Summary
determining that trial judge's use of "variable gross profit" figures to calculate damages and grant remittitur was not improper where the judge found that loss "was equated to a loss of net profit," noting that while the result was likely inaccurate it was not likely to produce an excessive verdict
Summary of this case from Contract Design Grp., Inc. v. Wayne State Univ.Opinion
Docket No. 57200.
Decided May 29, 1984. Leave to appeal denied, 419 Mich ___.
van Benschoten, Hurlburt van Benschoten, P.C. (by Harvey E. van Benschoten), for plaintiff.
Dykema, Gossett, Spencer, Goodnow Trigg (by Donald E. Shely and Kathleen McCree Lewis), and Elmer W. Johnson, General Counsel (by Robert W. Culver and Lee A. Schutzman), of counsel, for defendant.
We granted plaintiff's application for rehearing to decide whether we erred in our initial opinion by holding that defendant was entitled to a new trial on the issue of damages. Upon rehearing, we conclude that we did err and affirm the decision of the trial court.
This was an action for breach of contract. Plaintiff alleged, and the jury must have found, that defendant drove plaintiff out of business by breaching its contract with him. The jury awarded plaintiff $4.5 million in damages. The trial court ordered a remittitur, GCR 1963, 527.6, to $2,867,160. This award was accepted by plaintiff who, however, cross-appealed from the decision to order remittitur. In our initial opinion, we sustained defendant's claim that it was error for the judge to rely on evidence which measured plaintiff's damages solely by reference to the lost profits of his wholly owned corporation.
Trial courts have a large measure of discretion in the matter of granting new trials and this Court will not interfere unless the abuse of that discretion is palpable. Moore v Spangler, 401 Mich. 360, 372; 258 N.W.2d 34 (1977). To warrant a new trial on damages, defendant had to show that the jury's verdict was clearly or grossly excessive. GCR 1963, 527.1(4). The trial judge had to carefully evaluate the evidence and decide whether any basis existed for the jury's verdict. Lewis v Detroit Automobile Inter-Ins Exchange, 90 Mich. App. 251, 256; 282 N.W.2d 794 (1979). Where damages are measured by fixed rules and principles, as in a contract action, the jury's verdict may be set aside as excessive where it can be concluded that the jury must have disregarded such rules and principles. Guzowski v Detroit Racing Ass'n, Inc, 130 Mich. App. 322, 328; 343 N.W.2d 536 (1983). See also 22 Am Jur 2d, Damages, § 370, p 477. Upon rehearing, we conclude that the trial judge did not palpably abuse his discretion by refusing to grant a new trial on the issue of damages. Even though we agree that the final award of damages was probably inaccurate, we cannot conclude that it was excessive.
The trial judge made numerous legal rulings in deciding to grant remittitur but not to grant a new trial. His determination to allow damages based on the testimony of economist John P. Henderson did not award any damages for the years 1968 and 1969. He also held that damages for the years 1979-1988 were too speculative to be determined. Of the three approaches to damages presented in evidence by plaintiff, he allowed that which proved the least damages. While certain deficiencies in the calculations of witness Henderson necessarily led to mistakes in the judge's calculation of allowable damages, these mistakes did not result in an excessive verdict after remittitur.
Admittedly, no evidence was presented showing the relationship of corporate profits to plaintiff's reasonable expectations as the sole owner of the corporation. No evidence was presented, however, indicating that equating corporate profits to benefits to the sole shareholder would inaccurately measure damages. In the circumstances of this case, it was not unfair to presume that benefits which flowed to the corporation would ultimately be received by plaintiff as its sole owner. Defendant presented no evidence to indicate otherwise.
We find defendant's arguments on this point unconvincing. Although a corporation has tax liability, defendant cannot be allowed to assert the rights of the tax collector in order to avoid liability for the damages it caused. Many of defendant's arguments concerning the corporation's failure to pay its debts, which led to receivership, which led to the compromise of the debts, are subject to the same objection: these are rights which belong to, and should be asserted by, another. The evidence presented at trial does not persuasively support defendant's claim that substantial reductions from the award of damages must be made in order to account for plaintiff's doing business in corporate form.
We specifically reject the claim that damages may be based only upon proof of actual distribution of bonuses and dividends to plaintiff. Plaintiff is entitled to damages based on all benefits which would have flowed to him through the corporate form absent defendant's breach of contract. Again, we find nothing in the evidence which indicated that such benefits were substantially less than corporate profits.
Defendant also claims that the use of "variable gross profit" figures to calculate damages was improper. In his opinion granting remittitur, the trial judge stated that this loss figure "was equated to a loss of net profit". We agree that this equation can be drawn without substantially overstating net profit. Although we find that this means of calculating damages is likely to be inaccurate, we do not believe that it is likely to produce an excessive verdict. If anything, the calculations of witness Henderson were designed to understate the loss of profits for the years to which they were applied.
In summary, we find that the method of ascertaining damages used by the trial judge was likely to understate the damages proven. The errors alleged to be inherent in the method of calculating damages used by witness Henderson would not result in an excessive verdict. The amount eventually awarded after remittitur was within the range of evidence presented by plaintiff. Because defendant presented no realistic evidence on the issue of damages, the trial judge was limited to considering those approaches advanced by plaintiff. Since he adopted an approach which did not result in excessive damages, we find no abuse of discretion.
Affirmed.
I respectfully dissent. I continue to adhere to the result and reasoning expressed in this Court's original opinion in this case, Davidson v General Motors Corp, 119 Mich. App. 730; 326 N.W.2d 625 (1982).