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`;"E W
`5 1,,
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`'e
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF NEW YORK
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`II
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`UNI-RTY CORP. and GOLDEN PLAZA
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`LIMITED PARTNERSHIP,
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`-V-
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`Plaintiffs,
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`GUANGDONG BUILDING, INC., NEW
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`YORK GUANGDONG FINANCE, INC.,
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`EASTBANK, N.A., JOSEPH CHU, and
`ALEXANDER CHU,
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`Defendants.
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`II
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`I
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`i
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`GEORGE B. DANIELS, District Judge:
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` mm“C» m
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`,
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`wry—AWN
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`MEMORANDUMDECISION
`AND ORDER
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`95 CV 09432 (GBD)
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`Plaintiffs Uni—Rty Corporation and Golden Plaza Limited Partnership (collectively,
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`“Plaintiffs”) brought suit against Defendants Guangdong Building, Inc. (“GBI”), New York
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`Guangdong Finance, Inc. (“NYGF”), Alexander Chu and The Estate of Joseph Chu (collectively,
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`the “Defendants”) based upon a series of transactions from 1989 to 1994 involving a commercial
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`property located at 239-241 Canal Street in Manhattan’s Chinatown District (hereinafter, the
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`“Property”). The parties proceeded to trial on Plaintiffs’ claims for fraudulent inducement and
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`breach of contract; and on Defendants’ counterclaims to enforce a $3 million promissory note
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`and a two—year lease.
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`After this case was reassigned from Judge Sprizzo’s docket following his death, this
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`Court conducted a jury trial on all of the parties’ claims. At the conclusion of a seven—day trial,
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`the jury reached the following verdict: (1) Defendant NYGF breached the contract referred to as
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`the Joint Venture Agreement (“JVA”), and, as a result, Plaintiffs incurred damages of
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`$8,250,000; (2) Defendants Joseph Chu and Alexander Chu made false representations that
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`fraudulently induced Plaintiffs to enter into the 1994 Sale/Leaseback Agreement, and, as a result,
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`Plaintiffs incurred an additional monetary loss of $250,000; (3) Plaintiffs breached the 1994
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`Loan Agreement with Defendant Joseph Chu by defaulting and failing to pay the sums due and
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`owed under the loan note, and, as a result, Defendant Joseph Chu incurred damages of
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`$1,000,000; and (4) Plaintiffs breached the 1994 two-year lease agreement with Defendant GBI
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`by failing to pay the rents due and owed under the lease contract, but that Defendant GBI did not
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`incur any additional damages as a result of this breach. S_ee Trial Tr., at 1333-1335. Defendants
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`subsequently moved for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b) on the
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`breach of contract and fraudulent inducement claims, and judgment in Defendants’ favor on both
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`counterclaims, or, in the alternative, for remittitur and/or a new trial pursuant to Fed. R. Civ. P.
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`59. Defendants’ motions are DENIED.1
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`BACKGROUND
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`In May 1989, Plaintiffs purchased the Property from the FDIC for $8.5 million.
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`Plaintiffs funded the purchase by a loan from the FDIC and loans from Defendant Eastbank and
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`Defendant NYGF, an entity owned and controlled by Defendants Joseph Chu and Alexander
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`Chu. In February 1990, Plaintiffs refinanced the Property through a $10 million loan secured by
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`mortgage liens from Defendants NYGF. NYGF funded the loan to Plaintiffs by borrowing $9
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`million from HSBC, despite Plaintiffs’ insistence that HSBC not be involved in financing
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`transactions concerning the Property. Plaintiffs used the funds to pay off the 1989 loans, with
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`the remainder serving as working capital and proceeds for renovating the Property. Also in
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`1 Defendants also renewed their first motion in limine, which sought, in part, to preclude Plaintiffs from
`presenting evidence that Defendants’ alleged wrongful conduct caused Plaintiffs’ “loss” of the Property. Defendants
`contend that this motion is still pending. Defendants’ motion is DENIED, as that issue was decided by this Court at
`the trial and Defendants have articulated no reason for this Court to revisit its decision.
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`2
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`February 1990, Plaintiffs and Defendant NYGF executed the JVA. The parties disputed at trial
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`what obligations, if any, the JVA imposed on Defendant NYGF to help develop the property,
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`and whether Defendant NYGF engaged in conduct that violated the terms of that agreement.
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`The jury found that Defendant NYGF breached the JVA, and awarded Plaintiffs damages in the
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`amount of $8,250,000 million. The agreement between the parties had contemplated that the
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`rents from the renovated property would pay outstanding obligations and generate profits from
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`its income.
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`By January 1994, Plaintiffs had defaulted on their financial obligations under the 1990
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`loan agreement to Defendant NYGF. Plaintiffs owed approximately $2,600,000 in interest and
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`real estate taxes, and the $10 million principal balance was due to mature in February 1994.
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`Plaintiffs lacked sufficient funds to pay either the delinquent amount or the balloon payment.
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`In February 1994, Plaintiffs entered into the Sale/Leaseback Transaction with Defendant
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`GBI. The first aspect of the transaction was a sale agreement, whereby Plaintiffs transferred title
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`to the Property to Defendant GBI, a company formed by Defendant Joseph Chu solely to hold
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`the title. GBI assumed Plaintiffs’ principal mortgage debt of $10 million owed to NYGF. The
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`second aspect of the transaction was a separately executed lease agreement. Defendant GBI
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`leased the Property back to Plaintiffs for a non-renewable two—year term, with fifty percent of
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`the rental payments being deferred until the end of the lease. Plaintiffs had an option to
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`repurchase the Property from Defendant GBI at the end of the term. The parties disputed at trial
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`whether Defendants had made material misstatements or omissions concerning the 1990 HSBC
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`loan during the negotiations of the 1994 Sale/Leaseback Transaction, and whether Plaintiffs had
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`reasonably relied on those statements to their detriment. The jury found that Defendants Joseph
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`Chu and Alexander Chu fraudulently induced Plaintiffs to enter the 1994 Sale/Leaseback
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`3
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`Transaction, and awarded Plaintiffs additional damages in the amount of $250,000.
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`Plaintiffs defaulted on their obligations under the 1994 lease agreement with Defendant
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`GBI by failing to pay their property taxes in January 1995 and their lease payments in May,
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`June, and July 1995. In July 1995, Defendant GBI evicted Plaintiffs and retained ownership of
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`the Property. The jury found that Plaintiffs breached the 1994 lease agreement. The jury
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`determined that Defendant GBI did not incur any additional damages as a result of Plaintiffs’
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`breach.
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`Also, in February 1994, Defendant Joseph Chu personally loaned Plaintiffs $3 million.
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`Plaintiffs used the funds to pay real estate taxes and interest arrears under the 1990 loan
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`agreement, with the remainder serving as working capital. Plaintiffs never repaid the promissory
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`note to Defendant Joseph Chu. The jury found that Plaintiffs breached the 1994 loan agreement,
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`and awarded Defendant Joseph Chu $1 million.
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`STANDARD OF REVIEW
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`A motion, pursuant to Rule 50(b), to set aside a jury verdict and to award judgment as a
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`matter of law should be granted cautiously and sparingly. Meloff v. New York Life Ins. Co.,
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`240 F.3d 138, 145 (2d Cir. 2001) (citation and internal quotation marks omitted); see also Fed.
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`R. Civ. P. 50(b). In reviewing such a motion, the Court is required to consider the evidence in
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`the light most favorable to the non—moving party, drawing all reasonable inferences from the
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`evidence in that party’s favor. Okemo Mountain Inc. v. Sikorski, 2008 WL 5273494, at *1 (2d
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`Cir. Dec. 19, 2008) (quoting Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116, 122 (2d Cir.
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`2008)). The Court is precluded from assessing the credibility of the witnesses or weighing the
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`evidence. Brady v. Wal—Mart Stores, Inc., 531 F.3d 127, 133 (2d Cir. 2008) (quoting Caruolo v.
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`John Crane Inc., 226 F.3d 46, 51 (2d Cir. 2000)); Meloff, 240 F.3d at 145 (quoting
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`4
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`Galdieri-Ambrosini v. Nat'l Realty & Dev. Corp, 136 F.3d 276, 289 (2d Cir. 1998)).
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`To grant such a motion, the Court must either find that there is such a complete absence
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`of evidence that the jury’s verdict could only be the result of sheer surmise or conjecture, or that
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`such an overwhelming amount of evidence in the defendant's favor exists so that reasonable and
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`fair minded persons could not have arrived at a verdict against it. My, 531 F.3d at 133
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`(quoting Luciano v. Olsten Corp., 110 F.3d 210, 214 (2d Cir. 1997)). “Weakness of the
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`evidence does not justify judgment as a matter of law; as in the case of a grant of summary
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`judgment, the evidence must be such that a reasonable juror would have been compelled to
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`accept the view ofthe moving party.” This is Me, Inc. v. Taylor, 157 F.3d 139, 142 (2d Cir.
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`1998).
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`In contrast, a Rule 59 motion for a new trial is subject to a less stringent standard. The
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`Court may independently weigh the evidence and, in doing so, the evidence need not be viewed
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`in the light most favorable to the victorious party. E Martin v. Moscowitz, 272 Fed.Appx. 44,
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`47 (2d Cir. 2008) (quoting DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 133 (2d Cir.
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`1998)); w Fed. R. Civ. P. 50(b). Even where there is evidence supporting the jury verdict,
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`a new trial may still be granted if the Court is convinced that the jury has reached a seriously
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`erroneous result, or that the verdict is a miscarriage of justice. S_ee RR. Love Ltd. v. TVT
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`Music Inc., 282 Fed.Appx. 91, 93 (2d Cir. 2008) (quoting De Falco v. Bernas, 244 F.3d 286,
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`305 (2d Cir. 2001)); Nimely v. City ofNew York, 414 F.3d 381, 392 (2d Cir. 2005).
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`Nevertheless, “a jury’s verdict should rarely be disturbed,” and a new trial should be granted
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`only if the jury’s verdict is “egregious.” I_d_. at 635;w Binder v. Long Island Lighting Co.,
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`57 F.3d 193, 201 (2d Cir. 1995) (“[A] jury verdict is entitled to a strong presumption of
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`correctness, and a discretionary ruling that the verdict is not against the weight of the evidence is
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`presumptively correct”).
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`PLAINTIFFS’ CLAIMS
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`A.
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`BREACH OF CONTRACT (JVA)
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`Under New York law, “[i]n order to recover from a defendant for breach of contract, a
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`plaintiff must prove, by a preponderance of the evidence, (1) the existence of a contract between
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`itself and that defendant; (2) performance of the plaintiffs obligations under the contract; (3)
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`breach of the contract by that defendant; and (4) damages to the plaintiff caused by that
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`defendant's breach.”2 Diesel Props S.r.l. v. Greystone Business Credit 11 LLC, 631 F.3d 42, 52
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`(2d Cir. 2011) (citations omitted). Defendants challenge whether Plaintiffs established the third
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`and fourth elements, arguing that no rational jury could have found for Plaintiffs on the breach of
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`contract claim because: (a) the record is devoid of evidence of a breach; (b) there was no
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`proximate causation; and (c) the parties never contemplated damages for loss of the Property.
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`The evidence presented at trial was sufficient to support the jury’s verdict that Defendant
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`NYGF breached the JVA and would not have compelled a rational jury to find otherwise.
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`Defendant NYGF agreed to “devote such time and effort as [it] deem[ed] necessary to promote
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`adequately the interest of the venture and the mutual interest of the venturers” and received
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`consideration for “future help in the development of a hotel on the Property.” Ex. 10, PX 434,
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`W 4, 9. Defendant NYGF, through its agents Defendants Joseph Chu and Alexander Chu, were
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`2 “Causation is an essential element of damages in a breach of contract action; and, as in tort, a plaintiff
`must prove that a defendant‘s breach directly and proximately caused his or her damages.” Diesel Props S.r.1., 631
`F.3d at 52-53 (citation and quotation marks omitted). “[D]amages .
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`. ‘must be not merely speculative, possible, and
`imaginary, but they must be reasonably certain and such only as actually follow or may follow from the breach of
`the contract. Tractebel Energy Mktg. v. AEP Power Mktg., 487 F. 3d 89,110 (2d Cir. 2007) (quoting___Wake1nanv
`Wheeler & Wilson Mfg Co., 4 N. E. 264, 266 (1886) (emphasis added)); see_also Nat'l Mkt. Share, Inc. v. Sterling
`Nat'l Bank, 392 F. 3d 520, 525-26 (2d Cir. 2004). “‘Certainty,’ as it pertains to general damages, refers to the fact of
`damage, not the amount.” Tractebel, 487 F.3d at 110 (citing Wakeman, 4 NE. at 266).
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`found to have intentionally engaged in conduct that interfered with the development and that was
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`contrary to the best interest of the Property.3 See, e.g., Trial Tr., at 278, 362, 364-366 and 1115
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`(instructing tenants to not pay rent to Plaintiffs); Trial Tr., at 362, 364 and 631 (arbitrarily
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`refusing to approve lucrative lease opportunity and other new tenants); Trial Tr., at 167, 519, and
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`1 105-1 106 (engaging in secret negotiations to extend the 1990 HSBC mortgage loan for an
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`additional three years and executing that agreement one day before Sale/Leaseback Transaction);
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`Trial Tr., at 158, 208-209, 278, 280, and 367 (refusing to cooperate and assist Plaintiffs, even in
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`renovating the Property so that Plaintiffs could obtain full occupancy). That conduct
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`significantly harmed the financial viability of the Property such that Plaintiffs were unable to
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`either satisfy their financial obligations under the 1994 lease agreement or exercise their option
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`to repurchase the Property.4 Thus, the jury rationally concluded that Defendant NYGF was
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`liable for breach of contract.5
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`3 Neither of the parties requested that the jury indicate on the special verdict form which provision of the
`JVA was violated and/or what was the breaching conduct by NYGF. NYGF argues that “[e]ven assuming the jury
`could and did latch on to a particular provision in the [JVA] to reach its verdict, there is no evidence on this record
`that any one or more of the [JVA] ’s provisions could have furnished a rational basis for the jury to conclude any
`such breach was material in nature.” Defs. Mem., at 22-23. A reasonable jury could have concluded that NYGF
`materially breached the JVA. The parties explicitly provided that the “root” of the agreement was “to develop, own,
`and operate the [Property] into a commercial complex and hotel.” Ex. 10, PX 434, 1] 2 (“Purpose”). Any of the
`aforementioned breaching conduct, could have been reasonably construed as defeating the object of the parties in
`making the contract.
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`4 At trial, Defendants presented evidence that Plaintiffs lacked the financial wherewithal to save the
`Property. Having concluded that NYGF breached the JVA by engaging in conduct that harmed the financial success
`of the Property, the jury could have rationally concluded that Defendants’ evidence did not demonstrate that the
`Plaintiff’s loss of the Property was inevitable — that is, that the loss would have occurred absent NYGF’s breach of
`the JVA. For example, Plaintiffs had finished the renovations and fully rented the Property by July 2005. Trial Tr.,
`at 208, 278. Plaintiffs had enough revenue to support the mortgage payments and other obligations. Trial Tr., at
`373, 381, 631, 632, 635, 639, 640, 642. Also, all of Plaintiffs’ tenants remained after Defendants took control of the
`building. Trial Tr., at 796.
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`5 It was neither prejudicial nor reversible error for this Court to decline to use the phrase “material breach”
`in connection with the breach of contract question on the special verdict form. “District courts have broad discretion
`under Rule 49(a) to formulate special interrogatories for submission to the jury.” Romano v. Howarth, 998 F.2d
`101, 104 (2d Cir. 1993) (citing Ruggiero v. Krzeminski, 928 F.2d 558, 561 (2d Cir. 1991)); see also Vichare v.
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`B.
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`FRAUDULENT INDUCEMENT (1994 SALE/LEASEBACK)
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`In order to prove fraudulent inducement under New York law, a plaintiff must prove by
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`clear and convincing evidence “(1) that the defendant made a representation, (2) as to a material
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`fact, (3) which was false, (4) and known to be false by the defendant, (5) that the representation
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`was made for the purpose of inducing the other party to rely upon it, (6) that the other party
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`rightfully did so rely, (7) in ignorance of its falsity (8) to his injury.” Computerized Radiological
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`Services v. Symtex C033,, 786 F.2d 72, 76 (2d Cir. 1986) (citations omitted); Crigger v.
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`Fahnestock and Co. Inc., 443 F.3d 230, 234 (2d Cir. 2006); Leland Eaves v. Designs for Fin.,
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`I_ng, 2011 US. Dist. LEXIS 33654, at *20 (S.D.N.Y. Mar. 30, 2011); Gaidon v. Guardian Life
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`Ins. Co. of Am., 94 N.Y.2d 330, 348 (NY. 1999). Defendants argue that the record failed to
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`establish that Plaintiffs suffered any compensable loss as a proximate result of a fraud that they
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`perpetrated. Defendants contend that: (a) it is unclear what specific material misstatements or
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`omissions were made by any of the Defendants; (b) there was no testimony that, had they known
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`that foreclosure was not imminent or that the loan arrangements with HSBC were being
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`renegotiated, Plaintiffs would not have entered the transaction; and (c) the evidence failed to
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`AMBAC Inc, 106 F.3d 457 (2d Cir. 1996). “Whenever a court chooses to use them, however, it must ‘give to the
`jury such explanation and instruction concerning the matter thus submitted as may be necessary to enable the jury to
`make its findings upon each issue.” Id (quoting Fed. R. Civ. P. 49(a)). “Accordingly, special interrogatories must
`be read ‘in conjunction with the district court's charge.”’ I_d. (quoting Cutlass Prods, Inc. v. Bregman, 682 F.2d 323,
`327 (2d Cir. 1982)).
`This Court gave specific instructions regarding the legal rules governing the burden of proof and the
`elements of breach of contract. Specifically, this Court instructed the jury that:
`[I]n order to constitute a breach of contract, it must be proved by a preponderance of the evidence
`that the breach was material. A material breach of contract occurs if a party fails to do something
`which it is bound to do according to the contract which is so important and central to the contract
`that failure defeats the very purpose of the contract.”
`Trial Tr., at 1315. Thus, reading the jury instructions and the verdict form together, the charge is not
`inconsistent with the verdict form submitted and the instructions and the verdict form together adequately
`framed the issues the jury needed to resolve. See also Trial Tr, at 1239-1240.
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`establish that any misrepresentation made by the Defendants was the proximate cause of any
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`cognizable injury suffered by Plaintiffs because Plaintiffs’ loss of the building was inevitable.
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`The evidence presented at trial was sufficient to support the jury’s verdict that
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`Defendants fraudulently induced Plaintiffs to enter the 1994 Sale/Leaseback Transaction. That
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`evidence would not have compelled a rational jury to find otherwise. The jury heard evidence
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`that the Chu Defendants secretly planned to take over the Property and. its business. Trial Tr., at
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`858—864, 75. Plaintiffs, vis-a—vis Dr. Chung, trusted and had become dependent upon the Chu
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`Defendants for financing assistance. Trial Tr. at 112—113, 131, 165-167. As part of their plan,
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`the Chu Defendants repeatedly misrepresented that HSBC threatened to foreclose on the
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`Property during the negotiations of the 1994 Sale/Leaseback Transaction with Plaintiffs. The
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`Chu Defendants pressured Plaintiffs into believing that HSBC intended on foreclosing by
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`February 1994, while, in actuality, HSBC had made it clear to the Chu Defendants that it would
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`not foreclose. E Trial Tr. At 165, 199, and 1106. In fact, the Chu Defendants secretly
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`negotiated and reached an agreement with HSBC for an extension of the 1990 loan that took
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`effect one day before the 1994 Sale/Leaseback Transaction was executed. E Trial Tr. at 167,
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`518-519, and 1105-1106. The Chu Defendants also lied to Plaintiffs about having secured a new
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`lender in China that required, as a condition of the loan, Plaintiffs to give the deed of the
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`Property to Defendant Joseph Chu. Trial Tr. at 166—167, 198. Plaintiffs, relying on the Chu
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`Defendants’ numerous misrepresentations, entered the 1994 Sale/Leaseback Transaction. Trial
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`Tr. at 167-168. Plaintiffs’ suffered harm by losing ownership of the Property, a consequence
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`that was not only natural and probable in light of Defendants’ misrepresentations, but also
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`desired by Defendants. Thus, the jury rationally concluded that Defendants were liable for
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`fraudulent inducement.
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`C.
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`DAMAGES
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`“[D]amages for breach of contract should put the plaintiff in the same economic position
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`he would have occupied had the breaching party performed the contract.
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`Boyce v. Soundview
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`”6
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`Tech. Group, Inc., 464 F.3d 376, 384—85 (2d Cir. 2006) (quoting Oscar Gruss & Son Inc. v.
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`Hollander, 337 F.3d 186, 196 (2d Cir. 2003)); Q at 391 (“[T]he amount of damages must put the
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`non—breaching party in as a good a position as if the breach had not occurred”). “[T]he burden of
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`uncertainty as to the amount of damage is upon the wrongdoer.” Tractebel, 487 F.3d at 110
`
`(quoting Contemporary Mission, Inc. V. Famous Music Corp, 557 F.2d 918, 926 (2d Cir. 1977)).
`
`“The plaintiff need only show a ‘stable foundation for a reasonable estimate’ of the damage
`
`incurred as a result of the breach.” Id. at 110—1 11 (citations omitted); accord Schonfeld v.
`
`Hilliard, 218 F .3d 164, 182 (2d Cir. 2000). Damages for fraudulent inducement, on the other
`
`hand, “is indemnity for the actual pecuniary loss sustained as the direct result of the wrong or
`
`What is known as the out—of-pocket rule.” Lama Holding Co. v. Smith Barney, Inc., 88 N.Y.2d
`
`413, 421 (1996) (citations omitted); accord Crigger, 443 F.3d at 234; see, e.g., Eugenia VI
`
`Venture Holdings, Ltd. v. Glaser, 370 Fed. Appx. 197, 199 (2d Cir. 2010). “Damages are to be
`
`6 The question of damages was presented to the jury as solely a calculation of compensatory relief. The
`parties did not request a jury instruction on consequential damages, and thus the jury did consider that issue. NYGF
`
`waived any such objection. E Chooseco LLC v. Lean Forward Media LLC, 364 Fed. Appx. 670, 672 (2d Cir.
`2010) (“The 'failure to object to a jury instructions or the form of an interrogatory prior to the jury returning results
`
`in a waiver of that objection”) (quoting Jarvis v. Ford Motion Co., 283 F.3d 33, 57 (2d Cir. 2002)); accord Fogarg
`v. Near North Ins. Brokerage, 162 F.3d 74, 79 (2d Cir. 1998). Accordingly, Defendants argument regarding whether
`the loss sustained by Plaintiffs was reasonably contemplated by the parties at the time of or prior to contracting is
`meritless and wholly irrelevant to the present inquiry. E cases discussing consequential damages standard such as
`Schonfeld v. Hilliard, 218 F.3d 164, 172 (2d Cir. 2000); Bi-Economy Mkt., Inc. v. Harleysville Ins. Co. of N. Y., 10
`N.Y.3d 187, 192-94 (2008) (quoting Ashland Mgmt. Inc. v. Janien, 82 N.Y.2d 395, 403 (1993)); Kenford Co. v.
`County of Erie, 73 N.Y.2d 312, 319 (1989).
`
`10
`
`Case 1:95-cv-09432-GBD Document 242 Filed 05/23/12 Page 10 of 15
`
`

`

`FILED: NEW YORK COUNTY CLERK 03/01/2019 12:23 AM
` FILED: NEW YORK COUNTY CLERK 03m2019 12:23
`NYSCEF DOC. NO.
`NYSCEF DOC. NO. 516
`
`INDEX NO. 157621/2012
`INDEX NO. 157621/2012
`Pmi‘lagffi’éscm: 03/01/2019
`RECEIVED NYSCEF: 03/01/2019
`
`calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate
`
`them for what they might have gained.” Lama Holding, 88 N.Y.2d at 421.
`
`The evidence presented at trial was sufficient to support the damages awarded to
`
`Plaintiffs, and would not have compelled a rationally jury to find otherwise. The calculation of
`
`damages for both the breach of contract claim and the fraudulent inducement claim was based
`
`upon the loss of the Property. With respect to the breach of contract claim, which implicates
`
`only Defendant NYGF, Plaintiffs reasonably expected that, if the parties performed their
`
`obligations under the JVA, the Property would develop into a profitable commercial complex
`
`and hotel. Full and complete performance, at a minimum, would have included actual ownership
`
`of the Property by Plaintiffs. Plaintiffs were instead left with no building and no profit. Thus, it
`
`was appropriate for the jury to determine that Plaintiffs could be made whole by awarding them
`
`an amount that accounted for the value of the Property. With respect to the fraudulent
`
`inducement claim, which implicates all Defendants, Plaintiffs forfeited ownership of the
`
`Property under the 1994 Sale/Leaseback Transaction by entering the agreement based upon
`
`Defendants’ material misrepresentations. The money plaintiff invested to develop the property
`
`was also lost. It was therefore appropriate for the jury to determine that Plaintiffs’ actual, out—0f-
`
`pocket loss was the amount of the Property.
`
`The Property’s original purchase price (i.e. $8,500,000) was a reasonable estimate of the
`
`loss. Given that Plaintiffs are not entitled to a double recovery for the same injury, and that
`
`Defendant NYGF’s conduct may be perceived as a more serious harm, it was also reasonable to
`
`allocate the recovery as $8,250,000 on the breach of contract claim and $250,000 on the
`
`
`fraudulent inducement claim. E Indu Craft Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir.
`
`11
`
`Case 1:95-cv-09432-GBD Document 242 Filed 05/23/12 Page 11 of 15
`
`

`

`FILED: NEW YORK COUNTY CLERK 03/01/2019 12:23 AM
` FILED. NEW YORK COUNTY CLERK 03m2019 12. 23
`
`NYSC.3F DOC. NO.
`NYSCEF DOC. NO. 516
`
`INDEX NO. 157621/2012
`INDEX NO. 157621/2012
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`
`PME-Qagfflésczfiz 03/01/2019
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`1995) (acknowledging the pennissibility of allocating damages under two distinct causes of
`
`action so that an award is not duplicative); se_e,£g,, Hettinger V. Kleinman, 733 F. Supp. 2d 421,
`
`450 (S.D.N.Y. 2010) (single recovery for same injury as a result of fraud and breach of contract).
`
`Furthermore, the damages awards were not excessive. Where damages are awarded on
`
`claims governed by New York law, a federal district court will apply the standard of review
`
`provided by New York’s CPLR § 5 501(0). E Gasperini v. Center for Humanities, Inc., 518
`
`US. 415, 430-31 (1996); a_cco_rd Brady v. Wal—Mart Storegfl, 531 F.3d 127, 137 (2d Cir.
`
`2008). CPLR § 5501(c) provides that “[i]n reviewing a money judgment in an action .
`
`.
`
`. [the
`
`court] shall determine that an award is excessive or inadequate if it deviates materially from
`
`what would be reasonable compensation.” Here, there was a reasonable basis for the awards,
`
`and they are not inconsistent with the facts adduced at trial.
`
`Accordingly, Defendants’ Rule 59 and Rule 5 0(b) motions are denied. The jury’s
`
`findings were supported by sufficient evidence, and the jury’s conclusion that Defendant NYGF
`
`breached the JVA, and that Defendants fraudulently induced Plaintiffs to enter the 1994
`
`Sale/Leaseback Transaction, was neither seriously erroneous nor a miscarriage ofjustice. There
`
`is no legal basis to set aside the jury’s verdict or reduce the amount of damages with respect to
`
`either claim. There is also no legal basis to grant Defendants a new trial.
`
`DEFENDANTS’ COUNTERCLAIMS
`
`Both of Defendants’ counterclaims are for breach of contract. Defendants argue that the
`
`jury correctly found Plaintiffs liable,7 but disregarded the evidence of damages. Defendants
`
`7 Plaintiffs argue that the damages award on Joseph Chu’s counterclaim is unsupported because “the jury’s
`findings .
`.
`. completely negate the award of $1 million in damages.” Pls. Mem. at 34. Plaintiffs contend that, under
`New York law, “a breach of contract .
`.
`. excuses the other party from further performance.” I_d; Plaintiffs have not
`
`12
`
`Case 1:95-cv-09432-GBD Document 242 Filed 05/23/12 Page 12 of 15
`
`

`

`FILED: NEW YORK COUNTY CLERK 03/01/2019 12:23 AM
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`FILED: NEW YORK COUNTY CLERK 03m2019 12: 23
`NYSCEF DOC. NO.
`NYSCEF DOC. NO. 516
`
`
`INDEX NO.157621/2012
`INDEX NO. 157621/2012
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`Pfiflfiaififlfflésczar: 03/01/2019
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`contend that, upon finding Plaintiffs liable, the jury had no option but to award the Defendants
`
`the full amount due on the respective contracts as damages — that is, $3,550,000 on the 1994 loan
`
`agreement and $1,638,187.03 on the 1994 lease agreement.8 Defendants contend that the $1
`
`million award is a legally inadequate amount.
`
`The requested relief is not available under Rule 50(b). “Additur is a practice by which a
`
`judge offers a defendant the choice between facing a retrial and accepting a damage award
`
`higher than that determined by the jury.” Liriano v. Hobart Corp, 170 F.3d 264, 272 (2d Cir.
`
`1999). “[l]t is a tool that judges use to fix damages -- something that can generally be done only
`
`by the fact—finder —— without actually having to hold a second trial.” Id. “[F]ederal courts are
`
`
`denied the same freedom to use additur that is enjoyed by many state court judges.” Id.; see also
`
`Dimick v. Schiedt, 293 US. 474, 486 (1935) (“But where the verdict is too small, an increase by
`
`the court is a bald addition of something which in no sense can be said to be included in the
`
`verdict”); Elyse v. Bridgeside Inc., 367 Fed. Appx. 266, 267 (2d Cir. 2010). Accordingly, it is
`
`impermissible for this Court to unilaterally increase the jury award.
`
`Defendants are not entitled to a new trial on damages under Rule 59(a). The evidence
`
`presented at trial was sufficient to support the damages award, and that amount represents
`
`formally filed a motion for such relief, and they repeatedly stated during the oral argument on Defendants’ motions
`that the jury’s verdict was not irrational and that there is no basis

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