Jones Engineering v. Faulkner/Baker ( 1999 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JONES ENGINEERING SALES,
INCORPORATED,
Plaintiff-Appellee,
v.
FAULKNER/BAKER AND ASSOCIATES,
No. 98-2011
INCORPORATED,
Defendant-Appellant,
and
LIEBERT CORPORATION,
Defendant.
JONES ENGINEERING SALES,
INCORPORATED,
Plaintiff-Appellant,
v.
FAULKNER/BAKER AND ASSOCIATES,
No. 98-2084
INCORPORATED,
Defendant-Appellee,
and
LIEBERT CORPORATION,
Defendant.
Appeals from the United States District Court
for the District of South Carolina, at Columbia.
Patrick Michael Duffy, District Judge.
(CA-95-1576-3-23)
Argued: September 23, 1999
Decided: October 26, 1999
Before WILKINS, NIEMEYER, and TRAXLER, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Andrew Frederick Lindemann, DAVIDSON, MORRI-
SON & LINDEMANN, P.A., Columbia, South Carolina, for Appel-
lant. Daniel Tompkins Brailsford, ROBINSON, MCFADDEN &
MOORE, P.C., Columbia, South Carolina, for Appellee. ON BRIEF:
Charles H. McDonald, ROBINSON, MCFADDEN & MOORE, P.C.,
Columbia, South Carolina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Faulkner and Baker Associates, Inc. ("Faulkner/Baker") appeals
from the district court's refusal to permit an amended answer raising
the statute of limitations as a defense. Jones Engineering Sales, Inc.
("Jones"), by cross appeal, complains of the court's refusal to incor-
porate a proffered charge into the court's jury instructions. We affirm.
I.
In the latter part of the 1980s and early 1990s, Jones and Faulk-
ner/Baker were manufacturer's representatives for Liebert Corpora-
tion ("Liebert"). Liebert manufactures power and air conditioning
systems for business and industrial use. Liebert assigned Faulk-
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ner/Baker the upstate region of South Carolina, while Jones was given
the Columbia and Charleston markets.
Due to poor performance in 1989, Liebert's southeast regional
manager contemplated terminating Jones pursuant to the parties' Rep-
resentative Agreement, which was essentially an at-will contract with
a 30-day notice provision. Jones appealed to the upper echelons of
Liebert's management and was afforded another opportunity to boost
sales. Though Jones' performance improved initially, Jones'
depressed sales again caught Liebert's eye.
In anticipation of making changes, Liebert requested that Faulk-
ner/Baker prepare a marketing plan for Jones' South Carolina terri-
tory. In its December 16, 1991 marketing plan, Faulkner/Baker
offered to replace Jones as the Liebert representative in the Columbia
and Charleston markets and predicted that it could achieve a higher
sales volume than Jones. In the marketing plan, Faulkner/Baker indi-
cated that Liebert's reputation in Columbia and Charleston was "tar-
nished" because of Jones and that many customers did not want "`to
do business with Jones Engineering.'" (J.A. at 352 & 357).
In February 1992 Liebert informed Jones that its low level of sales
was "clearly not acceptable" and that Jones' performance had "de-
clined over the past couple of years." (J.A. at 409). Jones received no
more chances and a March 20, 1992 letter informed Jones that Liebert
was terminating the Representative Agreement.
Jones filed suit in April 1995 in South Carolina state court against
Faulkner/Baker and Liebert. The complaint alleged tortious interfer-
ence with Jones' Liebert contract by Faulkner/Baker, wrongful termi-
nation by Liebert, unfair trade practices by Liebert, and civil
conspiracy. Because of diversity of citizenship, see 28 U.S.C.A.
§ 1332 (West 1993 & Supp. 1998), the defendants removed the case
to federal court, see 28 U.S.C.A. § 1441(a) (West 1994). Liebert
raised the statute of limitations as an affirmative defense, but Faulk-
ner/Baker raised no affirmative defenses.
In July 1995 the district court issued a consent order permitting
Faulkner/Baker to amend its answer to raise the statute of limitations.
At that time Faulkner/Baker was represented by two attorneys: one
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assigned to the case by Faulkner/Baker's insurance company, and the
other retained by Faulkner/Baker itself. The attorney provided by the
insurance company later withdrew from representation because the
carrier determined no coverage existed and at the same time the case,
for administrative reasons, was transferred between judges. Appar-
ently some confusion resulted on the part of the attorneys for Faulk-
ner/Baker and the answer was never amended.
In October 1996, after discovering the marketing plan, Jones
amended its complaint to assert against Faulkner/Baker claims for
business defamation and violation of the South Carolina Unfair Trade
Practices Act ("SCUTPA"). In answering the amended complaint,
Faulkner/Baker did not raise the statute of limitations.1 Shortly after
Jones amended its complaint, the court granted Liebert summary
judgment, leaving Faulkner/Baker as the sole defendant.
In September 1997 the attorney originally assigned to the case by
Faulkner/Baker's insurance company again became involved with the
proceedings and realized the statute of limitations had not been raised.
With jury selection but two months away, Faulkner/Baker moved to
amend its answer. The district judge denied the motion, stating that
Faulkner/Baker had been "dilatory" and that leave to amend would
not be granted in the face of such delay when "all other parties have
engaged in extensive discovery and pre-trial preparation during the
interim under the justifiable assumption that the case would be going
to trial." (J.A. at 109).
The case was eventually tried with three causes of action presented
to the jury: defamation, intentional interference with contractual rela-
tions, and the SCUTPA. In crafting jury instructions regarding inten-
tional interference with contractual relations, the district judge refused
to charge Jones' Supplemental Instruction No. 35 which described
proximate cause and averred that the defamation need not have been
the sole cause of Jones' injury.
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1 Under South Carolina law, an action for libel or slander must be
brought within two years. See S.C. Code Ann.§ 15-3-550(1) (Law. Co-
op. Supp. 1998).
4
Though Faulkner/Baker objected to only the contributing cause
portion of the proffered instruction, the district judge rejected the
entire instruction and did not charge the law on foreseeability. How-
ever, the district judge did charge that Jones "must show that but for
the interference, the contractual relationship would have continued."
(J.A. at 335). The jury returned a verdict of $50,000 in favor of Jones
on the defamation claim, but returned defense verdicts on intentional
interference with contractual relations and the SCUTPA. Faulk-
ner/Baker moved for a judgment as a matter of law on the defamation
claim and the motion was denied. Faulkner/Baker now appeals the
district court's refusal to permit an amended answer raising the statute
of limitations, and Jones cross appeals the district judge's refusal to
charge Supplemental Instruction No. 35.
II.
Faulkner/Baker claims that the district court erred in denying its
motion to amend its answer to raise the statute of limitations as a
defense. Recognizing that the trial court is in a superior position to
make such a determination, we review the district court's decision for
abuse of discretion. See Chaudhry v. Gallerizzo , 174 F.3d 394, 404
(4th Cir. 1999), petition for cert. filed, (U.S. July 6, 1999) (No. 99-
5198); Davis v. Virginia Commonwealth Univ., 180 F.3d 626, 628
(4th Cir. 1999). Rule 15(a), in pertinent part, provides that when a
party moves to amend a pleading, "leave shall be freely given when
justice so requires." Fed. R. Civ. P. 15(a). According to the Supreme
Court:
In the absence of any apparent or declared reason--such as
undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party
by virtue of allowance of the amendment, futility of amend-
ment, etc.--the leave sought should, as the rules require, be
"freely given."
Foman v. Davis, 371 U.S. 178, 182 (1962). It is well settled in this
circuit that delay unaccompanied by prejudice to the non-movant or
attempted harassment "should not suffice as reason for denial" under
Rule 15(a). Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir.
5
1980); see also Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743
F.2d 1039, 1044 (4th Cir. 1984). However, "[a]mendments near the
time of trial may be particularly disruptive, and may therefore be sub-
ject to special scrutiny." Deasy v. Hill, 833 F.2d 38, 41 (4th Cir.
1987).
In the present case, Faulkner/Baker's delay was lengthy and inex-
cusable. Faulkner/Baker had three opportunities to raise the statute of
limitations: (1) in its original answer, (2) after receiving the consent
order, and (3) in its answer to the amended complaint. Though some
confusion may have resulted at the time of the consent order when the
attorney appointed by the insurance carrier withdrew from representa-
tion and the case was transferred between judges, this does not
explain the other missed opportunities. The amended complaint alleg-
ing defamation (and the only ground on which the jury found for
Jones) was filed in October 1996. After the passage of almost one
year, and just two months before the scheduled trial date, Faulk-
ner/Baker finally moved to amend its answer to assert the statute of
limitations. The district court rightly found that Faulkner/Baker's con-
duct was "beyond dilatory in seeking to assert its statute of limitations
defense." (J.A. at 108).
Evidence of prejudice to Jones is also abundant. 2 The statute of
limitations was not raised to the defamation cause of action until
Faulkner/Baker moved to amend its answer in September 1997. The
co-defendant, Liebert, did raise the statute of limitations when it
answered Jones' original complaint, but the original complaint made
no mention of defamation. Moreover, once Jones alleged business
defamation, the cause of action was directed at Faulkner/Baker, not
Liebert. As Liebert was granted summary judgment shortly after the
amended complaint was filed, Faulkner/Baker cannot argue that Jones
was on notice of the statute of limitations defense as to defamation
because of Liebert's answer to the original complaint. See National
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2 We reject Faulkner/Baker's contention that the district court abused
its discretion by failing to specifically state that Jones would suffer preju-
dice. "As long as its reasons are apparent in the record, a district court's
failure to articulate grounds for its denial of leave to amend does not
amount to an abuse of discretion." National Bank of Washington v.
Pearson, 863 F.2d 322, 328 (4th Cir. 1988).
6
Bank of Washington v. Pearson, 863 F.2d 322, 328 (4th Cir. 1988)
(noting that because the answer did not assert privilege, plaintiff
would not have devoted legal resources to researching the privilege
issue); Deasy, 833 F.2d at 41 (rejecting plaintiff's contention that
defendant had notice of negligence claim that was not pled because
plaintiff's expert had earlier indicated defendant was negligent). As
amendments made on the eve of trial and after the completion of dis-
covery can be "particularly disruptive," Deasy, 833 F.2d at 41, and
Jones had no reason to devote legal resources to countering the statute
of limitations defense, Jones would have suffered prejudice had
Faulkner/Baker been given leave to amend its answer at a date so
close to the scheduled trial. In light of the amount of evidence indicat-
ing undue delay as well as prejudice to Jones, the district court did
not abuse its discretion in denying Faulkner/Baker's motion to amend.3
III.
Jones cross appeals claiming that the district court erred in refusing
to charge Supplemental Instruction No. 35.4 "We must determine
whether the district court's instructions, construed as a whole, prop-
erly informed the jury of the controlling legal principles without mis-
leading or confusing the jury to [Jones'] prejudice." Hartsell v.
Duplex Prods., Inc., 123 F.3d 766, 775 (4th Cir. 1997); see also
Hardin v. Ski Venture, Inc., 50 F.3d 1291, 1294 (4th Cir. 1995).
Jones' Supplemental Instruction No. 35 provided:
For an act to be a proximate cause of an injury, the injury
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3 Faulkner/Baker also asks the court for judgment as a matter of law
based on the statute of limitations. Because this affirmative defense was
never pled, see Fed. R. Civ. P. 8(c), and the district court did not abuse
its discretion in denying the amendment to Faulkner/Baker's answer, we
decline to so rule.
4 Jones did not move for a new trial after the verdict. Though the better
remedy to correct an erroneous jury instruction is a motion for a new
trial, see Martin v. Cavalier Hotel Corp., 48 F.3d 1343, 1349-50 n.2 (4th
Cir. 1995), this court will review denials of instructions so long as the
refusal to charge was duly objected to and preserved in the record, see
United States v. Mountain State Fabricating Co., 282 F.2d 263, 265 (4th
Cir. 1960).
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must be a foreseeable consequence of the act. The test of
foreseeability is whether some injury to another is the natu-
ral and probable consequence of the complained of act.
However, the act need not be the sole cause of the injury.
It is enough that the act was a contributing cause to the
injury.
(J.A. at 347). Though Faulkner/Baker objected to only the last two
sentences of the jury instruction regarding "sole cause," the district
court rejected the entire charge and did not charge at all on foreseea-
bility. The crux of the proffered instruction was to advise the jury that
the defamation need not have been the sole cause of the injury to
Jones insofar as sales performance also could have figured in Lie-
bert's decision. Jones reasons that because the jury returned a verdict
for $50,000 on the defamation cause of action, the jury awarded gen-
eral damages for injury to reputation.5 Jones further argues that the
jury's failure to return a plaintiff's verdict on intentional interference
with contractual relations, after the jury found the business plan
defamatory, indicates that the jury did not find the defamation to be
the sole cause of the injury. Thus, Jones believes that it was unduly
prejudiced.
In charging causation regarding intentional interference with con-
tractual relations, the district judge instructed the jury that "[t]he
alleged act of interference must influence, induce or coerce . . . one
of the parties to the contract to abandon the relationship or breach the
contract. In other words, the plaintiff must show that but for the inter-
ference, the contractual relationship would have continued." (J.A. at
335). At the beginning of trial, Jones essentially previewed the court's
charge when its attorney admitted that "[w]e have the burden, under
tortious interference, to prove that but for the defendant's acts Mr.
Jones' company would not have been terminated." (J.A. at 124). In
light of South Carolina law and viewing the jury instructions as a
whole, Jones was not prejudiced by the court's refusal to charge Sup-
plemental Instruction No. 35. Under South Carolina law, if Jones'
contract would have been terminated anyway because of poor sales
performance, the defamation in the marketing plan could not have
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5 The verdict form did not differentiate between general and special
damages.
8
sustained a plaintiff's verdict for tortious interference. See Smith v.
Citizens and S. Nat'l Bank, 128 S.E.2d 112, 114 (S.C. 1962) (holding
that bank's alleged interference with contract between creditor and
debtor by demanding that debtor issue check jointly to creditor and
bank was not causally connected to debtor's refusal to pay which
resulted solely from debtor's own volition); Bocook Outdoor Media,
Inc. v. Summey Outdoor Adver., Inc., 363 S.E.2d 390, 394 (S.C. Ct.
App. 1987) (stating that "plaintiff must show that, but for the interfer-
ence, the contractual relationship would have continued"), overruled
on other grounds, O'Neal v. Bowles, 431 S.E.2d 555 (S.C. 1993); see
also F. Patrick Hubbard & Robert L. Felix, The South Carolina Law
of Torts 381 (2d ed. 1997) (examining South Carolina law and con-
cluding that "where there is no breach or where the breach would
have occurred anyway, then there is no cause of action"). Though the
district court should have instructed the jury on foreseeability, in the
context of the overall charge and based on the record as a whole, the
charge "properly informed the jury of the controlling legal principles
without misleading or confusing the jury to [Jones'] prejudice."
Hartsell, 123 F.3d at 775.
IV.
For the foregoing reasons, we conclude that the district court did
not abuse its discretion in denying Faulkner/Baker's motion to amend.
Moreover, based on the record as a whole and the overall charge, the
district court did not commit reversible error in its refusal to instruct
the jury in accordance with Jones' Supplemental Instruction No. 35.
AFFIRMED
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