United States District Court, W.D. Wisconsin
OPINION AND ORDER
WILLIAM M. CONLEY DISTRICT JUDGE.
found in favor of plaintiff GQ Sand, LLC, on breach of
contract and tortious interference claims asserted against
defendants Range Management Systems, LLC ("RMS")
and NEJGID, LLC, and awarded total damages of $934, 400.
(Dkt. ##285, 286.) After accounting for the amount plaintiff
received from a settling defendant, the court entered final
judgment in its favor. (Dkt. #289.) Before the court are a
number of post-judgment motions. In the first motion,
defendants move for judgment as a matter of law under Federal
Rule of Civil Procedure 50(b) and for a new trial under Rule
59. (Dkt. #303.) That motion will be denied in its entirety
because the court finds that (1) defendants waived certain of
these challenges by failing to raise them in a Rule 50(a)
motion; and (2) as to those challenges that were preserved,
the jury's verdict is supported by a sufficient
second motion, plaintiff seeks an order holding defendants
and their counsel in civil contempt based on defendants'
disclosed confidential information subject to the court's
protective order to third parties and used that information
for a purpose unrelated to this litigation. (Dkt. #330.)
While the court finds that defendants' sole member, Cody
Lyon, and defendants' counsel, Attorney Kolten Jennings
with the law firm Puis Haney, PLLC, violated the court's
protective order, it is uncertain whether GQ Sand suffered
any loss. Whether plaintiff was actually injured by the
disclosures ends up being a moot issue, since the relief that
plaintiff seeks is the same as that requested in itss own
motion to alter or amend the judgment, asking that the court
not reduce the judgment by any anticipated payment
by the settling defendant with an assignment of a credit,
since both the assignment itself and the amount of any
assignment remain uncertain. (Dkt. #290.) For the court will
grant this motion, finding that since the court was
apparently mistaken in reducing the jury's award of
damages for tortious interference with the Sand Supply
Agreement in light of the uncertainty of that payment, the
court will grant both of plaintiff's motion and the
requested relief in the form of entry of the corrected amount
as reflected in the order below.
plaintiffs move for attorneys' fees as contemplated under
the Rail Delivery Agreement and costs for the prevailing
party. (Dkt. ##293, 294.) Having found defendant Range
Management Systems breached that agreement, the court will
grant that motion as well, including supplementing the award
to reflect fees accrued post-judgment. (See dkt.
#353.) Relatedly, plaintiff's unopposed bill of costs is
well-documented and limited to approved categories of
expenses. Accordingly, the court will further award plaintiff
its costs against both defendants.
GQ Sand brought this civil action against defendants Conley
Bulk Services, LLC, RMS and NEJGID, arising out of a
multi-million dollar frac sand deal gone awry. All defendants
in turn filed counterclaims against plaintiff, while NEJGID
also asserted a cross-claim against Conley. The parties'
disputes involve two, core agreements: a Sand Supply
Agreement ("Supply Agreement" or "SSA")
between GQ Sand and Conley; and a Rail Delivery Agreement
("Delivery Agreement" or "RDA") between
GQ Sand and RMS. NEJGID's manager Carl Hudspeth played an
intermediary role in establishing the Supply Agreement. Then
at some point in 2015, after the events at issue in this
action, RMS's sole member, Cody Lyon, purchased NEJGID
from Hudspeth. In addition to the breach of contract claims,
plaintiff also asserted various tortious interference with a
contract claims and a civil conspiracy claim.
eve of trial, Conley and GQ Sand settled their cross-claims,
leaving only plaintiff GQ Sand's claims against
defendants NEJGID and RMS. At trial, the jury returned a
liability verdict in favor of GQ Sand, finding that defendant
RMS breached the Delivery Agreement (or RDA) and tortiously
interfered with both the Supply Agreement (or SSA), and that
NEGJID tortiously interfered with both agreements. (Liability
Verdict (dkt. #285).) After the damage phase, the jury
further awarded plaintiff: $45, 000 in compensatory damages
against RMS for breach of contract, $772, 200 in compensatory
damages against both defendants for tortious interference
with the SSA, and $77, 200 in compensatory damages against
NEJGID for tortious interference with the RDA. (Damages
Verdict (dkt. #286).)
Defendants NEJGID and RMS's Motion for Judgment as a
Matter of Law (dkt. #303)
Rule 50, judgment may be granted as a matter of law where
there is no "legally sufficient evidentiary basis"
to uphold the jury's verdict on that issue. Fed.R.Civ.P.
50(a). In reviewing a Rule 50 motion, the court will
"examine the evidence presented, combined with any
reasonably drawn inferences, and determine whether that
evidence sufficiently supports the verdict when viewed in the
light most favorable to the non-moving party, " which in
this case, is the plaintiff GQ Sand. E.E.O.C. v.
AutoZone, Inc., 707 F.3d 824, 835 (7th Cir. 2013).
particular, the court will not make credibility
determinations or weigh the evidence. Rather, the court must
assure that more than "a mere scintilla of
evidence" supports the verdict, Hossack v. Floor
Covering Assocs. of Joliet, Inc., 492 F.3d 853, 859 (7th
Cir. 2007). reversing "only if no rational jury could
have found for the prevailing party." AutoZone,
Inc., 707 F.3d at 835. Moreover, "[b]ecause the
Rule 50(b) motion is only a renewal of the preverdict motion,
it can be granted only on grounds advanced in the preverdict
motion." Wallace v. McGlothan, 606 F.3d 410,
418 (7th Cir. 2010); see also Thompson v. Mem'l Hosp.
of Carbondale, 625 F.3d 394, 407 (7th Cir. 2010)
(refusing to consider the defendant's argument that
plaintiff failed to demonstrate that he suffered an adverse
employment action, in part, because the defendant did not
raise argument in Rule 50(a) motion); Fed.R.Civ.P. 50 cmt.
1991 Amendments ("A post-trial motion for judgment can
be granted only on grounds advanced in the pre-verdict
also move for a new trial under Rule 59, which "may be
granted only if the jury's verdict is against the
manifest weight of the evidence." King v.
Harrington, 447 F.3d 531, 534 (7th Cir. 2006)
(citing ABM Marking, Inc. v. Zanasi Fratelli,
S.R.L., 353 F.3d 541, 545 (7th Cir. 2003)). To meet this
standard, defendants must demonstrate that no rational jury
could have rendered a verdict against them. See
King, 447 F.3d at 534 (citing Woodward v. Corr. Med.
Servs. of III, Inc., 368 F.3d 917, 926 (7th Cir. 2004)).
In making this evaluation, the court must view the evidence
in a light most favorable to plaintiff, leaving issues of
credibility and weight of evidence to the jury.
King, 447 F.3d at 534. "The court must sustain
the verdict where a 'reasonable basis' exists in the
record to support the outcome." Id. (quoting
Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir.
cannot overcome these high hurdles. First,
defendants argue that "[t]he evidence is legally
insufficient to support the verdict rendered by the jury in
regards to RMS breaching the RDA as it was void from the
onset because it was impossible to perform." (Defs.'
Mot. (dkt. #303) ¶ 15.) More specifically, defendants
contend that RMS could not have performed the terms of the
contract because the Allied Rail Terminal in Tomah,
Wisconsin, could not accept railcars. RMS made the same
arguments in its motion for summary judgment, which the court
also rejected. (6/10/16 Op. &l Order (dkt. #221) 28-32.)
Defendants similarly raised a challenge to the breach of
contract claim based on impossibility in their Rule 50(a)
motion. (6/28/16 Trial Tr. (dkt. #301) 126-27.) Consistent
with the law, the jury was instructed that: "If
performance of a promise is impossible because of a state of
facts existing when the contract was made and the promisor
had no knowledge or reason to know of such facts, there is no
duty to perform." (Jury Instr. (dkt. #282) 5.) See
also Scherrer Construction Co. v. Burlington Mem'l
Hosp., 64 Wis.2d 720, 733, 221 N.W.2d 855 (1974)
("[A] promise imposes no duty if performance of the
promise is impossible because of facts existing when the
promise is made of which the promiser neither knows nor has
reason to know.").
GQ Sand presented more than sufficient evidence from which a
jury could reasonably reject this impossibility defense. For
example, GQ Sand points to evidence that it specifically
relied on the sand supplier WWS's representation that the
Allied Terminal could receive 20 covered hopper rail cars.
(Pl.'s Opp'n (dkt. #324) 6-7.) Plaintiff GQ Sand also
presented evidence that RMS was the party with an account
with the Union Pacific ("UP") railroad and knew of
the plan to use the Allied Terminal a week before the
execution of the RDA, providing ample time for RMS to confirm
the viability of that terminal. (Id. at 7.)
further presented evidence that RMS learned of the
unavailability of the Allied Terminal (at least initially and
at the full 20 car requirement) within one hour of signing
the RDA, yet failed to inform GQ Sand. (Id. at 8.)
The evidence also demonstrated that RMS continued to assure
GQ Sand the cars were being released and moved into position,
even though the cars were never in Wisconsin, or at least a
reasonable jury could so find. (Id. at 8.) Finally,
plaintiff presented evidence demonstrating that even after UP
approved delivery of 10 cars to the Allied Terminal, RMS
still failed to produce those cars.
motion to dismiss also ignores the fact that plaintiff
alleged, and the court instructed, on a breach of duty of
good faith and fair dealing, which was part of the breach of
contract verdict question. The jury was instructed that
"[a] contracting party can breach the duty of good faith
even if it did not violate any express term of the
contract." (Jury Instr. (dkt. #282) 4.) Consistent with
this claim, plaintiff presented compelling evidence of: (1)
RMS's acceptance of the security deposit and other
payments; (2) RMS's failure to inform plaintiff of
difficulty it encountered in performing the contract,
repeatedly assuring that the railcars were moving into
position; and (3) RMS's assent to the change of location
to Hixton and continued failure to perform. This evidence was
more than sufficient to support the jury's finding of a
breach of duty of good faith and fair dealing.
further argue that the submission of a jury instruction on
modification of contract by conduct was "improper"
because the RDA's express terms required any amendment to
the agreement to be in writing. (Defs.' Mot. (dkt. #30)
¶¶ 21-22.) As an initial matter, defendants failed
to raise any objection to this instruction at any point, thus
waiving it. (Pl.'s Opp'n (dkt. #324) 9-10.)
Tellingly, defendants also failed to respond to
plaintiff's waiver argument in their reply, presumably
conceding that they have no basis to object to the
instruction at this late date. Regardless, the court finds no
error in giving a modification by conduct instruction,
especially when viewed in light of the waiver of strict
performance instruction, which permitted the jury to find
waiver of contractual provisions -- including the written
amendment requirement -- either "expressly or . . .
inferred from the conduct of the parties." (Jury Instr.
(dkt. #282) 4-5.) See also Royster-Clark, Inc. v.
Olsen's Mill Inc., 2006 WI 46, ¶¶ 3,
46-48, 290 Wis.2d 264, 714 N.W.2d 530 (holding that contracts
with unambiguous provisions requiring written modification
could be modified by an oral agreement of the parties). As
such, the court rejects defendants' motion for either
judgment as a matter of law or a new trial on the jury's
finding that RMS breached the RDA.
defendants challenge the jury's finding that both RMS and
NEJGID tortiously interfered with the Sand Supply Agreement
between GQ Sand and Conley. In support of their motion,
defendants contend that: (1) the SSA was impossible to
perform; and (2) Conley terminated the contract unilaterally.
(Defs.' Mot. (dkt. #303) ¶ 22.) As plaintiff points
out, defendants again failed to move for directed verdict on
this claim, instead solely moving on the breach of contract
claim. (See 6/28/16 Trial Tr. (dkt. #301) 126-27
(limiting Rule 50(a) motion to breach of contract claim).)
Defendant similarly failed to address this waiver argument in
their reply brief, again apparently conceding that their Rule
50(b) challenge is not proper. See Wallace, 606 F.3d
preserved, defendants failed to present any evidence or
argument to the jury in support of their claim that the
plaintiff's performance on the SSA was impossible given
the timing of sand deliveries. As for any argument based on
the sand quality, GQ Sand presented sufficient evidence from
which a reasonable jury could find that the sand met the
required specifications. Regardless, defendants'
challenge does not directly address the jury's
determination that defendants interfered with the SSA;
instead, defendants' argument that plaintiff could not
have performed the contract terms would only be relevant to
the jury's determination that ...