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Jester v. Hutt

United States Court of Appeals, Third Circuit

August 28, 2019


          Argued June 13, 2019

          On Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. No. 1-15-cv-00205) District Judge: Honorable Yvette Kane

          Gordon A. Einhorn Thomas Thomas & Hafer Attorney for Appellants in No. 18-3114

          Mark D. Bradshaw Stevens & Lee Attorney for Appellants in No. 18-3197

          Before: HARDIMAN, PORTER, and COWEN, Circuit Judges.



         This case comes to us following a jury verdict in favor of Penn Ridge Farms, LLC and against Fantasy Lane Thoroughbred Racing Stable, LLC. The jury awarded Penn Ridge $110, 000 on its contract claim, $1 in nominal damages on its defamation claim, and $89, 999 in punitive damages. The District Court reduced the punitive damages award to $5, 500. Fantasy Lane asserted counterclaims for negligence, breach of contract, and breach of fiduciary duty, but was unsuccessful on each. Fantasy Lane appealed, seeking reversal of certain adverse rulings before and after the trial. Penn Ridge responded with a cross-appeal asking us to reinstate the full punitive damages award.


         Penn Ridge is a horse boarding and breeding facility near Harrisburg, Pennsylvania. Penn Ridge agreed to board several of Fantasy Lane's horses starting in July 2012, including its thoroughbred stallion Uptowncharlybrown. The agreement obligated Penn Ridge to "act as Fantasy Lane's agent for the promotion and management of Uptowncharlybrown's stallion seasons, and . . . exercise its utmost good faith to promote, manage[, ] and sell Uptowncharlybrown stallion seasons . . . ." App. 721. Penn Ridge also agreed to keep several of its own mares at the facility to support Uptowncharlybrown.

         Beginning in August of 2013, Fantasy Lane got behind on its payments due to Penn Ridge. And after some of its horses became sick or injured and even died, Fantasy Lane refused to pay Penn Ridge boarding invoices totaling $65, 707. The managing partner of Fantasy Lane, Robert Hutt, sent several emails to others in the horse-breeding industry expressing his dissatisfaction with Penn Ridge owner Michael Jester and the treatment of Fantasy Lane's horses.

         In the midst of this dispute, Hutt told Dr. Jeffrey Edelson-the veterinarian designated by Penn Ridge-that Fantasy Lane was considering suing him for his role in treating their horses. The two negotiated and entered into a "General Settlement and Release Agreement." Michael Jester & Penn Ridge Farms, LLC v. Robert Hutt & Fantasy Lane Thoroughbred Racing Stable, LLC, 2017 WL 1150648, at *2 (M.D. Pa. Mar. 28, 2017). The agreement released "any and all persons, firms, or corporations liable or who might be liable . . . [from liability] arising out of or in any way relating to any injuries and damages of any and every kind . . . [in] the care and/or treatment of any [Fantasy Lane] horses stabled at Penn Ridge . . . ." Id. (alterations in original). The settlement and release resolved the conflict between Dr. Edelson and Fantasy Lane, but did nothing to dispel the acrimony between Fantasy Lane and Penn Ridge.

         Penn Ridge sued Fantasy Lane in Pennsylvania state court for breach of contract and defamation. The contract claim was for nonpayment for boarding and breeding services provided to Fantasy Lane's horses. The tort claim alleged that Hutt sent several defamatory emails about Penn Ridge and Jester's competence, as well as the care given to horses stabled there, to several individuals in the industry who had an interest or prospective interest in Fantasy Lane. Hutt blamed Penn Ridge for the deaths of its horses, calling the staff "inexperienced," and expressing that he had "no faith" in them. App. 768. He accused Penn Ridge of trying to conceal the problems, noting that Jester's personality "was a cross of President Richard Nixon, and the character[] Jack Nicholson played in[] A Few Good Men" and that Jester was "the type of person that would say or do anything to save his ass." App. 786. Hutt also alleged that Jester told him "the truth" about one of the deaths-that Jester made the decision not to seek professional help or notify Fantasy Lane when Penn Ridge first discovered the horse was ill. App. 787-88. He also claimed Jester "was responsible for killing [the] horse and he deliberately[, ] like Nixon[, ] was the leader of the coverup [sic]." App. 788.

         Fantasy Lane removed the case to the District Court based on diversity of citizenship. In answering Penn Ridge's amended complaint, Fantasy Lane brought counterclaims, including four negligence claims for the poor care and mistreatment of its horses, a breach of contract claim for the promotion and management of Uptowncharlybrown, and a breach of fiduciary duty claim stemming from the stallion season issues. Penn Ridge moved for partial summary judgment, and the District Court granted the motion on the negligence counterclaims, holding that the agreement between Fantasy Lane and Dr. Edelson released all other parties who might be liable for injuries to Fantasy Lane's horses while boarded at Penn Ridge.

         The remaining claims (breach of contract and defamation asserted by Penn Ridge and breach of contract and breach of fiduciary duty asserted by Fantasy Lane) were tried to a jury. After a three-day trial, the jury found for Penn Ridge, awarding it $110, 000 for the breach of contract damages, $1 in nominal damages on its defamation claim, and $89, 999 in punitive damages. The jury found against Fantasy Lane on its contract and fiduciary duty claims.

         Fantasy Lane filed a motion for a new trial or remittitur or, in the alternative, to alter or amend the judgment under Rules 59(a) and 59(e). The motion was granted in part and denied in part. The District Court found the punitive damages award unconstitutionally excessive under BMW of North America v. Gore, 517 U.S. 559 (1996), and State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), and reduced it to $5, 500. In the District Court's opinion, this amount was "reasonable and proportionate to the harm suffered by [Penn Ridge] and conform[ed] to the requirements of the due process clause." Jester v. Hutt, 2018 WL 4110625, at *7 (M.D. Pa. Aug. 29, 2018). But the Court declined to grant Fantasy Lane a new trial or reduce the contract damages award. ...

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