Mktg Des. Source, Inc. v. Pranda N.A., Inc., 93-699 (2000)

Citation: Not availableDocket: C.A. No. 93-699

Court: Superior Court of Rhode Island; November 1, 2000; Rhode Island; State Appellate Court

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Defendant Pranda North America, Inc. filed a motion for a new trial under Rule 59 of the Rhode Island Superior Court Rules of Civil Procedure following a jury verdict favoring plaintiff Marketing Design Source, Inc. (MDS). The case stems from an agency agreement executed on April 30, 1992, wherein MDS was engaged to act as an advertising agency for Pranda on two projects: 'Flyer' and 'Premiere.' The Flyer project involved producing a sales brochure for Pranda's independent sales representatives, which was delivered despite Pranda's refusal to pay the full amount upon delivery. Pranda paid MDS $84,026.20 for this project but retained the brochures after delivery. The Premiere project, which was unrelated to the Flyer project, was canceled by Pranda after partial payment for MDS's work.

MDS's complaint claimed that Pranda owed an outstanding balance for work on both projects, while Pranda counterclaimed that MDS's work on the Flyer project was defective and not fit for its intended purpose. The trial was conducted under relevant UCC provisions. The jury found in favor of MDS on both projects, determining that MDS had fulfilled its contractual obligations and calculating the outstanding balances owed as $45,012.80 for the Flyer project and $15,930 for the Premiere project.

Following the verdict, Pranda filed a motion for a new trial on broad grounds, asserting the verdict was against the law, evidence, and did not serve substantial justice. MDS objected to this motion. The court allowed time for both parties to submit memoranda regarding the motion, with the defendant submitting its memorandum on December 10, 1999, and MDS replying around October 13, 2000.

A motion for a new trial requires the trial justice to act as a super juror, independently evaluating the credibility of witnesses and the weight of evidence. If the evidence is evenly balanced or reasonable minds could differ, the verdict stands. However, if the jury's verdict is found to be against the preponderance of the evidence and does not achieve substantial justice, the motion must be granted. The trial justice should reference specific facts guiding their decision to allow for appellate review but cannot replace the jury's conclusions merely based on a different interpretation of the evidence. 

Under Rule 59 of the Superior Court Rules of Civil Procedure, errors of law by the trial justice can be raised in a new trial motion, with the 1995 amendment broadening the grounds for such motions to align with federal standards. An error of law constitutes an abuse of discretion, reviewed de novo by the appellate court. When the motion claims the verdict contradicts the law, the question is whether the jury followed the trial justice's instructions. If the verdict does not align with the law as instructed, it should be set aside.

For a motion for judgment as a matter of law under Rule 50, the trial justice must view evidence favorably towards the nonmoving party, making no credibility assessments and drawing all reasonable inferences in their favor.

Reasonable inferences must be based on more than mere conjecture or speculation, as established in Long v. Atlantic PBS, Inc. In cases where no reasonable jury could favor the nonmoving party, the motion should be granted, while factual issues that allow for differing reasonable conclusions must go to the jury. The defendant argues that the court incorrectly granted the plaintiff's motion for judgment regarding the defendant's counterclaim, which sought damages of $84,026.20 for alleged breaches of agreement related to the quality of brochures. The defendant claims evidence indicates that sales representatives found the brochures unusable, supported by testimony from Paul Oristaglio, Pranda's Vice President, who noted Pranda's dissatisfaction with the brochure quality and the sales representatives' review at a trade show. However, there was no direct evidence from the sales representatives to confirm the brochures' unusability. Despite some evidence suggesting the brochures were not used, the record lacked clarity on their usability. Consequently, there was insufficient evidence for a jury to support the defendant's counterclaim. 

Additionally, Pranda contends that MDS admitted its work was substandard, yet the evidence did not substantiate claims that MDS acknowledged the brochures were unmerchantable or unfit for their intended purpose. Testimony indicated that Pranda authorized MDS to print the brochures despite known quality issues and later refused payment upon delivery, retaining the brochures. These circumstances leave room for differing interpretations regarding whether Pranda waived any warranties or if the nonuse of the brochures indicated they were unmerchantable or unfit for purpose. Therefore, the court's denial of the defendant's motion for judgment as a matter of law was justified based on the evidence presented.

The defendant argues for a new trial based on count two of the plaintiff's complaint concerning damages from the cancellation of the Premiere project. Pranda asserts that the application of the kill fee clause, outlined in an agreement dated April 30, 1992, is essential to the plaintiff's claim and that MDS's failure to provide documentary evidence of this plan undermines their case. Pranda cites the statute of frauds as a defense, claiming it should lead to the dismissal of count two. However, the agreement specifies that a 50% kill fee applies to elements initiated and then halted by Pranda, and the plaintiff provided a Client Call Report dated May 18, 1992, which supports their claim by detailing project approvals and responsibilities. Testimony indicated that Pranda canceled the project, and evidence demonstrated the agreement's kill fee clause and MDS's performance. The court found that the burden to prove the statute of frauds lies with the defendant, who failed to establish it barred the plaintiff's claim. Consequently, reasonable evidence supported a breach of contract claim, leading to the denial of the defendant's motion for judgment on count two.

Additionally, Pranda challenges the sufficiency of evidence for the damages awarded, arguing they were excessive and that the inclusion of eighteen percent interest lacked support. Pranda contends MDS was required to hold contract-related goods under UCC 2-709, asserting that any judgment without proof of disposition of these goods is excessive. However, the court upheld the plaintiff's objection to Pranda's proposed jury instruction regarding UCC 2-709, which became binding. Testimony indicated the original budget for the Flyer project was $92,825, with evidence of authorized increases leading to a final cost of $129,039, reflecting incremental budget increases acknowledged by both parties.

A contract was established between the parties, which was subsequently modified, and the plaintiff fully performed under its terms. The jury awarded $45,012.80, calculated as $129,039 minus a payment of $84,026.20 made by Pranda. A damage award can only be set aside if it is deemed excessive, influenced by bias, or based on erroneous assessments of compensation. The court found the jury's award reasonable and not shocking to the conscience. The contract stipulated a 1.5% monthly interest on overdue invoices, which the defendant contested, claiming it did not apply to the Flyer program. However, the defendant did not dispute the plaintiff's testimony regarding the agreement's applicability, and supporting documentation confirmed that a 1.5% interest charge was appropriate for balances over 30 days. The court upheld the interest award as aligned with the agreement and rejected the defendant's claims of lack of evidentiary support. Additionally, the court found sufficient credible evidence to affirm the jury's verdict and denied the defendant's motion for a new trial. A hearing will be scheduled to enter judgment. Various references to trial transcripts and evidence were noted, but specific transcripts were not provided for the court's consideration regarding the motion for a new trial. The defendant's arguments primarily targeted the Flyer project, while evidence also indicated budget increases for the Premiere project, which were approved by Pranda's agents.