KEVIN H. SHARP, District Judge.
After a four day trial in this diversity action, a jury returned a verdict finding that the Metropolitan Government of Nashville and Davidson County ("Metro") and its insurer Travelers Insurance Company ("Travelers") were damaged in the amount of $4,540,879.00. Because this was more than the $2.5 million (plus interest and attorneys' fees) insurance deductible that Plaintiffs Allied Waste North America, Inc. ("Allied") and BFI Waste Services LLC ("BFI") (collectively "Allied/BFI") paid to settle an underlying state court action, judgment was entered in favor of Defendants Weinberg, Wheeler, Hudgins, Gunn Dial, LLC and Terrance Sullivan ("Weinberg Wheeler") on Plaintiffs' legal malpractice claim.
Following the entry of final judgment (Docket No. 272), Plaintiffs filed the now-pending "Motion for New Trial or for Remittitur and Renewed Rule 50(a) Motion for Judgment as a Matter of Law Regarding Cost of Repair Damages for the Underlying Lawsuit." (Docket No. 276). The Motion itself is 9 pages long, and is accompanied by a 49-page Memorandum (Docket No. 277) in support thereof. Those filings were followed by Defendants' 40-page Response (Docket No. 287) that, in turn, led Plaintiffs to file a 29-page Reply (Docket No. 291).
In diversity cases, federal procedural law applies in determining whether a party is entitled to a new trial.
"[A] renewed motion for a judgment as a matter of law . . . `may be granted only if in viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact for the jury, and reasonable minds could come to but one conclusion, in favor of the moving party.'"
The length of the briefing
Despite the enormity of the briefing, the Court finds it unnecessary to track the arguments in the order presented. This is because most of what Plaintiffs complain about stems from the Court's decision on how the case would be retried, which, in turn, flowed from the lengthy ruling (Docket No. 132) on the parties' Motions for Summary Judgment, and the rulings on the Motions in Limine (Docket No. 228) at the final pretrial conference. Although this Court assumes familiarity with its prior rulings, some background is, nevertheless, appropriate.
On May 23, 2002, fire destroyed the Nashville Thermal Transfer Facility, a waste-to-energy facility owned by Metro. Thereafter, in a case filed in the Davidson County Circuit Court styled
Plaintiffs sued trial counsel, Defendant Levine, Orr & Geracioti, PLLC ("Levine Orr") and two of its Members, alleging that those Defendants failed to exercise reasonable care and breached their retainer contract through a series of errors at trial. Among other things, Levine Orr allegedly erred by (1) failing to timely designate witnesses that had been provided by Allied/BFI, which led to a sanctions hearing and an adverse inference instruction; (2) retaining Jonathan Held, who was not an appraiser, to offer expert testimony about the diminution in value of the facility due to its obsolescence, but who was found by the trial judge, Joseph Binkley, to be unqualified to testify regarding the future plans for the facility; and (3) failing to find another expert or introduce other evidence that would show that market value of the facility was far less than the cost of repair.
Plaintiffs also sued Lewis, King, Krieg & Waldrop ("Lewis King") and two of its Members, as well as Weinberg Wheeler and two of its Members. Both firms had been retained to provided post-trial motion and/or appellate representation, and were alleged to be unsuccessful because the Tennessee Court of Appeals affirmed the rulings of the trial court,
It was in this posture that the Court ruled on five dispositive or partially dispositive motions in this case. First, the Court denied Defendants' Motions for Summary, except to the extent they sought to limit Allied/BFI's damages, and said damages were limited to the amount incurred in settling the underlying suit, plus attorney's fees spent in having to pursue this suit. Second, Levine Orr's Motion for Partial Judgment on the Pleadings or alternatively Summary Judgment was granted with respect to Allied/BFI's breach of contract claim, but denied with respect to the breach of fiduciary duty claim. Finally, Allied/BFI's Motion for Partial Summary Judgment on Affirmative Defenses relating to Plaintiffs' failure to settle the underlying suit was granted.
In the accompanying Memorandum, the Court discussed at length the standards underlying legal malpractice claims and the parties' respective arguments related thereto. That discussion,
The summary judgment ruling was entered on March 20, 2015. By the time of the final pretrial conference on February 29, 2016, however, the claims against Lewis, King and Levine, Orr and their members had been settled, leaving only Allied/BFI's claims against Weinburg, Wheeler and Terrance Sullivan, a partner in that firm. The reduction in the number of Defendants, however, did not necessarily simplify the case because, while the remaining Defendant's involvement was limited, their alleged error had potential ramifications beyond the exclusion of Held. This, in turn, presented the question of how best to address the Weinberg Wheeler Defendants' alleged malpractice.
At the start of the final pretrial conference, the Court indicated that the trial would be bifurcated, with the jury first determining damages and then (if necessary) determining whether Defendants had committed legal malpractice. The Court stated that, even though it "hate[d]" the prospect of the jury having to sit through a day or more of videotaped trial testimony from the state trial because the process would be "brutal," (Docket No. 227, PTC Hrg. at 3) this was the only feasible approach that would avoid the Court having "to sit up here and think, now, wait what would or what did Judge Binkley do in the face of this?" and the possible "different evidentiary rulings" were the Court to rule on admissibility issues. This process, in the Court's opinion, avoided trying what would effectively be "a different trial" and preclude the parties from "tak[ing] another bite at the apple." (
At trial, the Weinberg Wheeler Defendants played the role of Metro, while Plaintiffs played the role of Allied/BFI. Defendants played video portions of the trial testimony from the underlying trial that the jury heard during Metro's case, and provided expert testimony relating to lost business income and damages to cranes via videotaped deposition testimony that had been taken for purposes of the underlying suit.
For its part, Allied presented the testimony of Held and Gershman. Held provided expert testimony regarding damages to real property, while Gershman provided facts regarding the functional capacity of the facility, the pre-fire decision to close the facility, and the costs of demolition. Allied/BFI also presented the videotaped testimony of Floyd Mitchell who indicated that, by the day of the fire, the facility had only two cranes working, one boiler online and one door open.
As indicated, the jury returned a verdict that was more than the deductible Plaintiffs paid to settle the underlying case, and, as a consequence, judgment was entered in favor of the Wheeler Weinberg Defendants.
Plaintiffs argue "the retrial here was prejudicial and unfair to [them] for several reasons." (Docket No. 277 at 8). This error allegedly included: (1) failing to conduct the retrial in accordance with an objective standard; (2) restricting Plaintiffs' ability to present evidence or cross-examine witnesses; (3) admitting the underlying state court trial transcript; (4) limiting the retrial to the issue of damages; and (5) refusing to allow Plaintiffs to present liability evidence once Defendants did so. All of those arguments flow from the method the Court selected to try the malpractice case against the Wheeler Weinberg Defendants.
In support of their arguments, Plaintiffs cite several cases that stand for the proposition that "upon reversal by an appellate court, parties get an unlimited retrial — they are not forced to adhere to what happened during the first case; rather,
Plaintiffs' arguments have some purchase in the context of a true retrial. But, even then, the rule is not absolute. For example, "[w]hen a general verdict is affirmed as to the issue of liability but reversed on the award of damages, [the Tennessee Supreme Court] normally remand[s] for a new trial on all of the elements comprising the monetary award."
Regardless, the Court was not tasked with retrying the underlying case. Rather, the Court tried a legal malpractice case, the parameters of which were discussed at length in this Court's ruling on Defendants' Motions for Summary Judgment:
Effectively, "[t]he case-within-a-case or trial-within-a-trial approach applied in legal malpractice cases "[is] an objective approach to decide what should have been the result in the underlying proceeding or matter.'"
Weinberg Wheeler's alleged malpractice had to do with the failure to preserve the Held exclusion for appellate review and whatever ramifications that failure may have had on the state court verdict. At the pretrial conference, the Court voiced the opinion that the best way to present this issue would be for the jury to watch designated portions of the state court trial (which had been videotaped) supplemented by Held's testimony. The Court then asked for counsel's thoughts on the proposed procedure.
Weinberg Wheeler voiced no real objection, but Allied/BFI argued that the issue was broader than the exclusion of Held and had a "domino affect" on other evidence. For example, because of Held's exclusion, Harvey Gershman, a Metro consultant, was not allowed to testify that the facility was unable to process trash because the boilers and cranes were not working, and this allowed the trash to build up, which led to the fire in the first place. This "skewed the liability case" against Allied/BFI resulted in a "big windfall" for Metro because "the jury needed to know that [the] cost of repair was really a farce," instead of being led to believe that "this was just a perfectly functioning facility and then one day it burned down, and it got all rebuilt and everything was nice and shining and new[.]" (
After taking a break to consider the arguments presented, the Court stated:
(
The Court's decision to conduct the trial in the manner that it did was made after considerable thought. And, having considered the matter anew in the context of Plaintiffs' present Motion, the Court believes that the decision was sound and was the fairest and most accurate way to present to the jury the critical question of whether Held's testimony would have made a difference. Retrying the entire case, as Plaintiffs desired, would not have isolated the Weinberg Wheeler Defendants' alleged malpractice. Instead, it would have given Plaintiffs a second bite at the apple, even though the ultimate question in this legal malpractice action was not what the Tennessee Court of Appeals would have done were the Held exclusion properly appealed, but rather what effect his exclusion had on the outcome of the state court case. Thus, the Court created what it believed to be the closest facsimile to the underlying trial, while affording Plaintiffs the opportunity to supplement that evidence through the testimony of Held and Gershman.
During the pretrial conference the Court stated that if it was wrong in the manner selected for trying the case, one or both of the parties could "take that to the Sixth Circuit[.]" (Docket No. 227 at 18). The statement was not intended to be flippant or trite, but rather was a reflection of the Court's belief that the method it chose was the best possible given the issues presented and the posture of the case. The Court maintains that belief and will deny Plaintiff's Motion for a New Trial based upon the method used to try the case and the related arguments which have as their basis the manner in which the case was tried.
Plaintiffs claim that the jury's verdict was against the weight of the evidence because (1) no competent evidence supports (a) the claim for damages for business interruption and extra expenses, (b) the damages based on the costs for crane replacement or consultants, or (c) other costs of repair damages; and (2) the measure of damages should have been based on diminution of value instead of cost of repair. Additionally, Plaintiffs argue that the verdict is excessive and beyond the range of proof because (1) the only competent evidence supports a finding of zero damages with respect to the facility, cranes, and business interruption; and (2) the total damages based on competent evidence cannot exceed $259,147.00.
Once again, the manner the Court chose to try the malpractice case against the Weinberg Wheeler Defendants impacts many of these arguments because some of the damages evidence came from deposition testimony and stipulated damages in the underlying case that was read to the jury in this case. Obviously, this was not ideal for either party, but the goal of the trial was to measure the effect of the exclusion of Held's opinion. The goal was not to test Weinberg Wheeler's ability to track down almost a dozen witnesses from several state and have them testify as to facts, opinions, and documents related to a fire that occurred fourteen years earlier.
Regardless, the Court is not convinced that the jury's verdict was either against the weight of the evidence or excessive. "[P]roof of damages need not be exact or mathematically precise."
Here, the jury returned a verdict of $4,540,879.00, but did not indicate how it calculated that figure or on which components of damages it relied. This is hardly surprising given that the jury form was agreed to by the parties and simply asked, "What amount of damages (if any) do you find were sustained by Metro? (The burden of proof is on Metro)." (Docket No. 240 at 2). Regardless, the jury heard damages testimony that included: (a) business interruption loss — $1,900,000.00; (b) extra expense of natural gas — $1,900,000.00; (c) cost of repairing the facility — $1,992,201.98; (d) cost of demolishing the burned building — $951,518.00; (e) cost of replacing cranes — $750,000.00; (f) professional consulting fees — $203,000.00; (g) extra expenses to Metro caused by the fire — $1,694,274.00; (h) cleanup costs — $21,882.00, $25,185.00, and $9,078.00; (i) cost of repair minus depreciation — $1,434,023.00; and (j) cost to remove the crane bay — $209,725.00. Although it does not appear that adding any combination of these numbers would result in the exact figure returned by the jury, combining the demolition costs, consultant costs, the cost of the extra expense portion of adjusted loss, the demolition costs, the costs for crane bay removal, the consultant costs, the cost of repair minus depreciation, and two of the three figures for fire cleanup would result in a figure that is very close to that returned by the jury.
If more precision was required, Plaintiffs should not have agreed to a general verdict, inasmuch as the "use of special interrogatories . . . avoid[s] the `inscrutable mystery of a general verdict (and) impenetrable uncertainty.'"
As it stands, the amount returned was within the realm of reasonableness under the facts presented at trial, meaning that Plaintiffs are not entitled to a new trial or judgment as a matter of law based upon the amount of the verdict. Nor are they entitled to remittitur.
Under Tennessee law,
The decision not to grant a remittitur, new trial, or judgment as a matter of law necessarily means that the Court is unpersuaded by any of the myriad of arguments raised by Plaintiffs in relation to the various components of the damages evidence presented by Defendants at trial. Plaintiffs' position, in essence, is that (1) no competent evidence supported Metro's damages claims (in whose shoes Weinberg Wheeler stood) for (a) business interruption and extra expenses, (b) crane replacement, (c) consultant costs, or (d) other costs of repair damages; and (2) the measure of damages was required to be based on diminution of value, instead of the cost of repair.
However, Dayne Grey, a CPA and forensic accountant who was hired to participate in Traveler's adjustment of Metro's loss, conducted a walk-through of the facility and reviewed "hundreds" of documents before opining that the business interruption loss and increased gas expenditure for the 140-days following the fire, was approximately $1.9 million.
David Egarian, provided a foundation for the loss of the three cranes because of the fire, testifying that the replacement costs for each was $275,000. In arriving at that figure, Mr. Egarian examined the remnants of the cranes, and observed that the clamshells were not destroyed but that the insular facilities were. While Plaintiffs insist that Mr. Egarian's testimony (presented by deposition) offered nothing but a bottom line figure, his qualification to express his opinions were not challenged in the underlying suit.
Further, the approximately $200,000 in consulting fees that the jury could have found is also supported by the record. Even if Mr. Egarian's "bottom line" figure of approximately $197,000 is insufficient, Mr. Held testified that he was of the opinion that Travelers "reasonably adjusted" the consultant fees in the amount of $203,000. (Docket No. 258 at 131).
And there was sufficient support for the jury to determine cost of repair. Randy Creech, the president of the consulting division for Belfor USA and an expert in determining the amount of property damage to disaster-damaged buildings, testified that the reasonable repair costs for the damaged building was close to $2 million. For his part, Held testified that Travelers had, "for the most part" had properly calculated the cost to repair the building and that the adjusted building loss on a replacement cost basis was $1,914,637.55, but that with depreciation the value would be $1,434,023.
To be sure, there is a significant difference between the replacement cost figures and Held's depreciated physical loss value. But a jury is not required to accept an expert's opinion. Rather, "[e]xpert testimony is not ordinarily conclusive, but is purely advisory in character, and the trier of fact may place whatever weight it chooses upon such testimony and may retract it if it finds that it is inconsistent with the facts or otherwise unreasonable."
Admittedly, the presentation of damages was cabined by this Court's ruling on the method for trying the malpractice case. But, again, whether that decision was correct or incorrect is a matter for the appeals court to determine.
Finally, Plaintiffs argue that "cost of repair was an improper measure of damages where repairs never occurred and never were going to occur because the owner determined its property was obsolete and, in fact, planned to destroy the property before the incident giving rise to the litigation." (Docket No. 291 at 24). For this reason, Plaintiffs contend that the proper measure of damages was diminution in value and the jury should not have been allowed to consider costs of repair.
"Generally, the measure of damages will be the cost or repair unless the repairs are not feasible or the cost is disproportionate to the dimunition [sic] in value."
Here, the jury heard evidence about both types of damages, and was presented with proof and arguments regarding the future of the Thermal Plant Facility.
(Docket No. 259 at 60). Except for replacing "real property" with the phrase "Metro's property in the underlying lawsuit," this instruction is identical to Tennessee Pattern Jury Instruction 14.45, and is in keeping with the Proposed Jury Instructions (Docket No. 238 at 18) agreed to by the parties.
Finally, Plaintiffs argue that the Court erred in failing to apply the collateral sources rule. This rule was discussed in detail in the context of the Court's ruling on the Motion for Summary Judgment, and that discussion, too, is incorporated herein by reference.
On the basis of the foregoing, Plaintiffs' "Motion for New Trial or for Remittitur and Renewed Rule 50(a) Motion for Judgment as a Mater of Law Regarding Cost of Repair Damages for the Underlying Lawsuit" will be denied.
An appropriate Order will enter.
(Docket No. 228 at 2).
(Docket No. 259 at 41-42).