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Donald Kayser and Mary Kay Kayser v. Pam Jane Mcclary

June 22, 2012

DONALD KAYSER AND MARY KAY KAYSER, PLAINTIFFS,
v.
PAM JANE MCCLARY, DEFENDANT.



The opinion of the court was delivered by: Honorable Ronald E. Bush U. S. Magistrate Judge

MEMORANDUM DECISION AND ORDER RE: POST TRIAL MOTIONS

Currently pending before the Court are the following motions: (1) the Kaysers' Motion to Amend Judgment (Docket No. 148), (2) the Kaysers' Motion for an Award of Costs (Docket No. 151, Att. 1), (3) the Kaysers' Motion for an Award of Attorneys' Fees (Docket No. 152), and (4) McClary's Renewed Motion for Judgment as a Matter of Law and Alternative Motion to Alter or Amend the Judgment (Docket No. 153). Having carefully reviewed the record and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

I. BACKGROUND

Through their Second Amended Complaint, the Kaysers asserted the following substantive claims against McClary: (1) breach of contract, (2) tortious interference with contract, (3) trespass, and (4) quiet title/injunction. See Second Am. Compl. (Docket No. 69). Following a five-day jury trial in October 2011, the jury found that McClary's father, James McClary, was competent at the time he executed the underlying Grant of Easement and that there was valid consideration for that same Grant of Easement. See Special Verdict Form, p. 1 (Docket No. 145). In turn, the jury also found that McClary breached the Grant of Easement, trespassed upon the easement, and tortiously interfered with Plaintiff's contract to sell their property to the Richardsons -- all by constructing the at-issue fence. See id. at pp. 2-3.*fn1

Although finding that McClary breached the Grant of Easement and trespassed upon the easement by building the fence, the jury concluded that the Kaysers suffered no resulting damage on those claims. See id. However, the jury found that, in tortiously interfering with the Kaysers' contract to sell their property to the Richardsons, McClary damaged the Kaysers in the amount of $15,000. See id. at pp. 3-4. The jury additionally assessed punitive damages against McClary in the amount of $8,000. See id. at p. 4.

Through their Motion to Amend Judgment, the Kaysers ask that this Court quiet title to the Grant of Easement in their favor by decreeing the validity of the Grant of Easement; ordering McClary to remove the fence; and, permanently enjoining McClary from taking any action in violation of the Grant of Easement. See Mem. in Support of Mot. to Am. J., pp. 2, 5-9 (Docket No. 148, Att. 1). Separately, the Kaysers request that the punitive damages award be increased to an amount equal to their attorneys' fees. See id. at pp. 2, 9-13. In other motions, the Kaysers also seek to recover their litigation costs and attorneys' fees. See Mot. for an Award of Costs (Docket No. 151, Att. 1); Mot. for an Award of Attys' Fees (Docket No. 152).*fn2

McClary presents no directed opposition to the Kaysers' Motion to Amend Judgment, submitting instead a "Renewed Motion for Judgment as a Matter of Law or, alternatively,

Motion to Alter or Amend the Judgment" that naturally stands as a de facto opposition on its own. See Renewed Mot. for J. (Docket No. 153). Therein, McClary argues that the so-called Economic Loss Doctrine prohibits any recovery of economic losses under a tortious interference with contract theory and, therefore, the jury's $15,000 damage award was improper. See Mem. in Supp. of Renewed Mot. to Am. J., pp. 2, 4-10 (Docket No. 153, Att. 1). McClary further contends that the jury incorrectly found that the Grant of Easement was supported by valid consideration and, as such, argues that judgment should actually be entered in her favor. See id. at pp. 2, 10-15.

Because the Kaysers' post-trial requests for relief necessarily turn on the adequacy of the jury's verdict, McClary's Renewed Motion for Judgment as a Matter of Law/Motion to Alter or Amend the Judgment will be taken up first. If the verdict remains intact, the Court will then consider the Kaysers' Motion to Amend Judgment and related Motion for an Award of Costs and Motion for an Award of Attorneys' Fees.

II. DISCUSSION

A. McClary's Renewed Motion for Judgment as a Matter of Law and Alternative Motion to Alter or Amend the Judgment (Docket No. 153)

Presented orally at the close of the Kaysers' case-in-chief on October 6, 2011 and, later, through a formal filing, McClary made a Rule 50(a) Motion for Judgment as a Matter of Law. See Mot. for J. as a Matter of Law (Docket No. 138). At that time, McClary made two arguments: (1) the Kaysers' breach of contract claim (and, presumably, the Kaysers' other claims that are dependent upon the existence of a contract, i.e, the Grant of Easement) fails as a matter of law due to the absence of any consideration; and (2) the Kaysers' request for punitive damages should be stricken because there is no basis to support such a claim. See id. The Court denied the motion when it was raised during trial, and the jury returned a verdict in the Kaysers' favor. McClary now moves to renew her Motion for Judgment as a Matter of Law, pursuant to F.R.C.P. 50(b).

1. Legal Standard for Rule 50(b) Motion

Renewed motions for judgment as a matter of law are made pursuant to Rule 50(b), which states:

If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion. No later than 28 days after the entry of judgment -- or if the motion addresses a jury issue not decided by a verdict, no later than 28 days after the jury was discharged -- the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59. In ruling on the renewed motion, the court may:

(1) allow judgment on the verdict, if the jury returned a verdict;

(2) order a new trial; or

(3) direct entry of judgment as a matter of law.

Fed. R. Civ. P. 50(b).

"Pursuant to Rule 50 of the Federal Rules of Civil Procedure, a court may grant a motion for judgment as a matter of law . . . against a party on a claim or issue where the party has been 'fully heard on [that] issue during a jury trial' and the court finds that a 'reasonable jury would not have a legally sufficient evidentiary basis' to find for that party." Funai Elec. Co., Ltd. v. Daewoo Elecs. Corp., 593 F. Supp. 2d 1088, 1092-93 (N.D. Cal. 2009) (citing Fed. R. Civ. P. 50(a) & (b)). "Where a party moves for [a motion for judgment as a matter of law] in a case that has been tried to a jury, the court must determine whether 'there exists evidence of record upon which a jury might properly have returned a verdict in [the non-movant's] favor when the correct legal standard is applied.'" Id. (citations omitted). "The test is whether the evidence, construed in the light most favorable to the non[-]moving party, permits only one reasonable conclusion, and that conclusion is contrary to that of the jury." White v. Ford Motor Co., 312 F.3d 998, 1010 (9th Cir. 2002); see also E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009) ("We review a jury's verdict for substantial evidence in ruling on a properly made motion under Rule 50(b). . . . . The test applied is whether the evidence permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict."). Therefore, first, the court must determine the correct law; second, the court must review the jury's factual findings to determine whether they are supported by substantial evidence. See Funai Elec., 593 F. Supp. 2d at 1092 (citation omitted). While the jury's factual findings are given "substantial deference," the legal standards the jury applies are considered de novo to determine, as a matter of law, whether the correct standards have been used. Id. at 1092-93 (citation omitted).

A Rule 50(b) motion for judgment as a matter of law is not a freestanding motion; rather, it is a renewed Rule 50(a) motion. See Go Daddy, 581 F.3d at 961. That is, under Rule 50(a), a party must make a Rule 50(a) motion for judgment as a matter of law before a case is submitted to a jury and, if the judge denies or defers ruling on the motion, and the jury then returns a verdict against the moving party, the party may renew its motion under Rule 50(b). See id. "Because it is a renewed motion, a proper post-verdict Rule 50(b) motion is limited to the grounds asserted in the pre-deliberation Rule 50(a) motion." Id. "Thus, a party cannot properly raise arguments in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did not raise in its pre-verdict Rule 50(a) motion." Id; see also Fed. R. Civ. P. 50(b) Adv. Comm. Notes 1991 ("A post[-]trial motion for judgment can be granted only on grounds advanced in the pre-verdict motion."); Fed. R. Civ. P. 50(b) Adv. Comm. Notes 2006 ("Because the Rule 50(b) motion is only a renewal of the pre[-]verdict motion, it can be granted only on grounds advanced in the pre[-]verdict motion.").

Still, in ruling on a Rule 50(b) motion based on grounds not previously asserted in a Rule 50(a) motion, "'[courts] are limited to reviewing the jury's verdict for plain error, and should reverse only if such plain error would result in a manifest miscarriage of justice.'" Go Daddy, 581 F.3d at 961 (quoting Janes v. Wal-Mart Stores, Inc., 279 F.3d 883, 888 (9th Cir. 2002)). "'This exception . . . permits only extraordinarily deferential review that is limited to whether there was any evidence to support the jury's verdict.'" Go Daddy, 581 F.3d at 961 (quoting Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1109 (9th Cir. 2001)).

2. Idaho's Economic Loss Doctrine and Claims for Claims for Tortious Interference with Contract*fn3

McClary contends that Idaho's Economic Loss Doctrine "prohibits recovery of purely economic losses in tort" and, as such, "the jury should not have been instructed to award damages for Plaintiffs' [tortious interference with contract] claim." See Mem. in Supp. of Renewed Mot. to Am. J., pp. 4 & 9 (Docket No. 153, Att. 1). Such a description of the Idaho Economic Loss Doctrine, however, is overly broad.

As a general matter, absent personal injury or property damage, Idaho's Economic Loss Doctrine prohibits recovery of purely economic losses*fn4 in product liability cases and negligence cases.*fn5 However, having said this, Idaho has not extended the Economic Loss Doctrine's reach to all tort claims, as McClary contends, and specifically has not extended the application of the Doctrine to tortious interference with contract claims. See, e.g., Ramerth v. Hart, 133 Idaho 194, 197 (Idaho 1999) ("The economic loss rule applies to negligence cases in general; its application is not restricted to products liability cases."). There is no question that Idaho case law has, at times, contributed to this lack of certainty by loosely suggesting that economic losses are not recoverable "in tort" when addressing, for example, products liability actions and/or negligence claims generally. However, such generic references to a general rule stem from the fact that the issue almost always arises in products liability or more commonly-encountered tort claims. This case does not involve a commonly-encountered tort claim. Hence, such a characterization of the general rule does not necessarily mean that there are no exceptions to that rule. Indeed, McClary concedes that "Idaho courts have not dealt with the Economic Loss Doctrine in the context of tortious interference [with contract claims]." See Reply in Supp. of Mot. to Am. J., p. 5 (Docket No. 157).

In the Court's research, this precise issue has not been ruled upon by Idaho appellate courts. Nonetheless, other jurisdictions have ruled that the Economic Loss Doctrine does not necessarily bar the recovery of compensatory tort damages. See Giles v. Gen. Motors Acceptance Cop., 494 F.3d 865, 875-76 (9th Cir. 2007) (citing and quoting Grynberg v. Questar Pipeline Co., 70 P.3d 1, 11 (Utah 2003) ("[T]orts such as fraud and conversion exist to remedy purely economic losses.") (emphasis added); United Int'l Holdings, Inc. v. Wharf (Holdings) Ltd., 210 F.3d 1207, 1226 (10th Cir. 2000) (refusing to apply Economic Loss Doctrine because, under Colorado law, "the economic loss rule applies only to tort claims based on negligence, and only to some negligence claims.") (emphasis in original); EED Holdings v. Palmer Johnson Acquisition Corp., 387 F. Supp. 2d 265, 278-79 (S.D.N.Y. 2004) (allowing fraud claim to go forward because New York law permits recovery of economic loss on claims of fraud and fraud in the inducement even "in tandem" with contract claims); Indem. Ins. Co. of North America v. American Aviation, Inc., 891 So. 2d 532, 543, n.3 (Fla. 2004) (noting that "[i]ntentional tort claims such as fraud, conversion, intentional interference, civil theft, abuse of process, and other torts requiring proof of intent generally remain viable" despite Economic Loss Doctrine); Huron Tool & Eng'g Co. v. Precision Consulting Servs., Inc., 532 N.W.2d 541, 544 (Mich. Ct. App. 1995) (noting that torts outside the Economic Loss Doctrine's scope include defamation, misrepresentation, intentional misrepresentation, tortious interference with prospective economic advantage, intentional interference with contractual relations, and certain fraud in the inducement claims)); see also Santucci Constr. Co. v. Baxter & Woodman, Inc., 502 N.E.2d 1134, 1139 (Ill. App. Ct. 1987) (holding that claim for intentional interference with contract not barred by Economic Loss Doctrine because "the very interest protected by the torts of intentional interference with contractual relations and prospective advantage is the reasonable expectation of economic advantage, [therefore,] economic losses are the damages recoverable.").

In examining these decisions, the Court is persuaded by their logic and reasoning, and is further convinced that the Economic Loss Doctrine is not an outright bar to a tortious interference with contract claim for at least two reasons.

First, a claim for tortious interference with contract is intended to protect a party's economic interest in contractual relations. Accordingly, economic losses must be recoverable and it would not be sensible for the tort to be recognized under Idaho law on one hand, and then effectively eviscerated by application of the Economic Loss Doctrine on the other hand. See, e.g., Restatement (Second) of Torts § 774A (1979) ("One who is liable to another for interference with a contract or prospective contractual relation is liable for damages for the pecuniary loss of the benefits of the contract or the prospective relation [and] consequential losses for which the interference is a legal cause . . . ."); Restatement (Second) of Torts § 766 (1979) ("One who intentionally and improperly interferes with the performance of a contract . . . between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.").

Second, the very nature of a tortious interference with contract claim presumes that the parties are not in contractual privity with one another. Therefore, in the ordinary circumstance, the injured party has no recourse under contractual rights, and the tort claim may be all that is available, even though the injured party's damages are likely entirely or substantially economic damages in nature.

Thus, this Court finds that, if confronted with the instant question, the Idaho Supreme Court would conclude that the Economic Loss Doctrine does not outright bar the Kaysers' tortious interference with contract claim as McClary argues.*fn6 Therefore, McClary's Renewed Motion for Judgment as a Matter of Law and, alternatively, Motion to Amend or Alter the Judgment is denied in this respect.

3. Alleged Lack of Consideration for the Grant of Easement McClary re-incorporates the arguments from her previous Rule 50(a) Motion for Judgment as a Matter of Law (Docket No. 138), and argues that there was no consideration for the Grant of Easement. See Mem. in Supp. of Renewed Mot. to Am. J., pp. 10-15 (Docket No. 153, Att. 1) ("In this matter, Plaintiffs failed to provide any evidence of consideration for the easement agreement at issue. In fact, it is undisputed that no consideration was given for the January 11, 2000 easement agreement.") (emphasis in original).*fn7 The Court disagrees.

McClary admits that "there is a presumption of consideration when a document is written" but that "the presumption is rebuttable and non conclusive." See id. at p. 10 (citing I.C. § 29-103). McClary goes on to argue that "[e]very witness probed on the question of consideration freely admitted none was given for the Easement Agreement" and, "[t]hus, the jury had no evidentiary basis to support its finding that the easement was supported by consideration." See id. at p. 11. However, the parties to the Grant of Easement are no longer alive. Accordingly, there could be no true "admissions" as to what consideration was given, or whether consideration was given at all. Hence, all of the evidence as to such an issue, even in the form of testimony, was necessarily indirect or circumstantial, and the jury was charged with weighing such evidence in the context of the presumption of consideration that the law imposes upon the facts in this case. In other words, drawing all reasonable inferences in the Kaysers' favor as is required under Rule 50, the fact that no witness at trial was able to either confirm or deny the existence of consideration vis a vis the Grant of Easement is important only to establish just that: that non-parties to the Grant of Easement are understandably unaware of whether consideration existed, even though some witnesses described particular details of what they believed was the consideration for the Easement. Regardless, the fact that certain trial witnesses (who were not parties to the Grant of Easement) may have been unaware of the fact of any consideration is not conclusive on the issue of the existence of consideration, as McClary would contend.

Therefore, it cannot be said as a matter of law that there is no legally sufficient evidentiary basis for the jury to find for the Kaysers on the issue of consideration -- particularly given the acknowledged presumption in place. Therefore, McClarys' Renewed Motion for Judgment as a Matter of Law and, alternatively, Motion to Amend or Alter the Judgment is denied in this respect.

B. The Kaysers' Motion to Amend Judgment (Docket No. 148)

On October 12, 2011, consistent with the verdict of the jury, this Court entered a Judgment in favor of the Kaysers and against McClary in the amount of $23,000 ($15,000 attributable to McClary's tortious interference with contract and $8,000 in punitive damages). See J. (Docket No. 147). Within that Judgment, the Court added:

Additionally, if necessary, the Court will consider motions resolving Plaintiffs' Fourth Cause of Action -- Quiet Title/Injunction - consistent with the jury's Special Verdict. This Judgment may therefore be amended accordingly.

See id. at p. 2. The Kaysers' Motion to Amend Judgment seeks to finally resolve their quiet title/injunction claim, while also increasing the amount of punitive damages from $8,000 to at least the amount of their attorneys' fees.

1. Legal Standard for Rule 59(e) Motion

A court has "considerable discretion" in ruling upon a Rule 59(e) motion since specific grounds for a motion to amend or alter a judgment are not listed in the Rule. See McDowell v. Calderon, 197 F.3d 1253, 1255, n.1 (9th Cir. 1999). However, amending a judgment is "an extraordinary remedy which should be used sparingly." Id.

"In general, there are four basic grounds upon which a Rule 59(e) motion may be granted: (1) if such motion is necessary to correct manifest errors of law or fact upon which the judgment rests; (2) if such motion is necessary to present newly discovered or previously unavailable evidence; (3) if such motion is necessary to prevent manifest injustice; or (4) if the amendment is justified by an intervening change in controlling law." Allstate Ins. Co. V. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011).

2. The Kaysers' Quiet Title/Injunction Claim

The Kaysers' Quiet Title/Injunction claim is encapsulated within two paragraphs of the Kaysers' Second Amended Complaint:

Plaintiffs and their successors-in-interest in Plaintiffs' Property are entitled to the benefit of the Easement, are entitled to a decree confirming the validity of the Easement and enjoining Defendant ...


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