GETMAN v. MATHEWS

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Docket Number

Docket No. 58062.

Attorney(S)

Lauck, Leto Cavanaugh, P.C. (by Thomas J. Cavanaugh), for plaintiff and counter-defendant. Huegli Parrish (by Sharon Parrish), for defendants and counter-plaintiffs.

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Smart Summary

Factual and Procedural Background

Mark H. Getman brought an action for corporate dissolution and was named as a counter-defendant by Donald and Anna Mathews in a counterclaim alleging breach of contract and tortious interference with their ambulance business. A jury found against Getman on the counterclaim and awarded the Mathewses $54,972. The trial court denied Getman’s motion for a new trial, and Getman appealed the judgment and that order. The appeal concerned only the Mathewses’ counterclaim, not Getman’s corporate-dissolution claim. [1][2]

Legal Issues Presented

Whether the trial court’s jury instructions on liability and damages were sufficiently erroneous to constitute manifest injustice and require reversal despite Getman’s failure to object at trial. [3][4]
Whether the instructions improperly addressed intentional interference, exemplary damages, and lost profits. [4][5][6][7][8]

Arguments of the Parties

Getman

Getman challenged the judgment on the counterclaim and argued that the jury instructions were erroneous. He also contended that he was denied a fair trial by counsel misconduct and that the verdict was against the great weight of the evidence, although the court did not reach those additional arguments. [1][9]

Mathewses

The Mathewses proceeded on a theory of intentional interference with business relations. Their counsel argued for an award based on “gross profits.” [4][8]

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bluemlein v Szepanski, 101 Mich. App. 184, 191; 300 N.W.2d 493 (1980)	Manifest injustice exists when jury instructions incorrectly state the law and the verdict may have resulted from a misconception of the law.	The court applied this standard to review unobjected-to instructions and found the liability and damages instructions sufficiently misleading to warrant a new trial. [3][4][8]
Schipani v Ford Motor Co., 102 Mich. App. 606, 621; 302 N.W.2d 307 (1981)	Intentional interference with business relations requires intentional and unjustified interference.	The trial court failed to instruct the jury on these requirements, including the meaning of “intentional” and the necessity that the interference be unjustified. [4]
Placek v Sterling Heights, 405 Mich. 638, 667; 275 N.W.2d 511 (1979)	Contributory negligence had been abolished in Michigan.	The trial court improperly referred to contributory negligence in its instructions. [4]
Kewin v Massachusetts Mutual Life Ins Co., 409 Mich. 401; 295 N.W.2d 50 (1980)	Exemplary damages are ordinarily inappropriate in commercial contexts.	The court cited this principle in rejecting the trial court’s invitation to award exemplary damages for nonpecuniary injuries in the commercial dispute. [5]
Bailey v Graves, 411 Mich. 510, 513, 515; 309 N.W.2d 166 (1981)	Exemplary damages require proof that the defendant acted maliciously or so willfully and wantonly as to demonstrate reckless disregard of the plaintiff’s rights.	The trial court omitted the malice requirement, and because the verdict was unapportioned, the court could not determine whether the damages included an improperly awarded exemplary component. [6][7]
Lawton v Gorman Furniture Corp., 90 Mich. App. 258; 282 N.W.2d 797 (1979)	Lost-profit damages must be based on net profits rather than gross profits.	The trial court failed to distinguish gross from net profits despite the Mathewses’ argument for gross profits, potentially misleading the jury on damages. [8]
Restatement Torts, 2d, § 766B, p. 20	Intentional interference with business relations involves liability for pecuniary damages.	The court used the rule to conclude that the instructions improperly invited nonpecuniary exemplary damages and failed to focus on pecuniary damages. [4][5]

Court's Reasoning and Analysis

Although Getman did not object to the jury instructions at trial, the court could review the alleged error upon a showing of manifest injustice. That standard is met when instructions incorrectly state the law and the verdict may have rested on a legal misconception. [3]

The liability instructions were confusing and referred repeatedly to negligence, even though negligence had neither been pleaded nor proven. The court failed to define “intentional” and failed to instruct that interference with the Mathewses’ business had to be both intentional and unjustified. It also improperly referred to contributory negligence, a doctrine already abolished in Michigan. These errors could have caused the jury to decide liability under an incorrect legal theory. [4]

The damages instructions were independently erroneous. The court invited the jury to award exemplary damages for mental distress, embarrassment, humiliation, and other nonpecuniary injuries, contrary to the rule limiting recovery for intentional interference with business relations to pecuniary damages. [5]

Even assuming exemplary damages could have been awarded, the instructions omitted the requirement that the conduct be malicious or sufficiently willful and wanton to show reckless disregard of the Mathewses’ rights. Because the verdict did not separately identify damages, the court could not determine whether it included an improper exemplary award. [6][7]

The court also found that the jury was not instructed to distinguish gross profits from net profits. Because lost-profit damages must be based on net profits and the Mathewses’ counsel had argued for gross profits, the omission could have led the jury to use an improper damages calculation. [8]

Given the cumulative errors concerning both liability and damages, the court did not need to consider Getman’s remaining claims concerning counsel misconduct and the weight of the evidence. [8][9]

Holding and Implications

Reversed and remanded for a new trial. The judgment on the Mathewses’ counterclaim and the order denying Getman’s motion for a new trial were set aside because the jury instructions created a risk that the verdict rested on misconceptions of the law. [1][10]

The direct consequence was a new trial limited to the Mathewses’ counterclaim; Getman’s corporate-dissolution claim was not part of the appeal. The opinion did not announce a new rule beyond applying established principles concerning jury instructions and damages. [2][3][10]

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GETMAN v MATHEWS

PER CURIAM.

Mark H. Getman, plaintiff in an action for corporate dissolution below, was also named by Donald and Anna Mathews as counter-defendant in their counterclaim for breach of contract and tortious interference with their ambulance business. The jury entered a verdict against Getman on the counterclaim in the amount of $54,972. Getman brought a motion for a new trial, which was denied. Getman appeals as of right the judgment on the jury verdict and the trial court's order denying his motion for a new trial. We reverse and remand for a new trial based on the trial court's erroneous jury instructions.

Getman's original claim for corporate dissolution is not the subject of this appeal. The appeal relates solely to the trial on the Mathewses' counterclaim.

Despite the fact that there was no objection to the instructions at trial, this Court may review Getman's claim of error upon a showing of manifest injustice. Bluemlein v Szepanski, 101 Mich. App. 184, 191; 300 N.W.2d 493 (1980), lv den 411 Mich. 995 (1981). In Bluemlein, supra, this Court held that manifest injustice is shown where the jury instructions "incorrectly stated the law, and the jury's verdict may have been based on a misconception of the law".

In the present case, the court's instructions were highly confusing and replete with inappropriate references to liability theories which had neither been pled nor proven. The court failed to define certain terms essential to the theory of liability pleaded and argued by the Mathewses at trial, that being the tort of intentional interference with business relations. The court failed to define the term "intentional" for the jury and further failed to apprise the jury of the necessity of proving that the alleged interference with the Mathewses' ambulance business was not only intentional but also unjustified. See Schipani v Ford Motor Co, 102 Mich. App. 606, 621; 302 N.W.2d 307 (1981), citing Restatement Torts, 2d, § 766B, p 20. Instead of explaining the elements of the intentional tort involved in this case, the court repeatedly referred to the elements of negligence, a theory which was neither pled nor proven at trial. Compounding the court's confusion of legal theories was its highly inappropriate reference to the defense of contributory negligence, a doctrine which had already been abolished in Michigan by the time of trial. See Placek v Sterling Heights, 405 Mich. 638, 667; 275 N.W.2d 511 (1979). In short, the court's instructions as to liability were erroneous and may well have led the jury to enter its verdict based upon a misconception of the law. Bluemlein, supra.

The court's instructions as to damages were equally erroneous. The court openly invited the jury to award exemplary damages, such as those for "mental distress, embarrassment, humiliation", and other nonpecuniary damages. This contravened the well-established rule that one who commits the tort of intentionally interfering with another's business relations is subject to liability for "pecuniary damages". See Restatement Torts, 2d, § 766B, p 20. Exemplary damages are ordinarily inappropriate in commercial contexts such as the present one. Cf. Kewin v Massachusetts Mutual Life Ins Co, 409 Mich. 401; 295 N.W.2d 50 (1980).

Even if this Court were to accept the Mathewses' premise that exemplary damages could properly have been awarded in the present case — which we specifically decline to do — the trial court's instructions relating to such damages were so erroneous as to mandate reversal. The court failed to inform the jury of the prerequisites for awarding exemplary damages. In Bailey v Graves, 411 Mich. 510, 513; 309 N.W.2d 166 (1981), the trial court defined exemplary damages as "`additional compensation to the plaintiff for humiliation, sense of outrage and * * * injury to the plaintiff's feelings'". The Supreme Court held that such damages may only be awarded "where it is first shown that defendant's conduct was malicious, or so wilful and wanton as to demonstrate a reckless disregard of the plaintiff's rights". Bailey, supra, p 515.

In the instant case, the trial court did not instruct the jury as to the malice requirement for exemplary damages. Absent this crucial instruction, the jury's verdict may well have included an amount for exemplary damages which was based upon the misconception that the Mathewses were not required to show malice. Since the verdict was not apportioned, any tainted quantum of damages is unknown. Under similar circumstances, the Court in Bailey, supra, reversed and remanded for a new trial.

There is one final aspect in which the court's instructions as to damages were erroneous. The court failed to define the term "lost profits", neglecting to distinguish between "gross profits" and "net profits". Damages for lost profits must be based on the loss of net, rather than gross, profits. Lawton v Gorman Furniture Corp, 90 Mich. App. 258; 282 N.W.2d 797 (1979). Since counsel for the Mathewses had emphatically argued for an award of "gross profits" during closing arguments, the court's failure to clarify the meaning of the term "profits" could well have left the jury with a false impression of the proper method for computing damages. Standing alone, the court's failure to properly define "profits" was an error comparable to that found reversible in Bluemlein, supra. Given the degree to which the trial court's instructions as to liability and damages were erroneous, reversal is even more appropriate in the present case.

It is not necessary to review Getman's remaining contentions that he was denied a fair trial by the misconduct of the Mathewses' counsel and that the verdict was against the great weight of the evidence.

Reversed and remanded for a new trial.