decided: March 2, 1982.
DONALD WILLIAMS APPELLANT
V.I. WATER & POWER AUTHORITY, ET AL VIRGIN ISLANDS WATER AND POWER AUTHORITY, APPELLANT.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF THE VIRGIN ISLANDS DIVISION OF ST. CROIX; CHRISTIANSTED JURISDICTION D.C. CIVIL No. 78-00003
Before Hunter, Van Dusen and Sloviter, Circuit Judges.
Opinion OF THE COURT
Defendant Virgin Islands Water and Power Authority ("WAPA") appeals a jury verdict of $22,000 awarded to plaintiff Donald Williams in a breach of contract suit arising out of WAPA's act in ceasing to provide electrical service to certain rental units owned by plaintiff at Nos. 5 and 8 Grove Place ("Nos. 5 and 8," "rental units").*fn1 We will reverse, for the following reasons:
A. The evidence showed that there was no contract between WAPA and Mr. Williams for the provision of power to the rental units at No. 5.
B. The evidence introduced by defendant showed that there was a contract between WAPA and Mr. Williams for the provision of electrical power to a pump at No. 8. Plaintiff introduced insufficient evidence of a contract between WAPA and Mr. Williams for the provision of power to the rental units at No. 8 to allow the jury to find that such a contract existed and to award damages based on is breach.
C. Plaintiff's evidence as to damages was insufficient, as a matter of law, to justify any award to Mr. Williams by the jury.
I. Procedural History Prior to the Trial in Civil No. 78/3
The suit now before us began on January 6, 1978, when plaintiff/appellee Donald Williams filed a complaint alleging that WAPA breached its contracts with plaintiff when WAPA ceased on October 30, 1973, to provide electrical power to the rental units at Nos. 5 and 8. Mr. Williams seeks damages for lost rentals allegedly caused by the breach. This suit, Civil No. 78/3, was based solely upon WAPA's alleged breach of contract.
On or about July 17, 1974, Mr. Williams had filed a complaint against WAPA seeking, inter alia, damages for WAPA's actions in ceasing on October 30, 1973, to provide electrical power to Nos. 5 and 8 (Civil No. 74/363). In the 1974 complaint, Mr. Williams alleged that WAPA's actions were "in violation of Plaintiff's contractual rights" and "a deprivation under color of law of Plaintiff's constitutional rights to due process, i.e., notice and hearing." Appendix at 397-98; paragraphs 7 and 10 of the amended complaint in 74/363. Plaintiff was represented by counsel in Civil No. 74/363.
WAPA moved to dismiss Civil No. 78/3 on res judicata grounds, arguing that Civil No. 74/363 barred this action. The trial court denied the motion stating:
Review of the file in Civil No. 74/363 reveals that it was an action both in contract and under 42 U.S.C. Sec. 1983. By order of this Court dated 10 July, 1975, that action was dismissed with prejudice as to the Sec. 1983 claim, but with leave to amend the complaint so as to restate an action in contract. Because an amended complaint was not filed in that action, Civil No. 74/363 was dismissed for lack of prosecution on 22 November, 1978.
The present action, Civil No. 78/3 was commenced 6 January, 1978, approximately six (sic) months after Civil No. 74/363 was dismissed with leave to amend. Although Civil No. 74/363 was eventually dismissed unconditionally for reasons of judicial economy, this did not occur until some twenty-two (22) (sic) months after commencement of the present action. It necessarily follows that the case at bar was initiated at a time when the contract action remained viable and that the subsequent final dismissal of Civil No. 74/363 did not act to bar the prosecution of this action.
Appendix at 33-34.
In 1978, Mr. Williams filed a pro se action alleging damages based upon WAPA's action in turning off the power to Nos. 5 and 8 (Civil No. 78/190). On May 30, 1980, the trial court dismissed Civil No. 78/190 with prejudice on res judicata grounds. Appendix at 403. In its order, the trial court stated that "the complaint (in 78/190) is essentially identical to that of a prior action brought by plaintiff under 42 U.S.C. Section 1983 in Civil No. 74/363. That action was dismissed on the merits by order of this Court dated 10 July, 1975." Id.
Civil No. 78/3 seeks damages solely for breach of contract. Plaintiff does not seek damages herein based on any theory that his constitutional rights were violated by WAPA, and it is clear from the history of this case that any such claim would be barred by the doctrine of res judicata.*fn2
II. The Trial in Civil No. 78/3
Because we must determine whether the evidence was sufficient to allow the jury to award damages to plaintiff, it is necessary to review in detail the evidence adduced at trial.
A. Plaintiff's Case
The first witness called by plaintiff was George Suarez, an employee of the Department of Public Works ("DPW"). He testified that DPW enforces the Building Code (29 V.I.C. §§ 291-312, effective May 1, 1964) and the Housing Code (29 V.I.C. §§ 330-334, effective May 1, 1964).*fn3 He inspected Nos. 5 and 8 Grove Place in 1973, and found violations of the Building Code. In the course of his inspection, Mr. Suarez discovered "that the two meters (on the lots) were being used in violation of their intended use," appendix at 79. The violation "dealt with an interdepartmental agreement that Public Works would notify WAPA any time someone who got a temporary permit to get electrical power for construction purposes or who was using-who had power connection for the use of a well or something like that that has changed-(.)" Id. Mr. Suarez also testified that "(t)he violation was that the intended use of the power was violated," and that it is "(DPW's) responsibility" to notify WAPA of such violations. Appendix at 80.
Plaintiff next called Bodil Simmons, a WAPA employee. She testified that she had no documents with her which would show whether or not there was any delinquency in Mr. Williams' accounts for Nos. 5 and 8 Grove Place as of October 1973. Appendix at 87-88.*fn4 During her testimony, plaintiff's Exhibits 3 and 4, the notices from DPW to WAPA of impermissible use of electrical connections at Nos. 8 and 5, respectively, were admitted on motion by plaintiff.
Plaintiff's third witness was Hector Rodriguez, a WAPA employee.*fn5 He testified that WAPA does not inspect property before installing a meter on that property, because it is DPW's responsibility to inspect buildings, and not WAPA's. Appendix at 92. He further testified that DPW "order(ed)" WAPA to turn off the electricity, appendix at 93, and that WAPA was obligated to comply, appendix at 93-94. On cross-examination, Mr. Rodriguez testified that, once a meter is installed, it is the responsibility of the owner to wire the meter to the property.
The next witness called was Donald Farrelly.*fn6 A DPW employee, he testified to the existence of electrical deficiencies at Nos. 5 and 8. The power was off at the time of his inspection. During his testimony, several of defendant's exhibits concerning the condition of the rental units were admitted upon motion by defendant.
Plaintiff next called Simon Montoute.*fn7 Mr. Montoute testified that he was a tenant at No. 8 from 1970 to November 1974, more than a year after electrical service was terminated on October 30, 1973. Appendix at 107-08. He paid his own rent and helped Mr. Williams to collect rent from others. He testified that the total rent from all tenants on No. 8 was not less than $800 per month. Appendix at 114. The cross-examination dealt solely with the number of people living at No. 8.
Plaintiff then called John Lewis.*fn8 Mr. Lewis lived at No. 8 from 1970-1975, appendix at 118, and continued to pay rent after October 30, 1973, when the property was no longer being supplied with electricity. Appendix at 121.
Plaintiff's final witness was Mr. Williams, the plaintiff.*fn9 He testified that the power was turned off on October 30, 1973. Appendix at 127. He received approximately $1120 per month in gross rentals from No. 8, and $630 from No. 5. Appendix at 124. Thirty percent of his gross rental income went to expenses. Appendix at 131. Mr. Williams was then asked: "And for what period of time are you claiming that you lost this gross rental income of a little over $1700.00?" He answered: "Well, from the 30th of October to July, about 1975, when the last person moved out. That's all I'm asking for. About the lumber and so forth that I lost, I didn't even charge WAPA for that. All I'm asking for, the expense, the money I was to get between that time, but different to that I loose all what I had." Appendix at 131.*fn10 Mr. Williams also testified that DPW "harass(ed) me most of the time (with respect to Building Code deficiencies on the properties)," appendix at 127, that he had been taken to court by the Virgin Islands Government prior to 1973, and that the government had charged that he "had substandard houses." Appendix at 134-35.*fn11
Mr. Williams also testified that power was provided to the rental units at No. 5 pursuant to a contract between Mr. Luby, a tenant, and WAPA. The bills were paid directly to WAPA. Mr. Williams had wanted this arrangement because his tenants were reluctant to pay him at the end of each month for the electricity supplied to the rental units. Appendix at 124-25.*fn12
On cross-examination, Mr. Williams testified that he never filed income tax forms, and had filed none for 1973. Appendix at 137. He also reiterated that the contract with WAPA for electricity to be supplied to the rental units at No. 5 was between Samuel Luby and WAPA, and that the tenants at No. 5 paid WAPA bills directly to WAPA. Appendix at 139.*fn13
B. Defendant's Motion for a Directed Verdict
After the plaintiff rested, defendant moved for a directed verdict on the grounds that the evidence on damages was inadequate, unclear, speculative, undocumented, or nonexistent; that the contract at No. 5 was in Mr. Luby's name and that plaintiff could not collect damages for breach of a contract between Mr. Luby and WAPA; that there was no evidence of any contracts between WAPA and Mr. Williams; and that there was evidence of a contract between Mr. Luby and WAPA for No. 5, but no evidence that there was any contract at all for the provision of power to the rental units at No. 8. Appendix at 141-43. The trial judge reserved his ruling on the motion, although he ultimately denied it upon WAPA's request for a definitive ruling at the close of the entire case. Appendix at 289. The court stated that, although the written contracts were not in evidence, there had been testimony as to the existence of contracts to supply electricity to Nos. 5 and 8, and that in the absence of a "best evidence rule" objection from defendant which "would have either brought those contracts out or eliminated the verbal testimony that is now before the court," the "verbal testimony ... that I'm going to stand on is the contract." Appendix at 143. He also stated that evidence as to damages was meager, but that there was "some semblance of some damages." Appendix at 145.*fn14
C. Defendant's Case
Defendant's first witness was Bodil Simmons, who had previously testified for plaintiff.*fn15 In the course of her testimony, the two contracts between Mr. Williams and WAPA, which had been pre-numbered by plaintiff as Exhibits 1 and 2, were admitted into evidence on motion by defendant as part of defendant's case. Appendix at 151. Paragraph One of the contracts, which was printed, provided:
APPLICATION AND CONTRACT
for Residential or Commercial Electric Service
The undersigned hereby authorizes and requests the Virgin Islands Water and Power Authority to furnish electric service for his own use at any address which he may designate within the territory served by the said Authority, and agrees to pay for said electric service with the understanding that the furnishing of the service, the charges therefor and the time of payment thereof are to be in accordance with the Authority's rules and regulations and general terms and conditions on file at the Authority's General Office.
Appendix at 291-92. The printed portions of the two contracts are identical. The two contracts asked for certain information and had blank spaces to be filled in. Plaintiff's Exhibit 1, which was signed by Mr. Williams on May 1, 1970, stated that the premises to be served were No. 8 Grove Place, and that the power was to be supplied to a "New Installation" "Construction Pump." The word "pump" was handwritten in two places in the contract. Appendix at 291. Plaintiff's Exhibit 2, which was dated July 26, 1968 and signed by Mr. Williams, requested power for an "old installation" at No. 5 Grove Place. Appendix at 292.
Ms. Simmons testified, on direct examination, that no Certificate of Use was initially necessary as to No. 8, because service was requested for a pump, not a residence. Appendix at 161.*fn16 She also testified that a Certificate of Use was not required as to No. 5, which had requested power for a pre-existing building. Appendix at 161-62. Ms. Simmons further testified, however, that "If additional buildings was put up there, they will need a (sic ) Occupancy Permit." Appendix at 162.*fn17
On cross-examination, in response to questioning from the court, Ms. Simmons read to the jury the following from the electrical contract:
(the provision of power is) "... with the understanding that the furnishing of service, the charges therefor and the time of payment thereof are to be in accordance with the Authority's rules and regulations.'
Appendix at 167. She also read into evidence Section 34 of the WAPA regulations:
"The Authority assume (sic ) no responsibility for the inspection of any wiring beyond the delivery point. The Authority will not energize any building which has not been inspected by the municipal government and a Certificate of Inspection has been issued.'
Appendix at 167. In response to further questioning from plaintiff's counsel, Ms. Simmons testified that the contract made all of WAPA's rules and regulations applicable to the customer, and that the passage of the contract read to the jury accomplished that incorporation. Appendix at 168.
Defendant then called Roy Sealey, who was at DPW in 1973. He testified that the rental apartments at Nos. 5 and 8 were fairly new. Appendix at 170-76. On cross-examination, he agreed that it was possible that the buildings had been recently renovated. Appendix at 177.
Defendant then called Claude Richards, a DPW inspector.*fn18 Mr. Richards testified that the rental units at Nos. 5 and 8 were substandard, were built after the Building Code went into effect, and were not present in 1968. Appendix at 180-89. On cross-examination, Mr. Richards testified that the rental units had not been built before 1972. Appendix at 190.
At defendant's request, after all the witnesses testified, the court read into evidence a portion of a deposition of Mr. Williams. The deposition had been taken in the course of a law suit irrelevant here, on April 16, 1971. During the deposition Mr. Williams testified that he had not put up any rental units on No. 8 prior to 1971 and that he had put up several houses on No. 8 in 1971. Appendix at 239.*fn19
D. The Exhibits
Plaintiff introduced only two exhibits: the notices from DPW to WAPA requesting that the power to Nos. 5 and 8 be disconnected. Defendant introduced the two WAPA/Williams contracts and various other exhibits, including copies of several statutes, tending to show the substandard nature of the rental units, their date of construction, and the nature of prior litigation between Mr. Williams and WAPA.
E. Jury Instructions
Each side submitted proposed jury instructions commensurate with its theory of the case. Exceptions were apparently taken by defendant at all appropriate times. Appendix at 280-87. In any event, plaintiff on appeal does not contend that defendant waived any of its objections.
After trial, WAPA filed a motion for a new trial, remittitur or modification. Appendix at 386-94. That motion was denied. Appendix at 416.
On appeal, defendant contends, inter alia, that the WAPA/Luby contract should not have been included in any way in the case, that there was insufficient evidence to support the verdict, and that plaintiff's argument that he had the right to notice and a hearing was barred by res judicata.*fn20
A. No. 5: The WAPA/Luby Contract
Both sides agree that power to the rental units on No. 5 was provided by WAPA pursuant to a contract between one Samuel Luby and WAPA, and not pursuant to any contract between Mr. Williams and WAPA.*fn21 On appeal, Mr. Williams contends that he was a third party beneficiary of the WAPA/Luby contract and therefore entitled to sue on that contract. We disagree. Assuming for the purposes of argument only that WAPA breached the WAPA/Luby contract, there was no evidence from which the jury could conclude that Williams was a third party beneficiary of the WAPA/Luby contract entitled to sue on that contract.
The Restatement (Second) of Contracts provides:*fn22
§ 302. Intended and Incidental Beneficiaries
(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either
(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or
(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.
§ 315. Effect of a Promise of Incidental Benefit
An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee.
In order for plaintiff to be able to sue on the WAPA/Luby contract, he would have to show that giving him a right to performance by WAPA effectuates the intent of both parties to the contract. While there was evidence that plaintiff intended a benefit to himself from the WAPA/Luby contract, there was no evidence that Mr. Luby, one of the parties to the contract, intended to benefit plaintiff, and no evidence that WAPA, the other party to the contract, intended to benefit plaintiff. Indeed, there was no evidence at all as to the intent of either party to the contract. Thus, Mr. Williams cannot sue on the WAPA/Luby contract under the Restatement (Second) of Contracts.*fn23
Plaintiff contends specifically that he was a creditor beneficiary of the WAPA/Luby contract. The Restatement (First) of Contracts defines a creditor beneficiary as follows:
§ 133. Definition of ... Creditor Beneficiary...
(1) Where performance of a promise in a contract will benefit a person other than the promisee, that person is ...:
(b) a creditor beneficiary if ... performance of the promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary....
Here, there was no showing by plaintiff that Mr. Luby (the promisee for purposes of the analysis here) had any obligation to Mr. Williams (the beneficiary) which would be satisfied by performance of the WAPA/Luby contract by WAPA (the promisor). Thus, Mr. Williams does not fit into the category of creditor beneficiary here.*fn24
We conclude that Mr. Williams was not entitled to sue for damages based on the WAPA/Luby contract, and therefore was not entitled to recover damages (assuming there were any) emanating from WAPA's actions in ceasing to provide power to the rental units at No. 5.
Finally, even if we assume for the purpose of argument only that Mr. Williams is entitled to the benefits of the WAPA/Luby contract, plaintiff introduced no evidence that WAPA breached that contract. Even if it would have constituted a breach for WAPA to turn off the power at a time when the account was not overdue, there was no evidence that the Luby account was current. There was evidence from which the jury could infer that the accounts which were in Mr. Williams' name were current, but there was no such evidence as to the WAPA/Luby account. Since Mr. Luby was billed directly by and paid bills directly to WAPA, Mr. Williams would have had no knowledge of the status of that account. In any event, he was not asked if he had such knowledge.
B. No. 8: The Pump Contract
Defendant, as part of its own case, introduced the contract between Mr. Williams and WAPA for the provision of power to No. 8. Appendix at 151, 291. That contract, which was pre-marked Plaintiff's Exhibit 1, provided for the provision of power to No. 8 for a new installation/construction pump. The trial court instructed the jury as follows:
The jury is further instructed that whether or not Mr. Williams was in violation of either the Building Code, or the Housing Code or both, if you find that WAPA knew of such violations and/or his wrongful connection of his houses to the pump, or, if WAPA did not actually know of it but in the proper conduct of its business through its employees should have known of these alleged acts of Mr. Williams, and, if you further find tht, (sic ) therefore, WAPA continued to supply electrical power to the plaintiff's units, continued to bill him for the same, continued to collect monies as billed and continued this course of conduct for a sustained period, as the plaintiff's evidence tends to suggest, then you may find that WAPA acted wrongfully in terminating service to Mr. Williams the more so because they gave him no notice and no opportunity to be heard ....
Appendix at 275-76.
There was no evidence that the rental units at No. 8 complied with either the Housing Code or the Building Code, and there was considerable evidence that they did not. There was no evidence that WAPA had acquiesced over a "sustained period" in plaintiff's conduct in switching the power from the pump to the rental units or in maintaining substandard housing at Nos. 5 and 8. To the contrary, the evidence at trial showed that DPW had persistently sought to compel plaintiff's compliance with the Housing and Building Codes. See appendix at 76-78; 134-35. Plaintiff himself testified that "(DPW) used to harass me (about Building Code deficiencies on the properties) most of the time ...." Appendix at 127.*fn25
Thus, there was insufficient evidence that any contract existed for the provision of electricity by WAPA to the rental units at No. 8, insufficient evidence that any agency had acquiesced in the change from pump to rental units or in the condition of the rental units, and a fortiori insufficient evidence to allow the jury to award damages to plaintiff for WAPA's action in ceasing to provide electricity to the rental units at No. 8.
C. Nos. 5 and 8: The Sufficiency of the Evidence
Assuming for the purposes of argument that Mr. Williams had contracts with WAPA for the provision of power to the rental units at Nos. 5 and 8, and that WAPA breached those contracts when it turned off the power on October 30, 1973, Mr. Williams is not entitled to collect his lost net rentals because there was inadequate proof of any damages emanating from the breach. There was no testimony that any tenant left because of WAPA's actions in ceasing to provide electricity.*fn26 The only two tenants who testified stated that they remained for more than a year after the electricity was cut off; they did not testify as to why they left. One testified that he continued to pay rent after the electricity was cut off; the other did not testify that he stopped paying rent. The sole evidence introduced by plaintiff in support of any award of damages at all was Mr. Williams' testimony that he was seeking lost rental for the period from October 30, 1973 to July 1975. However, plaintiff himself introduced evidence that his tenants had not departed or stopped paying rent when the electricity was disconnected, and there was no evidence that the October 30, 1973, cut off had caused plaintiff to lose any rentals.*fn27
There was no reasonable way in this case for the jury to calculate damages. Indeed, in the course of giving his reasons for refusing to grant defendant's motion for a directed verdict, the trial court implied that he was himself unable to calculate plaintiff's damages. Appendix 144-45.
For the foregoing reasons, we conclude that there was insufficient evidence to support the verdict. The judgment below will be reversed, and judgment will be entered for defendant.