Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—S.D. Ill.: Broker denied new trial over termination dispute, (Mar 23, 2016)

An individual broker was not entitled to the alteration or amendment of a judgment or a new trial in his breach of contract action based on the termination of his brokerage agreement, according to the federal district court in Benton, Illinois. The court determined that: (1) there was no manifest error of law concerning the trial of his case; (2) the verdict was not against the manifest weight of the evidence; (3) the trial was not unfair; and (4) the evidence was sufficient to support the verdict (Burford v. Accounting Practices Sales, Inc., March 21, 2016, Gilbert, J.).

William Burford and Accounting Practices Sales, Inc. (APS) entered into an agreement, giving Burford the right to broker accounting practices for APS. Although it had the right to do so, APS did not terminate the agreement in 2011 when Burford failed to achieve his minimum yearly sales volume. However, APS later terminated the agreement shortly after asking its brokers to enter into franchise agreements and Burford refusing to do so.

Burford brought a breach of contract action against APS, which initially moved for summary judgment on the grounds that the agreement was terminable at will. The motion was denied, but APS eventually prevailed when a jury found that: (1) Burford had not achieved his minimum yearly sales volume for 2011 and (2) APS had not waived its right to terminate the agreement based on that shortcoming.

After judgment was entered for APS, Burford filed a motion to alter or amend the judgment or, in the alternative, for a new trial. He also asked the court for a judgment as a matter of law. Burford’s argued that APS should not have been allowed to change its theory of defense because: (1) the “mend to hold” doctrine prevents a party to a contract from changing its justification for its position after its first position fails and in circumstances that would indicate bad faith and (2) APS should not have been allowed to change its theory of defense from “at will” employment to termination for cause.

The court denied Burford’s request for judgment as a matter of law because he failed to seek it before the case was submitted to a jury. After finding that the “mend to hold” doctrine did not apply, the court also denied Burford’s request to alter or amend the judgment or for a new trial. The court determined that the “mend to hold” doctrine did not apply because APS did not change its justifications for terminating its agreement with Burford and allowing the evidence and argument that Burford believed the court should have allowed would have only confused the jury and introduced irrelevant evidence.

Burford argued that the court’s refusal to admit his Exhibit 13, an email that he claimed contained admissions that APS had not enforced its performance requirements in the past, rendered his trial unfair. The court disagreed after finding that: (1) the limited probative value of a couple of statements in the email, which primarily concerned the transition of APS brokers to franchisees, was outweighed by the danger of misleading or confusing the jury; and (2) any error in excluding the evidence was harmless.

Burford also argued that the jury’s decision that APS did not waive the performance requirements in the agreement was against the manifest weight of the evidence. The court, however, found that there was enough evidence for a reasonable jury to reject the notion that APS intended to relinquish its right to terminate Burford’s contract instead of simply making allowances for what it viewed as special circumstances.

Finally, the court found that any evidentiary error or jury instruction relating to damages was harmless and would not justify a new trial and APS’s pleading was sufficient to put Burford on notice that it was claiming his termination was justified because of his poor performance.

The case is No. 12-CV-1212-JPG-SCW.

Attorneys: David Patrick Hall (Law Office of David Hall) for William J. Burford. John F. Grady (Grady Bell LLP) for Accounting Practice Sales, Inc.

Companies: Accounting Practice Sales, Inc.

Cases: FranchisingDistribution IllinoisNews