Court Opinion

ID: 65448
Source: CourtListenerOpinion
Date Created: 2010-04-26 05:58:53+00
Date Added: 2024-06-11T17:20:38.498040
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                            April 21, 2009

                                       No. 07-11242                    Charles R. Fulbruge III
                                                                               Clerk

CHARLES ZUBARIK

                                           Plaintiff-Appellee-Cross-Appellant
v.

RUBLOFF DEVELOPMENT GROUP INC ET AL.

                                           Defendants-Appellants-Cross-Appellees

                   Appeals from the United States District Court
                        for the Northern District of Texas
                                   (05-CV-1491)

Before BARKSDALE, DENNIS, and ELROD, Circuit Judges.
PER CURIAM:*
       This appeal arises from a common-law fraud suit in which the jury
rendered a verdict in favor of Plaintiff Charles Zubarik (“Plaintiff”) and awarded
him compensatory and exemplary damages against Defendants Rubloff
Development Group, Inc. (“Rubloff”) and Sundowner Mesa, LLC (“Sundowner”)
(collectively “Defendants”). After rendering final judgment on the verdict, the
district court denied Defendants’ motion for a new trial but ordered a remittitur
of the exemplary damage award against Defendant Rubloff.                         Defendants

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
                                  No. 07-11242

appealed the district court’s denial of their motion for a new trial, and Plaintiff
cross appealed the district court’s remittitur order. We AFFIRM. There is
sufficient evidence to support the jury’s verdict, and the district court did not
abuse its discretion in applying a Texas statute to grant the remittitur.
      Plaintiff, who has extensive experience in the airline transportation
industry, won for his then-employer, Metscan Technologies, a contract with the
United States Marshall Service (“USMS”) for the air transport of prisoners and
aliens (“the Marshall Contract”). Subsequently Metscan Technologies sold the
Marshall Contract to Defendants, who needed Plaintiff’s services to finalize the
Marshall Contract and receive a novation from the USMS.
      To obtain Plaintiff’s work on the Marshall Contract, Defendants
represented that they would compensate Plaintiff $10,000 per month, 20% of the
contract profits, and benefits; that before the novation took place Plaintiff would
receive a written employment agreement containing these terms; and that once
the novation was granted Plaintiff would remain an employee of Defendants and
manage the Marshall Contract.        Based on these representations, Plaintiff
worked to secure the novation for Defendants, but despite repeated assurances
from Defendants, Plaintiff never received a written employment agreement.
Shortly after the novation was finalized, Defendants fired Plaintiff.
      Plaintiff sued Defendants in Texas state court for breach of contract and
common-law fraud, and Defendants removed the case to federal court. After a
five-day trial, the jury concluded that while no contract had been formed
between the parties, Defendants were liable for fraud against Plaintiff. As
compensatory damages, the jury awarded $80,000 against Rubloff and $600,000
against Sundowner; the jury also awarded exemplary damages of $600,000
against Rubloff and $600,000 against Sundowner. In an order accompanying its
entry of judgment, the district court ordered a remittitur of the exemplary

                                        2
                                    No. 07-11242

damage award against Defendant Rubloff 1 pursuant to Tex. Civ. Prac. & Rem.
Code § 41.008, reducing the award from $600,000 to $200,000, but otherwise
entered judgment consistent with the jury's award. Defendants then filed a
motion for a new trial, which the district court denied. Defendants timely
appealed the denial of the motion for new trial, and Plaintiff cross appealed the
district court's grant of remittitur.
      On appeal Defendants contend that the district court erred in denying
their motion for a new trial because Plaintiff did not produce sufficient evidence
to support the jury’s finding of fraud, did not present sufficient evidence to
support the jury’s compensatory damage award, and did not present clear and
convincing evidence of fraud sufficient for the jury to award exemplary damages.
To prevail on this argument, Defendants must demonstrate “an absolute absence
of evidence to support the jury's verdict, thus indicating that the trial court had
abused its discretion in refusing to find the jury's verdict contrary to the great
weight of the evidence.” Whitehead v. Food Max of Mississippi, Inc., 163 F.3d
265, 269 (5th Cir. 1998) (internal citations and quotation marks omitted). After
hearing oral argument and reviewing the briefs and the record, we conclude that
Plaintiff presented evidence to support the jury’s verdict. Thus, Defendants
cannot show that the district court abused its discretion in denying their motion
for a new trial.
      Defendants also contend, for the first time on appeal, that the jury’s
damage award was improper because Plaintiff should not be allowed to recover
benefit-of-the-bargain damages for his fraud claim. However, Defendants never
raised this issue during the proceedings before the district court, and, as
Defendants conceded during oral argument, arguments not presented before the

      1
         This remittitur applied only to the exemplary damage award against Defendant
Rubloff and did not impact the separate $600,000 exemplary damage award against Defendant
Sundowner. Defendant Sundowner never moved for remittitur of the awards against it.

                                           3
                                  No. 07-11242

district court are rarely reviewed on appeal. This is not one of those rare
exceptions permitting review.
      On cross appeal, Plaintiffs contend that the district court erred in ordering
remittitur of the jury’s exemplary damage award against Defendant Rubloff.
The district court ordered this remittitur based on Tex. Civ. Prac. & Rem. Code
§ 41.008, which limits exemplary damage awards to the greater of (1) two times
the economic damages plus an amount equal to any noneconomic damages found
by the trial court, not to exceed $750,000; or (2) $200,000. See Tex. Civ. Prac. &
Rem. Code § 41.008. Because the jury awarded only $80,000 in compensatory
damages against Rubloff, the district court applied § 41.008 to conclude that
$200,000 was the maximum allowable exemplary damage award against Rubloff.
We review this remittitur order for abuse of discretion, see Foradori v. Harris,
523 F.3d 477, 497-98 (5th Cir. 2008) (“[I]n an action based on state law but tried
in federal court by reason of diversity of citizenship, a district court must apply
a new trial or remittitur standard according to the state's law controlling jury
awards for excessiveness or inadequacy, and appellate control of the district
court's ruling is limited to review for ‘abuse of discretion.’”) (quoting Gasperini
v. Ctr. for Humanities, Inc., 512 U.S. 415, 419 (1996)), and the district court’s
application of § 41.008 evidences no such abuse.
      Accordingly, for the foregoing reasons we AFFIRM the judgment of the
district court.

                                        4