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Cohee v. Global Horizons, 07-1848 (2009)

Court: Court of Appeals for the Fourth Circuit Number: 07-1848 Visitors: 5
Filed: Feb. 06, 2009
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 07-1848 JOHN M. COHEE, JR., trading as Cohee Farms; DIANA B. COHEE, trading as Cohee Farms, Plaintiffs - Appellees, v. GLOBAL HORIZONS INCORPORATED, doing business as AgriLabor, Defendant - Appellant. Appeal from the United States District Court for the District of Maryland, at Baltimore. William D. Quarles, Jr., District Judge. (1:05-cv-03359-WDQ) Argued: December 3, 2008 Decided: February 6, 2009 Before NIEMEYER and MICHAEL,
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                             UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                             No. 07-1848


JOHN M. COHEE, JR., trading as Cohee Farms; DIANA B. COHEE,
trading as Cohee Farms,

                Plaintiffs - Appellees,

           v.

GLOBAL HORIZONS INCORPORATED, doing business as AgriLabor,

                Defendant - Appellant.



Appeal from the United States District Court for the District of
Maryland, at Baltimore.     William D. Quarles, Jr., District
Judge. (1:05-cv-03359-WDQ)


Argued:   December 3, 2008                 Decided:   February 6, 2009


Before NIEMEYER and MICHAEL, Circuit Judges, and Rebecca Beach
SMITH, United States District Judge for the Eastern District of
Virginia, sitting by designation.


Affirmed by unpublished per curiam opinion.


ARGUED:   Matthew  S.  Gibbs,   Los  Angeles,  California,  for
Appellant. Craig Forrest Ballew, FERGUSON, SCHETELICH & BALLEW,
P.A., Baltimore, Maryland, for Appellees. ON BRIEF: Chrystal L.
Bobbitt, LITIGATION COUNSEL FOR GLOBAL HORIZONS, INC., Los
Angeles, California, for Appellant. Tracey Dallahan-McLauchlin,
FERGUSON, SCHETELICH & BALLEW, P.A., Baltimore, Maryland, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.




                                2
PER CURIAM:

               Appellees John M. Cohee, Jr., and his wife, Diana B.

Cohee, operate Cohee Farms in Preston, Maryland.                                  (We refer to

the    appellees         as   “Cohee.”)      The          present     dispute      involves      a

contract       between        Cohee   and   appellant              Global    Horizons,       Inc.

(“Global”),         in   which    Global    agreed          to     provide    Cohee     a    labor

force to harvest watermelon and sweet corn in 2005.                                         Global

failed to furnish the promised labor because it could not find

housing in the area for its workers.                               Cohee sued Global for

breach of contract in state court, and the action was removed to

U.S. District Court on the basis of diversity jurisdiction.                                     A

jury determined that the contract was breached and awarded Cohee

damages that included lost profits for 2005 and future profits

for 2006 and 2007.               Global argues that it did not breach any

obligation to Cohee because it was not responsible for housing.

It    also    challenges        the     damages          awarded    to   Cohee     on   several

bases.       For the reasons below, we affirm.



                                             I.

               We    recount      the    evidence,           presented       in    a    four-day

trial, in the light most favorable to Cohee, who obtained a

favorable      verdict.          Global     is       a    California        corporation       that

provides foreign agricultural labor to farmers in the United

States.       Foreign agricultural workers are eligible to enter the

                                                 3
United       States    on    a   temporary            basis    through       the    H-2A        visa

program.        The process of securing H-2A visas is sufficiently

complex      that     Global     has    a   customer          base    of    farmers      who     are

willing to pay Global to navigate that process for them.                                         In

late 2003 or early 2004 Global met with several Maryland farmers

to provide them information about the availability of H-2A labor

and    about        Global’s     services.              Cohee        was    among       those     in

attendance.

               In need of labor, Cohee entered a contract with Global

for H-2A labor for his 2004 harvest, and Global provided the

laborers needed.            In early 2005 Cohee again decided to use H-2A

labor furnished by Global for that year’s harvest.                                      In March

2005     the    parties      executed        the       Farm     Labor       Contractor          H-2A

Agreement (the Agreement), drafted by Global, that is at issue

in this case.           Around April 1, 2005, Cohee began planting 55

acres of watermelon and 65 acres of sweet corn.

               Under the Agreement Global committed to furnish labor

“at    its     own    expense”     to       Cohee      from     June       25,   2005     through

September 10, 2005.               J.A. 695.            The Agreement left open the

number of workers required by Cohee, but Cohee requested ten

workers in a separate letter of intent that was signed the same

day as the Agreement.             In return Cohee promised to pay Global an

agreed       upon     hourly     wage       for       each     worker       plus    a     certain

surcharge.          The Agreement provided that the surcharge would be

                                                  4
35 percent if Cohee provided transportation and housing to the

workers; 40 percent if Global provided either transportation or

housing; and 45 percent if Global provided both transportation

and housing.      Although Cohee had housed workers in a farmhouse

on the property and paid a surcharge of 35 percent in 2004, the

farmhouse was torn down after the 2004 harvest.               Cohee says that

when he approached Global about providing his labor force for

the 2005 harvest, he informed Global that he could not provide

housing   for     the    laborers    during   that     harvest   season.   By

regulation, housing must be provided to H-2A workers at no cost

to the workers.        See 20 C.F.R. § 655.102(b).

              Global investigated housing possibilities near Cohee

Farms during the spring and summer of 2005.                   In late spring

Global inquired about prices at local hotels and booked rooms at

the   local    Econo    Lodge   Motel,   although    Global   representatives

later asserted that that arrangement was always intended to be

temporary.      In late June Global sent a representative to Cohee

Farms and the surrounding area to search for an affordable place

to house the workers.           Despite these efforts, Global contacted

Cohee in late June and, citing difficulties in securing housing,

asked to push back the start date from June 25 to July 1.               Cohee

agreed to the postponement.

              Global failed to furnish Cohee with any labor as of

July 1 or at any other point during the 2005 harvest.                  During

                                         5
Cohee’s   multiple     conversations       with   Global    representatives    in

June,   July,    and   August   about      his   pressing   need   for   workers,

Global representatives informed Cohee that Global “had workers

ready to come, but they . . . didn’t have any housing.”                      J.A.

848.

            Without his anticipated labor force, Cohee turned to

family and neighbors for help harvesting his crops.                      A cousin

was able to locate a source of labor in Delaware in mid-July,

and five to ten workers began traveling from Delaware to Cohee

Farms each day to help with the harvest.                In mid- to late July

or   August,    a   neighbor    with   a   larger   farming    operation    began

loaning Cohee between six and twenty-six workers, but only for a

few hours each morning.         And through a different neighbor, Cohee

worked out an arrangement with a broker, C & L Packing, to

harvest part of the Cohee Farms watermelon crop in exchange for

a favorable price for the watermelons and a broker’s fee for the

neighbor who arranged the transaction.               According to Cohee, the

assistance he received in harvesting “did not even come close”

to replacing the workers that Global had contracted to provide.

J.A. 855.       Roughly fifty percent of his crop was left in the

field unharvested at the end of the season.

            As a result, Cohee had “nowhere close” to enough sweet

corn or watermelon to satisfy his direct market and wholesale

customers.      J.A. 862.        Because of Cohee’s inability to meet

                                           6
customer demand in 2005, he lost some of his direct market and

wholesale customers.            In the next season (2006) Cohee decided to

grow small grains instead of the more profitable watermelon and

sweet corn because of a combination of factors, including the

damage    that     Global       had   caused     to    his   customer      base    and

independent      concerns       about     the    availability      of     labor    that

season.      Cohee’s profits in 2006 and 2007 were reduced as a

result, and a sweet corn packaging shed that Cohee had built was

rendered useless.

             At the conclusion of Cohee’s evidence, Global moved

for judgment as a matter of law, and the motion was denied.                        The

jury   found     Global    in    breach    of   its    contract    with    Cohee    and

awarded Cohee $490,000 for lost profits in 2005, $37,186 for

unnecessary expenses in 2005, $150,000 for lost profits in 2006,

and $142,500 for lost profits in 2007.                    Following the verdict

Global renewed its motion for judgment as a matter of law and

alternatively moved for a new trial.                  Global also filed a motion

to alter or amend the judgment.                 The district court denied each

of these motions.         Global now appeals.



                                          II.

            Global makes several arguments on appeal.                      First, it

argues    that    the   jury     improperly      found   that     it    breached   the

Agreement.       Second, it argues that any consequential damages

                                           7
awarded    by      the     jury    were     improper        because   the     terms    of       the

Agreement,         which    is     governed       by     California      law,    prohibited

consequential damages.                 Third, Global argues that each of the

specified damages awards -- lost profits in 2005, 2006, and 2007

and unnecessary expenses incurred in 2005 -- were improperly

awarded.

              We    review        de   novo      the    district      court’s    denial         of

Global’s motion for judgment as a matter of law.                                 Adkins v.

Crown Auto, Inc., 
488 F.3d 225
, 231 (4th Cir. 2007); Brown v.

CSX Transp., Inc. 
18 F.3d 245
, 248 (4th Cir. 1994).                                   “A court

may   award     judgment      as       a   matter      of   law   only   if    there       is    no

legally sufficient evidentiary basis for a reasonable jury to

find for the non-moving party.”                        Saunders v. Branch Banking &

Trust Co. of Va., 
526 F.3d 142
, 147 (4th Cir. 2008).                                   And the

court must view the evidence in the light most favorable to the

nonmoving       party,      drawing        all    reasonable       inferences         in    that

party’s favor.           Dennis v. Columbia Colleton Medical Ctr. Inc.,

290 F.3d 639
, 645 (4th Cir. 2002).

              We review the district court’s decision not to order a

new trial for clear abuse of discretion, and we will not reverse

the   decision       absent       exceptional          circumstances.         
Id. at 650; Bristol
Steel & Iron Works v. Bethlehem Steel Corp., 
41 F.3d 182
, 186 (4th Cir. 1994).                  A new trial is only appropriate when

“an error occurred in the conduct of the trial that was so

                                                 8
grievous as to have rendered the trial unfair.”                   Bristol Steel &

Iron 
Works, 41 F.3d at 182
(quoting DMI, Inc. v. Deere & Co.,

802 F.2d 421
, 427 (Fed. Cir. 1986)).

            We review the denial of a Rule 59(e) motion to alter

or amend judgment for abuse of discretion.                    Bogart v. Chapell,

396 F.3d 548
, 555 (4th Cir. 2005).              There are only three grounds

for granting such a motion: “(1) to accommodate an intervening

change in controlling law; (2) to account for new evidence not

available at trial; or (3) to correct a clear error of law or

prevent manifest injustice.”            Pacific Ins. Co. v. Am. Nat’l Fire

Ins. Co., 
148 F.3d 396
, 403 (4th Cir. 1998).

                                         A.

            Global    first    argues        that    it    did   not     breach   the

Agreement   with     Cohee   because     it   was    not     obligated    under   the

Agreement   to    provide     housing    to    its    H-2A    workers.       Rather,

Global contends that it had the option to provide housing, but

if it elected not to provide housing, Cohee was responsible for

providing it.        In rejecting Global’s post-trial motions, the

district    court    determined    that       the    Agreement     “place[d]      the

burden of securing worker housing squarely on Global Horizon’s

shoulders.”      Cohee v. Global Horizons, Inc., No. WDQ-05-3359 (D.

Md. July 19, 2007); J.A. 1412.                 Under California law, which

governs here, “[i]f contractual language is clear and explicit,



                                         9
it governs.”    Powerine Oil Co., Inc. v. Superior Court, 
118 P.3d 589
, 598 (Cal. 2005).

            The language is sufficiently clear and explicit if it

is not reasonably susceptible to materially different meanings.

Hayter Trucking, Inc. v. Shell W. E&P, Inc., 
18 Cal. App. 4th 1
,

15 (Ct. App. 1993).       Moreover, “[l]anguage in a contract must be

construed in the context of that instrument as a whole.”                     Bay

Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 
855 P.2d 1263
, 1271 (Cal. 1993) (emphasis removed).                We conclude as

a matter of law that the language of the Agreement, particularly

when construed as a whole, is sufficiently clear to obligate

Global to provide housing.

            The Agreement is an H-2A labor agreement under which

Global committed to providing labor “at its own expense.”                 J.A.

695.      The Agreement’s specific provisions make clear that it

allocated to Global the responsibility for all of the specific

expenses    attendant   to    providing     H-2A   labor.      There   are   no

exceptions to the expenses Global agreed to cover when it agreed

to provide labor “at its own expense,” much less an exception

that might reasonably be read as carving out responsibility for

housing    costs.   See      J.A.   695.    The    Agreement   provided   that

Global was solely responsible for paying the salaries, benefits

and “all other expenses relating to [its] workers.”                J.A. 696.

Global also agreed to “provide, at its sole expense, whatever

                                       10
ancillary      support,           equipment,        supplies,     transportation           and

facilities as required by law and for its workers to adequately

and properly perform their respective tasks.”                         J.A. 696.          These

laundry lists of expenses include a number of broad categories,

such as “ancillary support” and “facilities,” that, read in the

context of the Agreement as a whole, indicate that the agreement

was    intended      to    include       housing      expenses.       Moreover,        Global

represented       in      the    Agreement     that     it    would   comply       with    all

applicable     laws       and     regulations,        including      H-2A    visa      program

regulations,      which         require      that    housing    be    provided      to    H-2A

workers at no cost to the workers.                      Global’s representations in

the Agreement that “[t]he housing provided to [its] workers[]

meets or exceeds all legal requirements,” J.A. 697, would be odd

if    the    Agreement          did    not   also    contemplate      that       Global    was

responsible for housing.

              Global argues that the Agreement’s integration clause

precluded the introduction of any extrinsic evidence that might

have indicated that the parties intended for Global to provide

housing.       The integration clause states that the Agreement is

the “entire agreement between the parties hereto, and there have

been    no     oral        or     written      representations          affecting         this

Agreement,      or     the       provisions         hereof,    except       as   set     forth

herein.”       J.A. 699.              Of course, in the case of an ambiguity,

California law allows the admission of extrinsic evidence when

                                               11
it “is relevant to prove a meaning to which the language of the

instrument     is     reasonably     susceptible.”          Dore        v.    Arnold

Worldwide, Inc., 
139 P.3d 56
, 60 (Cal. 2006); Pac. Gas & Elec.,

Co. v. G.W. Thomas Drayage & Rigging Co., 
442 P.2d 641
, 644

(Cal. 1968).        Even if we assumed an ambiguity with respect to

the obligation to provide housing, the extrinsic evidence at

trial permitted a reasonable finding that at the relevant times

Global interpreted the Agreement as assigning to it the housing

obligation.

             The notice of deposit requirement that Global drafted

and required Cohee to sign revealed that Cohee was responsible

for paying a deposit calculated using an anticipated surcharge

of   “45%    (housing    and     transportation).”         J.A.    27    (emphasis

added).      Further,    Cohee    sent   Global’s   president       a   letter     to

confirm     several   details     pertaining   to    the    Agreement.           That

letter included the following sentence: “The workers will be

recruited, housed, transported, paid, and supervised by Global

Horizons, Inc.”         J.A. 28 (emphasis added).           Global negotiated

with a local Econo Lodge to provide housing for the workers.                       In

late June 2005 Global sent a representative to Maryland to look

for additional housing possibilities for its workers.                        Finally,

Global sought Cohee’s permission to delay the arrival of the

workers until it was able to secure housing.                      Insofar as the

Agreement leaves any room for ambiguity, extrinsic evidence was

                                         12
admissible,      and    that      evidence    makes      clear    that   both    parties

understood     that     Global     would     provide      housing    under      the    2005

Agreement.

           Global contends that one provision in the contract,

paragraph 8(iv) reserved to it the option to determine whether

or not it would provide housing.                  That paragraph provides that

if transportation or housing is provided by Global, Cohee would

pay a 40 percent surcharge (instead of 35 percent) against the

applicable wage rate.              The surcharge is 45 percent if Global

provided both transportation and housing.                        Read in the context

of the other contractual provisions that assigned to Global the

ultimate      responsibility        to    provide     housing,      paragraph         8(iv)

simply gave Cohee the option to provide housing, an option he

exercised in the 2004 season.                Before the Agreement was signed,

Cohee advised Global that he could not provide housing in 2005.

           We conclude that the district court did not err when

it   concluded    that      the    Agreement      made    Global     responsible        for

providing H-2A labor and for satisfying the attendant expenses

of   making     that    labor      available.         This       responsibility,       the

district      court     properly         determined,      included       the    ultimate

responsibility         to   provide       housing.         There     was       sufficient

evidence to support the jury’s finding that Global breached the

agreement to provide housing.



                                             13
                                          B.

            Global also argues that the jury should not have been

permitted to award consequential damages because the Agreement

expressly       precluded     liability     for   such   damages.      For    this

argument Global relies on paragraph 8(g) of the Agreement, which

provides as follows:

        If the CLIENT is delayed in making any payments due to
        [Global] hereunder, [Global] reserves the right to
        remove its workers and cease providing Services
        hereunder, until such balance has been paid by CLIENT.
        Payment for work performed and hours lost will be the
        responsibility of the CLIENT.      In no event shall
        [Global] be held responsible or liable for any
        consequential or incidental damages, including without
        limitation any lost profits that CLIENT may suffer as
        a result of [Global]’s actions under this Agreement.

J.A. 698.         Global argues that the last sentence of paragraph

8(g) limits its liability.              Global is correct that “limitation

of liability provisions have long been recognized as valid in

California.”       Markborough Cal., Inc. v. Superior Court, 227 Cal.

App. 3d 705, 714 (Ct. App. 1991).                    Here, however, the last

sentence     of    paragraph     8(g)     is   not   a   broad   limitation    of

liability.

            As noted above, “the context in which a term appears

is critical.”        Century Transit Sys., Inc. v. Am. Empire Surplus

Lines    Ins.     Co.,   42   Cal.   App.   4th   121,   126   (Ct.   App.   1996)

(emphasis in original).              Like the district court, we conclude

that the context in which the liability limitation provision


                                          14
appears      indicates     that     it   has    narrow     applicability.             If   the

parties intended a broad liability limitation, paragraph 8(g)

was    not    the      appropriate       place    in     this       agreement      for     it.

Paragraph 8 addresses the subject of Global’s “compensation,”

and paragraph 8(g), where the liability limitation appears, is a

narrow provision that addresses the consequences when Cohee is

delayed      in   making    payments       to    Global.         If       the   parties    had

intended a broad provision limiting liability for damages, the

proper place for it would have been paragraph 9.                            Paragraph 9 is

entitled      “Governing      Law    and    Waiver,”       and       it    contains       three

stand-alone        provisions       that    are    broadly          applicable       to    all

litigation and legal disputes arising under the Agreement:                                 (a)

California law governs the Agreement, (b) the prevailing party

in any litigation with respect to the Agreement will be entitled

to costs and expenses, including reasonable attorneys’ fees, and

(c) Cohee may not deduct damages from amounts owed on Global

invoices.         On the other hand, paragraph 8, which includes the

liability limitation sentence, is titled “Compensation,” and its

provisions        are     essentially      limited        to        that    topic.          Its

provisions address such issues as Global’s rates and fees and

when billing invoices become due.                  If the parties had agreed on

a broadly applicable liability limitation, common sense dictates

that   it     would      appear     in   paragraph       9.         The    fact   that     the

limitation        on    liability    provision      was       the    third      sentence    of

                                            15
paragraph 8(g) -- relating to Global’s right to withdraw workers

in the event of delay in the payment of its compensation --

suggests that the provision has a narrow application.

            The provisions in paragraph 8 that surround paragraph

8(g) fit a pattern that further supports the narrow reading of

the   liability      limitation.           The     previous        paragraph,    8(f),

provides that Global will submit a bill every Tuesday and that

Cohee must pay all undisputed amounts within two days of the

billing date.        But in the event of a dispute “arising from the

billing     statements,”       the   final       sentence     of     paragraph    8(f)

provides: “the parties shall meet and use their best efforts to

resolve the matter in question.”                   J.A. 698.         Paragraph 8(h)

provides for a two percent finance charge for overdue invoices.

It then provides for the possibility that “said percentage [is]

considered under any applicable law to be usurious or otherwise

illegal.”      J.A. 698.        In that event, according to the last

sentence     of     paragraph        8(h),       “the   percentage        shall    be

automatically       adjusted    to   the     maximum    rate   allowed     by    law.”

J.A. 698.      Both paragraphs 8(f) and 8(h) state the parties’

intentions with respect to an aspect of or obligation related to

compensation and then provide for the possibility and resolution

of a dispute as to that specific aspect or obligation.

            Especially given the incongruity of appending a broad

limitation     on     liability      to      a    narrow    compensation-related

                                           16
provision, paragraph 8(g) ought to be read to follow the same

pattern as paragraphs 8(f) and 8(h).                         Like the final sentences

in paragraphs 8(f) and 8(h), the final sentence of paragraph

8(g) provides for the possibility of a dispute concerning the

obligations contained earlier in the same paragraph -- a dispute

arising       from   Global’s    removal          of    workers    due   to    a   delayed

payment.        In that event alone, Global is not “responsible or

liable for any consequential or incidental damages, including

without limitation any lost profits that [Cohee] may suffer as a

result of [Global’]s actions under this Agreement.”                            J.A. 698.

Because       the    dispute     here       did        not    involve    the   situation

contemplated by paragraph 8(g) -- Global’s removal of workers

due    to   late     payment    by   Cohee        --    consequential     damages    were

available.

                                             C.

               Global also separately challenges each of the specific

categories of damages awarded on the grounds that the evidence

was insufficient and that certain damages were too speculative

and were not reasonably foreseeable to Global.

                                             1.

               With respect to the $490,000 awarded for lost profits

in    2005,    Global   argues       that    these       damages   were    “speculative

because they were based solely on the hypothetical value of what

plaintiff might have earned if he had been able to harvest all

                                             17
of his crops.”             Appellant Br. at 21.                 Global does not question

whether    the       evidence     submitted          as    to     the    expected    yield     or

prices for watermelon and sweet corn were ascertainable with

reasonable         certainty      in    2005,        the       standard    for     determining

whether damages are speculative or not.                                See Parlour Enters.,

Inc. v. Kirin Group, Inc., 
152 Cal. App. 4th 281
, 287-88 (Ct.

App. 2007).              Instead, Global argues that the jury calculated

damages assuming that Cohee would have harvested all 120 acres

of watermelon and sweet corn planted if Global had not breached,

yet    there       was    not   sufficient      evidence          to    establish    that     120

acres of the two crops would have been harvested.                             Global failed

to raise this argument before the district court, and we decline

to find error, much less plain error.                            First, the jury did not

necessarily assume that all 120 acres would have been harvested

but for Global’s breach.                The verdict form reflected the jury’s

determination that Cohee suffered $490,000 in lost profits in

2005, but not how the jury determined that figure.                               The evidence

supports       a    finding      of     $490,000          in    damages     even     absent    a

determination that 120 acres of sweet corn and watermelon would

have    been       harvested      but     for        the       breach.      Cohee’s     expert

calculated $492,811 in lost profits in 2005, using conservative

estimates with respect to corn prices and watermelon yield.

               Further,         there     was        sufficient           evidence     for     a

reasonable juror to conclude that all 120 acres would have been

                                                18
harvested absent Global’s breach.       Cohee indicated to Global his

need for ten H-2A workers on March 28, 2005.             Cohee then began

planting his sweet corn and watermelon crops “by the last of

March or the 1st of April.”        J.A. 807.      There was thus a basis

for the jury to find that Cohee would not have planted more

acres than he would be able to harvest with the ten-person labor

force he anticipated.     This is true even though Cohee was unable

to harvest 120 acres despite ultimately getting between five and

ten workers each day from Delaware and between five and twenty-

six workers for several hours each day from a neighbor.              These

workers became available late in the harvest season, and the

laborers that Cohee secured from his neighbor only worked for

several hours a day.      We have no basis for concluding that the

$490,000 damages award for 2005 amounted to plain error.

                                   2.

           Global also challenges the damages awarded for future

lost profits in 2006 and 2007 as speculative and unsupported by

the evidence.    Global raised these arguments before the district

court in its post-trial motions.        Global first argues that the

evidence   is   not   sufficient   to   support    the   jury’s   implicit

finding that Global’s breach caused Cohee to stop growing sweet

corn and watermelon.      According to Global, the evidence shows

that Cohee decided to stop growing those crops because he was

concerned about the availability of a labor force, not because

                                   19
he had lost his customer base.         While the record does contain

some evidence from which a juror could make such a finding, the

jury in this case obviously made a different finding.       It found

that Cohee stopped growing sweet corn and watermelon because of

Global’s breach and the consequences of that breach.

           There was sufficient evidence to support the jury’s

finding.   Three farmers, including Cohee, testified that direct

market and wholesale customers will not give a farmer who “drops

the ball” a second chance.        J.A. 945.    A gap in a farmer’s

product supply will likely result in direct market and wholesale

customers buying elsewhere.   Indeed, Cohee testified that he was

not prepared to grow sweet corn or watermelon in 2006 because of

a combination of factors including the damage that Global had

caused to his direct market and wholesale customer base. The

jury was free to credit this testimony rather than certain other

evidence relied upon by Global.

           Global also argues that the damages awarded for lost

profits in 2007 were overly speculative because Cohee’s expert

did not quantify a damages estimate for 2007.         But California

courts have upheld damages awarded for future lost profits in

the case of an established business.

     Where an established business’s operation is prevented
     or interrupted, “damages for the loss of prospective
     profits that otherwise might have been made from its
     operation are generally recoverable for the reason
     that their occurrence and extent may be ascertained

                                  20
       with reasonable certainty from the past volume of
       business and other provable data relevant to the
       probable future sales.”

Parlour Enters., 
Inc., 152 Cal. App. 4th at 287
(quoting Kids’

Universe v. In2Labs, 
95 Cal. App. 4th 870
, 883 (Ct. App. 2002)).

            Cohee      Farms    is    an    established        business,     and    Cohee

introduced evidence about his “past volume of business and other

provable data relevant to the probable future sales.”                             Parlour

Enters., 
Inc., 152 Cal. App. 4th at 288
.                          There was evidence

that   Cohee    planted    about      55    acres       of   watermelon    per    season,

produced an average yield of 40,000 pounds of watermelon per

acre, received at least 10 cents per pound, and paid around

$1,800    per   acre    for     labor.        Similarly,       the    record     contains

evidence that Cohee planted about 65 acres of sweet corn per

season; produced an average yield of 1,500 dozen ears of sweet

corn per acre, received $2 per dozen ears, and paid $1,200 per

acre for labor.        Using these average yields and prices, Cohee’s

expert was able to estimate the damages that Cohee suffered by

planting less profitable crops in 2006.                        Using the same data,

the jury could itself estimate damages for 2007.

            Global correctly notes that the expert witness did not

himself    calculate      estimated         lost    profits     for    2007,     but    the

expert    testified      that    “there       is    a    strong      probability       that

[Cohee’s]   earnings      have       been    adversely       affected     prospectively

[beyond 2006].”        J.A. 995.        He also testified that his analysis

                                            21
for   2006    was      relevant   to     future       years.     This        testimony     is

sufficient     to      demonstrate     the     occurrence       of    lost     profits     in

2007,   and      the    data    relating       to     average    yield        and   pricing

provided the data necessary to calculate the extent of those

damages to a reasonable certainty.

                                             3.

             Global’s final argument is that the award of $37,186

for unnecessary expenses incurred in 2005 should be reversed.

Cohee recovered damages for the unnecessary expenses he incurred

because    the    sweet    corn    packaging          facility       he    built    in   2004

suffered     diminished        utility    as      a   result    of    Global’s      breach.

Global argues on appeal that this damages award was improper for

two reasons: (1) there was insufficient evidence of a causal

connection between Global’s breach and the damages awarded and

(2) those damages were not reasonably foreseeable to Global.

              Because Global failed to raise these arguments before

the district court, we review for plain error.                            In this analysis

we inquire whether “(1) there is an error; (2) the error is

plain; (3) the error affects substantial rights; and (4) . . .

the error seriously affects the fairness, integrity or public

reputation of judicial proceedings.”                   Celotex Corp. v. Rapid Am.

Corp., 
124 F.3d 619
, 630-31 (4th Cir. 1997).                          We find no plain

error with respect to Global’s challenge to the sufficiency of

the evidence as to causation.                For the same reasons the evidence

                                             22
bore out a causal connection between Global’s breach and lost

profits      in    2006    and   2007,      the      evidence    establishes       a    causal

connection        between      the    breach      and    the   alleged    damage       due    to

unnecessary expenses.                 Cohee was forced to stop growing sweet

corn   and    watermelon         as    a   result       of   Global’s    breach,       thereby

diminishing         the     utility        of     Cohee’s       sweet    corn   packaging

facility.           The    evidence        supporting        these   determinations           is

sufficient to withstand plain error review.

              We also decline to find plain error with respect to

whether the diminished utility of the packaging facility was

reasonably foreseeable to Global at the time of formation of the

Agreement.

       [S]econdary   or   derivative    losses arising   from
       circumstances that are particular to the contract or
       to the parties . . . are recoverable if the special or
       particular circumstances from which they arise were
       actually communicated to or known by the breaching
       party (a subjective test) or were matters of which the
       breaching party should have been aware at the time of
       contracting (an objective test).

Lewis Jorge Constr. Mgmt., Inc. v. Pomona Unified Sch. Dist.,

102 P.3d 257
, 261 (Cal. 2004).                    There is no evidence that Cohee

in fact informed Global that he had constructed a sweet corn

packaging         shed    -–   evidence         which    would    have    satisfied          the

subjective test.            The question is thus whether Global ought to

have been aware that Cohee would suffer losses to sweet corn-

specific investments by its breach.                          It is not a stretch to


                                                23
conclude that anyone (such as Global) supplying labor to harvest

sweet corn would know that a packing shed would be a routine

expense for the grower.

            But    even   if   we    assume     that    these   losses   were     not

reasonably foreseeable, that it was plain error for the district

court to submit the foreseeability issue to the jury, and that

the error affected Global’s substantial rights, we decline to

conclude    that    any   error      “seriously       affect[ed]   the   fairness,

integrity    or     public     reputation        of     judicial    proceedings.”

Celotex 
Corp., 124 F.3d at 631
; see also Matco Mach & Tool Co.

v. Cincinnati Milacron Co., 
727 F.2d 777
, 781 (8th Cir. 1984)

(declining to find that error in damages instruction to jury

“seriously affected the fairness of the proceedings”).                      Not only

did   Global       fail   in      district      court     to    argue    lack      of

foreseeability as a matter of law, it failed to raise factual

arguments about foreseeability during the trial.                   The jury found

by a preponderance of the evidence that “both parties could have

reasonably     foreseen    the      harm   as   the    probable    result    of   the

breach.”     J.A. 761 (Jury instruction no. 14).                  As a result, we

perceive no serious effect on the fairness of the proceedings.

We thus conclude that it was not plain error for the district

court to submit the issue of packing shed damages to the jury.




                                           24
                  * * *

The judgment is

                          AFFIRMED.




                   25

Source:  CourtListener

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