Only the Westlaw citation is currently available.United States District Court, S.D. New York.

PALAZZETTI IMPORT/EXPORT, INC., Plaintiff,v.

Gregory P. MORSON and the Morson Group, d/b/a theMorson Collection, Defendants.

No. 98 CIV. 722(FM).

Dec. 6, 2001.

Debra J. Guzov, Esq., Guzov, Steckman & Ofsink,LLC., New York.Dan L. Johnston, Esq., New York.

MEMORANDUM OPINION AND ORDER

MAAS, Magistrate J.

I. Introduction

*1 This breach of contract action arises out of a licens-ing agreement pursuant to which plaintiff Palazzetti Im-port/Export, Inc.FN1 licensed defendant Gregory P.Morson FN2 to use the “Palazzetti” name in connectionwith a furniture store in Boston, Massachusetts. Thecase was tried before a jury over the course of threedays, commencing on July 16, 2001. Following severalhours of deliberations, the jury returned a verdict in fa-vor of Palazzetti in the amount of $1,661,981.

FN1. Plaintiff Palazzetti Import/Export, Inc. ishereinafter referred to as “Palazzetti.”

FN2. The defendants hereinafter are referred tocollectively as the “Defendants,” Gregory P.Morson as “Mr. Morson,” and The MorsonGroup, d/b/a “The Morson Collection,” as “TheMorson Group.”

The Defendants have now moved for judgment as amatter of law (“JMOL”) under Rule 50(b), or, in the al-ternative, a new trial under Rule 59, of the FederalRules of Civil Procedure. For the reasons set forth be-

low, I have determined that both motions should bedenied. The Clerk of the Court is therefore directed toenter judgment against the Defendants consistent withthis Memorandum Opinion and Order and close thiscase.

II. Factual and Procedural History

A. Palazzetti

Palazzetti is a corporation engaged in the business ofimporting furniture for sale to architects, decorators,and retail customers through furniture showrooms. (Tr.27-33).FN3 The Palazzetti collection consists of high-end “modern classic” furniture created by “famous de-signers” during the period from 1900 through 1950. (Id.at 28).

FN3. “Tr.” refers to the uncertified draft tran-script of the trial furnished to the Court byPalazzetti as part of its opposition papers.

Following the opening of its first showroom in NewYork City in 1982, Palazzetti has, at various times, op-erated showrooms in several cities, primarily in theNortheast, but also in Texas and California. (Id. at30-48). By the time of the trial, the Palazzetti empirehad been reduced to one showroom in New York Cityand another in Manhassett, New York. Except for ashowroom operated by the Defendants in Boston, all ofthe Palazzetti showrooms in the United States wereeither wholly owned or controlled by Palazzetti's prin-cipal, Sergio Palazzetti.FN4

FN4. Sergio Palazzetti is hereinafter referred toas “Mr. Palazzetti.”

B. The “Boutique” License

In the spring of 1994, Mr. Morson's then fiancé, Caro-lyn Hontoria, began working for Palazzetti as a sales-person in the New York showroom. (Id. at 150, 253).She and Mr. Morson subsequently spoke with Mr.

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Palazzetti about opening a Palazzetti store in Boston.(Id. at 217-18, 254-56). Those discussions led to a July18, 1995 “Palazzetti Boutique License” agreementbetween Palazzetti and Mr. Morson (“License”), pursu-ant to which Mr. Morson (or a corporate assignee thathe controlled) was granted the right to use the Palazzettiname for a furniture store in the Boston metropolitanarea for a period of ten years, commencing with theopening of the store. (License §§ 2, 4, 5, 11). The Li-cense granted Mr. Morson exclusivity in that area. (Id. §13).

In exchange for the License, Mr. Morson agreed to payan initial fee of $100,000. (Id. § 3). Mr. Morson alsoagreed that the majority of the inventory on the show-room floor and no less than sixty percent of the Bostonstore's annual sales would be derived from Palazzetti'sproduct line, which was to be offered to Mr. Morson orhis assignee “at wholesale costs no greater than thoseamounts charged to all other retailestablishments.”(Id. §§ 6, 10). As a consequence, in ad-dition to the $100,000 fee, the License afforded Palazz-etti the opportunity to realize substantial additional in-come based upon its sales of furniture to Mr. Morson orhis assignee.

*2 The License gave Mr. Morson or his assignee theright to renew for additional ten-year periods, with therenewal fee fixed as “an amount equal to one and onehalf percent (1.5%) of the total amount of sales, net ofdiscounts, for the immediately preceding ten (10) yearperiod.”(Id. § 4).

Pursuant to the License, any declaration of a default hadto be in writing, with the allegedly defaulting party hav-ing a thirty-day period to cure. (Id. § 16). The Licensestated that any “[u]ncured defaults of the License[e]may result in the revocation of the License.”(Id.) Thevery next sentence of the License provided, however,that any “[u]ncured defaults of the Licensor shall en-titled [sic] Licensee to damages, equity orboth.”(Id.).FN5

FN5. The License is riddled with typographicaland grammatical errors. In context, it seemsclear that the reference to “defaults of the Li-

cense” in the prior sentence must have been in-tended to address defaults of the “License[e].”

Finally, the License provided that the law of the State ofNew York would control. (Id. § 18).

C. Subsequent Events

After Mr. Morson entered into the License Agreement,he and Carolyn moved to Boston, where they negotiateda ten-year lease for a store which was opened on June13, 1996. (Tr. 237, 256). Although the Morsons contin-ued to operate that Palazzetti store until late 1997, therelationship was not a happy one. In brief, the Defend-ants contend that Palazzetti breached the terms of theLicense by continually failing to supply furniture in atimely manner due to its cash flow problems. Palazzetti,on the other hand, maintains that the Defendantsbreached the License terms by purchasing furniture dir-ectly from Palazzetti's suppliers, soliciting business out-side their designated territory, and, most importantly,sending a December 17, 1997 letter to Mr. Palazzetti.(Pl.Ex. R). In that letter, Mr. Morson suggested that Mr.Palazzetti had defrauded him by failing to disclose be-fore the License was executed that Palazzetti's financialproblems would make it impossible to deliver furnitureon time. (Def.Ex. R). Mr. Morson also threatened legalaction unless, by December 22, 1997, Mr. Palazzetti ac-cepted one of the following two options:

FIRST, WE WILL CONTINUE TO USE THEPALAZZETTI NAME BUT WE WILL ONLY BUYDIRECTLY FROM THE MANUFACTURERS. WEWILL IN EFFECT BE COMPLETELY INDEPEND-ENT, LIKE THE PALAZZETTI INCANADA.FN6WE WILL ONLY ACCEPT ORDERSFROM YOU WHICH YOU HAVE NOTIFIED U.S.ARE ALREADY IN THE WATER.FN7AND YOUWILL EITHER PROMPTLY REFUND THE LI-CENSE FEE OR PROVIDE A CREDIT AGAINSTOUTSTANDING INVOICES FOR AN AMOUNTNO LESS THAN $100,000.00.

FN6. Apart from this reference, there was noevidence at trial concerning a Canadian branch

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of Palazzetti.

FN7. The reference to goods “in the water”relates to furniture ordered by the Defendantswhich had been shipped to Palazzetti in NewYork by its suppliers but which had not yet ar-rived.

SECOND, WE WILL CHANGE OUR STORENAME AND SET UP OUR OWN FURNITURELINES TO CARRY. IN ADDITION, WE WILLSEEK FULL LEGAL RECOURSE FOR OUR LI-CENSE FEE AND ALL OTHER DAMAGES IN-CURRED OFFSET INITIALLY BY OUTSTAND-ING ACCOUNTS PAYABLE. FURTHER, ALLOPEN PURCHASE ORDERS WILL BE CAN-CELLED EFFECTIVE IMMEDIATELY.(Id.). At trial, during his cross examination of Mr.Palazzetti, the Defendants' counsel conceded that atleast the first of these options was “outside of the[L]icense ....” (Tr. 104).

*3 Rather than accepting one of the proposed alternat-ives, Palazzetti directed its counsel, Debra Guzov, Esq.,to send Mr. Morson a letter dated December 19, 1997.Pursuant to that letter, Palazzetti terminated the Li-cense, contending that Mr. Morson was “in breach ofthe [License]” as a consequence of “the facts set forth in[Mr. Morson's December 17th letter].” (Tr. 288; Def.Ex. R).FN8

FN8. The letter also contended that Defendantsbreached the License by advertising outside itsassigned territory and purchasing furniture dir-ectly from Palazzetti's suppliers. However, be-cause Palazzetti failed to provide the Defend-ants with written notice of default, and a thirty-day period to cure, it cannot recover damageson these grounds. (License § 16).

Within a matter of weeks after receiving the Guzov let-ter, the Defendants changed the name of the Bostonstore to “The Morson Collection” and began sellingtheir own lines of furniture comparable to the furniturethat they previously had purchased fromPalazzetti.FN9(Tr. 288-89). After a period of transition,

the store became profitable. (Id. at 304-05). It remaineda successful enterprise at the time of trial. (Id.).

FN9. When the License was terminated, theDefendants had $174,000 in orders for Palazz-etti furniture still outstanding. (Tr. 289). TheDefendants filled some of these orders by ob-taining the merchandise directly from Palazz-etti's manufacturer. (Id.). Consequently, therewas a brief period of time in which the Defend-ants distributed both lines of furniture.

D. Evidence of Morson's Intent

In determining whether Mr. Morson's letter constitutedan anticipatory repudiation of the License, as Ms.Guzov in effect alleged, the jury was afforded an unusu-al insight into his thinking. Prior to trial, the Defend-ants' counsel inadvertently turned over to his adversarytwo privileged letters that Mr. Morson had sent to EricDavis, Esq., an attorney who represented the Defend-ants during the course of their dealings with Mr. Palazz-etti. When Mr. Morson was confronted with those docu-ments at his deposition, counsel permitted him to an-swer many questions about them without interposing anobjection or directing him not to answer. As a con-sequence, former Magistrate Judge Grubin held that theattorney-client privilege was waived as to both docu-ments. See Palazzetti Import/Export, Inc. v. Morson,No. 98 Civ. 0722, 2000 WL 1015921, at * 1 (S.D.N.Y.July 21, 2001).

At trial, the Court therefore received into evidence aNovember 13, 1997 letter from Mr. Morson to Mr. Dav-is, which was one of the two documents as to whichMorson's attorney-client privilege was waived. (Tr. 70;Pl.Ex. 12). In that letter, Mr. Morson complained aboutPalazzetti's late deliveries, which he attributed to its fin-ancial problems, and suggested that a lawsuit could dealMr. Palazzetti “a crippling blow which he may not beable to recover from.”(Tr. 242-44). Mr. Morson alsooutlined the options that later were set forth in hisDecember 17, 1997 letter to Mr. Palazzetti. (Id. at244-45).FN10

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FN10. The Defendants conceded the authenti-city of the November 13th letter in the JointPretrial Order. (See Jt. PTO at 58). They never-theless complain in the JMOL motion that itwas improperly received over their objectionthat it was “privileged, irrelevant, and that noproper foundation had been laid.”(JMOL Mo-tion ¶ 19). Their privilege objection had previ-ously been addressed by Judge Grubin whosedecision was the law of the case. See Christi-anson v. Colt Indus. Operating Corp., 486 U.S.800, 815-16, 108 S.Ct. 2166, 2177, 100L.Ed.2d 811 (1988); In re PCH Assocs., 949F.2d 585, 593 (2d Cir.1991). The only otherobjection voiced at trial was that “no properfoundation has been laid at this point for therelevance of this exhibit.”(Tr. 70). The letterobviously was relevant, however, to Mr. Mor-son's state of mind at the time that he sent hisDecember 17th letter to Mr. Palazzetti. Al-though the letter was received during Mr.Palazzetti's testimony, Mr. Morson sub-sequently was questioned extensively about it.Indeed, Mr. Morson's own attorney had himread the entire letter to the jury. (Tr. 234-37,239-45).

E. Damages

At trial, Palazzetti sought to recover three categories ofdamages allegedly arising out of the Defendants' repudi-ation of the License. First, Palazzetti contended that itwas owed $92,147.96 for goods sold and delivered. TheDefendants conceded the validity of this claim (at leastas a set off) in their counsel's summation. (See Tr.421)(“[W]e agree we owe Mr. Palazzetti the $92,000....”).

Second, Palazzetti claimed to be owed $174,000 for fur-niture that was in transit to the United States at the timeof Morson's repudiation. At the close of Palazzetti'scase, I granted the Defendants' oral JMOL motion as tothis aspect of Palazzetti's alleged damages becausePalazzetti had failed to establish how it eventually haddisposed of most of this furniture, leaving the jury tospeculate as to what Palazzetti's actual loss was. (Id. at

167-68, 325-26).

*4 Finally, by far the largest component of Palazzetti'salleged damages consisted of lost profit, which it soughtto prove principally through the testimony of ProfessorSeymour Barcun, an economics expert. The direct andcross examination of this witness consumed fewer thana dozen pages of the uncertified trial transcript. (Id. at186-97). Insofar as lost profits are concerned, ProfessorBarcun testified that he assumed, based solely on theamended complaint, that the arrangement betweenPalazzetti and the Defendants was intended to last tenyears. (Id. at 195-97). He therefore projected the$95,068 in profit that Palazzetti realized from its last sixmonths of sales to the Defendants over the remainingeight and one-half year term of the License, assuming afive percent annual growth rate. (Id. at 190-91). Accord-ing to Professor Barcun, this calculation established thatPalazzetti's lost profits totaled $1,792,228, or$1,569,833 after discounting to present value. (Id. at191-92).

The Defendants' damages presentation was even moreterse. More specifically, Carolyn Morson testified that,in addition to the $100,000 license fee, the Defendants'had lost “something like [$]78,000, 76,000, somethinglike that” due to their inability to deliver certain lines offurniture to customers, an additional sum of “roughly ...20 something thousand dollars” due to customer cancel-lations, and three or four thousand dollars becausePalazzetti itself had fulfilled some of their outstandingorders. (Id. at 290-91).

F. Issues Presented to the Jury

Although the Joint Pretrial Order contemplated a multi-week trial in which the jury would be asked to considerclaims and counterclaims alleging breach of contract,accounts stated, unfair competition, tortious interfer-ence, defamation, and violations of the Lanham Act andthe New York General Business Law, the issues in thecase, and therefore the length of the trial, shrank dra-matically as time went on. Ultimately, because the De-fendants' liability therefor was undisputed, the jury wasinstructed, without objection, to return a verdict in favor

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of Palazzetti on the $92,147.96 account stated claim.(Id.at 453). The only other issues presented to the jury, assummarized on an agreed verdict sheet, were as fol-lows:

2(a). Do you find that the LicensingAgreement was breached or anticip-atorily repudiated?

(Answer yes or no.) ____________________

If you have answered “yes” to question 2(a), answer question 2(b):

2(b). Which party do you find breachedor repudiated the Licensing Agree-ment? (Insert either“Morson” or “Palazzetti.”)

____________________

If you answered “Morson” in response to question 2(b), answer question 2(c);if you answered “Palazzetti” in response to question 2(b), answer question2(d):

2(c). What amount, if any (exclusive ofany amount awarded in response toquestion 1), do you award toPalazzetti as damages?

$____________________

2(d). What amount, if any, do you awardto Morson as damages?

$____________________

*5 (See id. at 472-73).

After more than five hours of deliberations over thecourse of two days, the jury found that the Defendantshad anticipatorily repudiated the License, and thatPalazzetti was therefore entitled to recover $1,569,833in lost profits (the precise sum suggested by ProfessorBarcun) and an additional $92,147.96 on the accountstated claim. (Id.).

III. Discussion

The Defendants advance two basic arguments in supportof their motion. First, they contend that there was noevidence from which a jury reasonably could havefound that they breached the terms of the License be-cause it imposed no obligation on them to operate a

store. Second, they maintain that there was no basis forthe jury to award damages against Mr. Morson individu-ally on the account stated claim.

A. Rule 50(b)

1. Standard of Review of Jury Verdict

When reviewing a jury verdict pursuant to Rule 50(b),both trial and appellate courts apply the same standard.DiSanto v. McGraw-Hill, Inc./Platt's Div., 220 F.3d 61,64 (2d Cir.2000). JMOL consequently may not be gran-ted “unless the evidence, viewed in the light most favor-able to the opposing party, is insufficient to permit areasonable juror to find in [its] favor.” DiSanto, 220F.3d at 64 (quoting Galdieri-Abrosini v. Nat'l Realty &Dev. Corp., 136 F.3d 276, 289 (2d Cir.1998)). As theSecond Circuit has cautioned:

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In deciding such a motion, the court must give defer-ence to all credibility determinations and reasonableinferences of the jury, and it may not itself weigh thecredibility of witnesses or consider the weight of theevidence. Thus, judgment as a matter of law shouldnot be granted unless

(1) there is such a complete absence of evidencesupporting the verdict that the jury's findings couldonly have been the result of sheer surmise and con-jecture, or

(2) there is such an overwhelming amount of evid-ence in favor of the movant that reasonable and fairminded [persons] could not arrive at a verdictagainst [it].

Id. (citations omitted; brackets in original). In short, aJMOL motion faces “a high bar.” Lavin McEleney v.Marist College, 239 F.3d 476, 479 (2d Cir.2001).

2. Compliance with the Rule

Before turning to the merits of the Defendants' motion,there is a procedural issue that merits discussion. Dur-ing the trial, the Defendants made their JMOL motionboth at the close of Palazzetti's case and after the juryreturned its verdict, but not at the close of all of theevidence. (Tr. 200, 474). Pursuant to Rule 50, however,“a motion for directed verdict at the close of all theevidence is a prerequisite for [JMOL].” Cruz v. LocalUnion No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d1148, 1155 (2d Cir.1994) (quoting Hilord Chem. Corp.v. Ricoh Elec., Inc., 875 F.2d 32, 37 (2d Cir.1989)); seealso Pahuta v. Massey-Ferguson, Inc., 170 F.3d 125,129 (2d Cir.1999) (“the moving party must renew themotion both at the close of the evidence and within tendays after entry of judgment”) (citing 9A Charles AlanWright and Arthur R. Miller, Federal Practice and Pro-cedure, §§ 2536, 2537 (2d ed.1995)). The Second Cir-cuit case law regarding the consequence of a party'sfailure to move for a directed verdict at the close of allof the evidence is not fully in accord. Compare Cruz,34 F.3d at 1155 (“this procedural requirement may notbe waived as a mere technicality”) with Gibeau v. Nel-

lis, 18 F.3d 107, 109 (2d Cir.1994) (holding that failureof the nonmoving party to raise this procedural defenseresulted in its waiver). In LNC Investments, Inc. v. FirstFidelity Bank, 126 F.Supp.2d 778, 784-85(S.D.N.Y.2001), Judge Haight recognized the “tensionbetween these two lines of Second Circuit authority,”concluding that “the better course for me to follow is toconsider the motion on its merits.”Given Palazzetti'sfailure to raise this defense, I, too, think it is best toreach the merits of the Defendants' motion.

3. Defendants' Obligations Under the License

*6 As noted above, the main argument advanced by theDefendants in support of their JMOL motion is that theLicense did not impose any obligation to operate aPalazzetti store in Boston for any set period of time.Rather, in their view, the License merely afforded theman option to operate a Palazzetti store under specifiedconditions in exchange for a $100,000 payment. Theycontend that they chose to operate such a store for oneand one-half years, after which the relationship withPalazzetti became untenable and they exercised theircontractual right not to remain in business using thePalazzetti name. Palazzetti disagrees with this analysis,arguing that New York law imposes upon the Defend-ants, as an exclusive licensee, an implied duty to exploitwith due diligence the subject matter of the License.

In support of its claim, Palazzetti relies on Justice Car-dozo's famed opinion in Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88, 90, 118 N.E. 214, 214 (1917),and its progeny. In Wood, the defendant was “a creatorof fashions” who, in exchange for one half of all profitsgained through the relationship, granted the plaintiff anexclusive license to sell products with her endorsement.The plaintiff sued for damages when he learned that thedefendant had been endorsing other products withouthis knowledge in violation of their agreement. Id. Seek-ing to overcome this claim, the defendant-licensor ar-gued that the agreement imposed no obligation upon theplaintiff-licensee and therefore was unenforceable forwant of mutual consideration. Id. In his landmark de-cision, Justice Cardozo concluded that there was an im-plied obligation that the plaintiff-licensee would use

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reasonable efforts to exploit the defendant's productline, and that the contract was therefore enforceable. Id.at 91, 118 N.E. at 214.

In subsequent cases, courts often have suggested that aduty to use reasonable efforts to exploit a license shouldbe implied only when the resulting royalties, as inWood, constitute the sole consideration that the licensorwill receive. See, e.g., Emerson Radio Corp. v. OrionSales, Inc., 253 F.3d 159, 168 (3d Cir.2001) (applyingNew Jersey law); HML v. Gen. Foods Corp., 365 F.2d77, 80 (3d Cir.1966) (applying New York law); see alsoVacuum Concrete Corp. v. Am. Machine & Foundry

Co., 321 F.Supp. 771, 773 (S.D.N.Y.1971) (stating thatan implied covenant will not be found when unneces-sary to give effect to the terms of the contract). Accord-ingly, when a licensor is awarded either a substantialadvance payment or a guaranteed minimum royalty,courts typically have declined to imply a duty to exploitthe subject matter of the license. E.g., Emerson, 253F.3d at 169 (affirming grant of summary judgment onimplied obligation claim where licensor received“substantial minimum royalty payment totaling $4 mil-lion per year for three years”); Permanence Corp. v.Kennametal, Inc., 908 F.2d 98, 102 (6th Cir.1990)(“The key provisions of the contract ... which militateagainst implying a convenant to use best efforts areKennametal's obligation to pay $150,000 in order to ex-ercise the option for the exclusive license and the$150,000 in additional advance royalties paid under theexclusive license.”); Beraha v. Baxter Health CareCorp., 956 F.2d 1436, 1442 (7th Cir.1992) (“We findthe reasoning in Permanence persuasive); cf. Havel v.Kelsey-Hayes Co., 83 A.D.2d 380, 383, 445 N.Y.S.2d333, 336 (4th Dep't 1981) (indicating in dicta that “aguaranteed stipulated minimum payment is relevant indetermining the intent of the parties on the question ofwhether the covenant should be implied”).

*7 Notwithstanding this line of cases, courts have, onoccasion, implied a covenant requiring a licensee to ex-ploit a license even when the licensor has received aguaranteed minimum royalty or upfront fee. See, e.g.,Reback v. Story Prods., Inc., 15 Misc.2d 681, 683, 181

N.Y.S.2d 980, 982 (Sup.Ct. N.Y. County 1958)

(holding that the sale of exclusive motion picture, tele-vision, and radio rights in exchange for a “minimumguarantee” of $100,000 in royalties rendered the agree-ment “instinct with an obligation on the part of defend-ant to do more than merely pay the minimum guaran-tee”); Mech. Ice Tray Corp., 144 F.2d 720, 725 (2dCir.1944) (finding that parties “expected the defendantto make and sell trays on which royalties would havebecome due and not merely to pay a guaranteed minim-um royalty”). Indeed, even in Wood, in the course of de-termining that an obligation to exploit the defendant'sname should be implied, Justice Cardozo looked notjust to the absence of any payment, but to many circum-stances, including a recital that the plaintiff possessed abusiness organization “adapted” to the marketing of thedefendant's products, the plaintiff's obligation toprovide a monthly accounting of all sales, and his prom-ise to exercise his judgment with regard to registeringtrademarks, patents, and copyrights as he saw neces-sary. See Wood, 222 N.Y. at 91-92, 118 N.E. at 214-15.

Thus, the issue in this case is ultimately whether thewritten License and all of the surrounding circum-stances indicate that a promise on the part of the Mr.Morson is “fairly to be implied.” See Fakhoury Enters.,Inc. v. J.T. Distribs., No. 94 Civ. 2729, 1997 WL291961, at *5 (S.D.N.Y. June 2, 1997) (quoting Wood,222 N.Y. at 91, 118 N.E. at 24)). There are a number ofcircumstances from which the jury could reasonablyconclude that the Defendants, rather than having simplypurchased an option, had a continuing obligation to ex-ploit the License.

First, pursuant to the License, Mr. Morson had the rightto renew for an unlimited number of ten-year periods inexchange for a fee that was purely a function of the Bo-ston store's sales during the prior period. If the Defend-ants' interpretation were correct, the License wouldhave required a minimum payment of $100,000 for thefirst ten years, but then could have been renewed for ad-ditional ten-year periods for substantially less. For ex-ample, after operating a Palazzetti store for only eight-een months, the Defendants could have renewed the Li-cense in eight and one-half years (and therefore couldhave locked Palazzetti out of the Boston market for an

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additional ten years) simply by tendering a fee equal toone and one-half percent of their net purchases duringthat period. Then, after continuing not to operate aPalazzetti store for an additional ten years, the Defend-ants presumably could have sought to lock Palazzettiout of the Boston market for another ten-year periodwithout having to pay any money at all.FN*

FN* There is, of course, an issue whether suchan attempt at extending the License would failfor lack of consideration. See generally Weinerv. McGraw Hill, Inc., 57 N.Y.2d 458, 468, 457N.Y .S.2d 193, 197 (1982).

*8 Second, the initial term of the License was fixed as aperiod of ten years, which was to commence with theopening of the store. If the parties contemplated thatMr. Morson might not operate a store, the License pre-sumably would have commenced on the date that the$100,000 fee was paid (or earlier) so that Mr. Morsonwould be unable to sit on his rights for a lengthy periodbefore activating the License by beginning to operate aPalazzetti store.

Third, the License obligated Palazzetti to advertise thelocation of Mr. Morson's store as part of its national andregional publicity campaigns, in exchange for whichMr. Morson or his assignee was to make an annual con-tribution of $5,000 payable quarterly. (License § 8).This provision also suggests that the parties to the Li-cense in fact contemplated that the Defendants wouldoperate a Palazzetti store rather than simply having theoption to do so.

Fourth, within a matter of months after signing the Li-cense, Mr. Morson entered into a lease for the Bostonstore. Although the License did not place any limita-tions on the length of that lease, Mr. Morson agreed to aten-year term.

Finally, although the $100,000 initial fee for the licensewas not inconsiderable, Palazzetti earned an additional$100,000 from its sales of furniture to the Defendantsduring the last six months of their relationship alone, aperiod when the Defendants contended that numerousorders were being lost due to customer cancellations. As

Mr. Palazzetti explained in testimony which went un-challenged by the Defendants:

The value of the territory that was involved in the li-cense was worth a lot more than $100,000 in tenyears. Obviously, I could have opened a store thereand make [sic] a lot of money, much more than$100,000 worth of profit. Therefore, the [L]icense ...was done in a way that there would be a smalleramount up front and then obviously Palazzetti wouldmake a profit selling furniture throughout the periodof ten years.

(Tr. 381-82).

These facts and circumstances, taken together, permitthe inference that, at the time that they entered into theLicense, the parties expected that Mr. Morson or his as-signee would exercise reasonable diligence to operate aPalazzetti store for a period of ten years. Additionally,the $100,000 initial license fee, when compared to thepossible profits over the life of the license, could beviewed as insubstantial. While these obviously are notthe only factual conclusions that could be drawn fromthe evidence, they are reasonable ones. Accordingly, theDefendants have failed to meet their heavy burden un-der Rule 50(b).

4. Other Contract Issues

Although the Defendants' JMOL motion with respect tothe License claim was predicated solely on the premisethat Mr. Morson had no obligation to exploit the Li-cense, two subsidiary issues not specifically raised bythe parties merit brief discussion.

First, the License claim was presented to the jury pursu-ant to instructions which required the jurors to findeither that Palazzetti breached or that the Defendantsanticipatorily repudiated the terms of the License. Withrespect to the Defendants' potential liability, the jurywas instructed that “an anticipatory repudiation occurswhen a party [ ] whose performance under the contractis not yet due [ ] unequivocally advises the other partythat it intends not to perform the contract.”(Id. at 456).

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*9 Under New York law, when a party repudiates itscontractual obligations prior to the agreed time for per-formance, the other party is entitled to claim damagesfor a total breach. See Norcon Power Partners, L.P. v.Niagara Mohawk Power Corp., 92 N.Y.2d 458, 462-63,682 N.Y.S.2d 664, 667 (1998). The renunciation,however, must rise to the level of a clear and unquali-fied refusal to perform the entire contract. DeLorenzo v.BAC Agency, Inc., 256 A.D.2d 906, 908, 681 N.Y.S.2d846, 848 (3d Dep't 1998). The renunciation can consistof an attempt to advance an unwarranted interpretationof the contract or an indication that the renouncing partywill perform only if certain “extracontractual” condi-tions are satisfied. SPI Communications, Inc. v. WTZA-TV Assocs. Ltd. P'ship, 229 A.D.2d 644, 645, 644N.Y.S.2d 788, 790 (3d Dep't 1996). Once a party has re-pudiated a contract, the other party may bring suit im-mediately without satisfying conditions precedent thatmight otherwise apply. Lace v. Shapiro, 249 N.Y. 68,72-73, 162 N.E. 586, 588 (1928); Sunshine Steak, Salad& Seafood, Inc. v. W.I.M. Realty, Inc., 135 A.D.2d 891,522 N.Y.S.2d 292 (3d Dep't 1987); see also Long Is-land Rail Road Co. v. Northville Inds. Corp., 41 N.Y.2d455, 463, 393 N.Y.S.2d 925, 930 (1977) (injured partymay recover damages for total breach with stream of fu-ture payments discounted to present value).

Mr. Morson's December 17th letter expressed an inten-tion not to perform further pursuant to the License un-less Palazzetti agreed to one of two “options,” both ofwhich were contrary to the original License terms. Thejury could have concluded that the letter was a merebargaining ploy rather than an unequivocal renunciationof the License because the letter contained language in-dicating that these were the options that Mr. Morsonwas putting forth “at this time.” On the other hand, fromthe tenor and text of the letter that Mr. Morson had sentto his counsel less than one month earlier, the jury alsocould have reasonably concluded that the Defendantshad no intention of performing further under the Li-cense. Here, as the verdict sheet makes apparent, thejury reached the second conclusion. Accordingly, be-cause the jury found that Mr. Morson anticipatorily re-pudiated the License, there is no basis to grant JMOLon the theory that Palazzetti failed to provide written

notice of Mr. Morson's default.

The second issue relates to the remedies available underthe License in the event of a default. As noted above,the License provides that in the event of a default by thelicensee, the licensor “may” revoke the License, butprovides no other remedies. (License § 16). Nonethe-less, under New York law, contractual remedies aredeemed to be nonexclusive absent some indication ofcontrary intent. See, e.g., In re Hale Desk Co., 97 F.2d372, 373 (2d Cir.1938) ( “whether the provision fordamages in a contract should be treated as an exclusiveremedy is to be determined by the intent of the partiesas revealed in all the facts of the particular case”); PapaGino's of Amer., Inc. v. Plaza at Latham Assocs., 135A.D.2d 74, 76, 524 N.Y.S.2d 536, 538 (3d Dep't 1988)(“a liquidated damages clause does not bar the equitablerelief of specific performance unless there is explicitlanguage that it is to be the sole remedy”); seealsoN.Y.U.C.C. § 2-719(b) (resort to a remedy is“optional unless the remedy is expressly agreed to beexclusive, in which case it is the sole remedy”). Accord-ingly, Palazzetti was free to seek monetary damages if,as the jury found, Mr. Morson unequivocally repudiatedthe License.

5. Mr. Morson's Liability on the Account Stated Claim

*10 Mr. Morson also has moved for JMOL with regardto the account stated claim against him because thetransactions from which the account stated arises al-legedly were executed by The Morson Group ratherthan by him in his individual capacity. This motionmust be denied on at least two grounds. First, pursuantto the License, Mr. Morson was granted permission todo business as Palazzetti in the Boston area and to as-sign his rights to a corporate entity in which he held “amajority of the outstanding shares.”(License § 11).When he was recalled as a witness to testify about hisrelationship to The Morson Group, Mr. Morson testifiedthat he orally assigned his interest in the License to thatentity in December 1995. (Tr. 375). Mr. Palazzetti,however, testified that he was never informed of this as-signment. (Id. at 384). More importantly, the invoiceswhich gave rise to the account stated claim each are ad-

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dressed to “Palazzetti-Boston,” not to The MorsonGroup. The Palazzetti store in Boston was, of course,the business entity that Mr. Morson individually hadsought a license to operate.

In addition, during the trial, the Defendants neversought to distinguish Mr. Morson from The MorsonGroup with respect to the account stated claim. Indeed,during his JMOL motions at trial, counsel for the De-fendants never addressed the theory that Mr. Morsonwas not individually liable. (Id. at 200, 474). Rather, inhis summation, the Defendants' counsel stated that “weowe Mr. Palazzetti the $92,000 .... We agree that weowe that ....”(Id. at 421). In keeping with that conces-sion, the Defendants' counsel also did not object to theCourt's instructions to the jury which referred to Mr.Morson and The Morson Group collectively as“Morson” and directed that a verdict be entered forPalazzetti on the account stated claim because “Morsonconcedes that it owes these sums.”(Id. at 405, 453). TheDefendants similarly did not object to the verdict sheet,which asked whether Palazzetti was entitled to recover$92.147.96 “from Morson” on the account stated claim.

In sum, there is no factual or legal basis for the conten-tion that Mr. Morson is not individually liable on theaccount stated claim.

B. Rule 59

The Defendants also have moved, in the alternative, fora new trial pursuant to Rule 59 of the Federal Rules ofCivil Procedure. Insofar as pertinent, that Rule providesthat a new trial may be granted in an action tried beforea jury “for any of the reasons for which new trials haveheretofore been granted in actions at law in the courts ofthe United States.”Fed.R.Civ.P. 59(a)(1). The Rule im-poses a lower threshold for the granting of a new trialthan for JMOL because the trial judge may reassess thetrial evidence and need not view it in the light most fa-vorable to the nonmovant. United States v. Landau, 155F.3d 93, 104 (2d Cir.1998). Accordingly, a motion for anew trial may be granted even when the jury's verdict issupported by substantial evidence. Caruolo v. JohnCrane, Inc., 226 F.3d 46, 54 (2d Cir.2000). The trial

court therefore has substantial discretion in ruling on amotion for a new trial. Metromedia Co. v. Fugazy, 983F.2d 350, 363 (2d Cir.1992); Caruolo, 226 F.3d at54.Nevertheless, the Second Circuit has held that a newtrial motion “ordinarily should not be granted unless thetrial court is convinced that the jury has reached a seri-ously erroneous result or that the verdict is a miscar-riage of justice. Lightfoot v. Union Carbide Corp., 110F.3d 898, 911 (2d Cir.1997) (quoting Hugh v. Jacobs,961 F.2d 359, 365 (2d Cir.1992)) (emphasis supplied).

*11 Had this case been tried without a jury, I might wellhave reached a different conclusion. For example, theevidence that the parties contemplated a ten-year rela-tionship was, in my view, far from overwhelming. Inaddition, although the jury evidently adopted ProfessorBarcun's damages analysis in its entirety, it rested onthe same shaky assumption that Mr. Morson was con-tractually required to remain in business as a Palazzettistore for at least ten years.

Nonetheless, I am unable to say that the jury necessarilyerred in its determination of the liability and damagesissues that were presented for its consideration. Theevidentiary support for the jury's finding that the De-fendants repudiated an agreement whereby they were torun a Palazzetti store in the Boston area has been setforth in the discussion of their JMOL motion. On the is-sue of damages, by the time of trial the Boston store hadbeen in operation for more than five years. The juryconsequently could reasonably have concluded that, butfor their repudiation of the License, the Defendantswould have operated a Palazzetti store for a minimumof five years.

Although there was less evidence that Mr. Palazzettiand the Defendants had agreed that the store would re-main open for an additional five years, I am unable tosay that such a finding is necessarily erroneous.Moreover, Professor Barcun did provide a reasonedbasis for the jury to find that Palazzetti would haveearned profits of more than $1.7 million over the re-maining eight and one-half years of the initial Licenseterm. Although Professor Barcun's analysis was rathercursory, it is settled law that the Defendants are not en-titled to avoid responsibility for the monetary damages

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that they caused simply because their repudiation of theLicense has injected an element of uncertainty into thecalculation of Palazzetti's damages. See Bloor v. Fal-staff Brewing Corp., 601 F.2d 609, 615 (2d Cir.1979);Contemporary Mission, Inc. v. Famous Music Corp.,557 F.2d 918, 926 (2d Cir.1977).

Although it is not without a degree of reluctance, Itherefore decline to exercise my discretion to set asidethe verdict and require a new trial.

IV. Conclusion

For the foregoing reasons, Defendants' motions forjudgment as a matter of law or, in the alternative, for anew trial are denied. The Clerk of the Court is directedto enter judgement against the Defendants consistentwith this Memorandum Opinion and Order and closethis case.

SO ORDERED.

S.D.N.Y.,2001.Palazzetti Import/Export, Inc. v. MorsonNot Reported in F.Supp.2d, 2001 WL 1568317(S.D.N.Y.)

END OF DOCUMENT

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