Park Electrochemical Corp. v. Delco Electronics Corp.

Citation: 65 F. App'x 602Docket: Nos. 01-15326, 01-15690

Court: Court of Appeals for the Ninth Circuit; May 7, 2003; Federal Appellate Court

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The jury verdicts are affirmed, including the denial of Nelco's attorneys' fees, but the denial of Nelco's costs is reversed. The district court's refusal to modify the jury instructions on the breach of contract claim did not prejudice Nelco, as the requested modification essentially reiterated information already present in the instructions. Consequently, no new trial is warranted due to instructional error.

Delco's argument against liability on the good faith claim, based on the jury's finding in favor of Delco on the breach of contract claim, involves two issues. First, Delco contends there was an instructional error in submitting distinct instructions for both claims. However, Delco did not object to the good faith instruction and even proposed it, thus waiving any claim of error.

Second, regarding inconsistent verdicts, the court does not need to decide whether Delco waived its right to object, as the inconsistency claim fails. The court must uphold jury verdicts if they can be reconciled with any reasonable theory consistent with the evidence. The breach of contract instruction allowed for the possibility that Delco breached by closing its circuit board plant, while the good faith instruction required that neither party hinder the other's contractual benefits. The jury could have reasonably concluded that Delco acted in bad faith regarding the timing of its plant closure notice to Nelco, which was given only three months before the last order, despite an earlier decision to close the plant. Evidence suggested that a longer transition period was warranted.

Evidence indicated that Nelco experienced damages due to a shortened transition period, as Nelco witness Smoot testified that efforts to secure alternate customers did not commence until late 1997. Delco criticized Nelco for inadequate preparation for the potential closure of CBF. However, the jury could reasonably attribute much of the blame to Delco for its failure to provide timely notice of the closure. An internal document from Nelco reflected that upon learning of the closure, they had to urgently retool their operations and shift focus, yet Delco’s economist noted that Nelco successfully replaced a significant portion of the lost business. The jury could infer that with proper notice, Nelco might have mitigated its losses sooner, justifying an award for lost profits during the period without Delco orders or replacement business. The jury's award was significantly less than Nelco’s $56 million request, aligning with the jury's findings.

The verdict regarding the breach of good faith was consistent with Delco's defense against Nelco’s negligent misrepresentation claim, which centered on Delco’s obligation to disclose material facts prior to the extension agreement. A contract party must disclose facts if aware that the other party is entering under a mistaken belief about essential facts. Even if the district court erred by not providing a limiting instruction on certain pre-agreement oral promises or by excluding evidence about Delco’s Flint plant operations, these errors were deemed harmless. The jury sided with Delco on pre-extension conduct claims, indicating no prejudice against Delco. Furthermore, there was no prejudicial error in the exclusion of testimony that could have summarized factors affecting damage estimates, as the jury was capable of evaluating the evidence independently. Overall, none of Delco’s evidentiary objections warranted a new trial or extensive discussion.

The district court erred by denying Nelco's request for costs, as it has no discretion to do so under Arizona law, which mandates that costs be awarded to the prevailing party unless justified otherwise. Federal Rule of Civil Procedure 54(d)(1) similarly establishes a presumption in favor of awarding costs, which the court failed to justify despite Nelco's substantial victory of over $32 million in damages. The court's reasoning, focusing on Nelco's limited success on claims, mischaracterized the nature of its victory. Conversely, the court did not err in denying Nelco's request for attorneys’ fees, as Arizona law grants courts broad discretion in such matters. The court appropriately considered relevant factors, even if it did not analyze each one individually, and its decision to deny the fees was upheld. The verdicts are affirmed, the denial of attorneys’ fees is affirmed, but the denial of costs is reversed and remanded for further proceedings. This ruling is not to be published or cited except under specific Ninth Circuit rules.