United States District Court, D. New Hampshire
A. Davidow, Esq., Howard A. Roever, Esq., Robert S. Carey,
Esq. Lindsay Nadeau, Esq.
N. LAPLANTE UNITED STATES DISTRICT JUDGE
post-trial motions in this contract-based action turn on
whether the jury returned an internally inconsistent verdict
on one count. Plaintiffs Zev Shlasinger and Paul Gerardi
brought one count of fraud in the inducement of a contract
and one count of breach of the same contract against
defendant Daniel Yarrington and his company, Myriad Games,
LLC. After a four-day trial, the jury returned a verdict for
the defendants on the fraud count and for the plaintiffs on
the breach of contract count. As a remedy for that breach,
however, the jury awarded the plaintiffs "[z]ero
the trial, the plaintiffs renewed their motion for judgment
as a matter of law on both claims under Fed.R.Civ.P. 59(b).
In the alternative, they ask the court to amend the judgment
to award them damages that they did not request at trial.
See id. Rule 59(e). Failing that, they seek a new
trial on their breach of contract claim (or solely on
damages) in light of the jury's verdict on that claim,
which they characterize as internally inconsistent. See
Id. Rule 59(a)(1)(A). As a last request, they seek a new
trial in light of a juror's nondisclosure of a former
connection between his company and the law firm representing
the defendants. See id. And for their part, the
defendants request an award of attorneys' fees.
court denies the plaintiffs' Rule 50 motions, for which
the plaintiffs offered no evidentiary support. It also denies
the plaintiffs' motion for a new trial, concluding that
the jury's verdict on liability for the breach of
contract claim was logically consistent, consistent with New
York law, and consistent with the evidence. Nor are the
plaintiffs entitled to a new trial in light of the
purportedly undisclosed former association between a juror
and the defendants' counsel.
however, that the plaintiffs are entitled to nominal damages
on their breach of contract claim under New York law, the
court grants the plaintiffs' motion to amend the judgment
to the extent that it awards nominal damages. And because
this award precludes the defendants from claiming the
position of "prevailing party," even if the invoked
fees provision applied to this action -- which does not
appear to be the case -- the defendants are not entitled to
travel of this lawsuit begins, as so many campaigns do, with
parties questing together for a common end and concludes, as
so many campaigns also do, with disputes over which road to
take and how to distribute the treasure. Plaintiff Paul
Gerardi, an avid gamer, wanted to open a store in his home
borough of Staten Island, New York, to sell board games, card
games, and associated merchandise. He also hoped to employ
the store, as is the custom in the industry, as a venue in
which his customers could play the games he sold. Zev
Shlasinger, a friend of Gerardi's from gaming tournaments
and a previous employer, agreed to provide financial backing
for Gerardi's store.
their alliance incomplete, Shlasinger and Gerardi approached
Daniel Yarrington, owner and sole member of Myriad Games,
LLC, a games store with locations in Manchester and Salem,
New Hampshire. Yarrington, whom Shlasinger met previously
through trade shows, also operated Game Salute, a company
that published and distributed board and card games.
Yarrington thus brought experience as a retailer and
distributor into the party, along with his existing supply
The parties' agreements
Gerardi, and Yarrington joined forces to create ZaP'D
Games, LLC, in June 2012.The rulebook for this venture was the
ZaP'D Games Operating Agreement,  the agreement which formed
the company. The Operating Agreement designated Shlasinger as
the managing member and CEO of the company, Yarrington as
Secretary, and Gerardi as Treasurer. In the Operating
Agreement, the parties also set forth their plan to share the
profits: each year, Shlasinger and Yarrington would each
receive equal disbursements of the store's true net yield
until they had received $100, 000, after which the parties
would each receive one third of the net
parties each agreed to invest money and resources into the
Staten Island store. Shlasinger was to invest $100, 000.
Yarrington was to contribute money on an as-needed basis for
the store's operating costs and inventory, up to a
maximum of $100, 000, as well as to provide merchandise for
the store through Myriad Games's distribution systems and
an operations system for ordering and managing inventory. The
parties memorialized these investments of money and resources
in a separate agreement, the Store Agreement, entered into
between ZaP'D Games and Myriad Games.
Gerardi was to manage the day-to-day operations of the store.
He also took a salary of $60, 000 per year, except that for
first three years of the store's operation, he would
receive a salary of $30, 000. The $90, 000 total that he
forewent in salary during those three years would represent
his monetary investment in the store. Though the parties
discussed Gerardi's investment before entering into the
Store Agreement, it was not memorialized in that agreement or
in the Operating Agreement.
The Staten Island store
Yarrington negotiated and signed a lease for the Staten
Island store in October 2012 and the parties hoped to open in
time for the holiday season that year, the store did not open
until the end of January 2013. In accordance with the Store
Agreement, Shlasinger contributed $50, 000 to ZaP'D Games
and another $50, 000 to Myriad Games, for a total of $100,
000. As anticipated, Gerardi prepared the store to open and
managed it. Through Myriad Games, Yarrington provided the
store with initial inventory and managed its inventory and
operating under the company name ZaP'D Games, the Staten
Island store effectively functioned as a Myriad Games store.
It bore the name Myriad Games above its door, it shared
inventory with other Myriad Games locations, and Myriad Games
paid its costs out of its operating account. The Staten
Island store did not have a separate operating account or any
separate accounting system. Rather, Shlasinger's
contributions and its sales went into Myriad Games's
accounts and the agreed-upon profits to be shared
between Shlasinger and Yarrington came out of the same Myriad
to Shlasinger and Gerardi, the store began experiencing
problems relatively early. These problems included:
• The store was not receiving copies of new and popular
games, but was stocked with unpopular games from
Yarrington's publishing company, Game Salute.
• The store received copies of some base games without
that game's explanation sets or, alternatively, copies of
the expansion sets without the base game.
• The store did not receive popular games, even though
it ran in-store tournaments for those games.
• The store received some games that were not
appropriately targeted to a store in New York, such as Boston
Red Sox-themed Monopoly games.
• Yarrington failed to obtain a promised Pepsi
refrigerator for the store (to store drinks for customers to
purchase) for several months; it arrived only after Gerardi
called about it.
problems, Shlasinger and Gerardi testified, resulted in poor
sales for the Staten Island store, which could not reasonably
expect to sell inventory it did not have, or that was
incomplete, unpopular, or inappropriately targeted to other
defendants, in turn, presented evidence that Gerardi's
management of the store contributed to its poor sales.
Gerardi had never managed a retail location before and,
despite training from Myriad Games and support from its
staff, failed to follow certain procedures from the Myriad
Games "game guide" -- its employee handbook.
Yarrington sent monthly statements on the amount received in
sales at the Staten Island store to Shlasinger and Gerardi,
the plaintiffs had difficulty obtaining other inventory and
financial data from Yarrington. Shlasinger and Gerardi were
particularly troubled to learn that Yarrington had taken out
a line of credit in Myriad Games's name in April 2013 and
used Shlasinger's second payment of $50, 000 in July 2013
to pay down the loan and extend his credit. As a response of
questionable legality and judgment, Gerardi twice took home
money, totaling approximately $10, 000, from the Staten
Island store's cash register. He did so, he explained, to
see if Yarrington would notice and to demonstrate that
Yarrington was ignoring the financial state of the Staten
Island store. He returned the money after several weeks.
accordance with the Store Agreement, at the end of 2013,
Myriad Games paid ZaP'D Games Shlasinger's half of
the seven percent of the Staten Island store's total
earnings that year. But the Staten Island store still had not
turned a profit. That December, Yarrington and Shlasinger
discussed, by email, how to move forward. Yarrington proposed
two options: either Myriad Games could continue to run the
store in accordance with the Store Agreement, reserving the
sole discretion to close it if it continued to perform
poorly, or Shlasinger and Gerardi could buy out the
inventory, rename the store, and operate it themselves.
Shlasinger chose the first option.
the same time, Yarrington terminated Gerardi from his
position as manager of the Staten Island store. At trial, he
explained Gerardi's termination as a result of
Gerardi's admitted theft, his failure to follow Myriad
Games policies, and the store's generally poor
performance. He replaced Gerardi with Paul Yellovich, a
friend of Gerardi's and one of the store's employees.
Staten Island store never turned a profit. Both Yellovich and
a regular visitor to the store described it as poorly managed
after Gerardi's departure. At the end of April 2014,
Yarrington unilaterally, and without informing Shlasinger or
Gerardi, wound up the store's business assets and closed
it. More specifically, he staged a raid: he and several
employees of his New Hampshire stores visited the Staten
Island location in the middle of the night, removed the
merchandise, destroyed shelves that Gerardi had built for the
store, and drove back to New Hampshire.
plaintiffs brought two claims before the jury: one count of
fraud in the inducement of the Operating Agreement and one
count of breach of the Operating Agreement. Before trial,
the plaintiffs submitted their proposed jury instructions.
With respect to their fraud in the inducement claim, they
sought an instruction on reliance damages. On the breach
of contract claim, they proposed an instruction on
expectation damages.Though the court did not adopt the
plaintiffs' language, it did adopt the substance of the
plaintiffs' proposed damages instructions, which it found
consistent with New York law and the New York pattern jury
instructions. The plaintiffs never objected to these
instructions nor requested any other damages instruction,
such as an alternative instruction on reliance damages for
their breach of contract claim. Nor did either party request
an instruction on nominal damages.
claims went to the jury, which returned a verdict against the
plaintiffs on their fraud in the inducement claim. And though
the jury found that the defendants had breached the
Operating Agreement, it awarded "zero dollars" in
damages to the plaintiffs for that breach.
plaintiffs moved for judgment as a matter of law on both
claims. See Fed. R Civ. P. 50(a). In
the event the court denied that motion (as it now does), they
also ask the court for relief on their breach of contract
claim, on which the jury found the defendants liable but
awarded plaintiffs no damages. See Fed.R.Civ.P.
50(b). Specifically the plaintiffs ask the court either to
grant an entirely new trial, or at least a new trial on
damages, see Fed.R.Civ.P. 59(a), or to adjust the
damages award to reflect the jury's liability conclusion,
see id. Rule 59(e). Finally, the plaintiffs move for
a new trial on grounds of alleged juror misconduct. The court
addresses each of these motions in turn.
Plaintiffs' motion for judgment as a matter of
Federal Rule of Civil Procedure 50, the court may grant
judgment as a matter of law to a party on an issue if
'the court finds that a reasonable jury would not have a
legally sufficient evidentiary basis to find for the
[nonmoving] party on that issue.'" T G Plastics
Trading Co. v. Toray Plastics (Am.), Inc., 775 F.3d 31,
37 (1st Cir. 2014) (quoting Fed.R.Civ.P. 50) . "[A]
party seeking to overturn a jury verdict faces an uphill
battle,' since [c]ourts may only grant a judgment
contravening a jury's determination when the evidence
points so strongly and overwhelmingly in favor of the moving
party that no reasonable jury could have returned a verdict
adverse to that party.'" Id. (quoting
Monteagudo v. Asociacion de Empleados del Estado Libre
Asociado de P.R., 554 F.3d 164, 170 (1st Cir. 2009)).
moved at the appropriate times during trial for judgment as a
matter of law on both of their claims.Specifically,
and as permitted by the court,  they filed an ex parte
memorandum in support of their expected Rule 50 motion at the
beginning of the trial. In accordance with this court's
practice,  that motion was unsealed and provided to
defense counsel, and defense counsel was afforded an
opportunity to object, at the close of the plaintiffs'
case in chief. The court took the motion under advisement. It
now addresses -- and denies -- the plaintiffs' motion on
Fraud in the
inducement (Count 1)
plaintiffs first claimed fraud in the inducement of the
Operating Agreement. The plaintiffs moved for judgment as a
matter of law on this claim, see Fed.R.Civ.P. 50(b),
on two theories, only one of which they alleged in their
complaint. Neither theory merits judgment in the
Reliance on misrepresentations
the plaintiffs contend that they are entitled to judgment as
a matter of law on their claim for fraud in the inducement in
its traditional form. That is, where one party makes a
promise as to future action for the purpose of inducing the
other to enter into a contract, knowing at the time that the
promise was made that he did not intend to fulfill that
promise, and then does not fulfill that promise, a party who
relies on that promise to his detriment may recover for
fraud. See Centro Empresarial Cempresa S.A. v. Am. Movil,
S.A.B. de C.V., 952 N.E.2d 995, 1000 (N.Y. 2011) .
plaintiffs argue that they introduced evidence sufficient to
prove this claim by demonstrating the defendants made certain
representations for the purpose of inducing the plaintiffs to
rely on those representation in entering into the Operating
Agreement, and that the plaintiffs did so to their
detriment. They do not, however, cite or even refer
in a general sense to the evidence that they contend is
sufficient to entitle them to judgment as a matter of
law. A motion under Rule 50 "must
specify the judgment sought and the law and facts
that entitle the movant to the judgment." Fed.R.Civ.P.
50(a)(2) (emphasis added). Absent such support,
plaintiffs' motion amounts to a mere recitation of their
claim, and accordingly must be denied.
to the extent that the record contains such evidence, it
cannot be said that a reasonable jury would not have a
legally sufficient evidentiary basis to find for the
defendants on the plaintiffs' fraud in the inducement
claim. See T G Plastics, 775 F.3d at 37. The
plaintiffs bore the burden of proving the elements of that
claim. A reasonable jury could have found, based on the
evidence adduced at trial, that the plaintiffs failed to
carry that burden. The court is disinclined, especially
absent the plaintiffs' reliance on any specific evidence,
to conclude otherwise.
plaintiffs also moved for judgment on the pleadings on a
claim for fraud in the inducement on the theory that
defendants concealed information that they had a fiduciary
duty to disclose. The plaintiffs did not plead this claim
in their complaint nor seek to add it to the action until,
midway through the trial, they moved to amend their complaint
to conform to the evidence. The court denied that motion
from the bench.
Rule 15(b), a party may move to amend the pleadings to
conform them to the evidence "when an issue not raised
by the pleadings is tried by the parties' express or
implied consent . . . ." The defendants in this case did
not expressly consent. Nor did they impliedly consent by
"acquiesce[ing] in the introduction of evidence
which is relevant only to" the plaintiffs'
new claim. DCPB, Inc. v. City of Lebanon, 957 F.2d
913, 917 (1st Cir. 1992) (emphasis added) (internal
quotations omitted). As the court explained on the record,
the evidence relied on by the plaintiffs was relevant to
their breach of contract claim. "The introduction of
evidence directly relevant to a pleaded issue cannot be the
basis for a founded claim that the opposing party should have
realized that a new issue was infiltrating the case."
Id. The plaintiffs' breach of fiduciary
duty-based claim was thus never properly before the court or
the jury. The court accordingly denies the plaintiffs'
Rule 50 motion on that theory as well.
Breach of the Operating Agreement (Count 2)
jury's verdict in the plaintiffs' favor on their
claim for breach of contract renders moot the plaintiffs'
motion for judgment as a matter of law on that
claim. The court denies it as such.
were it not rendered moot by the jury's verdict, the
plaintiffs' motion lacked any evidentiary support, and
thus fails to satisfy Rule 50(a)(2). The plaintiffs
merely repeated the allegations in their complaint concerning
which provisions of the Operating Agreement the defendants
allegedly breached, without recounting any evidence of the
breach. Nor does the plaintiffs' mere citation to the law
of reliance damages --which, as discussed infra Part
III.C, the plaintiffs surrendered when they agreed to a jury
instruction on expectation damages --without more afford them
Motion for a new trial
a jury trial, this court may "grant a new trial on all
or some of the issues . . . for any reason for which a new
trial has heretofore been granted in an action at law in
federal court." Fed.R.Civ.P. 59(a)(1)(A). "A trial
court may grant a new trial on the basis that the verdict is
against the weight of the evidence," or "whenever,
in its judgment, the action is required in order to prevent
injustice." Jennings v. Jones, 587 F.3d 430,
436 (1st Cir. 2009). Its discretion is limited, however, in
that it "may not grant a motion for a new trial merely
because [it] might have reached a conclusion contrary to that
of the jurors . . . ." Conway v. Electro Switch
Corp., 825 F.2d 593, 598-99 (1st Cir. 1987) .
plaintiffs move for a new trial on the basis that the
jury's verdict on that claim was internally
inconsistent. In returning its verdict, the jury
answered "Yes" to the question "Do you find
that the plaintiffs have proven, by a preponderance of the
evidence, their claim for breach of the Operating
Agreement?" It then awarded "Zero dollars"
to the plaintiffs on their claim for breach of
contract. Though they raised no objection at the
time, the plaintiffs now argue that, under New York law, a
jury cannot consistently conclude that a plaintiff has proven
all of the elements of a breach of contract claim while at
the same time awarding zero damages, as the jury did in this
as it does that the jury's verdict is logically
consistent under New York law, consistent with the jury
instructions (to which the plaintiffs did not object), and
not against the weight of the evidence, the court denies the
plaintiffs' motion for a new trial.
Logical consistency under New York law
New York law, "the essential elements of a cause of
action to recover damages for breach of contract" are
"the existence of a contract, the plaintiff's
performance under the contract, the defendant's breach of
that contract, and resulting damages." JP Morgan
Chase v. J.H. Elec. of New York, Inc., 8 93 N.Y.S.2d
237, 239 (N.Y.App.Div. 2010). The court so instructed the
jury. Without more than a statement of the
elements of the claim, which is all that the plaintiffs
invoke, the verdict does appear to be internally inconsistent
on its face, as the plaintiffs argue. A more thorough
consideration of New York law, however, suggests that it is
initial matter, the plaintiffs failed to preserve their
objection to the verdict's alleged logical inconsistency.
"'bjections to inconsistences in the verdict must
be lodged 'while the jury is still in the box,' or
the issue is forfeited." Smith v. Jenkins, No.
07-CV-12067-RGS, 2011 WL 1660577, at *2 n.3 (D. Mass. May 3,
2011), aff'd, 732 F.3d 51 (1st Cir. 2013) (quoting
Correia v. ...