Convergent Mobile, Inc. v. JTH Tax, Inc.

Background

This case involved an alleged breach of a three-year commercial agreement approximately eighteen months after it began. After a bench trial, the court issued findings under Federal Rule of Civil Procedure 52 and entered judgment for Convergent Mobile, Inc. (CMI) against JTH Tax, Inc. (JTH). CMI then challenged the amount of damages.

Motion

CMI moved for a new trial under Rules 59(a), 59(e), and 52(b), arguing that the damages award resulted from a manifest error of law or fact. CMI requested a new trial on damages or, alternatively, an amended judgment awarding $2,257,200 plus prejudgment interest, for a total judgment of $2,538,662.86. CMI also submitted a declaration from its chief executive officer stating that he had misunderstood questions at trial about CMI’s net profits, along with additional spreadsheets.

Court’s analysis

For a new trial after a nonjury trial, the court explained that recognized grounds include a manifest error of law, a manifest error of fact, or newly discovered evidence. The party seeking a new trial must show harmful error.

The court found no manifest error of law. CMI did not identify an incorrect statement of California law concerning breach of contract, the implied covenant of good faith and fair dealing, or mitigation of damages. Instead, CMI disputed how the court applied the facts to the law, particularly the testimony concerning net profits.

The court rejected CMI’s attempt to change or supplement that testimony after trial. It found that the proposed evidence was not genuinely new because it could have been presented during trial. The court also questioned the evidentiary basis and accuracy of the spreadsheets. It had discounted the chief executive officer’s testimony because it found him not credible and believed he tended to skew the truth for his own benefit. The court noted that he had testified that he worked only on litigating the case from August 2019 until trial, had no other clients, and had laid off all employees as of August 2019. The court therefore did not find credible the claim that he lacked a relatively accurate understanding of CMI’s lost net profits.

The court also held that it was permitted to question witnesses. Federal Rule of Evidence 614(b) allows a court to examine a witness regardless of which party called the witness. The court concluded that its questions about mitigation were within its authority and served to clarify the facts.

Disposition

The court denied CMI’s motion for a new trial. The provided opinion does not state a separate disposition for the alternative request to alter or amend the judgment beyond the order’s denial of the motion for a new trial.