                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-22-2003

Sampson Fire Sales v. Oaks
Precedential or Non-Precedential: Non-Precedential

Docket 02-1584




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Recommended Citation
"Sampson Fire Sales v. Oaks" (2003). 2003 Decisions. Paper 865.
http://digitalcommons.law.villanova.edu/thirdcircuit_2003/865


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                                               NOT PRECEDENTIAL

                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                           __________

                          No. 02-1584
                           __________

                   SAMPSON FIRE SALES, INC.;
                DENNIS SAMPSON; LOUISE SAMPSON,
                                              Appellants

                               v.

                         JERRELL OAKS;
               NORTH AMERICAN FIRE EQUIPMENT CO.;
                NORTH ALABAMA FIRE EQUIPMENT CO.


        ON APPEAL FROM THE UNITED STATES DISTRICT COURT
            FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
                  D.C. Civil No. 99-cv-01208
      Magistrate Judge: The Honorable Malachy E. Mannion


           Submitted Under Third Circuit LAR 34.1(a)
                        January 10, 2003


       Before: SCIRICA, BARRY, and SMITH, Circuit Judges

               (Opinion Filed: January 22, 2003)
                          ____________

                            OPINION
                          ____________


BARRY, Circuit Judge
     This appeal arises out of a lawsuit brought by appellants Dennis and Louise
Sampson seeking damages against Jerrell Oaks and his wholly owned company, appellee
North American Fire Equipment Company ("NAFECO"), for misrepresentation and
breach of an oral contract. Upon consent of the parties, the case was tried to a jury
before a Magistrate Judge in the United States District Court for the Middle District of
Pennsylvania. After trial, the jury delivered a verdict against the Sampsons, and
specifically found that Oaks had neither entered into the oral contract alleged, nor had he
been unjustly enriched. Judgment was entered in accordance with the jury’s verdict on
January 25, 2002 and the Sampsons timely filed a notice of appeal. We have jurisdiction
pursuant to 28 U.S.C. 1291 and will affirm.

                               I.
     In their complaint, Dennis and Louise Sampson alleged that Jerrell Oaks orally
agreed to purchase their Pennsylvania fire equipment business, appellant Sampson Fire
Sales Inc., in exchange for assuming the debts of Sampson Fire Sales and 25% of the
profits that Oaks’s company, NAFECO, derived from Sampson Fire Sales Inc.’s territory.
In response, Oaks contended that although he did orally agree to enter into certain
business arrangements with the Sampsons to supply equipment and to hire Dennis
Sampson as a NAFECO employee, he never agreed to purchase Sampson Fire Sales, to
assume its liabilities, or to pay the Sampsons 25% of the profits NAFECO derived from
the Sampsons’ territory or customers.
     The Sampsons’ attorney failed to attend the originally scheduled final pretrial
conference. NAFECO’s attorney thus moved to dismiss the action for failure to
prosecute. As an exhibit to his motion, the attorney attached a faxed letter from the
Sampsons’ attorney addressed to the Sampsons which had incorrectly been faxed to
NAFECO. Once he learned of NAFECO’s receipt of his misdirected fax, the Sampsons’
attorney cross-moved to sanction NAFECO for intentionally violating the Sampsons’
attorney-client privilege by dismissing NAFECO’s answer to the Sampsons’ complaint.
In a Memorandum and Order dated July 5, 2001, the Magistrate Judge denied
NAFECO’s motion to dismiss for failure to prosecute, and granted the Sampsons’
motion to have the misdirected fax sealed and the original returned to the Sampsons.
The Magistrate Judge declined, however, to sanction NAFECO for using the misdirected
fax or to dismiss its answer.
     Trial on the merits of the Sampsons’ claims was held in January of 2002. After
trial, the jury found against them and in favor of NAFECO. In its answers to the special
verdict interrogatories, the jury specifically found that Oaks made certain representations
at his meeting with Dennis Sampson in October of 1997.   The jury went on to find,
however, that the representations did not relate to "material facts," that there was not "an
offer, acceptance and consideration to sell Sampson Fire Sales, Inc.," and that no "benefit
was conferred on the defendant NAFECO by the plaintiffs." After the jury returned the
verdict, the Sampsons moved for reconsideration of their motion for sanctions against
NAFECO, arguing that the Magistrate Judge’s denial of sanctions was inconsistent with
the jury’s verdict. The Sampsons also moved to set aside the jury’s verdict as what they
describe as "irreconcilably inconsistent" and against the weight of the evidence. The
Magistrate Judge denied both motions.

                              II.
     The Sampsons argue on appeal that the Magistrate Judge made three errors
warranting reversal: (1) denying the Sampsons’ motion to strike NAFECO’s answer as a
sanction for NAFECO’s attorney’s breach of the Sampsons’ attorney-client privilege and
by denying their post-trial motion for reconsideration of that motion; (2) incorrectly
submitting the question of whether the parties entered into an oral contract to the jury;
and (3) denying the Sampsons’ motion to set aside the jury’s verdict as irreconcilably
inconsistent and as against the weight of the evidence. We address each of these
arguments in turn.
     As an initial matter, we are unable to discern any error in the Magistrate Judge’s
denial of the Sampsons’ motion for sanctions against NAFECO’s attorney for
intentionally violating their attorney-client privilege, which we review for abuse of
discretion. See Saldana v. Kmart Corp., 260 F.3d 228, 236 (3d Cir. 2001). The
Sampsons’ argue that the Magistrate Judge’s ruling was primarily based upon a factual
finding that NAFECO had actually purchased Sampson Fire Sales, and thus was
rightfully receiving faxes at the Sampson Fire Sales fax number. They argue that absent
this factual finding   inconsistent with the jury’s verdict that Oaks did not agree to
purchase Sampson Fire Sales Inc.    the Magistrate Judge could not have concluded that
NAFECO received the fax from their attorney only by accident. Thus, the argument
goes, NAFECO’s attorney could not have concluded in good faith that the Sampsons had
waived their attorney-client privilege as to that document, and committed an ethics
violation by not returning it to their attorney and instead using it as an exhibit.
     Although the actions of NAFECO’s attorney in relation to the misdirected fax are
questionable, the Sampsons’ argument mischaracterizes the reasoning behind the
Magistrate Judge’s thoughtful refusal to impose the draconian sanctions they requested.
In his Memorandum and Opinion, the Magistrate Judge found that the Pennsylvania law
of inadvertent disclosure was insufficiently developed to allow the certain conclusion
that NAFECO’s attorney’s use of the document was knowingly unethical. Moreover,
and most importantly, the Court found that the "drastic sanction" of dismissal of
NAFECO’s answer was not an appropriate sanction. Instead, the Court ruled that the
appropriate remedy was to require the defendant to return the original document to the
plaintiffs, destroy all copies of the document, and order the copy of the document used as
an exhibit to be filed under seal. While we do not condone NAFECO’s attorney’s use of
a misdirected document that was clearly a direct communication between the Sampsons
and their attorney, we find that the Magistrate Judge did not rely on erroneous
conclusions of fact or law and that the remedy imposed was appropriate. Thus, the
refusal to impose sanctions was not an abuse of discretion. See Oddi v. Ford Motor Co.,
234 F.3d 136, 146 (3d Cir. 2000). Moreover, because the Magistrate Judge’s resolution
of the sanctions issue did not hinge upon a factual finding inconsistent with the jury’s
verdict, his denial of the Sampsons’ post-trial motion for reconsideration was likewise
not error.
     The Sampsons’ second argument on appeal   that the jury’s answers to the special
verdict interrogatories were irreconcilably inconsistent and against the weight of the
evidence   is not supported by the record. The Sampsons contend that the jury’s
affirmative answer to the first interrogatory, which asked if "the defendants made
representations at the October 1997 meeting," is logically inconsistent with their negative
answer to the second interrogatory, which asked whether "the representations related to
material facts." Given the deference accorded to jury verdicts, however, "it is well
established that a verdict must be molded consistently with a jury’s answers to special
interrogatories when there is any view of the case which reconciles the various answers."
Bradford-White Corp. v. Ernst & Whinney, 872 F.2d 1153, 1159 (3d Cir. 1989).
     Reviewing the record in this light, it is apparent that the Sampsons’ argument
depends on the false premise that Jerrell Oaks must have either agreed to purchase
Sampson Fire Sales, or made no oral representations at all. Instead, Oaks expressly
testified on cross-examination that he made various representations to Dennis Sampson
at the October 1997 meeting concerning Dennis Sampson’s future employment with
NAFECO and NAFECO’s ability to supply certain equipment for sale to Sampson’s
customers, but that he did not, at that meeting or at any other time   agree to purchase
Sampson Fire Sales, Inc. or to assume its liabilities. Thus, the jury’s answers to the first
two interrogatories are completely consistent with the record at trial. Because it was
based on record testimony, the jury’s verdict was also not against the weight of the
evidence, and the Magistrate Judge committed no error in denying the Sampsons’ motion
to set aside the verdict. See Delli Santi v. CNA Ins. Cos., 88 F.3d 192, 201 (3d Cir.
1996).
     Finally, the Sampsons argue that the Magistrate Judge misconstrued Pennsylvania
law when he submitted interrogatories to the jury which not only asked them to
determine what words were said between Dennis Sampson and Jerrell Oaks, but also
asked them to interpret the legal meaning of those words, a task properly the province of
a court. Once again, this argument is not supported by the record, the interrogatories, or
the jury’s responses thereto. The very case cited by the Sampsons in support of this
argument makes it clear that, under Pennsylvania law, it is up to the jury to determine the
terms of an oral contract and the parties’ understanding of those terms. McCormack v.
Jermyn, 40 A.2d 477, 479 (Pa. 1945). Thus, "[i]t is axiomatic that the jury’s function is
to determine from the surrounding facts of the parties’ dealings whether an oral contract
exists." United Coal & Commodities Co., Inc. v. Hawley Fuel Co., Inc., 525 A.2d 741,
742 (Pa. Super. Ct. 1987). Whether or not a valid oral contract existed between Dennis
Sampson and Jerrell Oaks was precisely the question directed to the jury in the special
verdict interrogatories and it was well within the jury’s role as factfinder to determine
that no such contract existed. Accordingly, we can find no error in the interrogatories
submitted on the special verdict form.

                              III.
       For the foregoing reasons, we conclude that the Magistrate Judge’s refusal to
impose draconian sanctions on NAFECO was well within his discretion, that the
interrogatories submitted to the jury were consistent with Pennsylvania law, and that the
jury’s answers to those questions were both internally consistent and consistent with the
evidence adduced at trial. Accordingly, we will affirm the order of January 23, 2002 and
judgment of January 25, 2002.

TO THE CLERK OF THE COURT:
     Kindly file the foregoing Opinion.

                                   /s/ Maryanne Trump Barry
                                   Circuit Judge
