Selective Insurance Company of America v. Heritage Construction Companies, LLC
- John Tunheim
- 0:19-cv-03174
- U.S. District Court · District of Minnesota
- 15
In Selective Insurance v. Heritage Construction, Judge Tunheim denied MMU and Philip Keithahn’s request for judgment as a matter of law, a new trial, or reduced damages.
Minnesota Medical University, LLC and Philip Keithahn, whose post-trial challenges to the jury’s liability findings and damages were denied; the jury verdict remained in place except for a duplicative-damages reduction ordered earlier.
What happened
In Selective Insurance Company of America v. Heritage Construction Companies, LLC, a jury found Minnesota Medical University, LLC and Philip Keithahn liable on claims involving a failed construction project, including breach of contract, negligent misrepresentation, fraud by omission, and indemnification. The jury awarded damages to the Heritage Parties.
MMU and Keithahn argued that the negligent-misrepresentation verdict could not stand because the statements were either true when made or concerned future events. They also challenged the jury instructions, evidence rulings, testimony, damages, and the breach-of-contract award.
Judge Tunheim denied their request for judgment as a matter of law and denied their alternative request for a new trial. He also denied their request to reduce the breach-of-contract damages by $300,000, leaving the jury’s verdict in place except for a duplicative-damages reduction ordered earlier.
The detailed version
- Selective Insurance Company of America v. Heritage Construction Companies, LLC · No. 0:19-cv-03174
- John Tunheim
- May 28, 2024
Background
The original dispute between Selective Insurance Company of America and the Heritage Parties was resolved through a confidential settlement. The Heritage Parties then pursued third-party claims against Minnesota Medical University, LLC (MMU) and Philip Keithahn arising from a failed construction project.
The claims that went to trial included breach of contract, fraudulent misrepresentation, negligent misrepresentation, fraud by omission, and indemnification. The jury found liability and awarded damages on the breach-of-contract, negligent-misrepresentation, fraud-by-omission, and indemnification claims. It found no liability on Heritage Construction’s fraudulent-misrepresentation claim.
MMU and Keithahn filed a renewed motion for judgment as a matter of law under Federal Rule of Civil Procedure 50 and, alternatively, a motion for a new trial under Rule 59. They also sought a $300,000 reduction of the breach-of-contract damages award.
Judgment as a Matter of Law
The court denied the renewed motion for judgment as a matter of law on the negligent-misrepresentation claim. The court viewed the evidence in the light most favorable to the Heritage Parties and assumed that the jury resolved evidentiary conflicts in their favor.
MMU and Keithahn argued that the statements about bond financing and construction funding were either true when made or were only assurances about future events. The court rejected those arguments. It concluded that, even if the bond financing had closed, the jury could reasonably find a misrepresentation that construction funding would then be available without contingencies. The court also concluded that the statements concerned material present facts rather than ambiguous future promises.
Because the court denied judgment as a matter of law on negligent misrepresentation, it found MMU and Keithahn’s related argument concerning indemnification moot.
Motion for a New Trial
The court denied the motion for a new trial on liability and damages. It found that the challenged jury instructions adequately explained that fraud claims must be based on past or present facts and that the absence of a separate instruction about future assurances did not affect the verdict.
The court also upheld its decision to allow limited evidence that Keithahn had received an MBA from Harvard University. It found that the information was relevant to the parties’ sophistication and that MMU and Keithahn did not show that the evidence prejudiced them.
The court found that the Heritage Parties clearly violated an order excluding testimony that Keithahn owned a bank by asking about his majority share in the corporation that owned the bank. But the court concluded that the single question was not shown to be prejudicial or to have affected the verdict. The court likewise found that statements about MMU’s ability to pay a judgment, while inflammatory, did not justify a new trial.
The court determined that the Heritage Parties properly used Keithahn’s deposition testimony to question his differing recollection of events. Finally, after considering the alleged errors together, the court found no cumulative effect that affected MMU’s or Keithahn’s substantial rights or created a miscarriage of justice. It also denied a new trial on the fraud-by-omission damages because the damages calculation was reasonably based on pay applications submitted after the alleged omissions.
Remittitur
Remittitur is a reduction of a jury’s damages award. MMU and Keithahn sought a $300,000 reduction from the breach-of-contract award, which exceeded $6 million, because Heritage Construction had not included that amount on a pay application.
The court denied remittitur. Although Heritage Construction had not included the $300,000 on a pay application, the evidence showed that it stopped submitting a pay application only after at least three earlier applications went unpaid. The court found that Heritage Construction had presented evidence supporting its entitlement to the amount, and MMU and Keithahn did not challenge the amount itself.
Disposition
Judge Tunheim ordered that the Third-Party Defendants’ motion for judgment as a matter of law and, alternatively, for a new trial was DENIED. The jury verdict remained in place except for the duplicative-damages reduction ordered in the court’s prior order.
Read the full 15-page opinion on CourtListener, the free public archive maintained by the Free Law Project.