LEGACY DATA ACCESS, INC., a Georgia corporation; DIANNE M. PETERS, a Georgia resident, Plaintiffs - Appellees,
CADRILLION, LLC, a North Carolina limited liability company; JAMES YUHAS, a North Carolina resident, Defendants - Appellants, and LEGACY DATA ACCESS, LLC, a North Carolina limited liability company, Defendant. LEGACY DATA ACCESS, INC., a Georgia corporation; DIANNE M. PETERS, a Georgia resident, Plaintiffs - Appellants,
CADRILLION, LLC, a North Carolina limited liability company; LEGACY DATA ACCESS, LLC, a North Carolina limited liability company; JAMES YUHAS, a North Carolina resident, Defendants - Appellees.
Argued: March 22, 2018
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Frank D. Whitney,
Chief District Judge. 3:15-cv-00163-FDW-DCK
Kirkland Hardymon, RAYBURN COOPER & DURHAM, P.A.,
Charlotte, North Carolina, for Appellants/Cross-Appellees.
Robert Buric, JAMES, MCELROY & DIEHL, P.A., Charlotte,
North Carolina, for Appellees/Cross-Appellants.
Benjamin E. Shook, RAYBURN COOPER & DURHAM, P.A.,
Charlotte, North Carolina, for Appellants.
Preston O. Odom III, John R. Brickley, JAMES, MCELROY &
DIEHL P.A., Charlotte, North Carolina, for
MOTZ, DUNCAN, and HARRIS, Circuit Judges.
GRIBBON MOTZ, CIRCUIT JUDGE:
diversity contract dispute, a jury awarded $256, 500 for
breach of contract and $1, 499, 999 for conversion. The jury
rejected plaintiffs' unfair and deceptive trade practices
claim, and the district court granted judgment as a matter of
law to defendants on the abuse of process claim. In a second
trial solely on punitive damages, another jury awarded $3
million in punitive damages. In response to numerous
post-trial motions, the district court reduced compensatory
and punitive damages, awarded attorneys' fees to
plaintiffs, and otherwise denied the remaining motions. For
the reasons that follow, we reverse the judgment of the
district court as to conversion and punitive damages, remand
for a new trial on damages for breach of contract, vacate the
attorneys' fees award, and affirm as to the abuse of
process and unfair and deceptive trade practices claims.
Data Access, Inc. ("Legacy Georgia") and its owner
Dianne Peters (collectively, "Plaintiffs") agreed
to sell certain assets to Cadrillion, LLC ("the
Agreement"). Cadrillion formed a subsidiary, Legacy Data
Access, LLC ("Legacy North Carolina"), to own the
assets and operate the business acquired from Legacy Georgia.
Cadrillion also hired Peters to manage Legacy North Carolina
for three years. The parties expected that Cadrillion, with
Peters's help, would grow Legacy North Carolina's
business and sell it in three to five years.
exchange for Legacy Georgia's assets, Cadrillion agreed
to make two separate payments: first, $513, 000, which
Cadrillion paid on the closing date of the Agreement, and
second, a "Deferred Purchase Price, " which
Cadrillion was to pay upon certain specified events, such as
if Cadrillion sold Legacy North Carolina. In the event that
Peters resigned from her position at Legacy North Carolina
after her initial three-year term, but before Cadrillion was
able to sell Legacy North Carolina, Cadrillion retained
"the right, but not the obligation, " to
"purchase . . . the rights to the Deferred Purchase
Price." In other words, Cadrillion could choose to
purchase Legacy Georgia's remaining interest in the value
of Legacy North Carolina at that time. The Agreement called
this "right" the "Call Option." To
exercise this Call Option, Cadrillion had to provide
"written notice to such effect" within 90 days of
Peters's resignation. The Agreement included a complex
formula to calculate the Deferred Purchase Price at the time
Cadrillion exercised the Call Option, also known as the
Peters resigned after her three-year term but before
Cadrillion could sell Legacy North Carolina, Cadrillion
timely provided written notice that it was exercising the
Call Option. However, Cadrillion did not pay the Call Price
to Legacy Georgia as the Agreement required. Instead,
Cadrillion filed a declaratory judgment action in federal
court, seeking a declaration that the Call Price was no more
than $460, 406, along with a motion to deposit that amount
with the court. Plaintiffs countered that Cadrillion had
incorrectly calculated the Call Price, and that depositing
the funds with the court would not satisfy the Agreement.
Cadrillion then decided to dismiss its action voluntarily,
now taking the position that it had never exercised its Call
Option in the first place.
April 14, 2015, Plaintiffs initiated this action against
Cadrillion, Legacy North Carolina, and James Yuhas, a manager
at Cadrillion. Plaintiffs asserted claims for breach of
contract, conversion, abuse of process, and unfair and
deceptive trade practices. The district court bifurcated the
trial into a first trial on liability and compensatory
damages, and a second trial on punitive damages.
Plaintiffs' presented their evidence, the court granted
judgment as a matter of law to Defendants on the abuse of
process claim. The jury returned a verdict finding Cadrillion
liable for breach of contract and awarding $256, 500 in
compensatory damages. The jury also found Cadrillion and
Yuhas liable for conversion and awarded $1, 499, 999 in
damages. The jury rejected Plaintiffs' claim of unfair
and deceptive trade practices.
separate jury later awarded Peters $3 million in punitive
damages: $2 million against Cadrillion, and $1 million
against Yuhas. The jury did not award punitive damages to
sides filed post-trial motions. In response, the district
court reduced the compensatory damages for conversion to
$460, 406, eliminated compensatory damages for breach of
contract as a double recovery, and reduced punitive damages
to $1.38 million total. The court also granted
Plaintiffs' request for pre- and post-judgment interest,
and awarded Plaintiffs $743, 297 in attorneys' fees
and Yuhas timely noted this appeal, challenging their
liability for conversion, the jury's award of punitive
damages, and the district court's award of attorneys'
fees. However, Cadrillion now concedes its liability for
breach of contract. See Appellants/Cross-Appellees
Br. at 17. Plaintiffs cross-appeal, contending they are
entitled to a new trial on breach of contract damages, that
the district court erred in ruling against them on their
abuse of process claim, and that they are entitled to
judgment as a matter of law on their unfair and deceptive
trade practices claim. The parties agree that North Carolina
law governs this diversity case.
first address Cadrillion and Yuhas's challenge to ...