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W.A. Wright Inc. v. Kdi Sylvan Pools Inc.

October 23, 1984

W.A. WRIGHT, INC. AND A.C. EXCAVATING, INC., APPELLEES
v.
KDI SYLVAN POOLS, INC., APPELLANT



On Appeal from the United States District Court for the District of New Jersey

Author: Seitz

Before: SEITZ, Circuit Judge, STEWART, Associate Justice (Retired),*fn* and ADAMS, Circuit Judge

Opinion OF THE COURT

SEITZ, Circuit Judge.

KDI Sylvan Pools, Inc., ("Sylvan") appeals from a final order of the district court entering judgment in favor of plaintiffs W.A. Wright, Inc. ("Wright Inc.") and A.C. Excavating, Inc. ("A.C. Excavating") after a jury trial. Sylvan further appeals an order of the district court denying Sylvan's motion for a new trial and granting plaintiffs' motion for an assessment of prejudgment interest. This court has jurisdiction under 28 U.S.C. ยง 1291.

I.

Defendant Sylvan is engaged in the business of selling and constructing residential inground swimming pools. Plaintiffs Wright Inc. and A.C. Excavating, both controlled by William and Patricia Wright, perform construction tasks related to the installation of such pools.

On February 14, 1980, Sylvan entered into separate subcontracting agreements with Wright Inc. and A.C. Excavating.*fn1 In the first of these agreements, Sylvan agreed to recommend Wright Inc. for all deck and terrace work on pools sold in Sylvan's Cherry Hill office during the 1980 season. The second agreement provided that A.C. Excavating would perform all excavation work on those pools. The latter contract estimated that "between 85 to 100 digs" would be commenced in 1980. Both agreements stipulated that either party could terminate the contracts for good cause.

Relations between the parties deteriorated, and Sylvan terminated the contracts in May of 1980, several months prior to the end of the season. Plaintiffs then filed suit in state court alleging breach of contract. The case was removed to federal court under the court's diversity jurisdiction. A jury trial was held in which the district court required the jury to respond to special interrogatories relating to the issues of liability, compensatory damages and punitive damages. The jury found that Sylvan had terminated the two subcontracting agreements without good cause. Wright Inc. received compensatory damages in the amount of $86,768.00, while A.C. Excavating received $28,396.00. Punitive damages of $7,500.00 were awarded to each of the plaintiff companies.

Prior to the district court's entry of judgment, plaintiffs moved for an assessment of prejudgment interest on the awards of compensatory damages. Also before the court was Sylvan's motion for a new trial. Applying New Jersey state law, the court held that equitable considerations supported an award of prejudgment interest. Interest was awarded for the period between November 30, 1980, the close of the 1980 season, and May 23, 1983, the date of entry of judgment. The motion for a new trial was denied. W.A. Wright, Inc. v. KDI Sylvan Pools, Inc., 569 F. Supp. 589 (D.N.J. 1983).

The arguments raised by Sylvan in its motion for a new trial are revived in this appeal. Sylvan asserts that the district court improperly granted plaintiffs leave to amend their complaint after the close of their case at trial. The amendment, which was added solely to assert a basis for the imposition of punitive damages, alleged that Sylvan had entered into the subcontracting agreements with knowledge that they violated an earlier consent decree. This decree had been entered into in an unrelated action brought against Sylvan by a competitor, Anthony Industries, Inc. ("Anthony"). Under the terms of the decree, Sylvan and Anthony were prohibited from interfering with each other's business relationships with any contractors or subcontractors.

Sylvan argues that New Jersey law*fn2 prohibits an award of punitive damages in this case and therefore that the jury should not have been instructed on the issue of such damages. The erroneous instruction, Sylvan further maintains, tainted the compensatory damage awards. Finally, Sylvan alleges that the district court abused its discretion in awarding prejudgment interest.

II.

A. Punitive ...


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