Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Plaintiff, SAS & Associates Inc., was the landlord and defendant Home Marketing Servicing, Inc. the tenant under a commercial office lease. The parties’ dispute relating to the lease was tried to a jury, and the trial judge entered judgment for HMS. Both parties appealed. SAS raised eight issues; HMS complained only of the trial judge’s suggestion of remittitur of the exemplary damages award. HOLDING:The court affirms the trial court’s judgment. SAS challenges the legal and factual sufficiency of the evidence and complains the trial judge erred in failing to grant its motion for judgment notwithstanding the verdict. SAS argues its motion for judgment notwithstanding the verdict should have been granted because the testimony of Denis Burns, HMS’s expert witness, was not reliable and was not supported by any evidence. SAS first contends Burns’s testimony “was not supported by generally accepted accounting principles,” but the court finds that SAS does not point to any particular principle Burns ignored or violated. The court holds that is not evidence that Burns violated or ignored any principles himself in reviewing SAS’s charges. The remainder of SAS’ complaints about Burns’s testimony relate to specific calculations Burns made. The court holds that even if Burns made errors in accounting treatment or in his calculations, as alleged by SAS’ expert Steve Townes, that did not create an impermissible “analytical gap” between the data and Burns’s conclusions. The court notes that HMS’ breach of contract claims are based upon alleged overcharges for “common area maintenance” expenses under the lease. SAS complains there was no evidence of any overcharge for common area maintenance under the lease, and avers the trial judge erred in denying its motion for judgment notwithstanding the verdict on this issue. SAS argues because the parties undertook an audit under the lease, and in 2003 SAS credited the amounts Townes and Burns agreed were overcharges for 2000 and 2001, there was no evidence of breach of the lease. The court disagrees and finds that Townes and Burns agreed to a certain level of overcharges, and Burns also testified to additional overcharges upon which Townes disagreed. The court holds that the jury could have found HMS was overcharged for common area maintenance in 2000 and 2001, and could have found the overcharges constituted a breach of the lease. SAS further argues it was actually the prevailing party in the lawsuit when the actual damages found by the jury for breach of contract are offset against the amounts HMS paid into the registry of the court. The court finds that the amounts paid by HMS, however, were not amounts for which HMS was determined to be liable by the jury; they were for years not in issue in the lawsuit. Further, the court notes that SAS did not plead offset as an affirmative defense, and has not appealed the trial judge’s denial of its request for trial amendment to recover 2002 and 2003 common area maintenance charges. The jury found SAS committed fraud and awarded damages of $7,574 on HMS’ fraud claim. SAS challenges the sufficiency of the evidence to support these findings, asserting that the trial judge erred in denying its motion for judgment notwithstanding the jury’s verdict on HMS’ fraud claim. The jury was also instructed regarding a failure to disclose material facts. HMS presented evidence SAS knew of roof leaks, lack of hot water, “bug infestations,” and “power problems,” but failed to disclose these problems and instead represented to HMS the leased premises were “a great space.” The court held that constitutes some evidence which, if believed by the jury, could support HMS’ allegation of fraud. SAS also contends Robert Lovell, President of HMS, was not designated as an expert to testify to the damages suffered by HMS as a result of SAS’ fraud. The court points out that a lay witness with personal knowledge on which to base his testimony may be qualified to testify regarding cost of repair. At trial, SAS objected only on the ground that Lovell was not a properly-designated and qualified expert; SAS did not object to Lovell’s lack of personal knowledge to testify as a lay witness. In its sole issue on cross-appeal, HMS complains of the trial judge’s suggestion of remittitur of a portion of the jury’s exemplary damages award. The court finds that the nature of the wrong was fraudulent inducement to enter into a commercial lease. The character of the conduct involved was the statement of Alan Aguilar, a representative of SAS, that the leased premises was “a great space” when in fact it had maintenance problems of which the landlord knew but did not disclose. The court does not agree with HMS that SAS’s later breaches of contract such as the common area maintenance overcharges and the failure to cooperate with an audit are additional grounds for the award of punitive damages. The court finds that the size of the jury’s punitive damages award against SAS appears to be the result of passion rather than the result of an objective assessment of the evidence. The court holds that the jury’s award of punitive damages was so against the great weight and preponderance of the evidence as to be manifestly unjust. The court reasons that a rational jury could not have found that the nature of the wrong, the character of the conduct, the degree of SAS’s culpability, the situation and sensibilities of the parties, and the public’s sense of justice and propriety required SAS to pay exemplary damages in the amount awarded. The court holds that the evidence was factually insufficient to support the jury’s award of $200,000 in punitive damages and concludes that the punitive damages in the amount suggested by the trial judge are not against the great weight and preponderance of the evidence and do not violate due process. OPINION:Whittington, J.; Whittington, Moseley and Lang-Miers, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.