FI LED U. S . COURT OF AP PE ALS E L E V E N T H C IR C U IT D e c e m be r 21, 2006 T HOM AS K. KAHN CL E RK

Honora ble Lyle E. Strom, United States District Judg e for the District of Nebraska , * sitti ngby designation. [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 05- 16065

________________________ D. C . Do c k e tNo . 8 8 - 1 0 1 7 2 - C V- 1 - MM P - AK G I L C H R I S T T I M B E R C O M P A N Y , a P a r tn e r s h ip , P la in tif f - A p p e lla n t, v ersu s I T T R A Y O N I E R I N C O R P O R A T E D , a D e la w a r e C o rp o r a tio n , N A T U R A L R E S O U R C E P L A N N I N G S E R V I C E S I N C ., a F lo r id a C o rp o r a tio n , A N D R E W V . S A N T A N G I N I , J R ., a n in d iv id u a l, D e f e n d a n ts - A p p e lle e s .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe N or the r n D i s tr i c tof F l or i da

_________________________ ( D e c e m b e r 21, 2006) B ef ore A N D E R S O N and B A R K E T T , C i rc ui tJudg es , and S T R O M , D i stri ct * Judg e.Although this ca se has a lengthy proce dural history

—spanningnearly

twenty year s of 1 litigation in federal c ourt—only a brie f summary

of the salient f

acts is nec essar

y to dispose of the issue pre sented in this appeal. 2 P E R C U R I A M: G i l chri stT i m ber C om pany (“ G i l chri stT i m ber” ) app ea l s f rom an order denyi ng the aw ar d o f pre j ud gm enti nt er es ton i t s j ud gm entagai nstIT T R ay on i er , I nc . ( “ R a y oni e r ” ) , on i t s c l a i m s of ne gl i ge ntr e pr e s e nt a t i on i n c onne c t i on w i th a p u r c h a s e o f

la n d in G ilc h r is t C o u n ty . B e c a u s e th e d is tr ic t c o u r t e r r e d in c o n c l u d i n g th a tp r e

j u d g m e n ti n t e r e s twa s n o ta v a i l a b l e a s a m a t t e ro f l a w, we r e ve r s e a nd r e m a nd f

orf ur the rpr oc e e di ngs c ons i s t e ntw i th thi s opi ni on.

I . B a c kgr ound 1 T hi s a c t i on a r os e outof G i l c hr i s tT i m be r ’ s pur c ha s e of 22, 000 a c r e s of

l a nd f r om R a y oni e r , pa r tof

w hi c h G i l c hr i s tT i m be ri nt e nde d t o s e l l f orf a r m i ng or resi d en t i al d ev el o p m en t . P ri o r t o th e p u rch ase, R ayo n i er p ro v i d ed G i l ch ri st T i m ber w i th w ri t t en m at er i al s on t he l and, i ncl ud i ng a thi rd-par ty app ra i sa l s how i ng tha ta l l 22, 000 a c r e s w e r e z one d f ora gr i c ul tur a l us e , a nd a l s o a l l ow e d f or r e s id e n tia l u s e . A f

te rp u r c h a s in g th e la n d , G ilc h r is t T im b e rd is c o v e r e d th a t, in f a c t, 1 6 ,0 0 0 o f

th e a c r e s it p u r c h a s e d w e r e z o n e d f o rp r e s e r v a tio n , a n d th a t o n ly 6 , 0 0 0 acres w ere zo n ed ag ri cu l tu ral . G i l ch ri stT i m b er su ed , an d th e case proceeded t o t ri al on i t s c l ai m for negl i gentm i sr epre se nt at i on . T he j ury w as3

i n stru ct ed o n d am ag es as fo l l o w s: N ow y ou s houl d c ons i de rthe f ol l ow i ng e l e m e nt s of

da m a ge s tha ty ou fi n d p ro v ed b y a p rep o n d eran ce o f th e ev i d en ce an d n o o th er; th ati s, the di f f e r e nc e , i f a ny , be tw e e n w ha ty ou f i nd t o ha ve be e n the va l ue of the subj ec tre al prop er ty a s of the dat e of the tra nsac t i on , w hi ch w as O ct ob er24 , 19 85 , had t he ent i re tra ctbeen zoned A -1 agri cul tural di s tr i c tunde rthe G i l c hr i s tC ounty , F l or i da , z oni ng or di na nc e s , a nd w ha ty ou f

i nd t o ha ve be e n the va l ue of the s ubj e c tr e a l pr ope r ty on th e d a te o f

th e tr a n s a c tio n , w h ic h w a s O c to b e r2 4 , 1 9 8 5 , a s it w a s in real i ty zo n ed u n d er t h e G i l ch ri stC o u n ty, F l o ri d a, zo n i n g o rd i n an ces, w hi c h w a s tha ta ppr oxi m a t e l y 6, 000 a c r e s w e r e z one d A - 1, a gr i c ul tur a l , a nd a ppr oxi m a t e l y 16, 000 a c r e s z one d P - 1, pr e s e r va t i on. T he j ury f

ou nd i n favor of G i l chri stT i m ber, and d et er m i ned t hati thad suffe re d dam ages i n t he am ou ntof $1 , 67 6, 50 0. H ow ever , the di stri ctcourtgrant ed j ud gm entno tw i thst andi ng the verdi cti n favor of R ay on i er . O n app ea l , thi s C ou rt re vers ed and sust ai ned t he j ury ver di ctand d am ages aw ar d. S ee G i l chri stT i m ber C o. v. IT T R ay on i er , Inc. , 12 7 F . 3d 13 90 (11t h C i r. 19 97 ). W e r em anded t he ca se , h o w e v e r , f

o rc o n s id e r a tio n o f

th e r e la tiv e n e g lig e n c e o f th e p a r tie s . O n rem and, a s ec on d j ury det er m i ned t hatR ay on i erw as 67 % atfa ul t ; that G i l chri stT i m ber w as 33 % atfa ul t ; and t hatthe thi rty- party app ra i se rs w er e notat f a ul t . T he di s tr i c tc our te nt e r e d f i na l j udgm e nti n f

a vorof G i l c hr i s tT i m be ra nd agai nstR ay on i erfor 67% of $1 , 67 6, 50 0, pl us po st -j ud gm enti nt er es t , nu nc pro tu n c to th e ju ry v er d ict. T h e d istrict co u rt, h o w ev er , d en ied G il ch rist T im b er ’s re qu es tfor a n aw ar d o f pre j ud gm enti nt er es tun der F l ori da l aw . G i l chri stT i m berWe reviewthe district court’s denial of pre judgment interest for a

buse of discretion. 2 B la s la n d , B o u c k

&L e e , In c . v . Ci ty

o f N o rth M ia mi , 2 8 3 F . 3 d

1 2 8 6 ( 1 1 th

Ci r . 2 0 0 2 ) . We revie w the district cour

t’s deter mination of Florida la

w de novo. Salve Re g ina Colleg e v. Russell, 499 U.S. 225 (1991). 4 now a ppe a l s tha trul i ng. 2 I I . D i s c us s i on U nde rF l or i da l a w , “ pr e j udgm e nti nt e r e s ti s m e r e l y a nothe re l e m e ntof pecuni ary dam ages [, ] ” t o b e a w ar ded “ fr om the dat e of l oss once a fi nd erof fa ct has det er m i ned t he am ou ntof dam ages and d ef endant ’ s l i abi l i ty there for. ” A r gona utI ns . C o. v. M a y P l um bi ng C o. , 474 S o. 2d 212, 215 ( F l a . 1985) ; s e e a l s o I n s u r a n c e C o . o f

N o r th A m e r ic a v . L e x o w , 9 3 7 F .2 d 5 6 9 , 5 7 1 - 7 3 ( 1 1 th C ir . 1 9 9 1 ) .

“ U nde rthe ‘ l os s the or y , ’ . . . ne i the rthe m e r i tof the de f e ns e northe c e r t a i nty of th e a m o u n t o f

lo s s a f f e c ts th e a w a r d o f

p r e ju d g m e n t in te r e s t. R a th e r , th e lo s s its e lf is a w r o n g f

u l d e p r iv a tio n b y th e d e f e n d a n t o f th e p la in tif

f 's p r o p e r ty .” A r g o n a u t, 474 S o. 2d a t215. A l tho ug h p re

j ud gm enti nt er es ti s gener al l y a vai l abl e und erF l ori da l aw , t ort c l a i m s t e nd t o be e xc l ude d “ pr i m a r i l y be c a us e t or tda m a ge s a r e ge ne r a l l y t oo s pe c ul a t i ve t o l i qui da t e be f or e f i na l j udgm e nt . ” L um be r m e ns M ut . C a s . C o. v. P e r c e f ul l , 653 S o. 2d 389, 390 ( F l a . 1995) ; A m e r a c e C orp v. S t a l l i ngs , 823 S o. 2d 1 1 0 , 1 1 2 - 1 3 ( F la . 2 0 0 2 ) . H o w e v e r , e v e n in to r t a c tio n s p la in tif f s a r e e n title d to re cover prej ud gm enti nt er es t“ w hen a verdi ctl i qu i dat es dam ages on [thei r]The e videnceat trial showed that Gilchrist Timber ultimately sold the land and timber 3 for a profit of a

bout $2.5 mill ion. 5 out - of - poc ke t , pe c uni a r y l os s e s [ . ] ” A r gona ut , 474 S o. 2d a t215 ( a w a r di ng pr e j udgm e nti nt e r e s ti n s ubr oga t i on a c t i on t o r e c ove rm oni e s pa i d f orne gl i ge nt pr ope r ty l os s ) ; s e e a l s o A m e r a c e , 823 S o. 2d a t113 ( hol di ng tha t , a l though

“ dam ages i n p er sonal i nj ury c as es ar e t oo spec ul at i ve t o l i qu i dat e bef ore f i nal j udgm e nt [ , ] ” the r e i s a n e xc e pt i on t o thi s rul e “ i f the pl a i nt i f

f c a n e s t a bl i s h tha the ors he ha s s uf

f e r e d the l os s of

a ve s t e d pr ope r ty r i ght . ” ) ; B e r ge n B runs w i g C orp. v. St a t e , D e p t . o f

H e a l th a n d Re h a b i l i t a t i v e Se r v s . , 4 1 5 So . 2 d 7 6 5 ( Fl a . 1 s tD CA 19 82 ) ( re vers i ng deni al of prej ud gm enti nt er es ti n an act i on for c on vers i on w here the j ur y ve r di c tf

i xe d da m a ge s a s of

a pr i orda t e ; a ppr oa c h e xpr e s s l y a dopt e d by F l ori da S up re m e C ou rti n A rgon aut ). H e r e , the di s tr i c tc our tde ni e d G i l c hr i s tT i m be r ’ s m ot i on f orpr e j udgm e nt i nt er es ton the basi s thati t s dam ages w er e “ t oo spec ul at i ve t o l i qu i dat e bef ore f i nal j udgm e nt . ” T he c our tr e l i e d on the f a c ttha tG i l c hr i s tT i m be re nga ge d i n “ va r i ous s tr a t e gi e s ” t o s e l l the l a nd a f t e r1985 a nd “ a c tua l l y m a de a pr of i tf r om the tra nsac t i on s. ” O bser vi ng thati tw ou l d b e “ extre m el y di ff i cul tt o p i np oi ntw hen 3 the l oss of i ncre as ed profi t s” occurre d, the courtconcl ud ed thatG i l chri stT i m ber had n ot“ suff

er ed ‘ ou t -of- po cket , pecuni ary l osse s’ thatca n b e quant i fi ed and set f ora da t e c e r t a i n. ” G i l c hr i s tT i m be ra r gue s tha tthe di s tr i c tc our t ’ s i nt e rpr e t a t i onSee, e.g ., Checke rs Drive -In Restaura nts, Inc. v. Tampa Checkmate Food Ser vices, 805 4 So. 2d 94 1 ( F la . 2 d D CA20 01 ) (reve rs ingawa rd of pre judgme nt intere st f

or los t prof its anticipated over a twenty

year span bec ause thedamag es we re not liquidated until the jury verdic t). 6 and app l i ca t i on of F l ori da l aw w er e e rr on eous because the j ury ver di ctl i qu i dat ed its d a m a g e s a s o f

th e p u r c h a s e d a te , O c to b e r2 4 , 1 9 8 5 . W e a g r e e . In th i s case, th e j u ry w as i n stru ct ed t o cal cu l at e n o tth e ex t en to f G i l ch ri st T i m b er’ s lo s t p r o

fits , w hi c h a r gua bl y w oul d ha ve be e n s pe c ul a t i ve , butr a the rthe 4 di f f e r e nc e be tw e e n the va l ue of the l a nd a s a c tua l l y z one d a nd the va l ue of the l a nd a s r e p r e s e n te d a t th e tim e o f s a le o n O c to b e r2 4 , 1 9 8 5 . T h e ju r y ’s v e r d ic t, there fore , l i qu i dat ed as ce rt ai nabl e, pecuni ary dam ages as of a dat e c er t ai n: an ove rpa y m e ntof

$1, 676, 500. 00 on O c t obe r24, 1985 ba s e d on the m is r e p r e s e n ta tio n s a s to th e la n d ’s z o n in g . C o n s e q u e n tly , th e g e n e r a l ru le p recl u d i n g th e aw ard o f p rej u d g m en ti n t eresti n t o rtcases d o es n o tap p l y. R ay on i erar gu es thatbeca use G i l chri stT i m ber procee ded o n a “ benefi t -ofth e-b arg ai n ” th eo ry o f reco v ery attri al , i tcan n o tn o w cl ai m “ o u t -o f-p o ck etl o sses” for the pu rpose of s ec uri ng prej ud gm enti nt er es t . R ay on i erhas not , ho w ever , ci t ed any a ut ho ri ty ( and w e a re aw ar e of non e) for the prop osi t i on thata par ty’ s theory of r e c ove r y a ttr i a l , a l one , c ontr ol s w he the rtha tpa r ty i s e nt i t l e d t o pr e j udgm e nt in te r e s t. M or e ove r , w e a r e pe r s ua de d tha ti n thi s c a s e , the the or y of r e c ove r y m a de no“Out-of -pocke t loss” is defined as “ [t ]he difference be tween thevalue of what the buyer 5 paid and the ma

rket value of what was re ceive d in return.”Bla ck’s L aw Dic tionary 957 (7th ed. 1999). The “benef

it-of-the- barg ain rule”is “[t] he princ iple that a def raude d buyer ma

y rec over from the se ller as da

mag es the diff

erence be tween themisrepre sented value of the property and the ac tual value rece ived.” I d. at 151-52. In this case, under either theory , the ef

fec t is the same: Gilchrist Timber suff

ere d a pecuniary

loss by paying ( out of pocke t) more than thevalue of what it rece ived in return. 7 d i f f e r e n c e , b e c a u s e Gi l c h r i s tT i m b e rs u f f e r e d a n a c tu a l , o u t - o f

- p o c k e tl o s s . On

5 O ct ob er24 , 19 85 , G i l chri stT i m ber purchase d l and for $1 , 67 6, 50 0. 00 m ore than w h a t it w a s w o r th . A s o f th a t d a te , th e n , G ilc h r is t T im b e rw a s o u t ( o f p o c k e t) $ 1 , 6 7 6 , 5 0 0 . 0 0 . S o l o n g as th e ad d i t i o n al m o n ey w as i n R ayo n i er’ s h an d s, G i l ch ri st T i m be rl os tthe i nt e r e s ti tw oul d ha ve e a r ne d on i t . S e e V e nn v. S t . P a ul F i r e a nd M ari n e In s. C o . , 9 9 F . 3 d 1 0 5 8 , 1 0 6 7 (1 1 th C i r. 1 9 9 6 ) (F l o ri d a’ s “ l o ss th eo ry” r e c ogni z e s tha t“ i nt e r e s ti s the na tur a l f rui tof m one y . ” ) ( c i t i ng A r gona ut , 474 S o. 2d at21 4 (qu ot i ng S ul l i van v . M cM i l l an, 19 S o. 34 0 (F l a. 18 96 )) ). U nd er F l or i da l a w , “ the l os s i t s e l f i s a w r ongf

ul de pr i va t i on by the de f e nda ntof the pl a i nt i f f’ s pr ope r ty . ” A r gona ut , 474 S o. 2d a t215; s e e a l s o L e xow , 937 F . 2d 569, 571- 72 ( di s c us s i ng A r gona ut ) . T ha tG i l c hr i s tT i m be rul t i m a t e l y m a de a pr of i ton th e s a le o f

th e la n d is o f

n o m o m e n t. P r e s u m a b ly , h a d th e m is r e p r e s e n ta tio n s in the a ppr a i s a l notbe e n m a de , G i l c hr i s tT i m be rw oul d ha ve pa i d l e s s f orthe l a nd ( r e t a i ni ng the $1, 676, 500. 00) a nd c oul d ha ve s t i l l m a de the s a m e pr of i t s f r om the sa l e of the l and and i t s t i m ber. R a y oni e r ’ s r e l i a nc e on A l va r a do v. R i c e , 614 S o. 2d 498 ( F l a . 1993) , f orthe8

prop osi t i on thatG i l chri stT i m ber s uffe re d n o o ut -of- po cketl oss, i s m i spl ac ed. In A l va r a do, the F l or i da S upr e m e C our the l d tha tpr e j udgm e nti nt e r e s tw a s not a va i l a bl e i n a pe r s ona l i nj ur y a c t i on on a n a w a r d f orm e di c a l e xpe ns e s , w he r e the pl a i nt i f f ha d notpa i d the out s t a ndi ng m e di c a l bi l l s orbe e n c ha r ge d i nt e r e s ton them . T he courtre as on ed that“ A l vara do has notsuff er ed the l oss of a vest ed p r o p e r ty r ig h t. S h e w a s n o t f o r c e d to u s e h e rp r iv a te f u n d s to p a y m e d ic a l b ills i ncurred as a r es ul tof [the defendant ’ s] negl i gence. ” I d. at49 9. T he courtfurther foun d t hat“ [h] ad A l vara do ac tual l y pai d h erm edi ca l bi l l s w hen t hey bec am e due, s he w oul d be s uf

f e r i ng the l os s of

a ve s t e d pr ope r ty r i ghtbe c a us e s he w oul d be deni ed the use of her mo ney. ” I d. at49 9-50 0. H er e, there ca n b e no d i sput e that G ilc h r is t T im b e ro v e rp a id f o rth e la n d , a n d s o s u f

f e r e d th e lo s s o f

a v e s te d p r o p e r ty r ig h t b e c a u s e it d id n o t h a v e u s e o f th e m o n e y w h ic h c o n s titu te d th e o v e rp a y m e n t. T hi s c a s e i s a l s o di s t i ngui s ha bl e f r om N a t i ona l R . R . P a s s e nge rC orp. v. R ou nt re e T ra nspo rtand R i gg i ng , Inc. , 28 6 F . 3d 12 33 (11t h C i r. 20 02 ), on w hi ch R a y o n ie rr e lie s . I n R o u n tr e e , a n in s u r e rs o u g h t to r e c o v e rth e a m o u n t it p a id its i nsured on a c l ai m for property l oss a ri si ng fr om a tra i n col l i si on . T he dam aged pr ope r ty , a c us t om i z e d turbi ne e ngi ne , w a s the f i r s tof f or ty - f i ve c om pone nt s of e qui pm e nttha tw e r e t o be tr a ns por t e d t o a n e l e c tr i c pl a nt , a nd the onl y one i nv ol ved i n t he col l i si on . W hen t he i nsured fi l ed a c l ai m , the cl ai m s a dj ust er9

c a l c ul a t e d the l os s by t a ki ng the va l ue of the f or ty - f i ve c om pone nt s be f

or e the c ol l i s i on, a nd s ubtr a c t i ng the va l ue of the r e m a i ni ng f

or ty - f ourpi e c e s a f

t e rthe c ol l i s i on. I tba s e d i t s pa y m e ntt o i t s i ns ur e d on thi s f or m ul a . D ur i ng the tr i a l on da m a ge s , how e ve r , the di s tr i c tc our tr e j e c t e d the i ns ur e r ’ s a ppr oa c h, a nd di r e c t e d a ve r di c tba s e d on the e vi de nc e a s t o the va l ue of the e ngi ne , onl y , be f

or e the c o l l i s i o n , a n d i t s v a l u e a f t e rth e c o l l i s i o n ( wh e n i twa s s o l d a s s c r a p ) . T h e r e , we foun d t hatthe courtdi d n oterr w hen, appl yi ng F l ori da l aw , i tdeni ed the i nsurer pr e j udgm e nti nt e r e s ton thi s da m a ge a w a r d. W e c onc l ude d tha t“ [ t ] he r e w a s no easi l y ascert ai n ab l e, o u t -o f-p o ck etam o u n tth at[th e i n su rer] co u l d p o i n tt o as a di sposi t i ve m ea sure of [i t s i nsured’ s] l oss. Itfol l ow s the di stri ctcourtdi d n oterr i n tr e a t i ng the da m a ge s i nc ur r e d by [ the i ns ur e d] a s una s c e r t a i na bl e a nd s pe c ul a t i ve be f

or e the t i m e of

f i na l j udgm e nt , a nd thus i n r e f us i ng t o gr a nt p r e ju d g m e n t in te r e s t to [ th e in s u r e r ].” R o u n tr e e , 2 8 6 F .3 d a t 1 2 5 9 . A lth o u g h R a y o n ie rd is p u te s th a t G ilc h r is t s u f f e r e d a n o u t- o f

- p o c k e t lo s s , it has notpers uaded u s of thatpo si t i on i n l i gh tof the j ury i nstruct i on on the m ea sure of da m a ge s i n thi s c a s e . I nde e d, R a y oni e r ’ s a r gum e ntf oc us e s on the s pe c ul a t i ve n atu re o f G i l ch ri stT i m b er’ s lo s t p r o fits and w hati tbel i eves t o b e the i na dequ acy of the ev i dence t o s uppor tthe j ur y ’ s ve r di c t . I ti s undi s put e d, how e ve r , tha tthe q u e s tio n o f

lo s t p r o f its w a s n o t p u t b e f

o r e th e ju r y ; it is th e r e f

o r e n o t a t is s u e h e r e .See Gilchrist Timber, 127 F.3d at 1396 (reje ctingRayonier’s a rgument that the jury 6 could not rea sonably

have f ound that plaintiffs sustained the damag es aw arde d, and finding sufficie nt evidenceto sustain the jury ’s damag es aw ard) . 10 T o t he ext entthatR ay on i erse eks t o com pl ai n abo utthe m etho d b y w hi ch the j ury w a s a s ke d t o c a l c ul a t e da m a ge s , orthe s uf f i c i e nc y of

the e vi de nc e t o s uppor tthe j u r y ’ s d a m a g e a wa r d , th o s e q u e s t i o n s t o o a r e n o tb e f o r e u s n o w. 6 R a y oni e ra r gue s tha tthe di s tr i c tc our t ’ s rul i ng s houl d ne ve r the l e s s be a f f i r m e d be c a us e the a w a r d of pr e j udgm e nti nt e r e s ti s w i thi n the c our t ’ s di s c r e t i on, and t he equi t i es w ei gh agai nstaw ar di ng i ti n t hi s c as e. Iti s c l ea r f rom the di stri ct court ’ s order , ho w ever , thati t s deni al of prej ud gm enti nt er es tw as base d o n an e r r o ro f la w , n o t th e e x e r c is e o f d is c r e tio n . R E V E R S E D A N D R E M A N D E D f o rf u r th e rp r o c e e d in g s c o n s is te n t w ith thi s opi ni on.