The opinion of the court was delivered by: Juan R. Sánchez, J.
On November 19, 2009, a jury awarded $4 million to Plaintiffs Mente Chevrolet Oldsmobile, Inc., Mente Chrysler Dodge, Inc., and Donald Mente for Defendant GMAC's breach of contract. GMAC now asks this Court to overturn the jury's verdict and grant GMAC judgment as a matter of law under Federal Rule of Civil Procedure 50(b). Alternatively, GMAC requests a new trial under Federal Rule of Civil Procedure 59.*fn1 Because this Court finds no grounds to disturb the jury's verdict, both of GMAC's motions are denied.
For more than fifteen years, Donald Mente owned two car dealerships, Mente Chevrolet Oldsmobile (the Chevrolet Dealership) and Mente Chrysler Dodge (the Chrysler Dealership). The Chevrolet Dealership was purchased by Mente's parents in 1971, and Mente began working there in 1979. In the 1990s, Mente assumed full control of the Chevrolet Dealership. Around the same time, the Mente family purchased the Chrysler Dealership.*fn3 All financial transactions for the dealerships were managed by Donna Johnson, who worked as the Chevrolet Dealership's controller for almost 30 years. Johnson was also the controller for the Chrysler Dealership after it was purchased by the Mente family.
Mente operated both dealerships under franchise agreements with General Motors (GM) and finance arrangements known as "floor plans"*fn4 with GMAC.*fn5 The Chevrolet Dealership's floor plan with GMAC began in 1982 and was governed by the Wholesale Security Agreement (WSA). The Chrysler Dealership's floor plan also operated pursuant to an identical contract. Under the WSA, Plaintiffs were required to repay GMAC "faithfully and promptly" for all cars sold to customers.*fn6
The meaning of the term "faithfully and promptly" was a central issue at trial because this Court determined the phrase was ambiguous. The WSA did not define the phrase or provide a specific time period for repayment. GMAC argued the term required immediate payment, transferred to GMAC the same day a vehicle was sold. Plaintiffs argued, based on their prior course of dealing with GMAC, they were authorized to wait for their receipt of third-party funds before paying GMAC.*fn7 If Plaintiffs failed to remit payment "faithfully and promptly," GMAC could declare the dealerships "out of trust."*fn8
Mente testified his business relationship with GMAC became problematic in 2006, after GM initiated a plan to decrease the number of GM dealerships. Near the end of 2006, GMAC ordered Mente to reduce the number of used cars on his lot and increase his profits. Around the same time, the parties had disputes related to a revolving line of credit GMAC supplied. GMAC abruptly asked Plaintiffs to reduce their $500,000 line of credit by half within 30 days, a time period 60 days shorter than GMAC normally allowed.*fn9 Mente told GMAC he would not be able to reduce his credit to $250,000 in such a short period of time. Despite Mente's protest, GMAC sent a letter to Mente purporting to confirm the parties' agreement for Mente to pay down his credit. On July 17, 2007, Mente left a message for his contact at GMAC denying the existence of such an agreement.
Two days later, on July 19, 2007, a GMAC agent audited the Chevrolet Dealership and demanded immediate payment of $317,841.20 for the cars missing from the dealership's lot.*fn10 This audit took place while Johnson, the sole person responsible for managing the dealerships' financial records, was on vacation. Johnson always informed GMAC of her absences to ensure it would not audit the dealerships while she was away*fn11 and to inform them payments for sold vehicles would not be made in her absence.*fn12 Before the July audit, Johnson gave GMAC written notice she leave for vacation on July 16, 2007, and would return to work the following Monday, July 23, 2007.
Mente asked GMAC to give him 24 hours to locate Johnson because he could not access the Chevrolet Dealership's financial records or issue checks in her absence. He reached Johnson by phone, but she could not return to work until the following day. GMAC refused to wait and immediately declared the dealerships out of trust.*fn13 If GMAC had waited, Plaintiffs claimed they had funds available to pay GMAC $269,405 on July 19 and approximately $400,000 on July 20.*fn14
Later the same day, GMAC sent eight guards to the Chevrolet Dealership and GMAC agents seized the titles, keys, and manufacturer's certificates of origin for all cars at the Chevrolet Dealership. GMAC took control of both dealerships' open accounts with GM and all funds contained therein.*fn15 GMAC instructed GM to cease its vehicle shipments to the dealerships. GMAC also initiated a new policy, in which Plaintiffs could not complete a vehicle sale unless they provided GMAC with a certified check for the full sale proceeds, including any trade-in credit, warranty payments, sales tax, or state registration fees. GMAC also forbade Plaintiffs from adding used cars to the floor plan or selling used cars at auctions to quickly generate income. GMAC billed Plaintiffs for charges associated with GMAC's actions, such as the cost of the security guards stationed at the dealerships. GMAC instituted similar policies at the Chrysler Dealership.
On July 25, 2007, Mente received three letters from William Tierney, GMAC's Director of Commercial lending, demanding he pay $7, 592,393.59 by the end of the following business day. See Exs. 41-43. This figure included $6,751,428.25 for the principal owed for vehicles financed by GMAC at both dealerships, $289,643 for unpaid vehicles at the Chevrolet Dealership, $51,321.87 for interest payments, and $500,000 for the balance of the Chevrolet Dealership's line of credit. Ex. 43. If Mente failed to make this payment, Tierney told him GMAC could take possession of all dealership property. Tierney also told Mente his wholesale credit line had been suspended indefinitely. Mente did not make the $7.5 million payment within 24 hours, and GMAC took possession of the dealerships.
Following GMAC's seizure of the dealerships, Plaintiffs could not raise enough income to pay state-required dealership fees, refunds due to customers, operating costs, or employee salaries. On July 27, 2007, Plaintiffs terminated all employees except Johnson and another essential employee and closed the Dealerships. Mente and Johnson continued to sell or trade cars to other dealerships and used their personal funds to pay the Dealerships' operating costs. At the end of September, following 30 days of negotiation, GMAC agreed to return $59,000 of the funds it seized from Plaintiffs and to refrain from enforcing its creditor rights for 90 days if Plaintiffs promised to waive their right to sue GMAC. This covenant was memorialized in a Forbearance Agreement (the Agreement) drafted by GMAC and presented to Mente and Johnson. Mente and Johnson signed the Agreement the same day it was presented.*fn16 At the time the Forbearance Agreement was signed, Plaintiffs were represented by counsel. At the end of the forbearance period, Plaintiffs sued GMAC for breach of the WSA.
Discovery was contentious. While Plaintiffs sought quick relief, GMAC tried to prolong this litigation. GMAC twice moved to continue the case and extend the trial date, and this Court twice refused to grant such a delay. GMAC persistently refused to turn over documents and, when documents were produced, delayed the documents' submission to Plaintiffs.*fn17 GMAC also continually frustrated Plaintiffs' attempts to identify and locate former and current employees of GM and GMAC who knew the circumstances surrounding the Mente dealerships' closure.
At trial, Plaintiffs argued GMAC breached the WSA by improperly declaring the dealerships out of trust and seizing all of the dealerships' property. Plaintiffs argued GMAC's declaration Plaintiffs were out of trust was pretextual and part of a scheme to force GM dealerships to close if they were not sufficiently profitable.*fn18 Plaintiffs contended they would have fully paid GMAC if they had been given the opportunity to pay upon Johnson's return the following day. Plaintiffs' experts testified the dealerships' closures caused Plaintiffs to lose approximately $707,000 in profits from vehicle sales, $1.15 million in franchise value, and more than $3 million in dealership value. GMAC asserted Plaintiffs were out of trust because Plaintiffs did not immediately remit payment when GMAC demanded payment on July 19, 2007. GMAC further argued Plaintiffs' claims were barred by the Forbearance Agreement.
The jury returned a verdict for Plaintiffs and awarded $4,000,000 in damages. The jury found the dealerships were not out of trust on July 19, 2007, and GMAC breached the WSA by its actions on July 19, 2007, and thereafter.*fn19 Official Verdict Slip (Nov. 19, 2007), at 3-4. The jury also determined the Forbearance Agreement was unenforceable because Mente and Johnson did not sign the agreement "knowingly and voluntarily without duress, fraud or undue influence." Id. at 1. The jury further found enforcement of the Forbearance Agreement was barred by the equitable doctrine of unclean hands and some of Plaintiffs' claims accrued after they signed the waiver.*fn20 Id. at 2.
On December 9, 2009, GMAC filed a renewed motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b)*fn21 and a motion for new trial pursuant to Rule 59. On June 29, 2010, this Court directed the parties to submit supplemental briefing regarding Plaintiffs' ability to recover damages based on the value of the two dealership properties. These properties were owned by entities not joined as parties, Don's Limited Partnership and Don's Second Limited Partnership. Mente held a majority stake in both partnerships.
In its supplemental brief, GMAC argued Plaintiffs did not produce sufficient evidence at trial or post-trial demonstrating Plaintiffs had "standing" to recover the partnership properties' losses. Plaintiffs asserted the jury assessed damages based on the total value of the dealerships, including the real estate, because the dealerships would have received financial termination assistance from GM and Chrysler if GMAC had not preemptively shut down their operations. In support, Plaintiffs cite the testimony of Thomas Bellairs, who stated the $3 million diminution of property value provided a basis for the amount GM would have paid Plaintiffs in dealer assistance. Plaintiffs further argue the property losses are personal because Mente was named as borrower on the notes and mortgage for the partnership properties, and the foreclosure proceedings on these properties were instituted against Mente personally. In addition, Plaintiffs state the partnerships' general partner (Mente himself) assigned Mente all claims and damages to partnership interests.
Plaintiffs also submitted the organizational documents for Don's Limited Partnership, Don's Second Limited Partnership, and Don's Corporation. The partnership agreements show Mente was the limited partner for both partnerships and held a 98 percent in each. Don's Corporation, for which Mente is the sole shareholder, director, and board member, owned a 2 percent interest in each partnership. The documents include affidavits authorizing Mente to enter into mortgage agreements on behalf of the partnership. These organizational documents were not introduced at trial, but Plaintiffs argue this Court can consider them post-trial because they are public records and were always available to GMAC.*fn22
In support of its renewed motion for judgment as a matter of law, GMAC argues this Court should overturn the jury verdict because: (1) the Forbearance Agreement was valid and barred Plaintiffs' suit; (2) Plaintiffs ratified the Forbearance Agreement by accepting the return of funds from GMAC; (3) Plaintiffs' measure of damages was too speculative for the jury to award any amount; (4) Plaintiffs lacked standing to ...