PALAZZETTI IMPORT/EXPORT INC. v. MORSON

Full title: PALAZZETTI IMPORT/EXPORT, INC., Plaintiff, v. GREGORY P. MORSON and THE…

Court: United States District Court, S.D. New York

Date published: Dec 6, 2001

98 Civ. 722 (FM) (S.D.N.Y. Dec. 6, 2001)

Opinion

98 Civ. 722 (FM)

December 6, 2001

MEMORANDUM OPINION AND ORDER

FRANK MAAS, United States Magistrate Judge.

I. Introduction

This breach of contract action arises out of a licensing agreement pursuant to which plaintiff Palazzetti Import/Export, Inc.¹ licensed defendant Gregory P. Morson² to use the "Palazzetti" name in connection with a furniture store in Boston, Massachusetts. The case was tried before a jury over the course of three days, commencing on July 16, 2001. Following several hours of deliberations, the jury returned a verdict in favor of Palazzetti in the amount of $1,661,981.

1 Plaintiff Palazzetti Import/Export, Inc. is hereinafter referred to as "Palazzetti."

2 The defendants hereinafter are referred to collectively as the "Defendants," Gregory P. Morson as "Mr. Morson," and The Morson Group, d/b/a "The Morson Collection," as "The Morson Group."

The Defendants have now moved for judgment as a matter of law ("JMOL") under Rule 50(b), or, in the alternative, a new trial under Rule 59, of the Federal Rules of Civil Procedure. For the reasons set forth below, I have determined that both motions should be denied. The Clerk of the Court is therefore directed to enter judgment against the Defendants consistent with this Memorandum Opinion and Order and close this case.

II. Factual and Procedural History A. Palazzetti

Palazzetti is a corporation engaged in the business of importing furniture for sale to architects, decorators, and retail customers through furniture showrooms. (Tr. 27-33).³ The Palazzetti collection consists of high-end "modern classic" furniture created by "famous designers" during the period from 1900 through 1950. (Id. at 28).

3 "Tr." refers to the uncertified draft transcript of the trial furnished to the Court by Palazzetti as part of its opposition papers.

Following the opening of its first showroom in New York City in 1982, Palazzetti has, at various times, operated showrooms in several cities, primarily in the Northeast, but also in Texas and California. (Id. at 30-48). By the time of the trial, the Palazzetti empire had been reduced to one showroom in New York City and another in Manhassett, New York. Except for a showroom operated by the Defendants in Boston, all of the Palazzetti showrooms in the United States were either wholly owned or controlled by Palazzetti's principal, Sergio Palazzetti.⁴

4 Sergio Palazzetti is hereinafter referred to as "Mr. Palazzetti."

B. The "Boutique" License

In the spring of 1994, Mr. Morson's then fiance, Carolyn Hontoria, began working for Palazzetti as a salesperson in the New York showroom. (Id. at 150, 253). She and Mr. Morson subsequently spoke with Mr. Palazzetti about opening a Palazzetti store in Boston. (Id. at 217-18, 254-56). Those discussions led to a July 18, 1995 "Palazzetti Boutique License" agreement between Palazzetti and Mr. Morson ("License"), pursuant to which Mr. Morson (or a corporate assignee that he controlled) was granted the right to use the Palazzetti name for a furniture store in the Boston metropolitan area for a period of ten years, commencing with the opening of the store. (License §§ 2, 4, 5, 11). The License granted Mr. Morson exclusivity in that area. (Id. § 13).

In exchange for the License, Mr. Morson agreed to pay an initial fee of $100,000. (Id. § 3). Mr. Morson also agreed that the majority of the inventory on the showroom floor and no less than sixty percent of the Boston store's annual sales would be derived from Palazzetti's product line, which was to be offered to Mr. Morson or his assignee "at wholesale costs no greater than those amounts charged to all other retail establishments." (Id. §§ 6, 10). As a consequence, in addition to the $100,000 fee, the License afforded Palazzetti the opportunity to realize substantial additional income based upon its sales of furniture to Mr. Morson or his assignee.

The License gave Mr. Morson or his assignee the right to renew for additional ten-year periods, with the renewal fee fixed as "an amount equal to one and one half percent (1.5%) of the total amount of sales, net of discounts, for the immediately preceding ten (10) year period." (Id. § 4).

Pursuant to the License, any declaration of a default had to be in writing, with the allegedly defaulting party having a thirty-day period to cure. (Id. § 16). The License stated that any "[u]ncured defaults of the License[e] may result in the revocation of the License." (Id.) The very next sentence of the License provided, however, that any "[u]ncured defaults of the Licensor shall entitled [sic] Licensee to damages, equity or both." (Id.).⁵

5 The License is riddled with typographical and grammatical errors. In context, it seems clear that the reference to "defaults of the License" in the prior sentence must have been intended to address defaults of the "License[e]."

Finally, the License provided that the law of the State of New York would control. (Id. § 18).

C. Subsequent Events

After Mr. Morson entered into the License Agreement, he and Carolyn moved to Boston, where they negotiated a ten-year lease for a store which was opened on June 13, 1996. (Tr. 237, 256). Although the Morsons continued to operate that Palazzetti store until late 1997, the relationship was not a happy one. In brief, the Defendants contend that Palazzetti breached the terms of the License by continually failing to supply furniture in a timely manner due to its cash flow problems. Palazzetti, on the other hand, maintains that the Defendants breached the License terms by purchasing furniture directly from Palazzetti's suppliers, soliciting business outside their designated territory, and, most importantly, sending a December 17, 1997 letter to Mr. Palazzetti. (Pl. Ex. R). In that letter, Mr. Morson suggested that Mr. Palazzetti had defrauded him by failing to disclose before the License was executed that Palazzetti's financial problems would make it impossible to deliver furniture on time. (Def. Ex. R). Mr. Morson also threatened legal action unless, by December 22, 1997, Mr. Palazzetti accepted one of the following two options:

FIRST, WE WILL CONTINUE TO USE THE PALAZZETTI NAME BUT WE WILL ONLY BUY DIRECTLY FROM THE MANUFACTURERS. WE WILL IN EFFECT BE COMPLETELY INDEPENDENT, LIKE THE PALAZZETTI IN CANADA.⁶ WE WILL ONLY ACCEPT ORDERS FROM YOU WHICH YOU HAVE NOTIFIED US ARE ALREADY IN THE WATER.⁷ AND YOU WILL EITHER PROMPTLY REFUND THE LICENSE FEE OR PROVIDE A CREDIT AGAINST OUTSTANDING INVOICES FOR AN AMOUNT NO LESS THAN $100,000.00.

SECOND, WE WILL CHANGE OUR STORE NAME AND SET UP OUR OWN FURNITURE LINES TO CARRY. IN ADDITION, WE WILL SEEK FULL LEGAL RECOURSE FOR OUR LICENSE FEE AND ALL OTHER DAMAGES INCURRED OFFSET INITIALLY BY OUTSTANDING ACCOUNTS PAYABLE. FURTHER, ALL OPEN PURCHASE ORDERS WILL BE CANCELLED EFFECTIVE IMMEDIATELY.

6 Apart from this reference, there was no evidence at trial concerning a Canadian branch of Palazzetti.

7 The reference to goods "in the water" relates to furniture ordered by the Defendants which had been shipped to Palazzetti in New York by its suppliers but which had not yet arrived.

(Id.). At trial, during his cross examination of Mr. Palazzetti, the Defendants' counsel conceded that at least the first of these options was "outside of the [L]icense . . . ." (Tr. 104).

Rather than accepting one of the proposed alternatives, Palazzetti directed its counsel, Debra Guzov, Esq., to send Mr. Morson a letter dated December 19, 1997. Pursuant to that letter, Palazzetti terminated the License, contending that Mr. Morson was "in breach of the [License]" as a consequence of "the facts set forth in [Mr. Morson's December 17th letter]." (Tr. 288; Def. Ex. R).⁸

8 The letter also contended that Defendants breached the License by advertising outside its assigned territory and purchasing furniture directly from Palazzetti's suppliers. However, because Palazzetti failed to provide the Defendants with written notice of default, and a thirty-day period to cure, it cannot recover damages on these grounds. (License § 16).

Within a matter of weeks after receiving the Guzov letter, the Defendants changed the name of the Boston store to "The Morson Collection" and began selling their own lines of furniture comparable to the furniture that they previously had purchased from Palazzetti.⁹ (Tr. 288-89). After a period of transition, the store became profitable. (Id. at 304-05). It remained a successful enterprise at the time of trial. (Id.).

9 When the License was terminated, the Defendants had $174,000 in orders for Palazzetti furniture still outstanding. (Tr. 289). The Defendants filled some of these orders by obtaining the merchandise directly from Palazzetti's manufacturer. (Id.). Consequently, there was a brief period of time in which the Defendants distributed both lines of furniture.

D. Evidence of Morson's Intent

In determining whether Mr. Morson's letter constituted an anticipatory repudiation of the License, as Ms. Guzov in effect alleged, the jury was afforded an unusual insight into his thinking. Prior to trial, the Defendants' counsel inadvertently turned over to his adversary two privileged letters that Mr. Morson had sent to Eric Davis, Esq., an attorney who represented the Defendants during the course of their dealings with Mr. Palazzetti. When Mr. Morson was confronted with those documents at his deposition, counsel permitted him to answer many questions about them without interposing an objection or directing him not to answer. As a consequence, former Magistrate Judge Grubin held that the attorney-client privilege was waived as to both documents. See Palazzetti Import/Export, Inc. v. Morson, No. 98 Civ. 0722, 2000 WL 1015921, at *1 (S.D.N.Y. July 21, 2001).

At trial, the Court therefore received into evidence a November 13, 1997 letter from Mr. Morson to Mr. Davis, which was one of the two documents as to which Morson's attorney-client privilege was waived. (Tr. 70; Pl. Ex. 12). In that letter, Mr. Morson complained about Palazzetti's late deliveries, which he attributed to its financial problems, and suggested that a lawsuit could deal Mr. Palazzetti "a crippling blow which he may not be able to recover from." (Tr. 242-44). Mr. Morson also outlined the options that later were set forth in his December 17, 1997 letter to Mr. Palazzetti. (Id. at 244-45).¹⁰

10 The Defendants conceded the authenticity of the November 13th letter in the Joint Pretrial Order. (See Jt. PTO at 58). They nevertheless complain in the JMOL motion that it was improperly received over their objection that it was "privileged, irrelevant, and that no proper foundation had been laid." (JMOL Motion ¶ 19). Their privilege objection had previously been addressed by Judge Grubin whose decision was the law of the case. See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 815-16, 108 S.Ct. 2166, 2177, 100 L.Ed.2d 811 (1988); In re PCH Assocs., 949 F.2d 585, 593 (2d Cir. 1991). The only other objection voiced at trial was that "no proper foundation has been laid at this point for the relevance of this exhibit." (Tr. 70). The letter obviously was relevant, however, to Mr. Morson's state of mind at the time that he sent his December 17th letter to Mr. Palazzetti. Although the letter was received during Mr. Palazzetti's testimony, Mr. Morson subsequently was questioned extensively about it. Indeed, Mr. Morson's own attorney had him read the entire letter to the jury. (Tr. 234-37, 239-45).

E. Damages

At trial, Palazzetti sought to recover three categories of damages allegedly arising out of the Defendants' repudiation of the License. First, Palazzetti contended that it was owed $92,147.96 for goods sold and delivered. The Defendants conceded the validity of this claim (at least as a set off) in their counsel's summation. (See Tr. 421)("[W]e agree we owe Mr. Palazzetti the $92,000. . . .").

Second, Palazzetti claimed to be owed $174,000 for furniture that was in transit to the United States at the time of Morson's repudiation. At the close of Palazzetti's case, I granted the Defendants' oral JMOL motion as to this aspect of Palazzetti's alleged damages because Palazzetti had failed to establish how it eventually had disposed of most of this furniture, leaving the jury to speculate as to what Palazzetti's actual loss was. (Id. at 167-68, 325-26).

Finally, by far the largest component of Palazzetti's alleged damages consisted of lost profit, which it sought to prove principally through the testimony of Professor Seymour Barcun, an economics expert. The direct and cross examination of this witness consumed fewer than a dozen pages of the uncertified trial transcript. (Id. at 186-97). Insofar as lost profits are concerned, Professor Barcun testified that he assumed, based solely on the amended complaint, that the arrangement between Palazzetti and the Defendants was intended to last ten years. (Id. at 195-97). He therefore projected the $95,068 in profit that Palazzetti realized from its last six months of sales to the Defendants over the remaining eight and one-half year term of the License, assuming a five percent annual growth rate. (Id. at 190-91). According to Professor Barcun, this calculation established that Palazzetti's lost profits totaled $1,792,228, or $1,569,833 after discounting to present value. (Id. at 191-92).

The Defendants' damages presentation was even more terse. More specifically, Carolyn Morson testified that, in addition to the $100,000 license fee, the Defendants' had lost "something like [$]78,000, 76,000, something like that" due to their inability to deliver certain lines of furniture to customers, an additional sum of "roughly . . . 20 something thousand dollars" due to customer cancellations, and three or four thousand dollars because Palazzetti itself had fulfilled some of their outstanding orders. (Id. at 290-91).

F. Issues Presented to the Jury

Although the Joint Pretrial Order contemplated a multi-week trial in which the jury would be asked to consider claims and counterclaims alleging breach of contract, accounts stated, unfair competition, tortious interference, defamation, and violations of the Lanham Act and the New York General Business Law, the issues in the case, and therefore the length of the trial, shrank dramatically as time went on. Ultimately, because the Defendants' liability therefor was undisputed, the jury was instructed, without objection, to return a verdict in favor of Palazzetti on the $92,147.96 account stated claim. (Id. at 453). The only other issues presented to the jury, as summarized on an agreed verdict sheet, were as follows:

2(a). Do you find that the Licensing Agreement was breached or anticipatorily repudiated?

(Answer yes or no.) ________

If you have answered "yes" to question 2(a), answer question 2(b):

2(b). Which party do you find breached or repudiated the Licensing Agreement? (Insert either "Morson" or "Palazzetti.") ___________

If you answered "Morson" in response to question 2(b), answer question 2(c); if you answered "Palazzetti" in response to question 2(b), answer question 2(d):

2(c). What amount, if any (exclusive of any amount awarded in response to question 1), do you award to Palazzetti as damages? $___________

2(d). What amount, if any, do you award to Morson as damages?

$___________

(See id. at 472-73).

After more than five hours of deliberations over the course of two days, the jury found that the Defendants had anticipatorily repudiated the License, and that Palazzetti was therefore entitled to recover $1,569,833 in lost profits (the precise sum suggested by Professor Barcun) and an additional $92,147.96 on the account stated claim. (Id.).

III. Discussion

The Defendants advance two basic arguments in support of their motion.

First, they contend that there was no evidence from which a jury reasonably could have found that they breached the terms of the License because it imposed no obligation on them to operate a store. Second, they maintain that there was no basis for the jury to award damages against Mr. Morson individually on the account stated claim.

A. Rule 50(b) 1. Standard of Review of Jury Verdict

When reviewing a jury verdict pursuant to Rule 50(b), both trial and appellate courts apply the same standard. DiSanto v. McGraw-Hill, Inc./Platt's Div., 220 F.3d 61, 64 (2d Cir. 2000). JMOL consequently may not be granted "unless the evidence, viewed in the light most favorable to the opposing party, is insufficient to permit a reasonable juror to find in [its] favor." DiSanto, 220 F.3d at 64 (quoting Galdieri-Abrosini v. Nat'l Realty Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998)). As the Second Circuit has cautioned:

In deciding such a motion, the court must give deference to all credibility determinations and reasonable inferences of the jury, and it may not itself weigh the credibility of witnesses or consider the weight of the evidence. Thus, judgment as a matter of law should not be granted unless

(1) there is such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or

(2) there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [persons] could not arrive at a verdict against [it].

Id. (citations omitted; brackets in original). In short, a JMOL motion faces "a high bar." Lavin McEleney v. Marist College, 239 F.3d 476, 479 (2d Cir. 2001).

2. Compliance with the Rule

Before turning to the merits of the Defendants' motion, there is a procedural issue that merits discussion. During the trial, the Defendants made their JMOL motion both at the close of Palazzetti's case and after the jury returned its verdict, but not at the close of all of the evidence. (Tr. 200, 474). Pursuant to Rule 50, however, "a motion for directed verdict at the close of all the evidence is a prerequisite for [JMOL]." Cruz v. Local Union No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d 1148, 1155 (2d Cir. 1994) (quoting Hilord Chem. Corp. v. Ricoh Elec., Inc., 875 F.2d 32, 37 (2d Cir. 1989)); see also Pahuta v. Massey-Ferguson, Inc., 170 F.3d 125, 129 (2d Cir. 1999) ("the moving party must renew the motion both at the close of the evidence and within ten days after entry of judgment") (citing 9A Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure, §§ 2536, 2537 (2d ed. 1995)). The Second Circuit case law regarding the consequence of a party's failure to move for a directed verdict at the close of all of the evidence is not fully in accord. Compare Cruz, 34 F.3d at 1155 ("this procedural requirement may not be waived as a mere technicality") with Gibeau v. Nellis, 18 F.3d 107, 109 (2d Cir. 1994) (holding that failure of the nonmoving party to raise this procedural defense resulted in its waiver). In LNC Investments, Inc. v. First Fidelity Bank, 126 F. Supp.2d 778, 784-85 (S.D.N.Y. 2001), Judge Haight recognized the "tension between these two lines of Second Circuit authority," concluding that "the better course for me to follow is to consider the motion on its merits." Given Palazzetti's failure to raise this defense, I, too, think it is best to reach the merits of the Defendants' motion.

3. Defendants' Obligations Under the License

As noted above, the main argument advanced by the Defendants in support of their JMOL motion is that the License did not impose any obligation to operate a Palazzetti store in Boston for any set period of time. Rather, in their view, the License merely afforded them an option to operate a Palazzetti store under specified conditions in exchange for a $100,000 payment. They contend that they chose to operate such a store for one and one-half years, after which the relationship with Palazzetti became untenable and they exercised their contractual right not to remain in business using the Palazzetti name. Palazzetti disagrees with this analysis, arguing that New York law imposes upon the Defendants, as an exclusive licensee, an implied duty to exploit with due diligence the subject matter of the License. In support of its claim, Palazzetti relies on Justice Cardozo's famed opinion in Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88, 90, 118 N.E. 214, 214 (1917), and its progeny. In Wood, the defendant was "a creator of fashions" who, in exchange for one half of all profits gained through the relationship, granted the plaintiff an exclusive license to sell products with her endorsement. The plaintiff sued for damages when he learned that the defendant had been endorsing other products without his knowledge in violation of their agreement. Id. Seeking to overcome this claim, the defendant-licensor argued that the agreement imposed no obligation upon the plaintiff-licensee and therefore was unenforceable for want of mutual consideration. Id. In his landmark decision, Justice Cardozo concluded that there was an implied obligation that the plaintiff-licensee would use reasonable efforts to exploit the defendant's product line, and that the contract was therefore enforceable. Id. at 91, 118 N.E. at 214.

In subsequent cases, courts often have suggested that a duty to use reasonable efforts to exploit a license should be implied only when the resulting royalties, as in Wood, constitute the sole consideration that the licensor will receive. See, e.g., Emerson Radio Corp. v. Orion Sales, Inc., 253 F.3d 159, 168 (3d Cir. 2001) (applying New Jersey law); HML v. Gen. Foods Corp., 365 F.2d 77, 80 (3d Cir. 1966) (applying New York law); see also Vacuum Concrete Corp. v. Am. Machine Foundry Co., 321 F. Supp. 771, 773 (S.D.N.Y. 1971) (stating that an implied covenant will not be found when unnecessary to give effect to the terms of the contract). Accordingly, when a licensor is awarded either a substantial advance payment or a guaranteed minimum royalty, courts typically have declined to imply a duty to exploit the subject matter of the license. E.g., Emerson, 253 F.3d at 169 (affirming grant of summary judgment on implied obligation claim where licensor received "substantial minimum royalty payment totaling $4 million per year for three years"); Permanence Corp. v. Kennametal, Inc., 908 F.2d 98, 102 (6th Cir. 1990) ("The key provisions of the contract . . . which militate against implying a convenant to use best efforts are Kennametal's obligation to pay $150,000 in order to exercise the option for the exclusive license and the $150,000 in additional advance royalties paid under the exclusive license."); Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1442 (7th Cir. 1992) ("We find the reasoning in Permanence persuasive); cf. Havel v. Kelsey-Hayes Co., 83 A.D.2d 380, 383, 445 N.Y.S.2d 333, 336 (4th Dep't 1981) (indicating in dicta that "a guaranteed stipulated minimum payment is relevant in determining the intent of the parties on the question of whether the covenant should be implied").

Notwithstanding this line of cases, courts have, on occasion, implied a covenant requiring a licensee to exploit a license even when the licensor has received a guaranteed minimum royalty or upfront fee. See, e.g., Reback v. Story Prods., Inc., 15 Misc.2d 681, 683, 181 N.Y.S.2d 980, 982 (Sup.Ct. N.Y. County 1958) (holding that the sale of exclusive motion picture, television, and radio rights in exchange for a "minimum guarantee" of $100,000 in royalties rendered the agreement "instinct with an obligation on the part of defendant to do more than merely pay the minimum guarantee"); Mech. Ice Tray Corp., 144 F.2d 720, 725 (2d Cir. 1944) (finding that parties "expected the defendant to make and sell trays on which royalties would have become due and not merely to pay a guaranteed minimum royalty"). Indeed, even in Wood, in the course of determining that an obligation to exploit the defendant's name should be implied, Justice Cardozo looked not just to the absence of any payment, but to many circumstances, including a recital that the plaintiff possessed a business organization "adapted" to the marketing of the defendant's products, the plaintiff's obligation to provide a monthly accounting of all sales, and his promise to exercise his judgment with regard to registering trademarks, patents, and copyrights as he saw necessary. See Wood, 222 N.Y. at 91-92, 118 N.E. at 214-15.

Thus, the issue in this case is ultimately whether the written License and all of the surrounding circumstances indicate that a promise on the part of the Mr. Morson is "fairly to be implied." See Fakhoury Enters., Inc. v. J.T. Distribs., No. 94 Civ. 2729, 1997 WL 291961, at *5 (S.D.N.Y. June 2, 1997) (quoting Wood, 222 N.Y. at 91, 118 N.E. at 24)). There are a number of circumstances from which the jury could reasonably conclude that the Defendants, rather than having simply purchased an option, had a continuing obligation to exploit the License.

First, pursuant to the License, Mr. Morson had the right to renew for an unlimited number of ten-year periods in exchange for a fee that was purely a function of the Boston store's sales during the prior period. If the Defendants' interpretation were correct, the License would have required a minimum payment of $100,000 for the first ten years, but then could have been renewed for additional ten-year periods for substantially less. For example, after operating a Palazzetti store for only eighteen months, the Defendants could have renewed the License in eight and one-half years (and therefore could have locked Palazzetti out of the Boston market for an additional ten years) simply by tendering a fee equal to one and one-half percent of their net purchases during that period. Then, after continuing not to operate a Palazzetti store for an additional ten years, the Defendants presumably could have sought to lock Palazzetti out of the Boston market for another ten-year period without having to pay any money at all.^_

_ There is, of course, an issue whether such an attempt at extending the License would fail for lack of consideration. See generally Weiner v. McGraw Hill, Inc., 57 N.Y.2d 458, 468, 457 N.Y.S.2d 193, 197 (1982).

Second, the initial term of the License was fixed as a period of ten years, which was to commence with the opening of the store. If the parties contemplated that Mr. Morson might not operate a store, the License presumably would have commenced on the date that the $100,000 fee was paid (or earlier) so that Mr. Morson would be unable to sit on his rights for a lengthy period before activating the License by beginning to operate a Palazzetti store.

Third, the License obligated Palazzetti to advertise the location of Mr. Morson's store as part of its national and regional publicity campaigns, in exchange for which Mr. Morson or his assignee was to make an annual contribution of $5,000 payable quarterly. (License § 8). This provision also suggests that the parties to the License in fact contemplated that the Defendants would operate a Palazzetti store rather than simply having the option to do so.

Fourth, within a matter of months after signing the License, Mr. Morson entered into a lease for the Boston store. Although the License did not place any limitations on the length of that lease, Mr. Morson agreed to a ten-year term.

Finally, although the $100,000 initial fee for the license was not inconsiderable, Palazzetti earned an additional $100,000 from its sales of furniture to the Defendants during the last six months of their relationship alone, a period when the Defendants contended that numerous orders were being lost due to customer cancellations. As Mr. Palazzetti explained in testimony which went unchallenged by the Defendants:

The value of the territory that was involved in the license was worth a lot more than $100,000 in ten years. Obviously, I could have opened a store there and make [sic] a lot of money, much more than $100,000 worth of profit. Therefore, the [L]icense . . . was done in a way that there would be a smaller amount up front and then obviously Palazzetti would make a profit selling furniture throughout the period of ten years.

(Tr. 381-82).

These facts and circumstances, taken together, permit the inference that, at the time that they entered into the License, the parties expected that Mr. Morson or his assignee would exercise reasonable diligence to operate a Palazzetti store for a period of ten years. Additionally, the $100,000 initial license fee, when compared to the possible profits over the life of the license, could be viewed as insubstantial. While these obviously are not the only factual conclusions that could be drawn from the evidence, they are reasonable ones. Accordingly, the Defendants have failed to meet their heavy burden under Rule 50(b).

4. Other Contract Issues

Although the Defendants' JMOL motion with respect to the License claim was predicated solely on the premise that Mr. Morson had no obligation to exploit the License, two subsidiary issues not specifically raised by the parties merit brief discussion.

First, the License claim was presented to the jury pursuant to instructions which required the jurors to find either that Palazzetti breached or that the Defendants anticipatorily repudiated the terms of the License. With respect to the Defendants' potential liability, the jury was instructed that "an anticipatory repudiation occurs when a party whose performance under the contract is not yet due unequivocally advises the other party that it intends not to perform the contract." (Id. at 456).

Under New York law, when a party repudiates its contractual obligations prior to the agreed time for performance, the other party is entitled to claim damages for a total breach. See Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458, 462-63, 682 N.Y.S.2d 664, 667 (1998). The renunciation, however, must rise to the level of a clear and unqualified refusal to perform the entire contract. DeLorenzo v. BAC Agency, Inc., 256 A.D.2d 906, 908, 681 N.Y.S.2d 846, 848 (3d Dep't 1998). The renunciation can consist of an attempt to advance an unwarranted interpretation of the contract or an indication that the renouncing party will perform only if certain "extracontractual" conditions are satisfied. SPI Communications, Inc. v. WTZA-TV Assocs. Ltd. P'ship, 229 A.D.2d 644, 645, 644 N.Y.S.2d 788, 790 (3d Dep't 1996). Once a party has repudiated a contract, the other party may bring suit immediately without satisfying conditions precedent that might otherwise apply. Lace v. Shapiro, 249 N.Y. 68, 72-73, 162 N.E. 586, 588 (1928); Sunshine Steak, Salad Seafood, Inc. v. W.I.M. Realty, Inc., 135 A.D.2d 891, 522 N.Y.S.2d 292 (3d Dep't 1987); see also Long Island Rail Road Co. v. Northville Inds. Corp., 41 N.Y.2d 455, 463, 393 N.Y.S.2d 925, 930 (1977) (injured party may recover damages for total breach with stream of future payments discounted to present value).

Mr. Morson's December 17th letter expressed an intention not to perform further pursuant to the License unless Palazzetti agreed to one of two "options," both of which were contrary to the original License terms. The jury could have concluded that the letter was a mere bargaining ploy rather than an unequivocal renunciation of the License because the letter contained language indicating that these were the options that Mr. Morson was putting forth "at this time." On the other hand, from the tenor and text of the letter that Mr. Morson had sent to his counsel less than one month earlier, the jury also could have reasonably concluded that the Defendants had no intention of performing further under the License. Here, as the verdict sheet makes apparent, the jury reached the second conclusion. Accordingly, because the jury found that Mr. Morson anticipatorily repudiated the License, there is no basis to grant JMOL on the theory that Palazzetti failed to provide written notice of Mr. Morson's default.

The second issue relates to the remedies available under the License in the event of a default. As noted above, the License provides that in the event of a default by the licensee, the licensor "may" revoke the License, but provides no other remedies. (License § 16). Nonetheless, under New York law, contractual remedies are deemed to be nonexclusive absent some indication of contrary intent. See, e.g., In re Hale Desk Co., 97 F.2d 372, 373 (2d Cir. 1938) ("whether the provision for damages in a contract should be treated as an exclusive remedy is to be determined by the intent of the parties as revealed in all the facts of the particular case"); Papa Gino's of Amer., Inc. v. Plaza at Latham Assocs., 135 A.D.2d 74, 76, 524 N.Y.S.2d 536, 538 (3d Dep't 1988) ("a liquidated damages clause does not bar the equitable relief of specific performance unless there is explicit language that it is to be the sole remedy"); see also N.Y.U.C.C. § 2-719(b) (resort to a remedy is "optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy"). Accordingly, Palazzetti was free to seek monetary damages if, as the jury found, Mr. Morson unequivocally repudiated the License.

5. Mr. Morson's Liability on the Account Stated Claim

Mr. Morson also has moved for JMOL with regard to the account stated claim against him because the transactions from which the account stated arises allegedly were executed by The Morson Group rather than by him in his individual capacity. This motion must be denied on at least two grounds. First, pursuant to the License, Mr. Morson was granted permission to do business as Palazzetti in the Boston area and to assign his rights to a corporate entity in which he held "a majority of the outstanding shares." (License § 11). When he was recalled as a witness to testify about his relationship to The Morson Group, Mr. Morson testified that he orally assigned his interest in the License to that entity in December 1995. (Tr. 375). Mr. Palazzetti, however, testified that he was never informed of this assignment. (Id. at 384). More importantly, the invoices which gave rise to the account stated claim each are addressed to "Palazzetti — Boston," not to The Morson Group. The Palazzetti store in Boston was, of course, the business entity that Mr. Morson individually had sought a license to operate.

In addition, during the trial, the Defendants never sought to distinguish Mr. Morson from The Morson Group with respect to the account stated claim. Indeed, during his JMOL motions at trial, counsel for the Defendants never addressed the theory that Mr. Morson was not individually liable. (Id. at 200, 474). Rather, in his summation, the Defendants' counsel stated that "we owe Mr. Palazzetti the $92,000. . . . We agree that we owe that. . . ." (Id. at 421). In keeping with that concession, the Defendants' counsel also did not object to the Court's instructions to the jury which referred to Mr. Morson and The Morson Group collectively as "Morson" and directed that a verdict be entered for Palazzetti on the account stated claim because "Morson concedes that it owes these sums." (Id. at 405, 453). The Defendants similarly did not object to the verdict sheet, which asked whether Palazzetti was entitled to recover $92.147.96 "from Morson" on the account stated claim.

In sum, there is no factual or legal basis for the contention that Mr. Morson is not individually liable on the account stated claim.

B. Rule 59

The Defendants also have moved, in the alternative, for a new trial pursuant to Rule 59 of the Federal Rules of Civil Procedure. Insofar as pertinent, that Rule provides that a new trial may be granted in an action tried before a jury "for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States." Fed.R.Civ.P. 59(a)(1). The Rule imposes a lower threshold for the granting of a new trial than for JMOL because the trial judge may reassess the trial evidence and need not view it in the light most favorable to the nonmovant. United States v. Landau, 155 F.3d 93, 104 (2d Cir. 1998). Accordingly, a motion for a new trial may be granted even when the jury's verdict is supported by substantial evidence. Caruolo v. John Crane, Inc., 226 F.3d 46, 54 (2d Cir. 2000). The trial court therefore has substantial discretion in ruling on a motion for a new trial. Metromedia Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir. 1992); Caruolo, 226 F.3d at 54. Nevertheless, the Second Circuit has held that a new trial motion "ordinarily should not be granted unless the trial court is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice. Lightfoot v. Union Carbide Corp., 110 F.3d 898, 911 (2d Cir. 1997) (quoting Hugh v. Jacobs, 961 F.2d 359, 365 (2d Cir. 1992)) (emphasis supplied).

Had this case been tried without a jury, I might well have reached a different conclusion. For example, the evidence that the parties contemplated a ten-year relationship was, in my view, far from overwhelming. In addition, although the jury evidently adopted Professor Barcun's damages analysis in its entirety, it rested on the same shaky assumption that Mr. Morson was contractually required to remain in business as a Palazzetti store for at least ten years.

Nonetheless, I am unable to say that the jury necessarily erred in its determination of the liability and damages issues that were presented for its consideration. The evidentiary support for the jury's finding that the Defendants repudiated an agreement whereby they were to run a Palazzetti store in the Boston area has been set forth in the discussion of their JMOL motion. On the issue of damages, by the time of trial the Boston store had been in operation for more than five years. The jury consequently could reasonably have concluded that, but for their repudiation of the License, the Defendants would have operated a Palazzetti store for a minimum of five years.

Although there was less evidence that Mr. Palazzetti and the Defendants had agreed that the store would remain open for an additional five years, I am unable to say that such a finding is necessarily erroneous. Moreover, Professor Barcun did provide a reasoned basis for the jury to find that Palazzetti would have earned profits of more than $1.7 million over the remaining eight and one-half years of the initial License term. Although Professor Barcun's analysis was rather cursory, it is settled law that the Defendants are not entitled to avoid responsibility for the monetary damages that they caused simply because their repudiation of the License has injected an element of uncertainty into the calculation of Palazzetti's damages. See Bloor v. Falstaff Brewing Corp., 601 F.2d 609, 615 (2d Cir. 1979); Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918, 926 (2d Cir. 1977).

Although it is not without a degree of reluctance, I therefore decline to exercise my discretion to set aside the verdict and require a new trial.

IV. Conclusion

For the foregoing reasons, Defendants' motions for judgment as a matter of law or, in the alternative, for a new trial are denied. The Clerk of the Court is directed to enter judgement against the Defendants consistent with this Memorandum Opinion and Order and close this case.

SO ORDERED.