“When the dust finally settled, our client was thrilled!” stated Brian Jorde, lead lawyer of the trial team responsible for Domina Law Group pc llo’s client’s victory. It was a race to the courthouse, and before our client could contact us he was already a Defendant. Being sued is bad enough, but when it is by a long term associate, a lawsuit can become very personal.
Although the parties transacted millions of dollars of business over decades, their business dealings and personal relationship came down to one contract gone bad. Plaintiff and Defendant were well known cattle traders, or in the industry known as “Order Buyers,” purchasing cattle, marking them up slightly, and selling to their respective customers. The body of law covering this breach of contract case is the UCC or Uniform Commercial Code Act which governs the sale of goods. Since cattle, although live animals, are considered goods or, for practical purposes, a product, they are governed by the UCC and parties to a contract must adhere to UCC formalities.
“The sticking point in this case was ambiguity in terms describing the specific type of cattle purchased, i.e. cattle that were ‘choice and the right kind.’ Two opposing experts relied on the same terms of art within their respective industry, but contended they had two very different
meanings. The terms were not otherwise definable and remained open for interpretation even between the experts. This created a challenge in the case and made the proof at trial a bit more difficult. The jury eventually saw, and agreed, with our view of the case,” stated lawyer, Jason Bottlinger.
Jorde added, “Our client was sued for breach of contract and damages. We countersued on the same basis. Not only did the jury find against Plaintiff’s breach of contract claim, but it awarded every single penny we asked for on our breach of contract counterclaim. The only question the jury submitted to the Judge was whether or not they could force the Plaintiff to pay for all of our client’s legal fees—it was a good day.”
Case History
After two jury trials and three successful appeals, one of the Nebraska Panhandle’s most complex lawsuits has finally ended. Success came after Domina Law Group pc llo was hired to handle the second trial, and successful appeal to the State Supreme Court.
Bridgeport Tractor Parts, Inc. was newly formed in 1998 to buy out a successful used machinery and implement dealership in the Nebraska panhandle. Its owner, Gary’s Implement, contracted to sell the business. But, signing the contract was the start of legal problems, not the end of legal work as contracts are intended to be.
The sales contract contained a clause allowing seller to collect antique tractor parts for its owner’s personal hobby. This was an exception from the contract’s overall purpose, which was to sell the “salvage and used parts business” to buyer. The contract was accompanied by a non-competition agreement providing for periodic payments and requiring seller to refrain from competitive activity for five years.
But, the seller did not refrain, and the buyer, Bridgeport Tractor, claimed the contract was breached. Lawsuits followed. Each side sued the other.
The First Trial: A Disaster for the Buyer.
In 2003, the case went to trial for the first time. It produced a jury verdict in favor of the seller and against the buyer, finding the contract balance of $622,500 was due from Bridgeport Tractor to the seller, Gary’s Implement. Bridgeport Tractor’s breach of noncompetition agreements counterclaim was completely rejected at the first trial.
Bridgeport Tractor appealed. The Nebraska Supreme Court found errors in the jury instructions. It reversed and remanded(1) for new trial on Bridgeport Tractor’s counterclaim alleging breach of the non-competition agreement. It also reversed the jury’s finding on the promissory note.
Domina Law Group pc llo was hired to try the case after a new trial was ordered. David Domina was elected to review the case, plan its retrial, and present it to the second jury. Things changed pretty dramatically thereafter.
While the first appeal was pending, the seller attempted to exercise the judgment and collect what was initially determined to be due, but later reversed. In this second appearance before the Supreme Court,(2) the Supreme Court again reversed the judgment in favor of the seller, holding that Gary’s enforcement of the judgment had to be set aside because the judgment itself was vacated by the Supreme Court’s reversal.
What a Difference A Retrial Makes!
Domina retried the case in late 2009. After retrial, the 2009 jury found for Domina’s client, Bridgeport Tractor and against the seller, finding that Gary’s Implement should recover none of its $622,500 note. The jury returned a verdict for the purchaser, Bridgeport Tractor Parts, for $1.25 million in damages and against Gary’s on its promissory note claim. So, instead of winning $622,000, Gary’s lost $1.25 million. And for Bridgeport Tractor instead of owing $622,000, the company was awarded $1.25 million. This time, Gary’s Implement appealed. For Bridgeport Tractor the difference is nearly $2.0 million dollars, and the company has strong prospects for an additional recovering in a matter remaining to be decided.
The Third Appeal: Bridgeport Tractor Wins.
The Nebraska Supreme Court’s April 1, 2011, decision in Gary’s Implement III(3) affirmed the jury’s $1.25 million verdict. The Supreme Court held that the trial court properly instructed the jury about the measure of damages in this complex lost profits and breach of contract case. The Supreme Court also unanimously affirmed the trial court’s decision to allow Sioux Falls, SD, Certified Public Accountant, John Wenande, serving as an expert, to give testimony about the lost profits sustained by Bridgeport Tractor Parts due to seller’s breach of the covenant not to compete.
The Supreme Court’s decision brings much, but not quite all, of the dispute between the parties to the 1998 contract to a close. The Court held Bridgeport Tractor Parts’ expert witness applied proper methodology to support the determination of lost profits, had a sufficient factual basis for his opinion, and the trial court properly admitted the opinion. The Supreme Court also notes the jury was properly instructed that it must decide “how much money will fairly compensate Defendant for the damage which it has sustained.” The Nebraska Pattern Jury Instructions(4) were followed and properly so. The jury instruction on damages as given at the second trial was not required to refer to the duration of the non-competition covenant, and the instructions were not limited to that classified reservation, since the evidence permitted the jury to conclude that damages actually transcended the five-year term.
The Supreme Court, quoting Domina’s brief on appeal, noted that the seller’s breach of the covenant not to compete “so retarded [Bridgeport Tractor] in the operation of its business that its entire loss was not fully absorbed by the end of five years, because the competition continued unfairly until the end of the five-year period.”
The Supreme Court noted that lost profits are “usually difficult of exact computation” but “an injured party will not be precluded from recovery because of that fact.”
The Supreme Court held that the expert witness John Wenande, Sioux Falls, SD, Certified Public Accountant, was properly allowed to testify under Neb R Evi § 27-703. His opinion had a sufficient factual basis and was not the product of their guess or conjecture.
Case Status Now: The Remaining Part of the Dispute.
The Supreme Court concluded that one portion of the dispute between the parties remains to be resolved. An issue remains pending in the District Court about whether a sale conducted, under a deed of trust to collect the promissory note vacated by the jury, requires the seller, Gary’s Implement, to pay back the foreclosure sale proceeds.
During the first appeal the seller. Gary’s Implement, used a deed of trust to collect part of the sum due from sale of the parts business. Bridgeport Tractor raised restitution issues on a cross appeal. Domina also filed a separate lawsuit for Bridgeport Tractor to protect its claim to the funds paid under the Deed of Trust. The Supreme Court said these issues must be decided in the separate lawsuit. This is so because the trust deed issue was not a part of the breach of contract case, itself.
The Supreme Court’s Opinion
The Supreme Court’s exhaustive 24-page opinion thoroughly analyzes the state of Nebraska’s law concerning lost profits, the measure of damages, and expert witnesses. It also updates and renders current Nebraska’s rules concerning the doctrine of restitution, an equitable legal theory permitting the Court to consider things implicated in legal rights between parties, and adjust them properly to avoid an inequitable result.
“I suspect Gary’s Implement III, this April 1, 2011, will be cited dozens and dozens of times in future years and will serve as important precedent in future commercial lawsuits involving lost profits or restitution issues,” Dave Domina said. “We are pleased to have been able to help get this worked out for Bridgeport Tractor Parts.”
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(1) Gary’s Implement vs. Bridgeport Tractor Parts, 270 Neb 286, 702 NW2d 355 (2005)
(2) Gary’s Implement vs. Bridgeport Tractor Parts (Gary’s II), 270 Neb 337, 701 NW2d 367
(2005)
(3) Gary’s Implement Inc. vs. Bridgeport Tractor Parts, Inc., 281 Neb 281, _______ NW2d
_______ (2011)
(4) NJI2d Civ 4.51
April 12, 2011
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