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Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 12, 1999 Decided January 18, 2000

No. 99-7028

Tri County Industries, Inc.,

Appellant

v.

District of Columbia, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 94cv02014)

Frank J. Emig argued the cause for the appellant.

Donna M. Murasky, Assistant Corporation Counsel, Office

of the Corporation Counsel, argued the cause for the appellees. Robert R. Rigsby, Interim Corporation Counsel, and

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Charles L. Reischel, Deputy Corporation Counsel, Office of

the Corporation Counsel, were on brief for the appellees.

Before: Edwards, Chief Judge, Silberman and Henderson,

Circuit Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge: This appeal

arises from proceedings determining what damages, if any,

appellant Tri County Industries, Inc. (Tri County) should be

awarded to compensate for what this court previously determined to be the District of Columbia's (District) violation of

its fifth amendment right to procedural due process. See Tri

County Indus., Inc. v. District of Columbia, 104 F.3d 455,

460-62 (D.C. Cir. 1997). Following the first of two trials, the

jury awarded $5,000,000. The trial court then granted a new

trial, nisi remittitur to $1,000,000, which was refused. At the

second trial, the district court admitted evidence excluded

from the first and the jury returned nominal damages of

$100. Tri County challenges the court's order granting the

District's alternative motion for a new trial as well as several

evidentiary rulings in the second trial and requests reinstatement of the first award or, in the alternative, a new trial due

to allegedly erroneous evidentiary rulings during the second

trial. For the reasons set forth below, we reverse the district

court's order of July 23, 1998 and reinstate the original jury

verdict of $5,000,000.

I.

On February 26, 1993 Tri County obtained a building

permit from the District authorizing conversion of an empty

warehouse into a facility for its business of decontaminating

soil tainted with oil and other hazardous materials. While

securing the permit, Tri County also obtained an air quality

permit as well as a waiver of the required environmental

impact statement. Even several months after it obtained the

necessary permits, however, it had not begun operating due

to equipment delivery delays. On September 7 it received a

District citation for storing soil at the facility without the

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required certificate of occupancy.1 Tri County neither removed the soil nor paid the fine; consequently, the District

issued a stop-work order on September 22. Tri County did

not challenge the citation or order. Its failure to respond led

to an order by the District Department of Consumer and

Regulatory Affairs (DCRA) dated October 13, 1993 purporting to suspend Tri County's building permit.

The building permit had already been suspended on September 20, however, when, prompted by a groundswell of

community opposition to the project, Hampton Cross, acting

DCRA director, summarily suspended Tri County's building

permit. The DCRA sent Tri County a letter requesting

further information on October 15, 1993 to which Tri County

did not respond. On December 6 the DCRA sent another

letter, this time rescinding the environmental impact statement waiver and threatening imminent revocation proceedings on the building permit. Tri County's only response was

to remove the soil that had caused the initial citation. Tri

County's counsel advised it that an appeal likely would be

influenced by politics given the strong community opposition

and that he could not guarantee when such an appeal would

be heard. Given the high rental cost of the property in

question and the necessity of purchasing, without delay,

costly equipment in high demand, Tri County estimated the

costs of an appeal at nearly $1,000,000. With no assurance of

a prompt hearing and the prospect of a politically influenced

review process, Tri County abandoned its project.

Tri County brought suit under 42 U.S.C. s 1983 and succeeded in its challenge to the September 20 suspension of its

building permit when this court reversed the district court's

dismissal, holding that the suspension violated Tri County's

right to procedural due process. See Tri County Indus., 104

F.3d at 460-62. We remanded for consideration of damages.

__________

1 A certificate of occupancy is issued when renovation of a structure has been completed in conformity with the earlier application

for a building permit and the building is found to be in compliance

with applicable zoning regulations and the building code. See 12

DCMR s 118, 39 DCR 8711-12.

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See id. at 462. The subsequent proceedings in the district

court are at issue in this appeal.

The first trial began on April 14, 1998. Tri County presented evidence of its costs already incurred, evidence of lost

profits through the testimony of a mechanical engineer and

the report of an economist and evidence as to the local

market demand for a soil treatment facility through the

testimony of a geologist at an environmental consulting firm.

The District largely accepted the testimony, often failing to

object or seriously cross-examine. Instead, the District relied on its argument that Tri County failed to mitigate its

damages when it refused to provide the information the

DCRA requested and when it declined to challenge the stopwork and suspension orders. The District also sought to

demonstrate that Tri County might not have been allowed to

operate its facility because community opposition, arising

largely out of concern over the facility's effect on the health

and safety of the community, would derail the regulatory

procedures. Hindering its argument was the trial court's

exclusion or striking of evidence relating to health and safety

concerns. See Joint Appendix (JA) 186-89. The court found

the District's permitting process had resolved the issues as a

matter of law. See id. at 182-83, 189. In the end, the jury

awarded $5,000,000.

The trial court denied the District's post-trial motion for

judgment as a matter of law but granted the alternative

motion for a new trial, nisi remittitur to $1,000,000. Addressing the District's primary argument, the court ruled that

the District had to establish both the standard for reasonable

mitigation under the circumstances and that Tri County failed

to meet it. The District failed to sustain that burden, particularly in light of Tri County's evidence that it would have to

spend nearly $1,000,000 to recoup its expenses of $536,421.

The court reversed field, however, in reviewing the award for

future damages which, assuming the $536,421 in costs were

awarded, constituted $4,463,579 of the $11,628,174 figure Tri

County presented to the jury. Emphasizing that Tri County

did not "invest[ ] a penny to seek reinstatement of the

unlawfully suspended building permit," the court ruled that

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the District need not have established a reasonableness standard because Tri County's failure to mitigate was unreasonable per se. District Court's Memorandum Order filed July

23, 1998 (Memorandum Order), at 2. The court also found

the lost profits evidence should not have been considered by

the jury without the District having the chance to prove that

the facility might not have been allowed to operate. Accordingly, the court found the estimate of lost profits "too speculative and remote" and, in any event, found the award "grossly

excessive." Id.

Tri County declined the $1,000,000 remittitur and a second

trial commenced on January 29, 1999. In this trial, the

district court allowed the District to admit the health and

safety evidence originally excluded. This time the District

challenged Tri County's experts and offered the testimony of

three new witnesses, one of whom refuted Tri County's

estimate of future profits. Another witness discussed a potential zoning bar to the facility and the third discussed

health and safety hazards associated with soil remediation.

The second jury awarded Tri County nominal damages of

$100.

II.

We review the district court's grant of a new trial for abuse

of discretion. See Langevine v. District of Columbia, 106

F.3d 1018, 1023 (D.C. Cir. 1997) (citing Hutchinson v. Stuckey, 952 F.2d 1418, 1420-21 (D.C. Cir. 1992)). "[A] more

searching inquiry is required" if the new trial is granted than

if denied, however, because of "the concern that a judge's

nullification of the jury's verdict may encroach on the jury's

important fact-finding function." Id. at 1023 (quoting Vander

Zee v. Karabatsos, 589 F.2d 723, 729 (D.C. Cir. 1978)).

In its post trial order, the trial court stated three reasons

for granting a new trial: (1) Tri County's failure to mitigate;

(2) the speculativeness in Tri County's projections of future

profits; and (3) the "grossly excessive" jury verdict. Memorandum Order at 2. The court also thought it had erred in its

evidentiary rulings excluding evidence related to community

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opposition to the project. See Memorandum Order at 2

(plaintiff's expert testimony should not have been received

"without allowing [the District] to adduce proof that plaintiff's

soil remediation facility would never have been permitted to

operate"). Tri County challenges each ground.

First, the court found Tri County's failure to expend any

resources to seek reinstatement of its building permit per se

unreasonable in light of the $11,628,174 it claimed in lost

profits. See id. Tri County contends that the determination

of whether a party satisfied its duty to mitigate, a question

that turns on what action was reasonable under the circumstances, see, e.g., Berger v. Iron Workers Reinforced Rodmen,

Local 201, 170 F.3d 1111 (D.C. Cir. 1999); Lennon v. United

States Theatre Corp., 920 F.2d 996 (D.C. Cir. 1990), is a jury

question. Here, we agree with Tri County that its alleged

failure to mitigate was an issue properly submitted to the

jury. See Hilord Chem. Corp. v. Ricoh Elecs., Inc., 875 F.2d

32, 38-39 (2d Cir. 1989); Waldorf v. Shuta, 142 F.3d 601, 623-

24 (3d Cir. 1998). Moreover, failure to mitigate is an affirmative defense and the party asserting it bears the burden of

demonstrating the opposing party's failure to act reasonably

under the circumstances. See Lennon, 920 F.2d at 1000; see

also Mark Keshishian & Sons, Inc. v. Washington Square,

Inc., 414 A.2d 834, 842 n.19 (D.C. 1980) (burden of showing

mitigation is on party raising issue) (citing Camalier &

Buckley-Madison, Inc. v. Madison Hotel, Inc., 513 F.2d 407,

419-20 n.92 (D.C. Cir. 1975)).

Tri County created a jury issue when it offered an explanation for its failure to challenge the DCRA's suspension order

or otherwise pursue administrative remedies. Its explanation

included evidence that it believed suggested the reviewing

body, the District's Board of Appeals and Review, might not

have acted impartially due to political influence and that an

appeal would have been indefinitely slow and expensive.2

__________

2 Tri County's lawyer (in 1993) testified that Cross told him that

the Board of Appeals and Review would act at the direction of the

District's Mayor and the Mayor's chief of staff. Tri County introduced Cross's deposition testimony indicating he had met with the

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Moreover, a jury justifiably could have found it reasonable for

Tri County not to contest the September 22 stop-work order

and subsequent suspension resulting from the failure to pay

the fine given the pre-existing September 20 suspension.

The District argues simply that the evidence it presented

regarding Tri County's failure to mitigate "was firmer by

far." Brief of Appellee at 30. Tri County responds that it is

improper to now assess the relative strength of the parties'

showings. Indeed, the trial court properly gave the failure to

mitigate issue to the jury and properly instructed the jury on

that issue:

[T]he law requires that an injured party take all the

reasonable steps it can to avoid further injury and reduce

its loss. Tri County may not recover damages for any

portion of its injury which it could have avoided through

the exercise of reasonable care and prudence.... The

District asserts that Tri County by failing to pay the

$500 fine ... and by failing to appeal the stop work

order, is not entitled to any damages.

JA 193. Thus, to the extent the district court based its new

trial decision on the mitigation issue, it abused its discretion

in declaring ex post that Tri County's failure to pursue

administrative remedies to reinstate its permit was per se

unreasonable, thereby withdrawing the mitigation issue from

the jury. See generally Tatum v. Morton, 562 F.2d 1279,

1283 (D.C. Cir. 1977) ("[T]he district court's per se approach

of imposing an absolute duty to mitigate was not sound.").

The trial court also found that Tri County's evidence of lost

profits was "too speculative and remote" and that the award

of less than half of the amount Tri County estimated was

"grossly excessive." Memorandum Order at 2. Where, as

here, the fact of injury has been established and the defendant's action (suspension of the building permit) affected the

plaintiff's ability to present actual revenue and cost figures to

__________

Mayor and members of the community opposition following the

suspension of the permit. Tri County's lawyer also testified that it

would have taken eight to twelve months to resolve the matter

administratively. JA 76-77.

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support a lost profits projection, the applicable standard for

proving lost profits damages is the one this court enunciated

in Samaritan Inns, Inc. v. District of Columbia, 114 F.3d

1227 (D.C. Cir. 1997):

Where the tort itself is of such a nature as to preclude

the ascertainment of the amount of damages with certainty, it would be a perversion of fundamental principles

of justice to deny all relief to the injured person.... In

such case, while the damages may not be determined by

mere speculation or guess, it will be enough if the

evidence show the extent of the damages as a matter of

just and reasonable inference, although the result be only

approximate. Thus, while a plaintiff seeking to recover

lost profits must ordinarily prove the fact of injury with

reasonable certainty, proof of the amount of damages

may be based on a reasonable estimate. Although a

court will not permit a plaintiff to recover damages based

on "mere speculation or guess," the fact that an estimate

is uncertain or inexact will not defeat recovery....

114 F.3d at 1234-35 (quoting Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931)) (citations

omitted).

Tri County produced evidence indicating it sustained lost

profits of $11,628,174. The evidence included the testimony

of eight witnesses3 and ranged from projections of tons of

contaminated soil the facility would treat per hour and the

number of hours it would operate per day to estimates of

equipment and labor costs. With expert testimony regarding

the accessible market for soil remediation and a comparison

of service rates for similar operations, an economist projected

the profitability of Tri County's facility. Their respective

opinions were left largely unchallenged by the District. Regardless whether the estimates were on the high end, that is,

__________

3 The witnesses included its President, Glenn Selzer, its Vice

President and its CPA. In addition, a chemical engineer, a remediation expert, a financial economist, a mechanical engineer and an

expert in soil remediation testified as to Tri County's costs and lost

profits.

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"uncertain or inexact," Samaritan Inns, 114 F.3d at 1235,

they were sufficiently well-founded to avoid characterization

as "mere speculation or guess." Id.

Moreover, we question the trial court's finding that the

award "shock[ed] the judicial conscience." Memorandum Order at 2. Tri County presented evidence that its costs

amounted to $536,421 and its lost profits amounted to

$11,628,174. The jury awarded $5,000,000, less than half of

the total amount claimed and, for that matter, less than half

of the future profits estimate standing alone. The award was

within the "reasonable range within which the jury may

properly operate." Langevine, 106 F.3d at 1024.

As demonstrated above, the trial court tried to cover all

bases in its order granting a new trial but the order reveals

that the court's real concern was its exclusion of evidence

regarding health and safety issues which may have led to

community resistance and, perhaps, regulatory barriers to Tri

County's project. For example, while declaring the award

grossly excessive, the district court expressed its dissatisfaction with its original evidentiary rulings:

[T]he jury's award ... shocks the judicial conscience,

particularly in view of the realistic prospect, which I did

not permit defendants to prove at trial, that there would

be continued community resistance to increased dump

truck traffic ... and a very real likelihood that the

District of Columbia would have closed down the remediation facility ... or that it never would have been

permitted to commence operations at all.

Memorandum Order at 2-3; see also id. at 2 (plaintiff's

expert testimony should not have been received "without

allowing [the District] to adduce proof that plaintiff's soil

remediation facility would never have been permitted to

operate").

In the excerpt above, the district court alluded to the

District's argument under Carey v. Piphus, 435 U.S. 247,

266-67 (1978), that a plaintiff who suffers a procedural due

process violation is entitled only to nominal damages if he

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would have suffered the same "injury" absent the violation.

Thus, the District argues that here the procedural violation

caused no compensable injury because the action taken, suspension of the permit, was justified even if improperly executed. The District claimed that Tri County's damages were

minimal because the facility either would not have become

operational or would not have been operational for long due

to community resistance.

The trial court excluded the District's health and safety

evidence under Rule 403 and determined that the permitting

process disposed of these issues as a matter of law. See JA

178, 189. The District argues that the evidentiary rulings

practically negated its argument under Carey that the project

would have been halted anyway. Despite its reliance on this

argument, the District never met the trial court's repeated

injunction to show how the health and safety issue would have

triggered additional regulatory procedures or otherwise allowed the District to rescind its earlier approval. See JA 172;

see also id. at 168-69, 172-75, 186-87. In short, the District

failed to show that community concern would be brought to

bear on Tri County's operation, specifically through the regulatory process. Accordingly, the district court did not abuse

its discretion in excluding the evidence. In light of our

findings that Tri County's evidence was properly before the

jury and the District's evidence was properly excluded, we

conclude that the district court, in granting a new trial based

on a revised view of its original rulings, did abuse its discretion.4 See Langevine, 106 F.3d at 1023 (a "more searching

inquiry" is particularly necessary "when the motion [for new

trial] is granted on the ground that the verdict is against the

weight of the evidence").

For the foregoing reasons, we reverse the district court's

order of July 23, 1998 and reinstate the original jury verdict of

$5,000,000, with interest pursuant to 28 U.S.C. s 1961. The interest shall be

calculated at a rate of 5.391% per annum, beginning on April 20,

1998, and computed daily until the date of payment. See 28 U.S.C.A. s 1961

(West 1994 & Supp. 2000). We vacate the verdict and judgment resulting

from the second trial.

So ordered.

__________

4 In light of our holding, we need not reach Tri County's alternative grounds for reversal based on the second trial.

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