Court Opinion

ID: 9488064
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:35:16.511424+00
Date Added: 2024-06-11T17:52:39.394145
License: Public Domain

JACOBS, Circuit Judge,
dissenting:
I respectfully dissent because: I see no error in the charge or the jury questionnaire; in any event, no party objected to either; and the amended judgment entered by the district court correctly applies New York law to the findings of the jury.
A. The Charge
The majority holds that the jury instructions “on punitive damages were not consistent with New York law, which requires a finding of actual damages before punitive damages may be awarded.” Ante at 1013. Neither party objected to the charge given. Accordingly we may not reverse for error in the charge absent plain error. Fed.R.Civ.P. 51; Abou-Khadra v. Mahshie, 4 F.3d 1071, 1078 (2d Cir.1993), cert. denied, — U.S. —, 114 S.Ct. 1835, 128 L.Ed.2d 463 (1994). Action House urges — and the majority apparently agrees — that the district court should have adopted the language of the New York Pattern Jury Instruction: “In addition to damages compensating plaintiff for his injuries, you may, but are not required to, allow plaintiff punitive damages.” New York Pattern Jury Instructions—Civil, No. 2.278 (2d ed. 1990). Instead, the district court charged: “In addition to compensatory damages, Action House and Markowitz are seeking punitive damages from Koolik.” The district court’s charge thus gave diminished emphasis to the concept that a punitive damages award supplements a compensatory damages award and cannot stand on its own. This distinction is one of emphasis and nuance, and is insufficient to raise an issue of plain error, particularly since New York Pattern Jury Instruction 3.38 is no more emphatic than the charge given by the district court here: “In addition, plaintiff asks that you allow him punitive damages.”
In any event, pecuniary injury is an essential element of Action House’s claims for breach of fiduciary duty and misappropriation. See S & K Sales Co. v. Nike, Inc., 816 F.2d 843, 847-48 (2d Cir.1987) (breach of fiduciary duty); Ziring v. Corrugated Container Corp., 183 Misc. 600, 605, 49 N.Y.S.2d 686, 692 (N.Y.Sup.Ct.1944) (misappropriation of funds). There is no separate cause of action for punitive damages under New York law. Santos v. Security and Law Enforcement Employees, Council 82, AFSCME, AFL-CIO, 80 A.D.2d 554, 435 N.Y.S.2d 357, 358 (2d Dep’t 1981). Since a jury instructed without objection or plain error had categorically found that plaintiff failed to establish an essential element of its case, the district court correctly dismissed the complaint.
B. The Interrogatories
The majority also assigns error to the jury interrogatories on the theory that questions were posed as to compensatory as well as punitive damages without apprising the jury that some compensatory award is a prerequisite for punitive damages. Again, since no timely objection was interposed by either side, our review should be limited to plain error. Here, too, I can find no error of any *1017kind; all that happened is that the jury was asked more questions than may have been strictly necessary. In my view, however, this surplusage was useful, because it elicited sufficient information to support entry of judgment under either view of a disputed issue of law.
On this appeal, Action House vigorously argues that actual damages are not a prerequisite for punitive damages under New York law, and that the punitive award therefore should be upheld notwithstanding the zero award of actual damages. Whether punitive damages can be awarded in the absence of compensatory damages is an issue of law. The jury finding on punitive damages may have been unnecessary in light of the zero award of compensatory damages, but this redundancy preserved the power of the district court — and this Court — to resolve that issue of law either way without need ever to ask a new jury the same question concerning punitive damages at a retrial. The issue of law would have become moot if the jury had awarded zero punitive damages. However, it would have been regrettable if on appeal we ruled that punitive damagés could be awarded in the absence of actual damages, and the district court then had to conduct a new trial because — having been of the opposite view on the legal question at the time the interrogatories were submitted — the district court failed to ask the punitive damages interrogatory. I do not know whether the district court consciously adopted this precaution, but I do not think that any step that in retrospect appears prudent should be held to be plain error.
The majority — as well as the district court and the parties — properly treat this jury verdict form as a special verdict governed by Fed.R.Civ.P. 49(a). The mandate of Rule 49(a) is to give the jury “such explanation and instruction concerning the material thus submitted as may be necessary to enable the jury to make its findings upon each issue” (emphasis added), and that is what was done. The majority deems the jury’s responses incongruous, and orders a remand. However, that is not the procedure mandated by Rule 49(a). If clarification is required in respect of a verdict rendered pursuant to Rule 49(a),
‘[i]t is the duty of the court to attempt to harmonize the answers, if it is possible under a fair reading of them.’ Thus ‘[w]here there is a view of the case that makes the jury’s answers to special interrogatories consistent, they must be resolved that way.’
Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884, 891 (2d Cir.1988) (citations omitted). This Court has the same “ ‘responsibility as a reviewing court ... to adopt a view of the case, if there is one, that resolves any seeming inconsistency.’ ” Id. (citations omitted). What is necessary to protect the parties’ Seventh Amendment rights to a jury trial is that the judgment not “disregard[ ] any material jury finding.” Id. (emphasis added). Accordingly, a new trial is unnecessary unless it is impossible to harmonize the material findings.
When counsel for Action House argued at the hearing of the post-trial motions that the award of zero compensatory damages was, “in effect, out of syne with the import of the substance of the jury’s verdict,” the district court responded: “Only if we don’t try to reconcile them.” Joint Appendix at 461. The district court harmonized the jury findings in a way that makes sense. It is perfectly possible for Koolik to have breached duties he owed the corporation without inflicting any actual damages. Among the fact issues disputed at trial were: whether or not the principals of Action House routinely used company funds for personal expenses and satisfied the resulting obligations by repayment or by reflecting unreimbursed amounts as salary; and whether or not Koolik’s loans in particular had been repaid in full by the time he resold his stock to the company. As the district court stated at oral argument of the post-trial motions:
That what Koolik did was unauthorized and reprehensible in a generalized, abstract sense is why they granted punitive damages. But that it didn’t really harm the company.
* ❖ * * * *
I think the jury clearly found that the conduct of Mr. Koolik was egregious. But that’s a different issue from whether it caused harm to the plaintiff. ,
Joint Appendix at 463-64.
Since the jury was properly instructed as to the nature of actual damages, and fixed *1018them at zero, I must agree with Koolik that a jury properly instructed on the interplay between actual and punitive damages should have fixed punitive damages at zero as well. Brief at 9. The majority sees “much force” in this argument, ante at 1013, but concludes that it is subverted by two invalid assumptions. The first such assumption, according to the majority, is that Action House waived its right to an instruction concerning nominal damages. Ante at 1013. On this point, the majority holds that there was no such waiver because counsel for Action House could not have anticipated that the punitive damage award would be vacated if the jury fixed the compensatory damages at zero, and therefore had no occasion to seek an instruction on nominal damages. Putting aside for a moment whether nominal damages could support a punitive award in this land of case, the majority’s assignment of blame for the supposed failure to object is much too attenuated: counsel should always anticipate that a judge will apply the law to the material findings of fact. The second supposedly defective assumption is that the jury may have formed an imperfect understanding of the difference between compensatory and punitive damages. Ante at 1014. But where (as here) there was no objection and no plain error, the assumption of jury comprehension is one that we make every week. See, e.g., United States v. Locascio, 6 F.3d 924, 942 (2d Cir.1993) (upholding convictions resulting in life sentences because there was no objection to jury instructions and because instructions were not plain error), cert. denied, — U.S. —, 114 S.Ct. 1646, 128 L.Ed.2d 365 (1994).
Even Action House does not argue that the jury conflated compensatory damages with punitive damages. Rather, Action House argues that the jury did in fact find that Action House had sustained actual damages, but was apparently “unable to calculate an exact amount of damages ... [and therefore] awarded plaintiff ‘zero’ dollars in compensatory damages.” Brief at 19. A few sentences on, Action House adds, “[i]t is plaintiffs contention that the jury would have awarded a minimum of $1.00 in compensatory damages in order to sustain the punitive award, if in fact the jury was cognizant of the law requiring such a minimal prerequisite in actual damages.” In short, no one who was at the trial contends that the jury was confused. Action House simply contends that the charge should have been sufficiently detailed to allow the jury to nullify it.
The majority casts the appellate issue in terms of which party failed to object to the jury verdict form and should therefore bear the risk of a supposed error. The fact is that neither party objected to the charge or to the jury verdict form. In my view, the proper question on appeal is whether or not the judgment reflects a correct conclusion of New York law applied to the material findings of the jury. Since, under New York law, a punitive damages award cannot stand in the absence of actual damages, the material and dispositive finding of the jury is that Action House suffered zero compensatory damages. The judgment is therefore sound.
The charge was a proper statement of the law. The jury verdict form elicited findings on each fact issue that is material — or that might be deemed material depending upon the resolution of issues of law disputed between the parties. The judgment thus applies a sound conclusion of law to the findings of a jury instructed without objection or plain error. Such a judgment should be able to withstand appeal. I would affirm the district court’s dismissal of the case.
C. Nominal Damages
There is, however, a further issue. The majority opinion specifically authorizes the district court, on remand, to instruct the jury on nominal damages. Ante at 1015. By remanding for a new trial on the issue of nominal damages, this court may be introducing an error into the proceedings.
Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 595 N.Y.S.2d 931, 612 N.E.2d 289 (1993), is the leading authority on the allowance of nominal damages in tort actions under New York law. According to Kronos, nominal damages “are allowed in tort only when needed to protect an ‘important technical right.’ ” Kronos, 81 N.Y.2d at 95, 595 N.Y.S.2d at 934, 612 N.E.2d at 292. As an example of such an “important technical right,” Kronos points to a landowner’s right *1019to be free from trespass, and notes that trespass is properly granted an “exception from the established rule that actual injury must be shown ... because a continuing trespass may ripen into a prescriptive right and deprive a property owner of title to his or her land.” Id. (citation omitted). Kronos holds that an exception is not warranted for tortious inducement of breach of contract, the claim presented in Kronos. Id.; see also Duarte v. Zachariah, 22 Cal.App.4th 1652, 1661-62, 28 Cal.Rptr.2d 88, 94 (1994) (nominal damages may not be awarded in negligence actions); Sanchez v. Clayton, 117 N.M. 761, 877 P.2d 567, 573 (1994) (same). Similarly, no such exception is warranted for either the breach of fiduciary duty or misappropriation claim at issue in Action House. In my view, neither cause of action involves the type of “important technical right[s]” noted in Kronos.
In summary, we are remanding — notwithstanding the absence of error in the first trial — so that a second trial can be conducted under the influence of a likely error introduced on appeal.