The parties in this breach of contract case, a successful musician and his former manager, dispute whether royalties from record albums have been accounted for
and paid to each other. The appeal is from a final judgment by the district court after a jury trial, disposing of all claims in respect to all parties.BACKGROUND: A BAND OUT OF BOSTON
In this case, the parties dispute many of the facts and the inferences to be drawn from them. Thus we start with a sketch of the basic facts, and address the individual issues in more detail
below. Appellant and crossappellee Donald Thomas Scholz ("Scholz") is a musician, composer, and record producer who was, and is, a member of the musical group BOSTON ("BOSTON"). In late
1975, Scholz entered into three agreements with appellee and crossappellant Paul F. Ahern ("Ahern"), who was engaged in the business of promoting and managing music groups, and his then partner, Charles
McKenzie ("McKenzie") (collectively, the "1975 Agreements"). First, Scholz made a recording agreement (the "Recording Agreement") with Ahern and McKenzie d/b/a P.C. Productions, to
which Bradley Delp, the lead singer of BOSTON, was also a party. Second was a management agreement (the "Management Agreement"), also between Scholz and P.C. Productions, under which *779 Ahern and
McKenzie were appointed Scholz' exclusive personal managers worldwide. The third agreement was a songwriter agreement made between Scholz and Ahern, under which Scholz was obligated to furnish Ahern his exclusive
songwriting services for a period of five years.
In early 1976, CBS Records ("CBS") and Ahern Associates, a business name of Ahern and McKenzie, entered into a recording agreement for the
exclusive recording services of BOSTON. The group's first album (the "first album") was released in 1976, and sold approximately 11 million copiesone of the highest selling debut albums ever. Its
second album (the "second album") was released in August 1978, and sold approximately 6 million copies.
In 1978, Scholz and the other members of BOSTON entered into a modification agreement with
Ahern and P.C. Productions, dated April 24, 1978. Among other things, the First Modification Agreement modified the 1975 Agreements and changed the financial relationship between Scholz and his managers.
Ahern and McKenzie dissolved their partnership. A few years later, in May of 1981, Ahern and Scholz, individually and under various business names, entered into a further modification agreement (the "Further
Modification Agreement" or "FMA"), which is at the heart of this dispute. Ahern ceased to be Scholz' manager.
In 1982, with the third album not yet released, CBS cut off the payment of
royalties generated from the first and second albums. In 1983, CBS brought suit against Scholz, Ahern, and the members of BOSTON for failure to timely deliver record albums. Scholz' counsel in that action
was Donald S. Engel ("Engel"); Ahern had his own counsel. While that litigation was pending, the third album was released by MCA Records ("MCA") in 1986 and sold well over 4 million
copies. At the close of trialseven years after the CBS litigation beganthe jury found that Scholz was not in breach of contract. Scholz incurred legal fees of about $3.4 million dollars.
In
February 1991, Ahern commenced this action against Scholz for breach of the FMA claiming a failure to pay royalties due under the third album. Scholz asserted various affirmative defenses and counterclaims against
Ahern, including breach of the FMA. During trial, Engel, Scholz' lead trial counsel, was twice called as a witness. At the close of the evidence, the court granted Scholz' directed verdict dismissing Ahern's
Count III for fraud and IV for breach of implied covenant of good faith and fair dealing. The court also granted Ahern's motion for directed verdict dismissing Scholz' First, Second, and Third Counterclaims and
his, Third, Fourth, and Fifth affirmative defenses. Only the parties' respective breach of contract claims went to the jury. The jury found that Scholz breached section 5.2.1 of the FMA to pay Ahern
royalties from the third album, and found that Ahern had not breached the FMA to account for and pay Scholz royalties due from the first and second albums. It awarded Ahern $547,007 in damages.
The
trial court sitting without a jury also found Scholz had breached the FMA, and heard Ahern's Count II for declaratory relief and Count V for violation of Mass. Gen. L. ch. 93A and Scholz' Fifth Counterclaim for
recision of contract for failure to obtain a license. The court denied the declaratory relief Ahern sought in Count I, and awarded him costs, interest and attorney's fees pursuant to Count V for violation of Mass.
Gen. L. ch. 93A ss 2 & 11. The court denied the relief sought by Scholz in his Fifth Counterclaim and held that he waived his Counts VI and VII at oral argument. After a hearing on Ahern's bill of
costs and application for reasonable attorney's fees and interest, the court awarded Ahern $265,000 in attorney's fees and $135,000 in costs.
The district court denied, without a hearing, Scholz' motion for
a new trial, motion to amend the court's memorandum and order and judgment entered thereon, motion to admit new evidence, and motion to amend the court's memorandum and order and the judgment entered thereon regarding
Scholz' Sixth Counterclaim. This appeal followed.
MOTION FOR A NEW TRIAL
Appellant first argues that the district court erred in denying his motion for a new *780 trial, made pursuant to
Fed.R.Civ.P. 59(a). We therefore review the record below to determine whether the evidence required that the district court grant the motion for a new trial. See de Perez v. Hospital del Maestro, 910 F.2d
1004, 1006 (1st Cir.1990). In reviewing the record of the 16day trial, we note that both parties presented extensive evidence. The jury heard testimony regarding a history that spans two decades, involves at
least seven contracts, includes detailed numerical accounting, and references more than half a dozen other legal battles. The parties called a total of fifteen witnesses, seven of whom, including Ahern, Scholz,
and Engel, Scholz' counsel, testified twice. In short, the jury faced a complex and sometimes conflicting set of facts in making its decision as to whether either, neither, or both parties breached the 1981
Further Modification Agreement. Ultimately, we find that the jury's verdict was not against the clear weight of the evidence, and the district court did not abuse its discretion in so finding.
A. Standard of Review
"A verdict may be set aside and new trial ordered 'when the verdict is against the clear weight of the evidence, or is based upon evidence which is false, or will result in a
clear miscarriage of justice.' " Phav v. Trueblood, Inc., 915 F.2d 764, 766 (1st Cir.1990) (quoting TorresTroche v. Municipality of Yauco, 873 F.2d 499 (1st Cir.1989)); see Fed.R.Civ.P. 59(a);
Sanchez v. Puerto Rico Oil Co., 37 F.3d 712, 717 (1st Cir.1994). In reaching its decision, "the district court has broad legal authority to determine whether or not a jury's verdict is against the 'clear
weight of the evidence.' " de Perez, 910 F.2d at 1006. Nonetheless, "the trial judge's discretion, although great, must be exercised with due regard to the rights of both parties to have questions
which are fairly open resolved finally by the jury at a single trial." Coffran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 571, 74 L.Ed.2d 933 (1982); see
Kearns v. Keystone Shipping Co., 863 F.2d 177, 17879 (1st Cir.1988). Thus, the district court judge "cannot displace a jury's verdict merely because he disagrees with it or would have found otherwise in a
bench trial." Milone, 847 F.2d at 37; see Coffran, 683 F.2d at 6. "The mere fact that a contrary verdict may have been equallyor even more easily supportable furnishes no cognizable ground for
granting a new trial." Freeman v. Package Mach. Co., 865 F.2d 1331, 133334 (1st Cir.1988).
Our review is circumscribed: we will disturb the district court's ruling on appellant's motion for a new
trial only where there has been a clear abuse of discretion. See Simon v. Navon, 71 F.3d 9, 13 (1st Cir.1995); Newell Puerto Rico, Ltd. v. Rubbermaid Inc., 20 F.3d 15, 22 (1st Cir.1994).
In order to
determine whether such an abuse occurred here, we must review the record below. We do this not in the role of "a thirteenth juror," assessing the credibility of witnesses and weighing testimony, but
rather to isolate the factual basis for the trial court's ruling and provide the foundation for our action today.
Kearns, 863 F.2d at 179. "So long as a reasonable basis exists for the jury's
verdict, we will not disturb the district court's ruling on appeal." Newell Puerto Rico, Ltd., 20 F.3d at 22.
With our standard of review established, we turn to Scholz' argument and the record
below. We address each of the two breach of contract claims the jury decided in turn.
B. Did Ahern Breach the FMA?
Scholz argues that Ahern breached his obligations under the 1981 FMA to
both account for and pay to Scholz, every six months, his share of the royalties from the compositions on the first and second albums: indeed, Ahern admitted at trial that he had failed to make some payments he
owed Scholz under the FMA. The jury and the trial court disagreed with Scholz, however, and found that Ahern's breach of the FMA was not material. [FN1] The question facing us, then, is whether the district
court abused its discretion in finding that the jury's decision was not against the weight of the evidence. After careful review of the record, we find no abuse of discretion in the lower court's decision not to disturb
the jury's finding.
FN1. Regarding substantial performance, the court's instructions to the jury stated that
The term "performance" contains within it substantial performance.
Namely, if a person has substantially performed, that, in the eyes of the law, is full performance of one's obligations. So when I've used the term "performance" or "breach of the obligations,"
just include within those concepts the question of what is the definition of the term "substantial performance" or "substantial breach."
Scholz argues at some length on appeal that
Ahern's breach was by definition material, both for his failure to account and his failure to pay. As for the first contention, we note that while Scholz' reading of the FMA as requiring that Ahern render Scholz
direct accountings every six months is a convincing one, it is not the only plausible one. Indeed, Ahern contends that the FMA only required him to send irrevocable letters of direction to various entities
involved directing them to send Scholz his share of the royalties when collected. In the end, it would not be against the clear weight of the evidence to find that letters of directions would satisfy Ahern's
accounting obligations under the FMA, and that such letters were sent. Therefore, Ahern's failure to account every six months was not a material breach.
As for the second contention, Scholz supports
his position that Ahern's failure to pay constitutes a separate, material breach by drawing on both New York [FN2] and Massachusetts case law. He points to the Second Circuit's refusal to overturn summary judgment
in ARP Films, Inc. v. Marvel Entertainment Group, Inc., 952 F.2d 643, 649 (2d Cir.1991). In that case, where plaintiffs failed to account and pay royalties in excess of $400,000, the court stated that
FN2. The FMA provides that it shall be "governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely in New
York." "In the absence of a conflict of public policy, Massachusetts honors choiceoflaw provisions in contracts, and, in this diversity case, so must we." Northeast Data Sys., Inc. v. McDonnell
Douglas Computer Sys., Inc., 986 F.2d 607, 610 (1st Cir.1993) (citation omitted). As we find no public policy issue is implicated by this private dispute, we respect the parties' choiceoflaw provision. See
id.the district court correctly concluded that the breach by plaintiffs in failing to make the payments and provide the reports required was material as a matter of law, thus authorizing Marvel to terminate the
contract. [The parties' agreement] explicitly singled out plaintiffs' obligation to provide "prompt accounting" for distributions as a term and condition of the agreement, the substantial breach of which
authorized Marvel to terminate the license provided by the agreement. In addition, failure to tender payment is generally deemed a material breach of contract. Finally, as the district court found, and the
subsequent accounting confirmed, the amounts withheld from Marvel by plaintiffs were very substantial. Id. (citations omitted).
Scholz also points to a New York case holding that a licensee's failure
to pay franchise fees totalling $40,129 over four months constituted a breach of contract, McDonald's Corp. v. Robert Makin, Inc., 653 F.Supp. 401, 40204 (W.D.N.Y.1986), as well as Massachusetts language indicating that
"[a] material breach of an agreement occurs when there is a breach of 'an essential and inducing feature of the contract.' " Leaseit, Inc. v. Massachusetts Port Auth., 33 Mass.App.Ct. 391, 600 N.E.2d
599, 602 (1992) (holding that sixmonth refusal to pay concession and rental fees was a material breach) (quoting Buchholz v. Green Bros. Co., 272 Mass. 49, 172 N.E. 101 (1930)). Scholz argues that Ahern's breach,
spanning thirteen years, is more egregious than these cases of a sixmonth failure to pay concession and rental fees, fourmonth failure to pay license and lease fees, and sevenmonth failure to pay (and fivemonth failure
to account). [FN3] Therefore, Scholz concludes, Ahern's failure to pay Scholz at least $459,000 is clearly a substantial breach.
FN3. Scholz states that this is especially true here, where a transfer
of copyrights are involved, and notes Ahern's admission that this imposed on him a heightened duty to account and pay royalties.
We are not convinced. We remind appellant that under our standard of
review, we do *782 not sit as a juror, evaluating credibility and weighing evidence, as he seems to ask us to do. Rather, we simply weigh whether the district court committed a clear abuse of its discretion in
determining that the jury verdict was not against the clear weight of the evidence. Newell Puerto Rico, 20 F.3d at 22; Kearns, 863 F.2d at 179. Our review of the record reveals that Ahern's counsel
presented testimony questioning, to varying degrees, nine of the thirteen items of the estimate Scholz' accounting expert made of how much Ahern owed Scholz. Phillip Ames ("Ames"), a certified public
accountant who served as business manager for both Ahern and BOSTON from 1976 through sometime in 1981 or 1982, made several estimates of how much Ahern owed Scholz, which he labelled "ball park
figures." While we note that Ames' final estimate was $277,000, for a total of $459,000 with interest, we cannot assume that the jury accepted this figure as gospel. Given that Ahern sought over a
million dollars in principal and interest from Scholz, the jury may reasonably have found that the Ames figure was not a substantial breach in the particular context of this case. It may have determined that the
amount of money Ahern owed, taken in the perspective of the contract, Ahern's obligations, and the total amounts of money concerned, was not so significant a breach as to violate "an essential and inducing feature
of the contract." LeaseIt, 600 N.E.2d at 602. Finally, addressing the case law Scholz relies on for support, we note that here, unlike in those cases, the amount of money owed was in question.
Ultimately, examining the record in full, the evidence clearly provides the jury and trial court with a basis for finding that Ahern did not substantially breach the FMA. As this Circuit stated on
another occasion,
We can understand how a jury might have decided for [defendant] on the basis of this evidence. But the jury did not do this; it decided for [plaintiff]. We do not see how one
could say that the jury clearly made a mistake. We do not see how one could say that the evidence overwhelmingly favored the [defendant]. Rather, the evidence simply was mixed and contradictory.de Perez, 910
F.2d at 1008. Therefore we cannot say that the district court committed a clear breach of its discretion on this point.
C. Did Scholz Breach the FMA?
Ahern claimed below that Scholz
breached his obligation under section 5.2.1 of the FMA to pay Ahern his share of the royalties due from the third album. [FN4] The evidence presented at trial centered on a document entitled "Artist Royalty
Statement" ("the Scholz Statement"), which Scholz presented to Ahern. [FN5] That statement listed over $6 million *783 in gross royalties reported by MCA prior to December 31, 1993, but reduced that
figure by deducting, among other things, a producer share and artist costs, so that the net artist royalties fell to below zeroand Ahern was not entitled to any money. Scholz argued at trial that he did not breach
the FMA, but the jury and the trial court disagreed.
FN4. That provision provided, in pertinent part,
With respect to the future commercial release of any albums embodying the musical
performance of the group "Boston" ..., Ahern shall be entitled to receive eighteen percent (18%) of gross royalties after deduction and payment of only (i) a producer's royalty to Scholz (computed according to
the terms and provisions of the agreement between CBS and Ahern Associates, as amended, at a basic rate of six percent (6%) of the wholesale royalty base price) and (ii) all commercially reasonable recording expenses,
including Tom Scholz' recording services (i.e. commercially reasonable engineering and other recording services), or recording expenses incurred by CBS or such other company and deducted from royalties payable.
Because McKenzie was entitled to a percentage of the royalties, Ahern's actual rate was 12 percent.
FN5. In fact, Scholz sent Ahern two "Artist Royalty Statements," the first dated from inception
to June 30, 1990, the second from inception through December 31, 1993. We address the second here, as being more recent. It listed the following figures:
Total Gross Royalties Reported by MCA
Records $6,604,048.14
Gross RoyaltiesAudit Settlement 170,000.00
Less Producer Share (2,257,862.05)
Gross Artist Royalties 4,516,186.09
less MCA Costs Deducted 508,566.22
less MCA CostsAudit Settlement (210,000.00)
less Artist Costs (Schedule 1) 4,360,447.00
Net Artist Royalties (142,827.13)
Of this final "Net Artist Royalties" figure, Ahern's percentage share was 12 percent, so that his share of the royalties was minus $17,139.26. "Artist Costs" included charges for 11,971
hours of studio time in Scholz' studio at $125 an hour; engineering and equipment for the studio, at atotal of $60 an hour; and $1.7 million in legal fees to Engel's law firm for the CBS litigation and
negotiation of the agreement with MCA.
On appeal, Scholz contends that their finding is against the weight of the evidence, because Ahern's prior material breaches excused Scholz' performance under the
Further Modification Agreement. Scholz points out that paragraph 2 of the FMA states thatScholz wishes to guarantee that Ahern shall receive at a minimum certain amounts of monies in connection with future
recordings embodying the performances of the group "BOSTON" .... in exchange for the agreement of Ahern as set forth herein.Scholz shapes his argument on appeal as follows: Since Ahern's only agreement
of substance was his agreement to account for and pay royalties to Scholz for prior BOSTON albums, Ahern's breach of his commitment excused Scholz' performance. Indeed, Scholz notes, the parties' mutual
commitments to account to and pay each other are expressly stated to be in consideration of each other. In such "bilateral contracts for an agreed exchange of performances, even though the promises are in
form absolute, the law regards them as constructively conditioned in order to avoid an unjust result." Industrial Mercantile Fac. Co. v. Daisy Sportswear, 56 Misc.2d 104, 288 N.Y.S.2d 209, 211
(N.Y.Civ.Ct.1967), order aff'd, 56 Misc.2d 584, 289 N.Y.S.2d 332 (N.Y.Sup.Ct.1968); see Restatement (Second) of Contracts, s 237 cmt. a (1979). Moreover, Scholz continues, the nonoccurrence of a condition of
a party's duty excuses the nonbreaching party's obligation to perform even though that party does not know of its nonoccurrence, id., s 237 cmt. c, and the intention or scienter of a breaching party are not considered
in the elements of breach of contract. See Agron v. The Trustees of Columbia Univ., 1993 WL 118495 (S.D.N.Y., April 12, 1993).
Considering this, Scholz points out that his first royalty statement
regarding the third album was rendered by MCA on April 1, 1987. Thus the earliest he could have owed money to Ahern under the FMA was August 15, 1987 and by that date, he argues, Ahern had already failed to
account to Scholz or pay him royalties with respect to the first two albums for over five years. Therefore, Scholz maintains he was excused, at least until Ahern tendered payment, from rendering an accounting or paying
royalties to Ahern from the third album. At the very least, Scholz argues, he could have withheld payment of the $459,000 admittedly owed him as a setoff against any amount he owed Ahern. See Record Club of
America v. United Artists Records, Inc., 80 B.R. 271, 276 (S.D.N.Y.1987), vacated on other grounds, 890 F.2d 1264 (2d Cir.1989).
In so arguing, Scholz does not contend that he did not in fact breach the
FMA: he simply maintains that Ahern did so first. Since Scholz does not revisit the merits of the evidence presented at trial regarding his breach, we will not do so here. [FN6] However, since we have
already found that the verdict that Ahern did not substantially breach the FMA was not against the clear weight of the evidence, Scholz' argument here must fail. Clearly, it would be inconsistent with our
acceptance of the verdict that Ahern did not substantially breach the FMA to find that Scholz' performance was excused by Ahern's material breach. Accordingly, we affirm the district court's decision to refuse the
motion for a new trial on this issue. [FN7]
FN6. We note, however, that our review of the record convinces us that the verdict is not against the clear weight of the evidence, and so the district court's
ruling was not an abuse of its discretion.
FN7. Scholz argues, in a footnote, that the jury's verdict violates the premise that a party cannot recover more than he would have obtained had no breach
occurred. However, we need not address his contention. Scholz provides no more than a couple of citations to flesh out his position: he does not explain how the jury verdict places Ahern in a better
position than he would have been if Scholz had not breached the FMA. It is by now axiomatic that "issues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are
deemed waived." United States v. Zannino, 895 F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082, 110 S.Ct. 1814, 108 L.Ed.2d 944 (1990).
D. Sufficiency of the Evidence
In a footnote, Scholz
adds that he is appealing the verdict not only in terms of the denial of his motion for a new trial, as discussed above, but also that he appeals each of the jury's findingsi.e. that Scholz breached the FMA, that Ahern
did not breach the Agreement, and that Ahern was entitled to damageson the grounds of insufficiency of the evidence. Scholz relies on Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1, 9 (1st Cir.1979),
cert. denied sub nom. Durham Distribs., Inc. v. Bombardier Ltd., 449 U.S. 890, 101 S.Ct. 248, 66 L.Ed.2d 116 (1980), to claim that our review of his alternative argument is limited to asking whether there is sufficient
support in the record for the jury's finding.
Engine Specialties outlines the standard of review as follows:
If we can reach but one conclusion after reviewing the evidence and all inferences
drawn fairly therefrom in the light most favorable to the plaintiff (the prevailing party) and if that conclusion differs from the jury's, only then can the finding be set aside. Even if contrary evidence was
presented and conflicting inferences could be drawn, it is for the jury to draw the ultimate conclusion, and such determination will not be disturbed unless the condition described above is met.
Id.;
see Fleet Nat'l Bank v. Anchor Media Television, Inc., 45 F.3d 546, 55253 (1st Cir.1995) (outlining application of standard). We note that, in fact, this is the standard of review applicable to motions for
judgment as a matter of law under Federal Rule of Civil Procedure 50. While it is a circumscribed review, it is nonetheless not as limited as our review of the district court's disposition of the motion for new
trial. See Sanchez, 37 F.3d at 71617 (comparing the two standards of review).
We find nothing in the record to establish that appellant Scholz made a motion for judgment as a matter of law, so
that he would be entitled to this less deferential standard of review. Rather, he argues sufficiency of the evidence in his motion for a new trial.
Our review of the record, therefore, must be under
the abuse of discretion standard outlined above. See MacQuarrie v. Howard Johnson Co., 877 F.2d 126, 131 (1st Cir.1989) (noting that the strict "abuse of discretion" standard "is especially
appropriate if the motion for a new trial is based on a claim that the verdict is against the weight of the evidence"); Freeman, 865 F.2d at 134143 (evaluating the weight of the evidence as part of a motion
for a new trial, separately from its review of the denial of the motion for judgment notwithstanding the verdict).
Irrespective of which standard of review we apply, however, Scholz' alternative argument
fails. First, the evidence was overwhelming that he breached the FMA by failing to pay Ahern his share of the royalties from the third album; indeed, Scholz does not attempt to argue otherwise. Second,
although the issue of the materiality of Ahern's breach is fairly close, as discussed above, there was sufficient evidence in the record for the jury to determine that Ahern did not materially breach the Further
Modification Agreement. Finally, having made these two determinations, the award of damages was appropriate. Therefore, given the scope of the evidence as described, we find that the district
court's denial of appellant's motion for a new trial was amply supported and not an abuse of discretion.
E. The Length of the Jury Deliberations
Scholz next contends that the jury failed to
follow its instructions. [FN8] The district court instructed the jury that damages could only be awarded if it found one party breached the FMA and the other did not. If it found that both parties were in
breach, no damages could be awarded. In making his contention, Scholz reiterates his argument that the evidence was insufficient, emphasizing that Ahern admitted he did not perform his obligations under the FMA,
and maintaining that Ahern's accountant admitted that he both failed to pay at least $459,000 to Scholz and mischaracterized an advance from a foreign subpublisher as a loan. Under the jury instructions, Scholz
argues, these factors preclude the jury from finding that Scholz breached the FMA, or at least from awarding Ahern any royalties. These contentions have been dismissed in our discussion above.
FN8. The jury was instructed, in pertinent part, that:
A party which has performed its obligations under a contract is entitled to have the other party do the same. Conversely, a party which has not
performed its obligations under a contract is not entitled to performance from the other party. So once you understand the terms of the contract, you should determine whether any party has failed to perform any of
the terms of the contract.
* * *
If your determination should be that the defendant or defendant in counterclaim breached the contract and that the plaintiff or plaintiff in counterclaim did not, at that point you would consider the issue
of damages.
* * *
If you find that both parties breached their obligations under the Further Modification Agreement, then no damages should be accorded to either party under the contract.(Day 15, pages 9092).
