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U.S. Accu-Measurements, LLC v. Ruby Tuesday, Inc.

United States District Court, D. New Jersey

January 14, 2014

RUBY TUESDAY, INC., Defendant.


KEVIN McNULTY, District Judge.

Before me are two motions in limine filed by the defendant, Ruby Tuesday, Inc., in advance of the imminent jury trial in this matter. Defendant requests, in its first motion, that I preclude the plaintiffs, U.S. Accu-Measurements, LLC and Ross Consulting Group, Inc., from offering evidence or argument related to their demand for punitive damages. Defendant requests, in its second motion, that I preclude Plaintiffs from offering evidence or argument related to their claim for unjust enrichment. For reasons discussed briefly infra, I will GRANT Defendant's first motion and DENY its second motion. Both rulings are, however, subject to revision depending upon the evidence at trial.

This case concerns two written agreements between Plaintiffs and Defendant, pursuant to which Plaintiffs prepared comprehensive audit reports assessing whether Defendant had paid the correct amount of common area maintenance ("CAM") to its landlords at malls nationwide. (Final Pretrial Order at ¶ 3 (Doc. No. 37)). Under those contracts, Defendant is to pay Plaintiffs for such auditing services "only when, as and if refunds and cost reductions are realized, as received by [Defendant], and whether in cash, kind, or by way of rental credit." (Contract, Pltf.'s Tr. Br. at Ex. 1 (Doc. No. 42). The contracts set Plaintiffs' fee as either 25 percent or 50 percent of Defendant's gross recovery of CAM overpayments to its landlords, depending on certain circumstances. ( Id. ). Plaintiffs' central allegation in this dispute is that Defendant used the audit reports to arrive at settlements with its landlords that included refunds of CAM overcharges, but that Defendant never paid Plaintiffs' fee or even informed Plaintiffs that such settlements had occurred. (Pltf.'s Tr. Br. at 2). Plaintiffs' causes of action are: 1) breach of contract, 2) breach of the covenant of good faith and fair dealing, 3) unjust enrichment, and 4) accounting. (Complaint (Doc. 1-1)). Plaintiffs' good faith and unjust enrichment claims include a demand for punitive damages. ( Id. ).

I. Motion to Exclude Punitive Damages

Defendant contends that its potential liability has been premised solely on alleged breaches of its contracts with Plaintiffs, and not on any other duty. Punitive damages, it says, are unavailable as a matter of law. (First Motion (Doc. 48)). Plaintiffs respond that punitive damages for breach of contract are available when the parties were in a special relationship of trust, as in the case of a joint venture. (Opposition to Motions (Doc. No. 51)).

As a general rule-and the parties agree on this much-punitive damages are not generally recoverable upon a breach of contract, unless the breach also constitutes a tort. Lightning Lube v. Witco Corp., 4 F.3d 1153, 1194 (3d Cir. N.J. 1993) (citing W.A. Wright, Inc. v. KDI Sylvan Pools, Inc., 746 F.2d 215, 217 (3d Cir. 1984) and Restatement (Second) of Contracts § 355 (1979)). Plaintiffs cite some authority that a breach of contract that also constitutes a breach of fiduciary duty may warrant punitive damages even if no separate claim of a fiduciary breach has been asserted. See Sandler v. Lawn-A-Mat Chemical & Equipment Corp., 141 N.J.Super. 437, 449-451 (App. Div. 1976) ("There may arise a case involving such an aggravated set of facts that punitive damages might be appropriate regardless of the contract form of the cause of action and even though it may be beyond the scope of recognized exceptions...").

Plaintiffs have never indicated, outside of their opposition to this motion in limine, that Defendant breached a fiduciary duty, or that the parties were in a fiduciary relationship. The complaint does not assert any cause of action for breach of fiduciary duty. I might overlook that in accordance with the dicta in Sandler. The trouble is that the complaint also lacks any factual allegations suggesting that the parties are joint venturers, or indeed that they stand in any relationship of trust. In the complaint, Plaintiffs refer to themselves as "vendors." ( See Doc. No. 1-1). Likewise, Plaintiffs' trial brief does not contain any factual assertion or argument that the parties stood in a special or fiduciary relationship. Plaintiff's claims and arguments are all rooted in the parties' status as contracting parties and in Defendant's alleged failure to abide by the contract. ( See Doc. No 42). The Final Pretrial Order does not list, as an issue for trial, whether the parties stood in a special, fiduciary, or joint venturer relationship ( See Doc. No. 37 at ¶¶ 4, 9). The PTO does not so much as mention this issue specifically, or the issue of punitive damages generally. ( See id. at ¶¶ 4.A.2, 9).

Even adopting arguendo the relaxed standard set forth in dicta in Sandler , I cannot find any cognizable allegation or showing of a special relationship of trust. For all that appears in the papers before me, punitive damages are unavailable as a matter of law. Evidence going exclusively to the issue of punitive damages would therefore be irrelevant. See Sandler, 141 N.J.Super. 437, 451-52.

The motion in limine is granted, at least provisionally. Of course, much evidence relevant to punitive damages would also be relevant to show a contractual breach or ordinary damages. Such dual-purpose evidence is not excluded by this ruling.

I say "provisionally" for the following reasons. It is possible that the evidence as presented might suggest a basis for an award of punitive damages. But even if I now thought punitive damages were properly in the case, I would bifurcate the issues and try the punitive damages case separately, if and when the jury found liability and ordinary damages. Therefore, at the close of the evidence or after the jury's verdict, the Plaintiffs may if appropriate move to reconsider this ruling and reopen the proofs for the purpose of considering punitive damages.

II. Motion to Exclude Unjust Enrichment

Defendant argues that there can be no recovery under a theory of unjust enrichment, or quasi-contract, because there is a valid, express contract that covers the same subject matter. There is no dispute that there exists a written contract governing Plaintiffs' provision of auditing services. (Second Motion (Doc. No. 49)). Therefore, Defendant argues, evidence and argument relating to Plaintiffs' unjust enrichment claim must be excluded from the trial. Plaintiffs respond that they are free to argue and submit both express and quasi-contract theories to the jury-they simply may not recover under both. Whether the written contract governs this dispute, they say, may remain open as an issue for the jury. In addition, quantum meruit recovery may occur even where a contract is present, if performance is incomplete. (Opposition to Motions (Doc. No. 51)).

This motion requires me to reconcile three partially overlapping principles.

The first principle, cited prominently by Plaintiffs, permits the submission of ...

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