Court Opinion

ID: 9919523
Source: CourtListenerOpinion
Date Created: 2024-01-18 18:00:59.381968+00
Date Added: 2024-06-11T08:04:22.548320
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                               _________________
                                      No. 22-2542
                                   _________________
                       ESTATE OF DR. RICHARD LIEBERMAN

                                             v.

                              PLAYA DULCE VIDA, S.A.,
                                                          Appellant
                                    ________________
                     On Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                              (D.C. Civil No. 2-14-cv-03393)
                     District Judge: Honorable Eduardo C. Robreno
                                    ________________
                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                  on May 17, 2023

     Before: SHWARTZ, MONTGOMERY-REEVES, and ROTH, Circuit Judges.

                                 (Filed: January 18, 2024)
                                       ___________
                                       OPINION *
                                      ___________

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Montgomery-Reeves, Circuit Judge.

       Playa Dulce Vida, S.A. (“PDV”) challenges two rulings issued by the District

Court and a jury verdict entered in favor of Appellee, the Estate of Dr. Richard

Lieberman. In its first ruling, the District Court declared a mistrial to remedy potential

prejudice caused by an earlier erroneous evidentiary ruling. In its second ruling, the

District Court denied PDV’s requests for post-trial relief from the jury verdict in favor of

the Estate of Dr. Richard Lieberman. Because the District Court did not abuse its

discretion in granting the mistrial and correctly held that the record evidence supported

the jury’s verdict, we will affirm.

I.     BACKGROUND1

       In 2004, Dr. Richard Lieberman 2 purchased 25 preferred shares in a beachfront

resort owned and operated by PDV. Lieberman and PDV memorialized Lieberman’s

purchase in a Preferred Shareholder Agreement (the “Shareholder Agreement”). The

Shareholder Agreement contained four parts, each governing a different part of the

transaction. Relevant here is the Rental Pool Agreement (the “Rental Agreement”). The

Rental Agreement guaranteed Lieberman, among other things: (1) use of a resort unit 91

days per year, (2) certified accounting statements from PDV, and (3) a portion of PDV’s

net rental income. The Rental Agreement defines net rental income as the gross profits

1
  We write solely for the benefit of the parties and will only recite the facts necessary to
resolve the issues before the Court.
2
 In 2021, Lieberman passed away, and his estate replaced him in the underlying action.
We refer to both as Lieberman herein.

                                                 2
generated from the rental units minus certain expenses enumerated in the Rental

Agreement.

       In 2014, Lieberman sued PDV for, among other things, breach of contract.

Lieberman alleged that in calculating the net rental income, PDV impermissibly deducted

three categories of line items—debt service expenses, depreciation, and capital

expenditures—which reduced the net rental income available for distribution (the “Rental

Income Claim”). The complaint also alleged that PDV denied Lieberman access to and

use of certain resort units. Lieberman sought monetary damages for the alleged breaches.

       In preparing for trial, Lieberman did not retain an expert witness to testify about

PDV’s certified accounting statements or its calculation of net rental income. Instead,

Lieberman planned to testify about the certified accounting statements and mathematical

calculations therein. Anticipating Lieberman’s testimony, PDV filed a motion in limine

to preclude lay-witness testimony regarding PDV’s certified accounting statements. In

March 2018, the District Court issued an order denying in part and granting in part

PDV’s motion. The District Court granted the motion “to the extent that it [sought] to

exclude opinion testimony concerning accounting practices, tax implications, or

lawfulness under either American or Costa Rican law.” J.A. 150. The District Court

denied the motion “to the extent that [Lieberman would] . . . testify as to the accuracy of

their arithmetic and whether these deductions were part and parcel of the contract that

[Lieberman] had entered into with the [PDV].” Id.

       In November 2019, the first trial commenced. During Lieberman’s direct

examination, PDV raised concerns about Lieberman’s ability to provide a proper

                                                 3
evidentiary foundation for “complicated [financial] documents” prepared by a Costa

Rican accounting firm. J.A. 189–90. Following PDV’s objection, the District Court

expressed concern that its prior ruling on PDV’s motion in limine may have misled

Lieberman to think that he did not need an expert witness. The District Court

acknowledged that it had not fully appreciated the accounting related foundational

questions that Lieberman would be asked before his testimony regarding the calculations.

The District Court explained:

              The problem is that you’re relying on a P and L, okay? And
              the question is -- and my analogy is let’s assume that the P and
              L was in Russian and none of us spoke Russian, and then you
              asked Dr. Lieberman to tell us what the P and L says, we would
              need an interpreter. We would need a translator to translate
              what the P and L say[s] to lay language. It seems to me that’s
              what the issue is here. It’s not the ultimate opinion.

Id. at 229–30.

       The District Court then engaged the parties in a detailed discussion of proposals to

move forward. The District Court identified three proposals: (1) that Lieberman testify

and, at the close of Lieberman’s case, PDV move to strike statements inconsistent with

the District Court’s prior ruling; (2) that the trial proceed but that the District Court

reopen discovery to allow Lieberman to retain an expert witness; and (3) that the District

Court declare a mistrial to allow Lieberman to obtain an expert and reschedule a second

trial sometime in the spring. After considering Lieberman’s and PDV’s concerns, the

District Court granted a mistrial.

       In November 2021, the District Court held a second trial. Lieberman had retained

Stephen Scherf, a Certified Public Accountant, as an expert witness. Scherf performed a

                                                   4
forensic accounting of the rental income, based on PDV’s certified accounting statements

from November 2007 to September 2017. Scherf’s testimony provided three scenarios;

each calculation, except scenario one, assumed an increase in the value of the shares that

Lieberman owned. Scenario one calculated $157,352 in damages; scenario two

calculated $1,049,219 in damages; and scenario three calculated $735,484 in damages.

       PDV’s expert witness did not testify at trial. PDV’s Corporate Representative,

David Callan, however, testified that PDV deducted certain expenses from the gross

rental income that were not enumerated in the Rental Agreement. Callan also testified

that if Lieberman was successful in his lawsuit, PDV would issue a “call for capital” to

all its shareholders, but that to date it had “found other solutions to make mortgage

payments.” J.A. 1348–49.

       The jury returned a verdict in favor of Lieberman, awarding approximately $1.7

million in damages for the Rental Income Claim and $695,000 on the usage claim.

       Post-trial, PDV sought judgment as a matter of law on three grounds: (1) there

was no evidentiary support for the amount of damages awarded by the jury; (2) the jury’s

finding that PDV breached the Shareholder Agreement created an absurd result because if

PDV paid Lieberman, PDV would default on its mortgage; and (3) Lieberman suffered

no damages because all shareholders, including Lieberman, must cover the costs

associated with litigation. The District Court held that there was no evidence to support

the jury’s calculation of damages for the usage Claim and reduced the award amount by

$695,000. The District Court denied the remainder of PDV’s request for relief.

       PDV filed a timely appeal.

                                                 5
II.    DISCUSSION 3

       This appeal requires the Court to resolve the following questions: (1) whether the

District Court erred by granting a mistrial after determining that it issued an erroneous

evidentiary ruling that disadvantaged Lieberman’s case; and (2) whether the District

Court erred in denying PDV’s post-trial motion (a) because the jury’s damages award

was not supported by sufficient evidence, (b) because Lieberman’s proffered

interpretation of the Shareholder Agreement would lead to an absurd result, and (c)

because Lieberman suffered no damages. We address each question in turn.

       A.     The Mistrial

       PDV challenges the District Court’s ruling granting a mistrial. Specifically, PDV

asserts that the District Court’s concern that its evidentiary ruling “misled” Lieberman

was insufficient to support granting a mistrial because Lieberman, through counsel, made

the strategic choice not to retain an expert witness. And the District Court’s evidentiary

ruling had no effect on that choice because Lieberman made this choice long before the

District Court ruled on PDV’s motion in limine. PDV further argues that granting a

mistrial is an abuse of discretion here, because there was an alternative option available.

PDV asserts that because the counsel, parties, witnesses, and court were available,

3
  This Court has jurisdiction under 28 U.S.C. § 1291. The District Court had jurisdiction
under 28 U.S.C. § 1332.

                                                 6
proceeding with the already scheduled trial was a clear and viable alternative to granting

a mistrial. Thus, PDV contends that the District Court erred in granting a mistrial. 4

       Trial courts possess significant discretion in deciding whether to grant or deny a

request for a new trial. Bhaya v. Westinghouse Elec. Corp., 922 F.2d 184, 187 (3d Cir.

1990) (“When the granting or denial of a new trial is contested on appeal, substantial

deference must generally be given to the decision of the trial judge ‘who saw and heard

the witnesses and has the feel of the case which no appellate printed transcript can

impart.’” (quoting Cone v. W. Va. Pulp & Paper Co., 330 U.S. 212, 216 (1947))).

“[W]here a new trial was granted based in part on erroneous evidentiary rulings, the

Supreme Court [has] stated that ‘the authority to grant a new trial . . . is confided almost

entirely to the exercise of discretion on the part of the trial court.’” Bhaya, 922 F.2d at

187 (quoting Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36 (1980)).

              1.     Evidentiary Ruling

       Following PDV’s second objection to Lieberman’s testimony regarding the

certified accounting statements, the District Court realized that it had not fully

appreciated the foundational questions about accounting terms that Lieberman could be

asked leading up to his testimony regarding the calculations. The District Court

explained that “[w]e would need a translator to translate what the P and L say[s] to lay

4
  This Court reviews a District Court’s order granting a mistrial for an abuse of discretion.
United States v. McKoy, 591 F.2d 218, 222–23 (3d Cir. 1979). “An abuse of discretion
may occur as a result an errant conclusion of law, an improper application of law to fact,
or a clearly erroneous finding of fact.” McDowell v. Phila. Hous. Auth., 423 F.3d 233,
238 (3d Cir. 2005).

                                                  7
language.” J.A. 229. The District Court then determined that even if Lieberman’s initial

decision not to retain an expert was wrong, the District Court’s evidentiary ruling

“misled” Lieberman or, at a minimum, “assisted” in Lieberman’s continued decision not

to retain an expert. 5

       PDV argues that this basis for declaring a mistrial was wrong because the date to

identify experts had passed under the operative scheduling order. While PDV correctly

notes that discovery had closed, not all was lost for Lieberman. The District Court ruled

on the motion in limine in March 2018. The first trial commenced in November 2019.

Had the District Court realized the issue when ruling on the motion in limine, Lieberman

could have requested, and the District Court could have granted, leave to amend the

scheduling order. After all, there was a year and a half between the District Court’s

ruling on the motion in limine and the commencement of the first trial. Thus, we are not

convinced that the District Court committed reversable error in determining that its

evidentiary ruling may have prejudiced Lieberman’s ability to present his case.

               2.        Declaration of Mistrial

       The District Court’s decision to grant a mistrial rested on a prior evidentiary ruling

that the District Court determined was erroneous. As this Court has stated, “Particular

5
  J.A. 253 (“The problem here is that I think, in fairness, my ruling misled the plaintiff.
Now, maybe it misled the plaintiff on something that they should have thought about it
[sic] and they were wrong to begin with, but I assisted in that enterprise. Had I not made
that ruling, I wouldn’t have had any problem saying look, you don’t have it, you don’t
have it, that’s the end of it”).

                                                   8
deference is appropriate [when] the decision to grant a new trial rest[s] on an evidentiary

ruling that was itself entrusted to the trial court’s discretion.” Bhaya, 922 F.2d at 187.

       Further, after identifying the issue caused by its prior ruling, the District Court

proposed three alternatives: (1) proceed with the trial, allow Lieberman to testify, and

allow PDV to move to strike statements inconsistent with the prior ruling; (2) recess the

trial, reopen discovery to allow Lieberman to retain an expert witness, and resume trial

with Lieberman’s expert the following week; or (3) declare a mistrial, schedule a second

trial, and allow Lieberman to obtain an expert in the interim. In discussing a potential

mistrial, the District Court acknowledged that ordinarily, a party cannot change course in

the middle of trial. The District Court recognized, however, that the current situation was

“out of the ordinary course” and explained its concerns that the District Court’s prior

evidentiary ruling may have “misled” Lieberman. J.A. 253 (“The problem here is that I

think, in fairness, my ruling misled the plaintiff.”). The District Court then engaged

extensively with both parties about their concerns regarding its proposals. And although

PDV disagreed with all three proposals, that does not negate the District Court’s careful

consideration of possible alternatives before declaring a mistrial.

       Accordingly, we hold that the District Court did not abuse its discretion in

declaring a mistrial.

                                                  9
       B.      PDV’s Post-Trial Motion

       Post-verdict, PDV filed an omnibus motion seeking post-trial relief under Rules

50(b), 59(a), and 59(e) of the Federal Rules of Civil Procedure. 6 The District Court

granted, in part, PDV’s request for judgment as a matter of law and subtracted the

$695,000 damages awarded for the usage claim. The District Court denied the remaining

requests for relief.

       On appeal, PDV argues that the remaining judgment is invalid for three reasons:

(1) the jury’s award of $1,773,699 for the Rental Income Claim is not supported by the

trial evidence; (2) the District Court’s interpretation of the Shareholder Agreement would

6
  This Court exercises plenary review over a Rule 50(b) motion. Trabal v. Wells Fargo
Armored Serv. Corp., 269 F.3d 243, 249 (3d Cir. 2001). Under Rule 50(b), a court may
(1) allow judgment on the verdict, (2) order a new trial, or (3) direct entry of judgment as
a matter of law. See Fed. R. Civ. P. 50(b). A Rule 50(b) motion should not be granted
unless “the record is critically deficient of that minimum quantity of evidence from which
a jury might reasonably afford relief.” In re Lemington Home for the Aged, 777 F.3d
620, 626 (3d Cir. 2015) (quoting Trabal, 269 F.3d at 249); see also ZF Meritor, LLC v.
Eaton Corp., 696 F.3d 254, 268 (3d Cir. 2012). In considering a Rule 50(b) motion, a
court “must disregard all evidence favorable to the moving party that the jury is not
required to believe.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151
(2000). Absent such a showing, a court’s ruling should stand.

Under Rule 59, a movant may also request a new trial or an amended judgment. See Fed.
R. Civ. P. 59(a), (e). This Court reviews joint or alternative requests for post-trial relief,
under Rule 59, for an abuse of discretion. See Failla v. City of Passaic, 146 F.3d 149,
152 (3d Cir. 1998). Under Rule 59(a), “[t]he decision to grant a new trial is within the
sound discretion of the trial court, and such requests are disfavored.” See Williamson v.
Consol. Rail Corp., 926 F.2d 1344, 1353 (3d Cir. 1991). And under Rule 59(e), a court
may alter or amend a judgment only if there is (1) “an intervening change in controlling
law; (2) the availability of new evidence; or (3) the need to correct clear error of law or
prevent manifest injustice.” See In re Processed Eggs Prods. Antitrust Litig., 962 F.3d
719, 729 (3d Cir. 2020) (quoting Wiest v. Lynch, 710 F.3d 121, 128 (3d Cir. 2013)).

                                                 10
lead to an absurd result, requiring PDV to default on its mortgage obligation; and (3)

Lieberman has failed to show that he will suffer any damages from the alleged breach of

the Rental Agreement because, according to the testimony of PDV’s corporate

representative, Lieberman would be subject to a capital call to cover any award he

receives. Each argument fails.

              1.     The Jury Award

       PDV argues that there is insufficient evidence to support the jury’s award of

$1,773,699 in favor of Lieberman. But PDV is wrong. Here, there is sufficient record

evidence to support the jury’s verdict.

       To begin, Lieberman’s expert, Scherf, provided three scenarios that offered three

different possible damages numbers based on Lieberman’s share ownership and PDV’s

accounting statements. The highest scenario calculated $1,049,219 in damages, which

Scherf reached based on documents in the trial record.

       As to the remaining $724,480 of the jury award, PDV argues that any calculation

of damages should have been limited to deductions for debt service expense,

depreciation, and capital expenses from its calculation of net income based on its certified

accounting statements. But neither the jury instructions nor the verdict sheet provided

any such limitations, and PDV did not object to the proposed jury instructions or verdict

sheet. Thus, the jury was free to consider all evidence regarding the calculation of

damages and to give that evidence the weight the jury thought it deserved.

       During trial, the jury heard from Callan, PDV’s Corporate Representative, who

testified that PDV made deductions for several “related party” payments that were not

                                                11
enumerated under the Rental Agreement. These were deductions that Lieberman argued

should not have been deducted from the gross rental income but were not accounted for

in Scherf’s damages scenario. And the District Court’s jury instructions provided that if

the jury found that certain amounts were impermissibly deducted from the net income, it

was free to infer that PDV’s deduction of some or all of these amounts—including the

“related party” payments—was in error.

       Furthermore, in attempting to determine whether certain deductions were, in fact,

impermissible, a reasonable juror could have conducted a side-by-side comparison of the

Rental Agreement and the certified accounting statements to identify which line items fell

within the enumerated deductions under the Rental Agreement. In conducting this

comparison, a reasonable juror could have, consistent with the jury instructions, included

in the net income any deduction from the certified accounting statements that did not fall

under an enumerated category listed in the Rental Agreement. After doing this, that same

reasonable juror would have found ample evidence to support the damages verdict.

Therefore, the record evidence supports the jury’s verdict and must not be disturbed. Am.

Bearing Co. v. Litton Indus., Inc., 729 F.2d 943, 948 (3d Cir. 1984) (‘“The authority to

grant a new trial . . . is confided almost entirely to the exercise of discretion on the part of

the trial court,’ and will only be disturbed if the district court abused its discretion.”

(quoting Allied Chem., 449 U.S. at 36)).

       Accordingly, we conclude that the District Court did not err.

                                                  12
             2.     Contract Interpretation

      PDV argues that the District Court erred by refusing to amend the judgment

regarding the breach of contract claim. PDV contends that had it performed under the

Shareholder Agreement as interpreted by Lieberman, PDV would have defaulted on its

mortgage; therefore, the judgment supporting Lieberman’s interpretation of the

Shareholder Agreement leads to an “absurd and unreasonable” result. We disagree.

      At trial, PDV’s Corporate Representative, Callan, testified that PDV has “found

other solutions to make mortgage payments.” J.A. 1348. Callan further testified that if

the District Court entered a judgment in favor of Lieberman, PDV would issue a “call for

capital” to all shareholders to pay the expenses associated with the judgment. J.A. 1348–

49. Based on this testimony, a reasonable juror could find unpersuasive PDV’s argument

that had it performed under the terms of the Shareholder Agreement, it would have

defaulted on its mortgage. Therefore, we conclude that the District Court did not err in

denying PDV’s requests for relief.

             3.     Rental Income Damages

      PDV argues that the District Court also erred in refusing to amend the judgment

regarding the Rental Income Claim because Lieberman suffered no damages. According

to PDV, uncontroverted evidence showed that if forced to pay the damages for the Rental

Income Claim, “PDV would issue a capital call to all . . . shareholders—including

[Lieberman]—to cover damages awarded by the jury here. Thus, this would create a

zero-sum gain for [Lieberman].” Appellant’s Br. 29. But this argument is flawed

                                               13
because it misconstrues Callan’s testimony. As articulated above, Callan testified that if

the District Court entered judgment in favor of Lieberman, PDV would issue a “call for

capital” that would require all shareholders to cover the expenses associated with the

judgment. So, although Lieberman may be required to cover some portion of the

judgment, based on Callan’s testimony, he would not be required to cover all of it.

        Accordingly, we hold that the District Court did not err in denying PDV’s requests

for relief. 7

III.    CONCLUSION

        For the foregoing reasons, we will affirm the District Court’s judgment.

7
   For the same reasons discussed herein, we conclude that the District Court did not abuse
its discretion in denying PDV’s alternative request for a new trial.

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