United States District Court, W.D. Virginia, Harrisonburg Division
RORY J. CUTAIA, Plaintiff,
RADIUS ENGINEERING, INTERNATIONAL, INC., et al., Defendants.
MICHAEL F. URBANSKI, District Judge.
This matter is before the court on defendant Radius Engineering International, Inc.'s ("Radius") Motion for Judgment as a Matter of Law pursuant to Rule 50(b) of the Federal Rules of Civil Procedure (Dkt. # 314). In this motion, Radius asserts that the jury's liability verdict on plaintiff Rory J. Cutaia's ("Cutaia") breach of warranty, fraud and Virginia Consumer Protection Act claims was undermined by the lack of any damages awarded by the jury on those claims, and that the jury's award of $1, 762, 087.40 in damages on the breach of contract claim was grossly excessive and unsupported by the evidence. For the reasons that follow, Radius' motion is DENIED.
Cutaia entered into an oral contract with Radius for the manufacture of a custom built underground survival shelter to be installed on his property in Augusta County, Virginia. Cutaia testified that he paid "over $2 million in connection with the shelter." Cutaia Trial Testimony, Dkt. # 319, at 212. Radius manufactured the components of the survival shelter in Texas and shipped them to Cutaia's property. Those components included a living pod, a generator pod and the main structure, an Earthcom Dome 60. The Earthcom Dome 60 was a fiberglass dome manufactured by Radius in pie-shaped sections which were shipped to the construction site, where they were assembled and buried by Green Eye Technology, LLC ("Green Eye"), Radius' exclusive installer. Witnesses associated with Green Eye testified that they had difficulty assembling the pieces of the dome to assure a water-tight fit and bemoaned the lack of adequate assembly instructions and quality of the Radius components. For its part, Radius blamed the problems with the dome on Green Eye's faulty installation. The evidence adduced at trial indicated there were gaps between the pie-shaped sections of the dome and cracks around the circular foundation of the dome. At Radius' instruction, Green Eye attempted to seal the gaps between the dome sections with a non-waterproof filler material akin to that used in auto body repairs. At the end of the day, the evidence established that the dome leaked water through the seams of the vertical dome sections and between the dome and the foundation. Without completing the installation, Green Eye abruptly quit the project. Cutaia engaged a local contractor to cover the dome with a membrane and take steps to divert water away from the dome. Cutaia's evidence was that the dome continued to leak water, became moldy and could not be repaired. As such, Cutaia argued that it was utterly unsuitable as a survival shelter.
A bifurcated jury trial was conducted over eight days in October, 2013. On liability, the jury returned a verdict for Cutaia against Radius on all six counts. At the damages phase, Cutaia sought recovery for the value of the dome, as reflected in the monies he paid to have it manufactured and installed. Cutaia presented evidence at the damages phase as to the amounts he paid to have the Earthcom Dome 60 manufactured and installed, and asked the jury to award a total of $1, 807, 087.50. For its part, Radius asserted that the dome could be made watertight by the interior application of fiberglass and water-activated urethane foam at a cost of $30, 000 to $35, 000. The jury awarded Cutaia damages for breach of contract in the amount of $1, 762, 087.40,  but penned in "$Ø" for the five remaining counts. See Damages Verdict Form, Dkt. # 297.
In its Rule 50(b) motion, Radius argues that the jury's award of $1, 762, 087.40 is factually unsupported and contrary to law, and asserts that the proper measure of damages is $100, 980. Radius also asserts that the jury's award of this vast sum for breach of contract is inconsistent with the award of $Ø for the breach of warranty counts, and that the award of $Ø on the fraud and VCPA counts negates the liability finding on those claims.
Rule 50(b) of the Federal Rules of Civil Procedure allows the parties to renew a motion for judgment as a matter of law made under Rule 50(a) following a jury verdict and judgment. A district court should grant a Rule 50(b) motion only if the court "determines, without weighing the evidence or considering the credibility of the witnesses, that substantial evidence does not support the jury's findings." S. Atl. Ltd. P'ship of Tenn., L.P. v. Riese , 284 F.3d 518, 532 (4th Cir. 2002) (quoting Konkel v. Bob Evans Farms, Inc. , 165 F.3d 275, 279 (4th Cir. 1999)). In ruling on the motion, the court must view the evidence and draw all reasonable inferences in the light most favorable to the nonmoving party. Lack v. Wal-Mart Stores, Inc. , 240 F.3d 255, 259 (4th Cir. 2001). The court may not substitute its judgment for that of the jury and must uphold the verdict if there is evidence upon which a reasonable jury could return a verdict in favor of the nonmoving party. Price v. City of Charlotte , 93 F.3d 1241, 1249-50 (4th Cir. 1996). At the same time, while a court is "compelled to accord the utmost respect to jury verdicts and tread gingerly in reviewing them, [it is] not a rubber stamp convened merely to endorse the conclusions of the jury, but rather [has] a duty to reverse the jury verdicts if the evidence cannot support it." Id. at 1250 (internal citations omitted). With regard to damages, the power and the duty of the district court to set aside an excessive verdict is "well-established, the exercise of the power being regarded not in derogation of the right of trial by jury but one of the historic safeguards of that right." Cline v. Wal-Mart Stores, Inc. , 144 F.3d 294, 304 (4th Cir. 1998) (quoting Virginian Ry. Co. v. Armentrout , 166 F.2d 400, 408 (4th Cir. 1948)). "The determination of damages is left to the discretion of the jury, to be reviewed by the district court in accordance with federal standards of review under Rule 50(b) and Rule 59. The award shall stand unless no substantial evidence is presented to support it, it is against the clear weight of the evidence, it is based upon evidence that is false, or it will result in a miscarriage of justice." Barber v. Whirlpool Corp. , 34 F.3d 1268, 1279 (4th Cir. 1994). "[A]n award of substantial compensatory damages... must be proportional to the actual injury incurred.... The award must focus on the real injury sustained....'" Hetzel v. County of Prince William , 89 F.3d 169, 173 (4th Cir. 1996) (quoting Piver v. Pender County Bd. of Educ. , 835 F.2d 1076, 1082 (4th Cir. 1987)).
Radius argues that the jury's finding of no damages on the fraud in the inducement and VCPA claims requires entry of judgment as a matter of law in Radius' favor on those claims. Radius also argues that the jury's finding of no damages on the warranty claims undermines the breach of contract damages award. In considering this issue, it is the duty of the court "to determine whether a jury verdict can be sustained, on any reasonable theory." Atlas Food Sys. & Servs. Inc. v. Crane Nat'l Vendors, Inc. , 99 F.3d 587, 599 (4th Cir. 1996) (quoting Richardson v. Suzuki Motor Co. , 868 F.2d 1226, 1246 (Fed. Cir. 1989)). "And it must, therefore, harmonize seemingly inconsistent verdicts if there is any reasonable way to do so." Id . (citing Gallick v. Baltimore & Ohio R.R. Co. , 372 U.S. 108, 119 (1963)).
In this case, the jury's answers to special interrogatories at the liability and damages phases can be reasonably harmonized. Finding against Radius on all of Cutaia's liability theories, the jury next proceeded to follow the court's damages instruction to "determine an amount of money that you find to be justified by a preponderance of the evidence as full, just and reasonable compensation for all of the plaintiff's damages, no more and no less." Damages Jury Instructions, Dkt. # 306-1, at 3. Having awarded Cutaia his full measure of damages on the breach of contract count, the jury may well have reasonably concluded that to award additional amounts on the other counts would result in a duplicative recovery. In other words, it is reasonable to read the jury's damages award on the breach of contract claim not so much as undermining its liability verdict on the other claims as reflecting its decision that the $1, 762, 087.40 awarded on the breach of contract claim represents the full measure of compensatory damages for all six claims.
Other courts, faced with similar issues, have likewise reconciled the jury's responses to liability and damages interrogatories in multi-count cases. For example, in Allstate Ins. Co. v. Plambeck, No. 3:08CV388M, 2014 WL 1303000 (N.D. Tex. Mar. 31, 2014), the court rejected defendants' argument that a new trial was warranted because the jury's verdict was inconsistent and irreconcilable. In Plambeck, the jury found defendant liable on fraud, unjust enrichment and RICO claims, but only awarded damages for the RICO claim. The court rejected defendants' post-trial claim that the verdict could not be reconciled, citing the Fifth Circuit's decision in Holt Oil & Gas Corp. v. Harvey , 801 F.2d 773, 781 (5th Cir. 1986), as follows: "[W]e have no difficulty reconciling the jury's verdict in the instant case. The jury might well have concluded that Holt would unjustifiably receive a double recovery if damages were awarded under both theories of recovery." 2014 WL 130300, at *7. That reasoning applies equally to the jury's decision in this case. As such, the court will harmonize the jury's verdict by entering judgment for $1, 762, 087.40 on the breach of contract claim only. As will be explained in detail below, this damages award will fully compensate Cutaia for the damages he sustained.
In Virginia,  a successful plaintiff in a breach of contract case is entitled to recover those damages which are "the natural and direct result of the breach of the contract." Manss-Owens Co. v. H.S. Owens & Son , 129 Va. 183, 201, 105 S.E. 543, 549 (1921). "The object of the law in awarding damages is to make amends or reparations by putting the party injured in the same position, as far as money can do it, as he would have been if the contract had been performed." Lehigh Portland Cement Co. v. Va. S.S. Co. , 132 Va. 257, 270, 111 S.E. 104, 109 (1922). "Direct damages are those which arise naturally or ordinarily from a breach of contract and which, in the ordinary course of human experience, can be expected to result from the breach." Transdulles Ctr., Inc. v. USX Corp. , 976 F.2d 219, 226 (4th Cir. 1992) (citing Roanoke Hosp. Ass'n v. Doyle & Russell, Inc. , 215 Va. 796, 801, 214 S.E.2d 155, 160 (1975)). "The measure of direct damages is the cost to complete the contract according to its terms, or... the cost of repair to meet the contract terms." Id . (citing Lochaven Co. v. Master Pools By Shertle, Inc. , 233 Va. 537, 544, 357 S.E.2d 534, 538 (1987)). "Damages need not be established with mathematical certainty. Rather, a plaintiff is required only to furnish evidence of sufficient facts to permit the trier of fact to make an intelligent and probable estimate of the damages sustained." Taylor v. Flair Prop. Assoc. , 248 Va. 410, 414, 448 S.E.2d 413, 416 (1994).
Radius does not take issue with these well-established tenets of Virginia law, nor does it take issue with the court's damages jury instructions. Rather, Radius asserts that the $1.7 million verdict amounted to recoupment of Cutaia's out-of-pocket costs and, as such, was inconsistent with both Virginia law and the court's instructions. Radius argues that under the court's instructions, and consistent with Virginia law, the jury should have awarded ...