclude that although the
partnership may have been terminable at-will by either party there
was still a breach of the partnership agreement.” Appellee’s Br.
at 6.

                                 -12-
caused by any partner ceasing to be associated in the carrying on

as distinguished from the winding up of the business.”                         Mass. Gen.

Laws ch. 108A, § 29. Dissolution occurs, among other things, “[b]y

the expulsion of any partner from the business,” as happened here

when   Reed     was     excluded      from    LMG.        Id.     §   31(1)(d).     Under

Massachusetts law, upon dissolution of an at-will partnership, each

partner “has the right to wind up the partnership affairs.”                         Id. §

37.      “On    dissolution       the    partnership         is   not   terminated,     but

continues       until    the      winding      up    of      partnership      affairs   is

completed.”         Id. § 30.      “Winding up” is “the process that occurs

during the period following dissolution and preceding termination,

during    the       course   of    which      work     in     process    is    completed,

partnership assets are sold, creditors are paid, and the business

of the partnership is brought to an orderly close.”                           Anastos v.

Sable, 819 N.E.2d 587, 592 (Mass. 2004) (quoting Adams v. United

States, 218 F.3d 383, 388 (5th Cir. 2000)).

               Each partner’s right to “wind up” includes “the right to

an account of his interest” in the partnership, Mass. Gen. Laws ch.

108A, § 43, and the right to receive the payment of “the net amount

due him from the partnership,” id. § 38.                    See Eddy v. Fogg, 78 N.E.

549, 550 (Mass. 1906) (“[A partner’s] right to an accounting and

settlement accrue[s] upon the dissolution of the firm.”).                           These

principles apply equally to at-will partnerships.                          See Murray v.

Bateman,       51   N.E.2d     954,     955-56      (Mass.    1943)     (former   partner

                                             -13-
entitled to an accounting upon dissolution of at-will partnership);

Lawson v. Shine, 295 N.E.2d 177, 177-78 (Mass. App. Ct. 1973)

(expelled partner in at-will partnership was entitled to half of

the value of the partnership).

           Here, Zak’s own testimony indicated that, despite Reed’s

demands,   she    was    never   provided   with       an   accounting   of   her

partnership interest or a distribution of her portion of the

profits, and the loan modification business continued. In essence,

following dissolution, there was never any winding up of the

partnership affairs as is required by Massachusetts law before a

partnership can be terminated. The result was that the partnership

continued through the date of trial (which was approximately

eighteen months following dissolution).            Under Mass. Gen. Laws ch.

108A, § 23(2), “[a] continuation of the business by the partners

. . . without any settlement or liquidation of the partnership

affairs,   is    prima   facie   evidence   of     a    continuation     of   the

partnership.”     See also id. § 30; Shapira v. Budish, 175 N.E. 159,

161 (Mass. 1931).

           Having determined that the partnership was never wound up

following Reed’s expulsion, the jury could have also reasonably

concluded that Reed was entitled to damages based upon LMG’s post-

dissolution continuation of the business, while employing assets

that Reed contributed.

           The Supreme Judicial Court of Massachusetts considered a

situation very similar to this case in Murray v. Bateman, 51 N.E.2d

                                    -14-
954.       In    that   case,   four   men   entered    into    an    at-will       oral

partnership       agreement     to   establish   and    conduct      a     school   for

shipfitters.       Under the agreement, each of the four partners would

receive one fourth of the profits from the school.                    Shortly after

the school opened, three of the partners expelled the fourth,

directing him to leave the school premises.               Id. at 955.        Although

the three partners told the expelled partner that the partnership

was dissolved, they nonetheless continued to operate the school

without him, employing the good will that he had contributed.7 Id.

The court noted that where the partnership agreement was “for a

partnership at will and any party could retire from the firm at any

time he desired,” the retiring partner generally “would not have

any right . . . to claim damages because he was thereby deprived of

sharing in the future profits of the business.”                     Id. at 955-56.

However, the court held that, under the Uniform Partnership Act as

adopted     in    Massachusetts,8      “[p]rofits      made    by    the    remaining

partners subsequently to dissolution, through the employment of the

firm’s assets, must be accounted for to the partner who had retired

and has not been paid his share of the assets.”                          Id. at 956

(emphasis added).

       7
          As the court noted in Murray, “[g]ood will is generally
understood to mean the advantage that accrues to a business on
account of its name, location and reputation, which tends to enable
it to retain the patronage of its old customers.” 51 N.E.2d at
955.
       8
              Massachusetts enacted the Uniform Partnership Act in
1922.      See Tropeano v. Dorman, 441 F.3d 69, 75 (1st Cir. 2006).

                                        -15-
               The rule articulated in Murray has been similarly adopted

in other jurisdictions that have enacted the Uniform Partnership

Act.    See, e.g., Schrempp & Salerno v. Gross, 529 N.W.2d 764, 771

(Neb. 1995) (“[A] partner [has] a continuing fiduciary duty to [the

partnership] that prohibits a partner of a dissolved partnership

from entering into contracts for personal gain in connection with

unfinished business of the partnership.”); Hamilton Co. v. Hamilton

Tile Corp., 197 N.Y.S.2d 384, 386-87 (N.Y. Sup. Ct. 1960) (“Being

a partnership at will, [a former partner] may have had the right to

dissolve and to request a winding up of the partnership affairs; he

could even then go off to another new venture, but he could not

secretly become part of a venture that looks for its profits to the

accounts and fruits of the former partnership still in a process[]

of being wound up.”); see also, e.g., Wanderski v. Nowakowski, 49

N.W.2d 139, 145 (Mich. 1951) (“[P]laintiff [under state law similar

to the Uniform Partnership Act] was entitled . . . to be awarded

his    share    of     the   profits   arising      from    the    continued   use    of

partnership assets in the business                       . . . from [the time of

dissolution]         until   the    entry    of    decree   in the      circuit court

. . . .”).

               There    is   no    question       here    that    LMG   continued    the

partnership          business      following       Reed’s    expulsion      from     the

partnership. The jury was also presented with substantial evidence

that Reed contributed the majority, if not all, of the client base

for the loan modification business.                  Based on that evidence, the

                                            -16-
jury could have easily concluded that LMG utilized Reed’s client

database to operate its business, and that by continuing the

business with the assets (customer base) that Reed contributed, LMG

breached its duties and obligations to Reed. Where the partnership

breaches its fiduciary duty by continuing the partnership business

with partnership assets, but depriving the expelled partner of

participation in the business, the expelled partner is entitled to

“the net amount due him,” Mass. Gen. Laws ch. 108A, § 38, from the

continuing partnership.       See Murray, 51 N.E.2d at 956; see also

Essay v. Essay, 123 N.W.2d 20, 27 (Neb. 1963) (“[An expelled

partner   who]   does   not   acquiesce   in   the   termination   of   the

partnership but demands a winding up of the partnership . . . is

entitled to share in the profits until the partnership business has

been finally terminated.”).

           Based on the evidence, the jury could conclude that “the

net amount due” Reed was fifty percent of LMG’s profits and the

agreed upon $2,500 bi-weekly salary. Reed was entitled to the full

amount due to her (including the salary) as long as the partnership

continued regardless of whether the partnership agreement was

express or implied.      See Shulkin v. Shulkin, 16 N.E.2d 644, 649

(Mass. 1938) (“The right of a partner to compensation for his

services depends wholly upon agreement, express or implied.”); see

also Boyer v. Bowles, 37 N.E.2d 489, 493 (Mass. 1941) (“[T]he

subsequent course of dealing and conduct of the parties may be

considered in determining whether there is such an implication in

                                  -17-
favor of the allowance of compensation as is tantamount to an

express agreement.”).         As the district court instructed, having

found that the partnership was never terminated and that LMG

breached its fiduciary duties, the jury was free to “award Ms. Reed

her share of the profits . . . of the partnership [and her salary]

from the date of the dissolution of the partnership until [the date

of trial].”    J.A. 62.

                                        D.

          LMG finally contends that the jury verdict should be set

aside because the amount of the jury’s damages award is not

supported by the evidence.        In particular, LMG apparently argues

that the award of $324,000 as Reed’s “partnership profit share” for

the eighteen-month period is not supported by the record because

Reed is only entitled to fifty percent of LMG’s net income during

the eighteen-month period, which was substantially less than the

premise of the jury award–-i.e., a total net profit of $648,000.

          We    review    a    jury’s    award    of    damages    with   “great

deference.”    Segal v. Gilbert Color Sys., Inc., 746 F.2d 78, 81

(1st Cir. 1984). “[T]he jury is free to select the highest figures

for which there is adequate evidentiary support.                   And, such a

verdict will be reduced or set aside only if it is shown to exceed

any rational appraisal or estimate of the damages that could be

based upon the evidence before the jury.”              Id. (internal quotation

marks and citation omitted). Accordingly, we will not overturn the

jury’s   damages   award       “unless       it   is    ‘grossly   excessive,’

                                    -18-
‘inordinate,’ ‘shocking to the conscience of the court,’ or ‘so

high that it would be a denial of justice to permit it to stand.’”

Id. at 80-81 (quoting McDonald v. Fed. Labs., 724 F.2d 243, 246

(1st Cir. 1984)).

          LMG’s theory concerning the amount of net profits during

the eighteen-month period is not entirely clear.     LMG’s apparent

premise is that its gross receipts during that time were $367,384

as reflected in LMG’s bank statements, and that even without

accounting for any reductions for business expenses, the gross

income was far less than the amount of net income assumed by the

jury’s damages award ($648,000).9     In contrast, Reed’s theory at

trial was that LMG diverted its income to ZLO in an attempt to

conceal its true post-dissolution profits.     Reed pointed to the

combined LMG and ZLO bank statements during the relevant eighteen-

month period, which showed that the total gross income for both LMG

and ZLO combined was approximately $3.5 million.     There was also

evidence that LMG and ZLO’s combined expenses for the first three

months of the eighteen-month period were on average $154,554 per

month.   Assuming $3.5 million in net revenue and average expenses

of $154,554 per month for eighteen months, LMG’s total profit

during the eighteen-month period would have been approximately

     9
          LMG also points to its profit and loss statement which
showed $207,717 in net income for 2009 and $7,258 in net income for
January through March, 2010.    However the eighteen-month period
here began in January 2010, when Reed was expelled from the
partnership, and concluded in June 2011, the month of trial.

                               -19-
$718,000,    exceeding     the   $648,000   assumed   by   the   jury.

Additionally, Reed presented evidence indicating that before she

was ousted, the profits from the business exceeded $60,000 per

month, and the business was steadily growing.          As the district

court concluded in rejecting LMG’s motion for judgment as a matter

of law, the jury was entitled to reject LMG’s evidence in favor of

the contrary evidence presented by Reed, and to calculate a total

profit of $648,000 and Reed’s profit share as $18,000 per month

over the eighteen-month period.

            Accordingly,    we   conclude   that   there   was   adequate

evidentiary support to sustain the jury’s damages award.

                                   III.

            For the foregoing reasons, we find that there was no

error in the jury verdict, and that the district court did not err

in denying LMG’s Rule 50 motion.

Affirmed.

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