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Newbury v. Virgin
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2002 ME 119
Docket: Ken-01-383
Submitted
on briefs: May 30, 2002
Decided: July 30, 2002
Panel: SAUFLEY, C.J., and CLIFFORD, RUDMAN, DANA, ALEXANDER, CALKINS and
LEVY, JJ.
JUSTIN NEWBURY
v.
HOWARD VIRGIN
CLIFFORD, J.
[¶1] Justin Newbury appeals from a judgment entered in the Superior
Court (Kennebec County, Marden, J.) against Howard Virgin for illegal eviction
and conversion of personal property. Pursuant to M.R. Civ. P. 50(b) the court,
concluding that the evidence was insufficient as a matter of law, vacated that part
of the jury verdict awarding Newbury consequential damages for lost profits and
punitive damages. Following the court's action, the judgment in favor of
Newbury was limited to compensatory damages for conversion, and damages and
attorney fees for the illegal eviction. Newbury contends that the court erred
because the evidence, viewed in a light most favorable to him, was sufficient to
support a jury finding that Newbury was entitled to recover damages for lost
profits, and a finding that Virgin acted with malice, entitling Newbury to punitive
damages. We vacate the court's judgment.
[¶2] The evidence, viewed in a light most favorable to Newbury,
establishes the following facts: During and following college, Newbury worked at
over a dozen nightclubs in a variety of capacities. He developed familiarity with
inventory, cash flow, and the financial aspects of clubs and bars. He also ran a
successful disk jockey business while living in Maine.
[¶3] After saving his money for more than two years, Newbury decided to
open a chemical-free dance club in Augusta, which he eventually named "Club
Xtremis." Using an employee manual and business plan he obtained from his
previous work in the nightclub industry, and relying on his own knowledge and
experience, he created a business plan for Club Xtremis. Newbury agreed to rent
space for the nightclub from Virgin at a property located at 333-339 Water Street
for $93 per week, with the first six weeks of rent being waived because Newbury
had to clean-up and repair the leased premises.
[¶4] Virgin is an experienced landlord who has owned as many as forty
residential and commercial rental properties at one time. He has a law degree, has
worked in the real estate business for over fifty years, is knowledgeable about
landlord-tenant relationships, and is familiar with leases, including lease
agreements similar to his agreement with Newbury. Virgin is familiar with the
forcible entry and detainer procedures for evicting tenants.
[¶5] During the initial six weeks of the lease, Newbury, along with family,
friends, and volunteers, worked long hours cleaning and repairing the property,
and preparing it for the chemical-free dance club. Newbury leased personal
property and equipment for the club, such as chairs, tables, dishes, sinks, and a
security system. He also obtained the required licenses and certificates for
opening a dance club.
[¶6] Club Xtremis opened for business on October 15, 1998. The club was
an immediate success, drawing 120 patrons on the first evening, a Friday, and 150
people on the following evening. The club sustained its success over the next
couple of weekends, hosting even larger crowds. In its first three weekends, Club
Xtremis generated gross revenues totaling more than $4600. The revenue
generated within the first three weeks of business allowed Newbury to recover all
the costs he incurred in creating and starting the business. Newbury testified that
he would have been able to sustain the revenues he received during the first three
weeks of business indefinitely, revenues that essentially amounted to a net profit
of $350 per week.
[¶7] On Saturday, October 31, 1998, Newbury tendered a check to Virgin
for the upcoming week's rent and the prior month's electric bill. The next
morning, Newbury went back to Club Xtremis to clean-up. When he arrived at
the club, Newbury found a note on the door written by Virgin, stating that the
locks were changed and that Newbury would have to contact Virgin at his Florida
residence in order to get into the building. The note listed Virgin's telephone
number in Florida. Virgin had left for Florida immediately after changing the
locks on the club. Virgin had long standing plans to leave for Florida on that
Sunday, but never gave Newbury any prior notice that he was going to lock
Newbury out.
[¶8] Newbury reached Virgin by telephone in Florida that day. Virgin
refused to discuss the matter and hung up on him. Only after Newbury's mother
called and pleaded with Virgin to let her son retrieve his personal items, such as
his insulin to treat his diabetes, did Virgin send a key to Justin Roy, a tenant of
Virgin who managed Virgin's property. It was not until November 5 that
Newbury was able to get back into the club, and even then, Newbury was allowed
to retrieve only his personal financial records, money that was in the cash box,
personal tools and disk jockey items, and his insulin. Roy, at Virgin's direction,
refused to allow Newbury to retrieve any of his business equipment at that time.
Newbury was unable to regain possession of his business equipment until the third
week of November. Virgin returned the week's rent paid by Newbury via postal
mail sometime during the first week of November.
[¶9] Prior to Club Xtremis's opening, Roy and Virgin had discussed the
possibility of Roy running his own dance club where Club Xtremis was located.
Virgin had even purchased an insurable interest in Roy's disk jockey equipment to
help Roy with his plans. Virgin testified that he had become "pretty well upset"
with Newbury because Newbury was not operating the club in the manner Virgin
wanted. After Newbury was locked out, Roy obtained a dance license for a club
at the same location as Club Xtremis.
[¶10] In December of 1998, in an attempt to sustain the momentum
generated by Club Xtremis, Newbury opened another club called Club Fusion
located at 349 Water Street. Newbury could not open Club Fusion earlier because
of the delay he incurred in reacquiring his business equipment. Club Fusion did
not generate the business generated at Club Xtremis before the lock out, and Club
Fusion was eventually shut down.
[¶11] Newbury brought suit against Virgin for illegal eviction and for
conversion of Newbury's property during the course of the illegal eviction.
Virgin acted pro se at the trial. Following the close of the evidence, pursuant to
M.R. Civ. P. 50(a), the trial court granted Newbury's request for a directed
verdict on Virgin's liability for the illegal eviction. The trial court also stated that
although it was going to let the jury consider lost profits and punitive damages
claimed by Newbury, it intended to vacate any such awards and direct verdicts in
favor of Virgin.
[¶12] With a special verdict form, the jury returned a verdict for Newbury
awarding $4575 as damages on the illegal eviction, $3500 for conversion of the
property, $52,000 for subsequent lost profits and earnings from the temporary loss
of use of Newbury's property, and $25,000 in punitive damages. Following the
jury's verdict, without any request from Virgin, and based on what it considered
to be insufficient evidence, pursuant to M.R. Civ. P. 50(b) the trial court vacated
the damages awarded by the jury for lost profits, and also vacated the award for
punitive damages. The court then entered a judgment on the verdict, awarding
Newbury $8075 in damages for the eviction and conversion, and $16,542 in
attorney fees and $1603.24 in court costs on his illegal eviction claim. See
14 M.R.S.A. § 6014(2)(B) (Supp. 2001) (attorney fees may be awarded to tenant
illegally evicted).
[¶13] Newbury appealed. Virgin filed no notice of appeal.
[¶14] Newbury's contention is that the evidence was sufficient to support
the jury awards of lost profits and punitive damages. Virgin, acting pro se, has
not responded to any of Newbury's contentions in his appellee brief. Rather,
despite neglecting to file any notice of appeal, he argues that we should vacate the
entire judgment in favor of Newbury because the Superior Court violated his
rights to due process and his rights under the American with Disabilities Act by
failing to accommodate his hearing disability. Because Virgin never raised in the
trial court the issue he now raises for the first time on appeal, he failed to properly
preserve his contention and accordingly, we will not consider it. See McAfee v.
Cole, 637 A.2d 463, 466-67 (Me. 1994) (unless it is obvious error an issue raised
for the first time on appeal is deemed unpreserved and will not be considered on
appeal).
I. LOST PROFITS
[¶15] In reviewing a trial court's grant of a Rule 50(b) motion for a
judgment as a matter of law, we examine "the jury verdict to 'determine if any
reasonable view of the evidence and those inferences that are justifiably drawn
from that evidence supports the jury's verdict.'" Maine Energy Recovery Co. v.
United Steel Structures, Inc., 1999 ME 31, ¶ 6, 724 A.2d 1248, 1250 (quoting
Townsend v. Chute Chem. Co., 1997 ME 46, ¶ 8, 691 A.2d 199, 202).
[¶16] In a conversion claim, the traditional measure of damages is the full
value of the property at the time of the unlawful conversion. Doughty v. Sullivan,
661 A.2d 1112, 1122 (Me. 1995). "In certain cases, however, consequential
damages, including lost earnings, may be warranted when the plaintiff can show
that the damages were proximately caused by the defendant's acts and the amount
of damages can be shown with reasonable certainty." Id.
[¶17] Newbury presented uncontroverted evidence that he had extensive
experience, acquired over the past decade, working in and dealing with the
financial aspects of nightclubs. Virgin made no objection to Newbury's testimony
about his specialized knowledge of club finances, successes, and profits.
Newbury's testimony on his work related experience and knowledge, along with
his intimate familiarity with Club Xtremis as its owner, was sufficient to qualify
him to testify to the amount of profits he lost from the conversion of his business
equipment by Virgin.
[¶18] Claims for lost earnings or profits for conversion, however, generally
are limited to the period it would take a reasonable person to replace the converted
property. Id. at 1122-23. Newbury testified that Club Xtremis would have netted
a profit of at least $350 per week. This testimony was sufficient to establish that
Newbury was entitled to $1050 in lost profits for the three-week period during
which his business equipment was held by Virgin.
[¶19] The jury awarded lost profits of $52,000; this amount approximates a
claim for lost profits for a period of nearly three years. Newbury contends that
the evidence was sufficient to support the $52,000 amount because his testimony
established that as a result of not being able to have his business equipment during
the first three weeks of November of 1998 he was unable to take advantage of the
good will generated at Club Xtremis and transfer that good will to Club Fusion.
According to Newbury, Club Fusion's profit-generating potential could have
lasted into perpetuity, had it captured Club Xtremis's "momentum." We disagree.
[¶20] Although Virgin has offered no argument on the issue of lost profits,
an award of damages must be supported by credible evidence. Newbury offered
no corroborating evidence establishing that Club Xtremis's profits would be
sustainable throughout the year or for any extended period of time, let alone
indefinitely. There was no credible evidence demonstrating that Newbury's
efforts to mitigate his damages were completely frustrated by the fact that he
could not capitalize on the "momentum" created by Club Xtremis. The evidence
is insufficient to justify the extent of the period for which the award was given or
the reasonableness of the amount of the award. See Eckenrode v. Heritage Mgmt.
Corp., 480 A.2d 759, 766 (Me. 1984) ("Plaintiff's own opinion as to the
increased profits he would have reaped had he operated the shop for the entire
period of his contract, based merely on one year's past performance of the shop
and on changes that would result under the contract as to plaintiff's expenses and
profit retention, was not an informed opinion based on relevant facts in evidence
upon which the jury could rely in assessing damages for claimed lost profits.").
On the state of the evidence in this case, we see no reason to depart from the
principle espoused in Doughty, 661 A.2d at 1122-23, that damages for lost
earnings and profits for conversion are usually limited to the time period it would
take a reasonable person to replace the converted items. We conclude that
Newbury's claim for lost profits should be limited to a period of three weeks, or
$1050.
II. PUNITIVE DAMAGES
[¶21] "[I]n order to recover punitive damages, a plaintiff must prove by
clear and convincing evidence that the defendant acted with malice." Tuttle v.
Raymond, 494 A.2d 1353, 1354 (Me. 1985). Malice can be express or implied.
Id. at 1361. Express malice exists "where the defendant's tortious conduct is
motivated by ill will toward the plaintiff." Id. Malice also exists "where
deliberate conduct by the defendant, although motivated by something other than
ill will toward any particular party, is so outrageous that malice toward a person
injured as a result of that conduct can be implied." Id. Implied malice is not
established "by the defendant's mere reckless disregard of the circumstances." Id.
[¶22] The evidence was sufficient for a jury to conclude that Virgin
planned to drive Newbury out of business so that Roy and Virgin could start-up a
similar business in the same location. Virgin admitted that he did not like the way
Newbury conducted himself and did not like the fact that, in his eyes, Club
Xtremis was not shaping up the way Virgin thought it should. It is reasonable to
infer that Virgin knew that by locking Newbury out of the rented premises, and
prohibiting Newbury access to his business equipment, Club Xtremis would fail.
Virgin's agreement with Roy, the egregious illegal lockout of the rented premises,
and the subsequent wrongful retention of Newbury's business equipment, along
with evidence of Virgin's personal animosity towards Newbury and Newbury's
business practices, are sufficient to support a finding by clear and convincing
evidence that Virgin acted with actual malice or that Virgin's conduct was so
outrageous that malice could be implied.
The entry is:
Judgment vacated in part. Remanded to the
Superior Court for a modification of the judgment
to reflect a reinstatement of an award for lost
profits in the amount of $1050 and of the jury's
award for punitive damages in the amount of
$25,000. Judgment affirmed in all other respects.
_________________________________________
Attorney for the plaintiff:
Walter F. McKee, Esq.
Lipman & Katz
P.O. Box 1051
Augusta, Maine 04332
For the defendant:
Howard Virgin, pro se
1571 South Atlantic Ave.
New Smyrna Beach, Florida 32169
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