Lieberman v. Playa Dulce VIA

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THE ESTATE OF DR. RICHARD LIEBERMAN, Plaintiff, v. PLAYA DULCE VIA, S.A., Defendant.

Civil Action No. 14-3393

United States District Court, E.D. Pennsylvania

July 26, 2022

MEMORANDUM

EDUARDO C. ROBRENO, J.

Table of Contents

I. INTRODUCTION .............................................. 2

II. BACKGROUND ................................................ 3

III. LEGAL STANDARDS ......................................... 8

IV. DISCUSSION ............................................... 11

A PDV's Motion for Post-Trial Relief ....................... 11

1. Plaintiff's Rental Pool Payment Claim 12

2. Plaintiff's Claim for Deprivation of Use of the Unit ... 19

3. Conversion and Punitive Damages ........................ 22

4. Plaintiff's Standing ................................... 24

5. Failure to Join Indispensable Parties .................. 24

6. Statute of Limitations ................................. 29

7. The Court's Refusal to Instruct the Jury on PDV's Laches Defense ................................................... 30

8. The Court's Denial of PDV's Motion to Strike the Testimony of Plaintiff's Expert ..................................... 32

B. Plaintiff's Motions to Amend the Judgment and for Costs and Interest .................................................... 37

1. Prejudgment Interest ................................... 37

2. Post-judgment Interest ................................. 39

3. Costs .................................................. 41

V. CONCLUSION ............................................... 42

I. INTRODUCTION

The Estate of Richard Lieberman (“Plaintiff”) brings this action against Defendant Playa Dulce Vida, S.A. (“PDV”), a Costa Rican corporation.

Following a five-day jury trial, the jury returned a verdict in favor of Plaintiff in the amount of $2,468,699. Thereafter, the Court entered judgment in favor of Plaintiff in the amount of the verdict.

The parties' post-trial motions are now before the Court. For the reasons set forth below, PDV's motion for post-trial relief will be granted in part and denied in part. Pursuant to that motion, the Court will grant judgment as a matter of law in favor of PDV on Plaintiff's claim for breach of contract based on the use of the unit. The award of compensatory damages set forth in the judgment in the amount of $2,468,699 will therefore be reduced by $695,000. The Court will deny all other relief requested in PDV's motion.

In turn, the Court will grant in part and deny in part Plaintiff's motions to amend/correct the judgment and for costs and interest. The Court will deny Plaintiff's request for prejudgment interest, grant Plaintiff's request for postjudgment interest, and award costs of $3,376.08.

Therefore, the judgment in this case will be amended to award Plaintiff $1,777,075.08, consisting of $1,773,699 in compensatory damages and $3,376.08 in statutory costs, plus post-judgment interest in accordance with 28 U.S.C. § 1961.

II. BACKGROUND

PDV is a corporation organized and existing under the laws of Costa Rica. PDV owns and operates the Arenas Del Mar Beachfront and Rainforest Resort (the “Resort”) in Costa Rica.

In 2004, Richard Lieberman^[1] purchased twenty-five preferred shares in Defendant PDV. The purchase entitled Lieberman to the usage, enjoyment, ownership, and disposal of two conjoined units at the Resort. As a part of his purchase, Lieberman also signed a Rental Pool Agreement, which required him to place the units into the Resort's “rental pool” for a minimum of 274 days per year. During that “rental pool” period, Defendant maintained the exclusive ability to rent the units in the rental pool to the public. Lieberman maintained the right to use the unit for the remaining ninety-one days of the year, provided that only twenty-one of those ninety-one days could occur during the period between November 30th and May 1st of each year.

The Rental Pool Agreement further provides that Lieberman, as a preferred shareholder, would receive his share of “60% of the net income generated from the rental income of the apartments combined.” Third Am. Compl. ¶ 52, ECF No. 181. Net income was defined as

the sum total income calculated after the deduction of credit charges, insurance policies, institutional deductions, commissions to travel agents and tour operators, costs of discounts as a result of exchanges, municipal and other (government taxes), as well as the cost to maintain and operate the rental facilities, including operating personnel, maintenance in general, gardeners, service of maids, electric power, water, and telephone, security and repairs, whose cost shall be deducted from the income to be distributed.

Id. Defendant also agreed to distribute the net income from the “rental pool” within sixty days after the closing of the fiscal period along with an accounting statement. Id. ¶ 59.

On June 10, 2014, Lieberman filed the initial complaint in this case alleging, inter alia, that PDV had breached the Rental Pool Agreement by failing to pay rental pool income distributions and failing to provide audited financial statements for certain fiscal years. Lieberman also alleged that PDV had breached the Rental Pool Agreement by refusing him access to the unit on several occasions. After the motion to dismiss and summary judgment stages, Plaintiff's claims against PDV for breach of contract, conversion, and promissory estoppel remained in the case to be adjudicated at trial.

On November 4, 2019, trial commenced in this case. On the second day of trial, Lieberman was called as a witness and sought to testify as to Defendant's financial records. The Court determined, sua sponte, that its ruling on a prior motion in limine, which held that no expert was required to evaluate the contractual impropriety of certain deductions in PDV's financial statements, was in error and that expert testimony pursuant to Federal Rule of Evidence 702 was required. The Court accordingly declared a mistrial and directed the parties to obtain expert witnesses.

Trial commenced once more on November 15, 2021. At trial, Plaintiff's expert, Stephen Scherf, testified as to the amount of damages to which Plaintiff would be entitled should the jury find PDV liable for breach of contract as to Rental Pool payments.^[2] Scherf presented three different damage calculations, each based on a distinct outcome that would be reached depending on the jury's determination of whether PDV breached the contracts and whether Lieberman's proportionate share of the total number of preferred shares increased at certain times.

Scherf's first calculation assumed that Lieberman's proportional share of total preferred shares remained at 4.81% throughout the entire damage period, and arrived at a total damages figure of $157,352. The second scenario assumed that Lieberman's share of preferred shares increased from 4.81% to 33.3% after 2010, and arrived at a damages total of $1,049,219. Scherf's third scenario assumed that Lieberman's share increased from 4.81% to 33.3% after 2013, and calculated a damages total of $735,484. The potential increase of Lieberman's proportional share over time was based on two PDV documents Scherf identified in his testimony at trial. The first is a 2011 letter from PDV to preferred shareholders which offered them the choice to retain their preferred shares or exchange them for common stock. The second is a private placement memorandum dated October 14, 2014, which stated that “[a]s of the date of this Offering Memorandum, we have 75 shares of Preferred Stock issued and outstanding.” Pl's Tr. Ex. 3 at 15. PDV disputed the accuracy of the private placement memorandum at trial and claimed that, at all times relevant to this case, there were 520 outstanding preferred shares.

The expert report Scherf produced prior to trial also briefly addressed Plaintiff's claim for damages based on PDV allegedly depriving Lieberman of the use of the unit. Scherf wrote in the report that “Dr. Lieberman has been deprived the economic value of his investment in the 25 preferred shares in the amount of $415,000, which included the use of unit #603. Therefore $415,000 must also be included in Dr. Lieberman's damages.” Pl's Tr. Ex. 57 at 7. In response to the report, PDV filed a motion in limine to preclude Scherf from offering expert testimony related to damages based on the purchase price of Lieberman's shares in PDV. The Court granted the motion.

At trial, Scherf testified that he was not asked to opine in any way on Plaintiff's request for $415,000, which represented the purchase price of the preferred shares, in connection with Plaintiff's unit usage claim. Susan Landis Lieberman, Lieberman's wife, also testified that Plaintiff was seeking, in addition to its fair share of the rental pool income, $415,000 on the basis that she and Lieberman had “been deprived usage” of the unit. Transcript of Trial 11/16/2021, 50:23-51:2, ECF No. 223.

At the conclusion of the trial, the jury was instructed on Plaintiff's claims for breach of contract and conversion.^[3]Plaintiff's conversion claim was presented as an alternative theory of liability to its claim for breach of contract. In other words, the jury was instructed to consider whether PDV was liable for conversion only if it first determined that it was not liable for breach of contract.

The jury returned a verdict in Plaintiff's favor and awarded Plaintiff $1,773,699 in compensatory damages related to rental pool income and $695,000 in damages related to the usage of Plaintiff's unit.

Plaintiff now seeks to amend the judgment to add statutory costs as well as prejudgment and post-judgment interest. PDV moves for judgment as a matter of law, a new trial, or an order...