Ever Win, Inc. v 1-10 Indus. Assoc., LLC
Decided on April 24, 2012
Supreme Court, Kings County
Ever Win, Inc., Plaintiff,
1-10 Industry Associates, LLC, Defendant.
Plaintiff's Attorney:Adam E. Deutsch
Morelli Ratner, PC
Defendant's Attorney:Frank Ravia
Rivkin Radler LLP.
Yvonne Lewis, J.
Defendant 1-10 Industry Associates, LLC moves for an order, pursuant to CPLR 4404 (1), setting aside the jury verdict and directing judgment in the defendant's favor, or, in the alternative, setting aside the jury verdict as against the weight of the evidence, or, in the alternative, ordering a new trial because of prejudicial trial error.
The plaintiff, Ever Win, LLC commenced the instant action by filing a summons and complaint on October 17, 2003. The pleadings indicate that the plaintiff leased office and basement space of the building owned by the defendant and located at 253 36th Street in Brooklyn. On August 4, 2003, a water pipe underneath the subject basement burst and, consequently, water flooded the basement. The plaintiff alleged that the defendant maintained exclusive control of the subject pipe, and that the burst pipe and subsequent leak was caused by the defendant's negligent acts and omissions. The plaintiff further alleged that the defendant's negligence proximately caused 1.2 million dollars of damage to the plaintiff's property, which was stored in the basement.
Subsequently, the defendant moved to dismiss the complaint. That motion was granted by order of this court dated February 2, 2005. The plaintiff appealed, and by decision and order dated October 24, 2006, the Second Department of the Appellate Division, noting the applicability of the doctrine of res ipsa loquitur to burst pipes, reversed this court and reinstated the complaint (Ever Win, Inc. v 1-10 Indus. Assoc., LLC, 33 AD3d 845, 846-847 ).
The defendant then interposed an answer, and discovery ensued. On July 31, 2007, the [*2]plaintiff filed a note of issue, indicating that the action was ready for trial. This court conducted a bifurcated trial, and on September 11, 2008, the jury in the liability phase returned a verdict that the defendant was negligent, and that the defendant's negligence was a substantial factor in causing the water damage to the plaintiff's property. The jury was then excused, and the defendant orally moved pursuant to CPLR 4404 (a) to set aside the verdict. Ruling from the bench, this court granted the motion, set aside the verdict, and dismissed the action. On May 13, 2009, the defendant entered judgment in its favor based on this court's ruling.
The plaintiff appealed that ruling. By decision and order dated June 1, 2010, the Second Department of the Appellate Division again reversed this court. In Ever Win, Inc. v 1-10 Indus. Assoc., LLC (74 AD3d 735 ), The matter was remitted to this court for a trial on damages. The trial began on February 23, 2011. The plaintiff's case was mainly based on the testimony of three witnesses: the plaintiff's former employee, Robert Marousek; Billy Chen, principal of a non-party company that had agreed to purchase the subject goods stored in the subject building, and Anita Ng, the plaintiff's president. The defendant called no witnesses. On March 1, 2011, the jury reached a verdict and awarded the plaintiff the principal sum of $1,181,660.00. Also, considering that the plaintiff disposed of the damaged goods, the jury found that the plaintiff did so in order to mitigate her losses and not with the intent to prevent the defendant from inspecting the damaged goods. The defendant now moves to set aside the verdict.
Movant's Arguments in Support of its Motion
In support of the instant motion, the defendant first argues that the instant action should be dismissed. The defendant notes that the plaintiff has obtained a verdict representing the diminished value of the stored goods damaged by a flood. The the defendant claims that the plaintiff has not demonstrated that it ever owned the subject goods and therefore, has not shown that it suffered an injury in fact, rendering the plaintiff with a lack of standing to maintain this action. The defendant acknowledges that, normally, the defense of lack of standing must be raised in the first papers the defendant submits to the court; in this matter, however, the defendant asserts that it did not learn that the plaintiff never paid for the subject goods until trial. The defendant contends that, therefore, it should not be deemed to have waived the defense of lack of standing.
Alternatively, the defendant argues that the plaintiff has not suffered any damages. The defendant asserts that the plaintiff has admitted that it did not pay the manufacturer for the subject goods and thus suffered no out-of-pocket loss as a consequence of the flood. The defendant also asserts that the plaintiff has not demonstrated any debt to the manufacturer as a consequence of the damaged goods. For these reasons, the defendant concludes that the plaintiff suffered no damages whatsoever.
The the defendant also argues, in the alternative, that the plaintiff's damages should be limited to the wholesale value of replacement goods. The defendant asserts that this court's refusal to charge the jury with such an instruction constituted error, and a new trial on damages is thus warranted. Moreover, the defendant claims that the plaintiff has not demonstrated what particular items of clothing were damaged. Additionally, the defendant characterizes the plaintiff's testimony regarding what items were damaged and thus either diminished or devoid of retail value as speculative. Therefore, claims the defendant, the award of damages in this action [*3]is against the weight of the evidence and should be vacated.
Next, the defendant asserts that the action should be dismissed because the plaintiff failed to join a necessary party. The defendant reiterates its position that the plaintiff did not own the subject goods. Therefore, claims the defendant, the "true owner" of the goods was a necessary and indispensable party. The defendant argues that, given the plaintiff's testimony, at least two other entities"the manufacturer and the buyer"have possible ownership interests in the subject goods. The defendant reasons that the plaintiff's failure to join these entities as parties leaves the defendant subject to additional lawsuits. The defendant notes that the rationale for mandatory joinder of necessary parties is to avoid multiple actions concerning the same matter, and concludes that since the plaintiff failed to join necessary parties, the instant action should thus be dismissed.
Additionally, the defendant argues that this court erred in failing to issue any sanction against the plaintiff for spoliation. Specifically, the defendant alleges that in this matter, the plaintiff disposed of the subject goods before it had an opportunity to inspect them or perform an inventory. The defendant next notes that at trial, the plaintiff relied on photographs of boxes that allegedly contained the damaged goods in order to prove its case. The defendant contends that these photographs depict only boxes, and therefore are not probative of the alleged property damage. Accordingly, the defendant reasons that since it never had access to the subject goods, it was prejudiced from an effective defense at trial. The defendant concludes that, therefore, and irrespective of whether the plaintiff's disposal of the subject goods was wrongful, this court should have sanctioned the plaintiff for spoliation.
The defendant also argues that this court erred when it gave the jury a missing witness charge concerning Dominick Flavoni. The defendant maintains that the plaintiff did not demonstrate the three requirements for such a charge: that an uncalled witness would likely be knowledgeable about a material issue; that the uncalled witness would likely testify in the plaintiff's favor, and; that the defendant failed to call the subject witness. The defendant first asserts that the plaintiff requested the missing witness charge at the close of all testimony and was therefore untimely"such an untimely request for a jury charge should be denied on that ground alone. Additionally, the defendant claims that the jury charge was unwarranted. The defendant states that Flavoni was a maintenance worker in its employ, and that he removed water from and helped repair the subject flooded basement. However, contends the defendant, Flavoni's presence in the basement after the flood was not an opportunity to inspect or inventory the subject damaged goods. The defendant argues that this court erred when it instructed the jury that Flavoni could have testified about the subject goods, and that a negative inference could be drawn from Flavoni's failure to testify. The defendant concludes that these errors were harmful, and at the very least, this court should grant a new trial of the instant action.
Plaintiff's Arguments in Opposition to the Motion
In opposition to the movant's arguments, the plaintiff first notes that a motion to set aside a jury verdict can only be granted when either the plaintiff failed to make a prima facie case at trial, or the jury's verdict is against the great weight of the evidence. The plaintiff argues that neither basis exists here. In fact, claims the plaintiff, the defendant has neither identified a defect in the jury's reasoning nor stated the overwhelming evidence against the jury's verdict.
The plaintiff next addresses the issue of standing. First, the plaintiff suggests that the [*4]defendant may not now assert the plaintiff's lack of standing; such a challenge is waived unless asserted in the defendant's answer or a pre-answer motion to dismiss. The plaintiff alleges that here, the defendant did neither. Next, the plaintiff argues that, contrary to the defendant's arguments, the plaintiff did in fact have standing to maintain this action, and had standing because the plaintiff owned the subject goods. The plaintiff claims that neither party presently disputes that the plaintiff made a partial payment to the manufacturer for the subject goods. Also, the plaintiff notes the undisputed evidence that the manufacturer demanded the balance due from the plaintiff. According to the plaintiff, these facts belie the defendant's suggestion that the plaintiff did not own the subject goods and therefore had no standing to sue for damage thereto.
Similarly, the plaintiff rejects the defendant's contention that the subject manufacturer was a necessary party to this action. The plaintiff characterizes this argument as dependent on the contention that the manufacturer"and not the plaintiff"was the "true" owner of the subject goods. The plaintiff concludes that this argument is likewise belied by the evidence introduced at trial.
Next, the plaintiff contends that it suffered actual damages and not speculative damages. The plaintiff does not dispute the relevant jury charge cited by the defendant, which (as applicable here) directs the jury to award the difference in market value of the plaintiff's property immediately before and after it was damaged. The plaintiff challenges, however, the defendant's contention that the wholesale price of the subject goods is the proper basis to determine damages. The plaintiff argues that, to the contrary, since it was a party to a contract that specified the value of the goods, the contract price is the relevant measure for the value of the damaged goods.
Also, the plaintiff rejects the defendant's claim of spoliation of evidence. The plaintiff first asserts that the defendant's agents actually observed the damaged goods after the flood and later had ample opportunity to inspect them. The plaintiff further asserts that the decision to sell or discard was done in the ordinary course of the plaintiff's business, and not in an effort to frustrate discovery. Also, the plaintiff notes that the defendant had access to photographs, documents and witnesses concerning the subject goods. Moreover, the plaintiff argues that if this court finds spoliation of evidence, the plaintiff should not be subject to a harsh sanction. The plaintiff claims that, presently, there is no serious dispute that the subject goods were damaged when they were submerged. Thus, reasons the plaintiff, and contrary to the defendant's suggestion, production of the subject goods is unnecessary to demonstrate that the goods were damaged. the plaintiff maintains that during trial of this action, the defendant obtained a favorable spoliation charge, and, therefore, no sanction is presently warranted.
The plaintiff asserts that the missing witness charge now contested by the defendant was appropriate. The plaintiff argues that the defendant could have called employee Dominick Flavoni to the witness stand to testify about responding to the flood and his observation of the damaged goods. The plaintiff further argues that this witness could have testified as to the extent of the damage to the goods, but the defendant chose not to call him. Thus, contends the plaintiff, this court properly informed the jury that a negative inference is permitted from the defendant's failure to call this witness. Moreover, given that the defendant simply rested at the close of the plaintiff's case, the plaintiff maintains that the defendant should not now object to the timing of the plaintiff's request for a missing witness charge. Concluding, the plaintiff suggests that the defendant's failure to call a witness who observed the damaged goods is incongruous with the [*5]defendant's claim of spoliation of evidence. For these reasons, the plaintiff concludes that this could should deny the instant motion.
The court denies the instant motion. "A jury verdict should not be set aside . . . unless the verdict could not have been reached upon any fair interpretation of the evidence" (Enright v Bryne, 20 AD3d 549 ; Garrett v Manaser, 8 AD3d 616, 616 ; Klein v Vencak, 298 AD2d 434, 434 ; Sullivan v Pampillonio, 288 AD2d 299, 299 ; Devoe v Kaplan, 278 AD2d 734, 735 ). Stated differently, "[a] verdict is not supported by legally sufficient evidence if there is no valid line of reasoning and permissible inferences which could possibly lead rational [persons] to the conclusion reached by the jury on the basis of the evidence presented at trial'" (Lallemand v Cook, 23 AD3d 533, 534 , quoting Aprea v Franco, 292 AD2d 478 , quoting Cohen v Hallmark Cards, 45 NY2d 493, 499 ). "The determination of the jury, which observed the witnesses and the evidence, is entitled to great deference" (Enright, 20 AD3d at 549; see also Evers v Carroll, 17 AD3d 629, 631 ; Zweben v Casa, 17 AD3d 583, 583 ; Lalla v Connolly, 17 AD3d 322, 323 ; Rockowitz v Greenstein, 11 AD3d 523, 524 ; Yau v New York City Transit Auth., 10 AD3d 654, 654 , lv denied 4 NY3d 701 ). Accordingly, the power to set aside a jury verdict and order a new trial "must be exercised with considerable caution" (Shachnow v Myers, 229 AD2d 432, 433 ). Although the decision to set aside a verdict "involves balancing many factors . . . [t]he ultimate test is whether any viable evidence exists to support the verdict" (see Rugo v Osowiecky, 256 AD2d 839, 840 [3d Dept., 1998]).
During trial of this action, Anita Ng, the plaintiff company's president, testified that she purchased the subject goods from Hong Kong clothing manufacturer Victory Century for the sum of $949,200. She further testified that she remitted the sum of $150,000 to the manufacturer and remains obliged to submit payment for the remainder of the agreed-upon purchase price. The defendant notes that the partial payment was made with funds advanced by the prospective buyer, concludes that the plaintiff incurred no out-of-pocket expenses, and argues that the plaintiff never truly owned the subject goods.
The court rejects this argument. First, it is undisputed that the plaintiff lawfully possessed the subject goods; accordingly, the plaintiff is presumed to be the owner of the subject goods (57 NY Jur 2d Evidence § 116 ["possession of chattels creates a rebuttable presumption of ownership"]). Although that presumption may be rebutted by evidence (id.), the defendant herein has advanced no evidence that the "true owner" of the goods was a company other than the plaintiff. Instead, the defendant asserts the self serving conclusion that the plaintiff did not own the goods. Moreover, the jury heard the testimony of Anita Ng, and was entitled to believe that the plaintiff purchased the subject goods by remitting payment or incurring debt pursuant to an agreement. To the extent Anita Ng contradicted a previous statement about whether the plaintiff paid for the subject goods, the court must defer to the findings of the jury resolving her prior inconsistent statement (Beaumont v City of New York, 56 AD3d 591 [2d Dept., 2008] [jury's determination as to issues of credibility is entitled to great deference given its opportunity to hear and observe the witnesses]). Indeed, "[t]he credibility of the witnesses, the reconciliation of conflicting statements, a determination of which should be accepted and which rejected, the truthfulness and accuracy of the testimony, whether contradictory or not, [are] issues for the trier [*6]of the facts" (Healy v Williams, 30 AD3d 466, 468 [2d Dept., 2006] [internal quotation marks omitted]; see also Sorokin v Food Fair Stores, 51 AD2d 592, 593 [2d Dept., 1976]). Here, since the trier of fact had a rational basis to believe the plaintiff purchased the goods prior to the flood damage, this court cannot "first conclude that there is simply no valid line of reasoning and permissible inferences which could possibly lead rational men to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards (45 NY2d 493, 498 ; see also Vecchione v Amica Mut. Ins.,96 NY2d 708 ). The defendant presented its theory that the plaintiff never owned the the subject goods to the jury, but the jury ostensibly rejected it. Accordingly, the jury's verdict will not be disturbed.
The same reasoning suffices to reject the defendant's claim that the plaintiff lacked standing to maintain this action. The defendant correctly asserts that "a court has no inherent power to right a wrong unless the rights of the party requesting relief are affected by the challenged action . . . Thus, a plaintiff must allege an injury-in-fact that falls within his or her zone of interest" (Skelos v Paterson, 65 AD3d 339, 344 [2d Dept., 2009], revd on other grounds 13 NY3d 141 , citing Society of Plastics Indus. v County of Suffolk, 77 NY2d 761  and Schieffelin v Komfort, 212 NY 520, 530 ). More specifically, the defendant further correctly notes that "[a] party cannot claim damages for property it does not own" (Momeni v Shurguard Stor. Ctrs., Inc., 2009 NY Slip Op 30610[U] [NY, 2009]).[FN1]However, as stated above, the jury heard the testimony of the plaintiff's principal and concluded that the plaintiff did pay for, and thus own, the subject damaged goods. The defendant's present protestations do not establish a lack of standing.
Similarly, the court will not dismiss the action for the plaintiff's alleged failure to join an indispensable or necessary party (see CPLR 1001, 1003). This contention is also based on the defendant's speculation that either or both of the manufacturer or the buyer of the subject goods is the "true owner" thereof. The court notes that the defendant's interpretation of Anita Ng's testimony concerning has ostensibly been rejected by the trier of fact. In any event, even if the manufacturer or buyer of the subject goods may be entitled to claim jointly with the plaintiff, neither is an indispensable party to the action (see e.g. Monroe Abstract & Tit. Corp. v Giallombardo, 54 AD2d 1084 [4th Dept.,1976]). Therefore, to the extent the defendant seeks dismissal for the plaintiff's alleged failure to join a necessary or indispensable party, the motion is denied (see e.g. Flanagan v Board of Educ., Commack Union Free School Dist., 56 AD2d 574 [2d Dept., 1977] ["None of the parties defendant seeks to have joined is necessary for complete relief ... to be accorded between the persons who are parties to the action [nor will any] be inequitably affected by a judgment in the action'"], citing CPLR 1001 [a], Weinstein-Korn-Miller, NY Civ Prac ¶ 1001.01 [2d ed]; see also Yecies v Sullivan, 221 AD2d 433, 434 [2d Dept., 1995]).
Additionally, there is no merit to the defendant's claim that the plaintiff is guilty of [*7]spoliation of evidence. "Where a party did not discard crucial evidence in an effort to frustrate discovery, and cannot be presumed to be responsible for the disappearance of such evidence, spoliation sanctions are inappropriate" (Cordero v Mirecle Cab Corp., 51 AD3d 707, 709 ; see also O'Reilly v Yavorskiy, 300 AD2d 456, 457 ). Here, the plaintiff's president acknowledges that she salvaged or discarded the indisputably damaged goods. Such a disposal does not warrant a sanction for spoliation (see e.g. Awon v Harran Transp. Co., Inc., 69 AD3d 889 [2d Dept., 2010] [sale of totaled vehicle for scrap did not prejudice ability to defend actions]). Moreover, on the verdict sheet, the jury was asked whether the plaintiff disposed of the subject goods in an effort to prevent the defendant's inspection of the same; the jury responded "no". Accordingly, the court denies the subject motion insofar as it seeks sanctions for spoliation of evidence.
The court also rejects the defendant's contentions concerning damages. The defendant claims that a plaintiff seeking damages for negligent harm to property cannot recover lost profits; in such cases, damages are limited to the replacement value of the goods. To the contrary, "[t]he generally accepted rule is that where it is shown that a loss of profits is the natural and probable consequence of the act or omission complained of, and their amount is shown with reasonable or sufficient certainty, there may be a recovery. Such damages must not be speculative, contingent or uncertain and there must be reasonable proof of their amount. Any reasonable method of estimating a prospective profit is acceptable. Absolute certainty is not required" (Snyder v Bio-Lab, 94 Misc 2d 816, 819 [Supreme Court, Monroe County 1978 Schnepp, J.], citing 25 CJS, Damages, §§ 42, 90; see also Felice Fedder Oriental Art, Inc. v Scanlon, 708 F Supp 551, 559  ["New York law does not require that lost profits be calculated with absolute certainty to be recoverable. The existence and amount of lost profits must only be reasonably certain and a product of defendant[ s] wrongful conduct"]; Borne Chem. Co. v Dictrow, 85 AD2d 646, 650"651 [2d Dept., 1981]).
In this action, Billy Chen testified that at relevant times, he was part of a clothing company that agreed, before the flood, to purchase the subject goods from the plaintiff for the approximate sum of $1,300,000. He further testified that after the flood, the company purchased the damaged
goods for the sum $149,500. Thus, and contrary to the defendant's suggestion, the verdict awarding damages to the plaintiff in the principal sum $1,181,660"representing the approximate diminished value of the goods"is an "acceptable" and "reasonable method of estimating a prospective profit" (Snyder, 94 Misc 2d at 819). For these reasons, to the extent the defendant seeks to disturb the verdict on the ground that the plaintiff suffered no damage"or, less damage than the jury found"the motion is denied.
The court rejects the defendant's contention that a missing witness charge concerning Dominick Flavoni should not have been given. It is undisputed that Dominick Flavoni, then an employee of the defendant, had access to the basement after the flood and observed the damaged goods. In light of the defendant's many contentions"including the contention that the defendant was deprived of a meaningful opportunity to inspect the damaged goods"the court correctly charged the jury that they were permitted (cf. Kronenberg v Morris, 174 AD2d 610 ) to infer that Dominick Flavoni would have testified about the subject goods and that his testimony would have been unfavorable to the defendant (see e.g. Marine Midland Bank v John E. Russo [*8]Produce Co., Inc., 50 NY2d 31 ; Wilson v Bodian, 130 AD2d 221 ; Getlin v St. Vincent's Hosp. & Med. Ctr. of NY, 117 AD2d 707 ; Chandler v Flynn, 111 AD2d 300 ; Trotta v Koch, 110 AD2d 631 ). Finally, although the defendant correctly notes that a missing witness charge should be given before the close of all the evidence (see e.g. Buttice v Dyer, 1 AD3d 552, 553 ), the argument that the instruction was untimely in this case is rather disingenuous since the defendant elected not to present a case. Thus, this court will not order a new trial because of the missing witness charge objected to by the defendant.
In sum, the motion of defendant 1-10 Industry Associates, LLC is denied in its entirety.
The foregoing constitutes the decision and order of the court.
E N T E R,
yvonne lewis, JSC
Footnote 1: The defendant's reliance on Momeni is peculiar, since in that case, the court denied summary judgment on the ground that questions of ownership existed. Here, in contrast, the plaintiff's witnesses testified as to ownership, and the jury rendered its verdict accordingly.