Walling v. Holman (858 F.2d 79, 1988)

OAKES, Circuit Judge:

Appellants Richard Holman and Wall Street Reports and Intelligence Bulletin, Inc. (“Wall Street Reports”) appeal from a judgment entered by the United States District Court for the Southern District of New York, Charles M. Metzner, Judge, holding them liable for the loss of furniture and other furnishings from a rented home in Bedford, New York, and awarding L. Metcalfe Walling, the homeowner, damages in the amount of $45,837 plus interest.

Appellants’ principal arguments are that the district court erred in allowing the deposition of a witness, Ida C. Bellotti, to be read at trial, and that the evidence was insufficient to support the jury’s verdict. Appellants also argue that New York Real Property Law § 235-b(l) (McKinney 1988) prohibits recovery of certain damages related to the residential property, that the district court committed error in not dismissing Walling’s action as time-barred under New York’s three-year statute of limitations, that the court improperly pierced the corporate veil in holding appellant Richard Holman personally liable, and that the court improperly dismissed appellants’ counterclaim as abandoned. On cross-appeal, Walling argues that the district court erred in refusing to charge the jury on defendants’ contractual liability and on punitive damages and in dismissing appellee Mary Holman from the suit.

As to the cross-appeal, we find that the district court should have given a jury instruction on contractual liability, but that the jury’s verdict was not affected by this failure. On Richard Holman’s and Wall Street Reports’ appeal, we affirm the judgment below except for certain damages awarded, which we reverse and remand to the district court for recomputation.

FACTS

In July 1971, while L. Metcalfe Walling was living abroad, his son rented his father’s furnished house in Bedford, New York, to Wall Street Reports as a weekend residence for the corporation’s 100% stockholder, Richard Holman. When the lease expired on September 4, 1972, an informal rental arrangement continued between the parties. Letters negotiating rent increases and other terms of occupancy were directed to Richard Holman personally, and bills relating to the property were paid from both Holman’s corporate accounts (including that of another wholly owned corporation, Wall Street Transcripts) and his personal funds. In 1978 Holman married Mary Holman, who sometimes accompanied him to the Walling residence.

In October 1979 Walling’s niece, with his consent, removed some furniture from the house and reported to her uncle that the furniture and a piano remaining in the house were damaged. Walling testified that in 1979, when he last visited the property, he noticed that although the house still contained some of his furniture and part of his collection of objet d’art, other pieces were missing. In 1982 Richard and Mary Holman moved out of the house, leaving it empty except for the damaged piano. The roof had leaked, damaging the parquet floors, and a pool filter had to be replaced.

L. Metcalfe Walling commenced this suit on April 10, 1984, seeking recovery of damages based upon at least two distinct theories: the defendants’ contractual obligation to leave the house and furnishings in good repair, and the defendants’ conversion of the personal property. Judge Metz-ner instructed the jury to award damages for injury to the house and to personal property in the possession of the plaintiff’s niece if it found that the defendants had breached the lease by failing to surrender items m the same condition as they were received, less reasonable wear and tear. He instructed the jury to award damages for missing personal property if it found that conversion had occurred, but he refused to charge the jury on punitive damages or on contractual recovery for the missing items. The jury found for the plaintiff, awarding a total of $45,837 as follows:

Breach of Contract

(a) Damage to the parquet floors O LO T — I 69-

(b) Damage to the beams and side walls

(e)Damage to the pool filter O ^

(d) Damage to the glass door (M 1 — I

(e) Refuse removal H T — I

(f) Damage to the piano lO