896 F2d 555 Beaver Insurance Company v. Burroughs Corporation

896 F.2d 555

Unpublished Disposition

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

BEAVER INSURANCE COMPANY, Plaintiff-Appellee, Cross-Appellant,
BURROUGHS CORPORATION, Defendant-Appellant, Cross-Appellee.

Nos. 85-2121, 85-2223.

United States Court of Appeals, Ninth Circuit.

Feb. 28, 1990.

Before GOODWIN, SCHROEDER and BEEZER, Circuit Judges.

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I. Introduction


This is a suit by Beaver Insurance Company against Burroughs Corporation, a computer manufacturer, for breach of contract, fraud and negligence arising out of the lease of a Burroughs B-800 computer to Beaver. The jury found fraudulent conduct and assessed damages against Burroughs. Burroughs appeals.


The principal issues concern whether the district court should have ordered a new trial or entered judgment in Burroughs' favor because of inconsistencies between the jury's original verdict and the verdict which it returned after resubmission; whether there was evidence of fraud to support the jury's verdict; and whether there were reversible errors in the admission of certain evidence.

II. The Verdicts


The jury was originally instructed that in order to find for Beaver on the fraud claim, an essential element of the cause of action was that Beaver sustained actual damage, and that in order to award punitive damages, a finding of actual damages was necessary. The jury retired to deliberate and that afternoon returned a verdict finding in favor of Burroughs on the breach of warranty and negligence claims and in favor of Beaver on the fraud and breach of contract claims. The jury awarded "zero dollars" in "ordinary damages" and $872,500 in "punitive damages" on the fraud claim, and $14,000 on the breach of contract claim.


Counsel for Burroughs indicated to the court that the punitive damage award appeared to be improper, because an award of actual damages was necessary to support an award of punitive damages. The trial court agreed and asked the jurors to return on the following day. The court told the jury that their verdict was "inconsistent" because "the plaintiff may not recover punitive damages unless they suffer actual injury" and that it was not clear from the "zero dollar" ordinary damage award "whether you found that Beaver incurred no actual damage ... or whether you found ... that the amount of damages suffered were not computable ... [a]nd perhaps there is a third explanation which doesn't occur to the court." The court went on to emphasize that Beaver was not entitled to punitive damages unless it incurred actual damages but that it was not necessary for the jury to have been able to put a dollar amount on those damages. Burroughs immediately objected to the reinstruction and moved for a mistrial, which was denied.


The jury retired for further deliberations and returned later that day with a revised verdict. It did not alter its findings on negligence, warranty or breach of contract, but on the fraud cause of action indicated $785,300 ordinary damages and changed the punitive damage award to zero dollars. The trial court thereafter entered judgment in accordance with the revised verdict and Burroughs filed motions for JNOV, new trial and to alter and amend the judgment. These were denied, and Burroughs appeals.


Burroughs argues that the first verdict should be regarded as a conclusive finding by the jury that the plaintiff suffered no actual damages, and that the district court abused its discretion in resubmitting the case to the jury because of possible jury confusion. There was no abuse of discretion. The problem in the case appears to be a problem of labeling giving rise to confusion. The original verdict form did not refer to "actual" damages, which wording would have conformed to the instructions, but referred instead to "ordinary" damages. This is not a case in which the jury found there were no damages, despite a finding of wrong doing. Contrast Philippine National Oil Co. v. Garrett Corp., 724 F.2d 803 (9th Cir.1984). The jury here did award damages, but erroneously labeled them "punitive." This thus is a case of jury confusion.

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Burroughs also contends that the jury must have meant to impose punitive rather than actual damages, because the figure eventually chosen approximated one day of Burroughs' pre-tax profits. The figure chosen, however, is actually closer to the amount of damages Beaver requested, as adjusted upward by Beaver's expert witness' testimony that the figure was accurate to within ten to fifteen per cent.


Burroughs also contends that the two verdicts are irreconcilably inconsistent, and that at the very least the district court should have granted the motion for new trial. Courts should make every reasonable effort to reconcile inconsistent verdicts. See Los Angeles Nut House v. Holiday Hardware Corp., 825 F.2d 1351, 1353-54 (9th Cir.1987) ("When there is an inconsistency between a general verdict and a written interrogatory, if reasonably possible we resolve the inconsistency in favor of sustaining the judgment."); Omar v. Sea-Land Service, Inc., 813 F.2d 986, 991 (9th Cir.1987) (with respect to inconsistent special verdicts, the jury verdict must be upheld unless it is impossible to harmonize the answers under a fair reading). We agree with the district court that a fair reading of the two verdicts renders them reconcilable viewed in light of the district court's subsequent explanation and instructions to the jury on resubmission of the inconsistency in the original verdict.

III. Sufficiency of the Evidence


Burroughs argues that there was no evidence presented demonstrating "specific misrepresentations by identified individuals."


As to Burroughs' first claim, Beaver offered evidence that the B-800 was advertised as having multiprogramming ability, and that Burroughs had knowledge that the file lockout system made this claim false. Further, Beaver introduced evidence that it relied upon Burroughs' representations and suffered damage. Similar showings were made concerning the speed of the machine, and the limited multi-terminal capabilities. Although Burroughs' characterization of the situation as resulting from Beaver's misunderstandings about the system and Beaver's high rate of growth might have garnered sympathy, it was not unreasonable for the jury to reach the conclusion it did.


Burroughs also contends that even if fraud had been proved, Beaver did not make any showing of actual damages because Burroughs demonstrated that the B-800 actually saved Beaver a great deal of money. Even if it were true, however, that the computer handled all the functions of the service bureau previously utilized by Beaver, that showing does not negate the possibility of any actual damages. Beaver's theory of the case was that there were misrepresentations in connection with the capacity of the computer to handle additional work.


Burroughs challenges the expert testimony of Mr. Barone on damages, claiming that his testimony was improperly based on speculation and conjecture. Fed.R.Evid. 703 allows experts to base opinions upon firsthand observations and upon testimony at trial. Apparently this expert conducted interviews with Beaver employees to determine the economic effect that Burroughs' representations made. We see no basis for holding that there was abuse of the broad discretion granted district court judges in the admission of expert evidence. See United States v. Stewart, 770 F.2d 825, 831 (9th Cir.1985), cert. denied, 474 U.S. 1103 (1986).


IV. The Admission of Highly Inflammatory and Irrelevant Evidence of Burroughs' Products


Burroughs complains that Beaver was erroneously permitted to poison the trial with inadmissible evidence. For example, Burroughs argues that the testimony of a former Burroughs employee, August Shima, concerning an "OPM hotline," was inadmissible because of a lack of connection between Beaver and the "OPM" product. However, the record indicates that virtually every objection made by Burroughs' counsel to Shima's testimony was sustained by the court or conceded by Beaver's counsel. Moreover, Burroughs' counsel was permitted to cross-examine the witness and reveal weaknesses in his testimony. There was no error in the admission of the evidence that the jury was permitted to consider.


Burroughs also complains that Beaver was allowed to introduce a number of Burroughs' documents concerning B-800 hardware and system software problems without demonstrating a connection to Beaver. The pre-trial statements of both parties identify as a disputed fact "whether Burroughs ... concealed a material fact of which it was aware...." Counsel for Burroughs also alluded to the errors as being mistakes in his argument to the jury. Therefore, this evidence was properly admitted under Federal Rule of Evidence 404(b), which allows the admissibility of evidence of other conduct to prove the absence of mistake.


Burroughs also complains that evidence was erroneously introduced concerning the B-900, a different line of computer. However, P-Exhibit 125 refers to both the B-900, and the B-800. The memo states that field personnel had noted "the lack of narrative description of the B-800 System Dump" and questioned, "what are the current reliability grievances against the B-776/800 product. (They are only going to escalate with time)?" There was no prejudicial reliance by Beaver on evidence concerning the B-900. Therefore this evidence was properly admitted.




This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3