# U ni te d S ta te s Co ur t of A pp ea ls
For the Eig hth Circu it

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No. 1 3- 18 43

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Grah am Co ns tru ct io n S erv ic es , Inc

.

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.

Ham m er & St eel Inc

.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll an t

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No. 1 3- 19 06

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Grah am Co ns tru ct io n S erv ic es , Inc

.

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el la nt

v.

Ham m er & St eel Inc

.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Eas te rn Dis tri ct of M is so ur i - St . Lou is

__ __ __ __ __ __

Su bm it te d: Jan ua ry

14 , 20 14 Fil ed : J un e 1 3, 2 01 4

__ __ __ __ __ __Befo re GRUENDER, BRIGHT, an d M ELLOY, Cir cu it Ju dg es

.

__ __ __ __ __ __ BRIGHT, Ci rcu it Ju dg e.

Thi s di sp ut e aro se be twee n th e le ss or of dr il li ng eq ui pm en t, Ham m er & St eel

, In c. (H&S)

, an d it s le s s e e , Grah am Co ns tru ct io n Serv ic es , In c. (Grah am ), ov er th e le as e of dr il li ng eq ui pm en t fo r th e co ns tru ct io n of a n u n d e r g r ou nd wate r sh aft

. As

a res ul t of th e un sa ti sf

act or y pe rfo rm an ce of th e eq ui pm en t, Grah am br ou gh t se ve ral

cl ai m s fo r da m ag es ag ai ns t H&S. H&S fil ed co un te rcl ai m s se ek in g cert ai n da m ag es

no t pa id un de r th e le as e, as well as th e va lu e of an au ge r th at was l o s t d u rin g th e dr il li ng pr oc es s. The jur y a w a r d e d Grah am $4 20 ,19 4.4 0 in eco no m ic lo ss es on it s

ne gl ig en t m is rep res en ta ti on cla im . As to th e co un te rcl ai m s, t he jury award ed H&S $1 97 ,23 8 fo r br each of co nt ract pl us an award m ad e by th e d is tri ct co ur t of an ad di ti on al $5 2,3 87 fo r th e va lu e of th e lo st au ge r. H&S app eal s th e jury’ s award to
Grah am on th e gr ou nd th at it is ba rred by th e eco no m ic lo ss d oc tri ne

. Grah am

ap pe al s th e di st ric t co ur t’s award of th e va lu e o f t h e a ug er as well as th e di st ric t

co ur t’s refu sa l to s u b m it Grah am ’s de fen se s to th e jury. Hav in g juri sd ic ti on un de r
28 U.S.C. § 12 91

, we (1 ) va cat e th e jury award of $4 20 ,19 4.4 0 fo r ne gl ig e n t

m is rep res en t a t io n in fav or of Grah am an d en te r jud gm en t in fav or of H&S on th at
cl ai m an d (2) vac at e bo th th e jury award of $1 97 ,23 8 in fav or of H&S on it s brea ch

of co nt ract cl ai m an d th e di st ric t co ur t’s awar d o f $5 2,3 87 in fav or of H& S fo r lo ss of th e au ge r an d re m an d fo r a n ew tr ia l o n d am ag es as t o t ho se cla im s.

I. Ba ck gr ou nd
Grah am is a co nt ract or lo cat ed in Eag an , Mi nn es ot a. In Aug us t 20 09

, Grah am ob ta in ed in fo rm at io n to bi d fo r th e co ns tru ct io n of a raw wate r in ta ke st ru ct ur e (“ th e

pr ojec t” ) fo r th e ci ty of Pars ha ll

, Nor th Dak ot a. The pr ojec t req ui red th e co ns tru ct io n of an un de rg ro un d sh aft fo r a wate r st or ag e un it

, whi ch in tu rn req ui red dr il li ng a 96

- fo ot -d eep , 14 -fo ot -wid e sh aft an d l in in g i t wi th co nc ret e.

-2

-If Grah am rece iv ed th e bi d, it in te nd ed to ex ecu te th e dr il li ng it se lf. Howev er,

be cau se Grah am di d no t ha ve th e req ui si te eq ui pm en t, Gra h am ’s se ni or pr ojec t

m an ag er, Qui nt McDe rm an d

, co nt act ed Tod d Max a, a sa le sp ers on fo r H&S, ab ou t
le as in g dr il li ng eq ui pm en t. Acco rd in g to McDe rm an d, Max a rep res en te d th at H&S

“ co ul d p r o v i d e a d r i ll rig to do th e job .” Alt ho ug h Grah am di d no t win th e bi d, it

su bc on tra ct ed wit h th e win ni ng bi dd er to pe rfo rm th e pr ojec t fo r a r e d u c e d p r i ce. Grah am ’s su bc on tra ct was ba se d on it s or ig in al e s ti m at e of th e pr ojec t co st
, whi ch

to ok in to acco un t t he pri ce t ha t H&S ha d p ro vi de d fo r le as in g t he eq ui pm en t.

In Sep te m

be r 20 09

, Grah am m et wit h an en gi ne er to de si gn a dr il l pl at fo rm at
th e pr ojec t si te

. Max a at te nd ed th e m eet in g to pr ov id e in fo rm at io n reg ard in g th e dr il l

th at Grah am ha d sel ect ed —t he SANY SR 25 0. So on th erea fte r, H&S s en t Gra ha m th e ren ta l ag reem en t fo r t he SANY S R 25 0 dr il l an d a 60 -in ch au ge r. McDe rm an d

la te r te st ifi ed th at he si gn ed th e le as e ag reem en t bu t di d no t read th e fin e pr in t
be cau se he was co nf

id en t t ha t H&S was pr ov id in g ap pr op ria te eq ui pm en t fo r th e

pr ojec t. The ag reem en t in cl ud ed cl au se s un de r whi ch Grah am “ ack no wled ge [d ] th at [it ] ha s se le ct ed th e eq ui pm en t

. . . b as ed en ti rel y an d so le ly o n [it s] ju dg m en t” an d

ag reed th at it “ is no t rel y in g on [H&S] reg ard in g pr op er us e of th is eq ui pm en t or in st al la ti on or r em ov al tec hn iq ue s.”

Grah am en co un te red se ve ral ob st acl es du rin g th e dr il li ng pr oc es s. In Ja nu ary
20 10

, a co m

po ne nt of th e dr il l cal le d th e “ Kell y ba r” br ok e, res ul ti ng in th e 60 -in ch

au ge r fal li ng to th e bo tt om of th e sh aft

. Des pi te th is se tb ack

, H&S co nf irmed th at th e dr il l was “ m or e th an en ou gh m ach in e” to co m pl et e th e pr ojec t. The Kell y ba r br ok e

on two m or e oc cas io ns whi le Grah am at te m pt ed to reco ve r th e au ge r fro m th e bo tt om of th e sh aft

. Afte r th e th ird br eak in Ju ly 20 10

, McDe rm an d se nt Ma xa an em ai l

st at in g hi s un de rs ta nd in g th at th e Kell y ba r co ul d no t wit hs ta nd th e to rq ue s an d

pr es su res req ui red to dr il l th e sh aft

. H&S arra ng ed fo r th e rem ov al of th e dr il l fro m

-3

-th e pr ojec t sit e. Grah am was fo rced to ab an do n th e sh aft

, lo cat e a rep la cem en t dr il l

rig , and red ril l a n ew sh aft

.

In Mar ch 20 12

, Grah am fil ed a n a m en de d co m pl ai nt ag ai ns t H&S al le gi ng

va rio us cau se s of act io n, in cl ud in g ne gl ig en t mi sr ep res en ta ti on

. H&S fil ed

co un te rcl ai m s as se rti ng (i) bre ach of c on tra ct , (ii ) un jus t en ric hm en t, (iii ) br each of

ex pr es s warra nt ie s, an d (iv ) a cl ai m fo r de li ve ry or th e va lu e o f th e lo st au ge r. Th e

pa rti es tri ed th e cl ai m s to a jury in Jan ua ry 20 13

. Afte r th e cl os e of ev id en ce, H&S

mo ve d fo r jud gm en t as a m at te r of la w (J MOL) un de r Fed

. R. Ci v. P. 50 (a ) o n i t s

co un te rcl ai m fo r br each of co nt ract a n d o n va rio us cl ai m s br ou gh t by Grah am , in cl ud in g ne gl ig en t m is rep res en ta ti on

. W it h res pe ct t o t he ne gl ig en t

m is rep res en ta ti on cl ai m , H&S arg ue d, in rel ev an t pa rt, th at Mi ss ou ri’s eco no m ic lo ss do ct rin e ba rred Grah am ’s reco ve ry on th at cl ai m

. Grah am al so m ov ed fo r JM OL on
H&S’s cl ai m s of un

jus t en ric hm en t, br each of ex pr es s warra nt ie s, an d th e va lu e of th e

au ge r. The d is tri ct co ur t d en ie d t he m ot io ns

.

The jury ret ur ne d a ve rd ic t in fav or of H&S fo r it s br each of co nt ract cl ai m in

th e am ou nt of $1 97 ,23 8 a nd in fav or of Grah am fo r it s ne gl ig en t m is rep res en ta ti on cl ai m in th e am ou nt of $ 42 0,1 94 .40

.

H&S su bs eq ue nt ly fil ed a m ot io n fo r po st -v erd ic t JM OL un de r Fed

. R. Ci v. P.

50 (b ) on Grah am ’s neg li ge nt m is rep res en ta ti on cla im

. H&S als o m ov ed for JM OL

on it s clai m fo r th e va lu e of th e au ge r. The d is tri ct co ur t g ran te d ju dg m en t i n fav or of H&S on it s clai m fo r th e va lu e of th e au ge r in th e am ou nt of $5 2,3 87

, bu t den ie d

H&S’s m ot io n fo r jud gm en t o n Gra ha m ’s neg li ge nt m is rep res en ta ti on cla im

.

Grah am m ov ed fo r po st -v erd ic t JM OL on th ree of th e fo ur co unt er cl ai m s ra is ed by H&S. As rel ev an t to th is ap pe al

, Grah am arg ue d th at H&S’s clai m fo r th e va lu e of th e au ge r was ba rred by Grah am ’s affi rm at iv e de fen se of un cl ean ha nd s. Grah am

-4

-al so arg ue d th at H&S was eq ui t a b l y e s t o p pe d fro m br in gi ng it s br each of co nt ract

cl ai m

. The di st ric t co ur t de ni ed th e m ot io ns an d en te red jud gm en ts as no te d ab ov e.

On ap pe al , H& S arg ue s th at th e di st ric t co ur t erre d in de nyin g it s m ot io n fo r
JM OL on Grah am ’s neg li ge nt m is rep res en ta ti on cla im

.

O n c r o s s ap pe al

, Grah am rai se s th ree cl ai m s: (1 ) th e de fen se of eq ui ta bl e

es to pp el ba rs an y reco ve ry on H&S’s breac h of con tra ct cl ai m ; (2) th e di st ric t co ur t
ab us ed it s di sc ret io n by fai li ng to in st ru ct th e jury on Grah am ’s de fen se s of es to pp el

an d mi t i g a t i o n ; an d (3 ) th e de fen se of un cl ean ha nd s ba rs H&S’s reco ve ry on it s cl ai m for th e v al ue of t he au ge r.

The pa rti es ag ree t ha t M is so ur i l aw go ve rn s t hi s ca se

.

II

. Dis cus si on
A. H&S’s Appea l: Ne gl ig ent Mi sr epre se nta tio n On ap pe al

, H&S arg ue s th at th e di st ric t co ur t erre d in d e n yi n g JM OL in it s fav or on Grah am ’s neg li ge nt m is rep res en ta ti on cla im

.

“ W e r e v i ew de no vo th e di st ric t co ur t’s de ni al of a m ot io n fo r jud gm en t as a

m at te r of law, u si ng th e sa m e st an da rd s as th e di st ric t co ur t.” How ar d v . Mo. Bon e & Jo in t Ct r., In c. , 61 5 F.3 d 99 1, 99 5 (8 th Ci r. 20 10 ). Ju dg m en t as a m at te r of la w is

ap pr op ria te whe n “ a pa rty ha s be en fu ll y he ard on an is su e du rin g a jury tri al an d th e

co ur t fin ds th at a reas on ab le jury wou ld no t ha ve a le ga ll y su ffi ci en t ev id en ti ary ba si s

to fin d fo r th e p art y

on th at is su e.” Fed . R. Civ . P. 50 (a)( 1)

.

H&S co nt en ds th at Mi ss ou ri’s eco no m ic lo ss do ct r i n e b a rs Grah am fro m

reco ve rin g un de r a ne gl ig en t m is rep res en ta ti on th eo ry . H&S as se rts th at Grah am ’s

rem ed ie s are co nt ra c t u a l in na tu re an d li m it ed to th os e av ai la bl e in th e ren ta l

-5

-ag reem en t. In co nt ras t, Grah am arg ue s th at Mi ss ou ri co ur ts pe rm it reco ve ry of

eco no m ic lo ss es un de r th e to rt o f ne gl ig en t m is rep res en ta ti on

.

The eco no m ic lo ss do ct rin e p ro hi bi ts a pa rty “ fro m see ki ng to reco ve r in to rt
fo r eco no m ic lo sses th at are co nt ract ua l in na tu re.” Aut ry Mor la n Ch evr ol et Ca di ll ac , In c. v. RJF Age nc ie s, In c. , 33 2 S.W .3d 18 4, 19 2 (Mo

. Ct

. Ap p

. 20 10 ). “ [C]on tra ct
la w, an d th e la w of warra nt y in pa rti cu la r, is be tt er su it ed fo r de a l i n g w i t h pu rel y

eco no m ic lo ss in th e co m

m erci al aren a th an to rt la w, be cau se it pe rm it s th e pa rti es to

sp eci fy th e te rm s of th ei r ba rg ai n an d to th ereb y pr ot ect th em se lv es fro m co m m erci al

ris k.” Dak

ot a Gas if ic at io n Co

. v. Pas co e Bld g. Sy s., a Div. of

Amcor d, In c. , 91 F.3 d

10 94

, 10 98 (8 th Ci r. 19 96 ) (ap pl y in g Nor th Dak ot a la w). U n d er Mi ss ou ri la w,

“ [r]eco ve ry in to rt for pu re econ om ic da m ag es are on ly li m it ed to cas es whe re th ere i s pe rs on al in

jury, da m ag e to pr op ert y ot he r th an th at so ld

, or de st ru ct io n of th e

pr op ert y so ld du e to so m e vi ol en t oc cu rren ce.” Ca pt iv a L a k

e I n v s., LLC v. Ameri st r u ct ur e, In c. , No. ED 10 05 69

, 20 14 W L 16 12 64 3, at *7

,

__ S.W .3d

__ ,

__ (Mo . Ct. Ap p. Ap r. 22 , 20 14 ).

W e co nc lu de th at th e eco no m ic lo ss do ct rin e ba rs Grah am ’s reco ve ry on it s

ne gl ig en t m is rep res en ta ti on cl ai m

. Our re cen t d eci si on in Dan ni x Pai nt in g, LLC v. Sh er wi n- W

il li ams Co

. , 73 2 F.3 d 90 2 (8 th Ci r. 20 13 ), req ui res th is res ul t. In th at cas e,

an em plo y ee fr om the Sh erwi n- W il li am s Co m pa ny (SWC) reco m

m en de d th at Dan ni x Pai nt in g, LLC, (Dan ni x) us e a p art ic ul ar p ro du ct to pa in t b ui ld in gs at t he Egl in Air

Fo rce Bas e in Fl or id a. Id

. at 90 4. The pa in t de la m in at ed on bo th in te rio r an d ex te rio r

su rfac es res ul ti ng in fin an ci al lo ss to Dan ni x. Id

. Dan ni x su ed SWC, al le gi ng th at
SWC n eg li ge nt ly m is r e p res en te d th at a pa rti cu la r type of pa in t was su it ab le fo r th e

pr ojec t whe n, in fact

, it was no t. Id

. a t 9 0 6

. O n ap pe al fro m th e di st ric t co ur t’s
di sm is sa l of th e cl ai m , we he ld th at Dan ni x’s cl ai m fo r da m ag es it in cu rred whe n th e

re co m m en de d pr od uc t pr ov ed un su it ab le “ is pr eci se ly th e type of to rt cl ai m by a di sa pp oi nt ed co m

m erci al bu y er th at th e eco no m ic lo ss do ct rin e pr oh ib it s.” Id

. at 90 8.

W e em ph as iz ed th at we co ul d no t l o c a t e “a Mi ss ou ri cas e al lo win g a co m m erci al

-6

-bu y er of go od s un de r th e U.C.C. to m ai nt ai n a n e g l i g e n t m is rep res en ta ti on cl ai m

a g a i n st th e se ll er ba se d up on th e se ll er’s reco m m en da ti on as to th e fit ne ss o r

pe rfo rm an ce of th os e go od s.” Id

. at 90 7. Bec au se Dan ni x so ug ht reco ve ry of pu rel y

eco no m ic (i.e

. pe cu ni ary) da m ag es th ro ug h it s ne gl ig en t m is rep res en ta ti on cl ai m , we

co nc lu de d t ha t t he eco no m ic lo ss do ct rin e b ars reco ve ry on th at cla im

. Id

. at 9 10

.

Si m il arl y , Grah am al le ge s th at “ H&S’s as su ran ces an d rep res en ta ti on s” ab ou t
th e su it ab il it y of th e d ril li ng eq ui pm en t fo r it s p ro ject wer e “ a di rect an d pr ox im at e

cau se ” of th e da m ag es it in cu rred

. The ba sis of Grah am ’s ne gl ig en t m is rep res en ta ti on cl ai m —t ha t H&S fai le d to ex erci se reas on ab le care in as su rin g th e su it ab il it y of th e dr il li ng eq ui pm en t— “ is th e es se nc e of a warra nt y act io n, th ro ug h whi ch a co nt ract in g

pa rty can se ek to reco up th e be ne fit of it s ba rg ai n.” Id

. at 90 9. In effe ct
, “ [a]ll owi ng [Grah am ] to m ai nt ai n a ne gl ig en t m is rep res en ta ti on cl ai m at th is po in t wou ld rewri te
th e pa rti es ’ co nt ract an d real lo cat e th e ris k of lo ss .” Id

. at 90 8 n.6

. Bec au se Grah am

se ek s pu rel y eco no m ic da m ag es th ro ug h it s ne gl ig en t m is rep res en ta ti on c l a i m, we

co nc lu de th at th e eco no m ic lo ss do c t r i n e b a r s reco ve ry on th at cl ai m

. Se e Aut ry
Mor la n , 33 2 S .W .3d at 1 92

.

Acco rd in gl y , we rev ers e th e di st ric t co ur t’s de ni al of JM O L on Grah am ’s

n eg li ge nt m is rep res en ta ti on cl ai m , va cat e th e jury award in fav or of Grah am , an d

en te r jud gm en t in fav or of H&S on Grah am ’s cl ai m fo r ne gl ig en t m is rep res en ta ti on

. 1

Se e W ei sg ra m v. Mar le

y Co

. , 52 8 U.S. 44 0, 45 1- 52 (2 00 0) (s ta ti ng th at “ if a co ur t of

ap pe al s det erm in es th at th e di st ric t cou rt erro ne ou sl y de ni ed a m ot io n fo r jud gm en t

as a m at te r of la w, th e ap pe ll at e co ur t m ay

. . . di rect th e en try of jud gm en t as a m at te r of law fo r th e d efen da nt ”).

W e ob se rv e th at th is cas e pr ov id es y et an ot he r ex am pl e of th e fed eral jud ic ia ry 1

ap pl y in g Mi ss ou ri’s eco no m ic lo ss do ct rin e wit ho ut cl ea r gui danc e fro m th e Mi ss ou ri Su pr em e Co ur t.

-7

-B. Gra ha m ’s Cros s App ea ls

On cro ss ap pe al

, Grah a m r a i s e s th ree cl ai m s: (1 ) th e de fen se of eq ui ta bl e

es to pp el ba rs H&S’s reco ve ry on it s br each of co nt ract cl a i m; ( 2 ) t h e di st ric t co ur t
ab us ed it s di sc ret io n by fai li ng to in st ru ct th e jury on Grah am ’s de fen se s of es to pp el

an d m it ig at io n; an d ( 3 ) t h e d e f en se of un cl ean ha nd s ba rs H&S’s reco ve ry on it s cl ai m for th e v al ue of t he au ge r.

1. Eq ui ta bl e Es to ppel as a Ma tter of L aw Grah am fir st arg ue s th at th e di st ric t cou rt erred in de nyin g JMOL i n i ts fav or

on H&S’s br each of co nt ract cl ai m be cau se Grah am ’s de fen se of eq ui ta bl e es to pp el

ba rs th e cl ai m as a mat te r of la w. H&S as se rts th at Grah am waiv ed it s arg um en t
be cau se Grah am di d no t se ek JM OL wit h res pe ct to H&S’s br each of co nt ract cl ai m in an in it ia l Ru le 50 (a) m ot io n.

Fed eral Ru le of Ci vi l Pro ced ur e 50 (a)( 2) pr ov id es th at “ [a] m ot io n fo r jud gm en t as a m at te r of la w m ay be m ad e at an y ti m e be fo re th e cas e is su bm it te d to
th e jury.” Fed eral Ru le of Ci v i l Pro ced ur e 50 (b ) pr ov id es fo r ren ewin g th e m ot io n aft er tri al

. “ [W] e ha ve no ba si s fo r rev ie w of [an ] is su e” whe n th e pa rty fai ls to rai se th at is su e in a Ru le 50 (a) m ot io n. Day v. To man , 26 6 F.3 d 83 1, 83 7 (8 th Ci r. 20 01 );

se e al so Fed

. R. Ci v. P. 50 (b ) ad vi so ry co m m

. no te s to 19 91 a men d m en t (“ A po st

tri al m ot io n fo r jud gm en t can be gr an te d on ly on gr ou nd s ad va nc ed in th e pr e-v erd ic t

m ot io n

. ” ) ; C o n s e co Fin

. Se rv ic in g Co rp

. v. N. Am. Mor tg

. Co

. , 38 1 F.3 d 81 1, 82 1 (8 th Ci r. 20 04 ) (“ [A] m ot io n fo r ju d g men t a s a m at te r of la w at th e cl os e of th e

ev id en ce pr es erv es f

o r rev ie w on ly th os e gr ou nd s sp eci fie d at th e ti m e, an d no oth er s.” (ci ta ti on om it te d) (in te rn al qu ot at io n m ark s om it te d) ); Bro wn in g v. Pres id ent
Rive rb oa t Ca si no -Mo

., In c. , 13 9 F.3 d 63 1, 63 6 (8 th Ci r. 19 98 ) (s am e). “ Adh eren ce

to th e ru le is m an da to ry .” Co ns eco , 38 1 F .3d at 8 21

.

Afte r th e cl os e of ev id en ce, Grah am m ov ed fo r jud gm en t as a m at te r of la w on th ree cl ai m s: (1 ) it s cl ai m fo r br each of ex pr es s warra nt y , (2 ) H&S’s cl ai m of un jus t

-8

-en ric hm en t, an d (3 ) H&S’s cl ai m fo r th e va lu e of th e au ge r. Grah am di d no t m ov e

fo r JM OL as to H&S’s cl ai m for bre ach of c on tra ct un ti l af te r th e ve rd ic t th ro ug h a

Ru le 50 (b ) m ot io n. Grah am ’s f ai lu re to rai se th is ch al le ng e in a Ru le 50 (a) m ot io n waiv ed th e op po rtu ni ty to rai se it aft er tri al

. Se e Day

, 26 6 F.3 d at 83 7. Acco rd in gl y ,

we ha ve no ba si s to co nc lu de th at th e do ct rin e of eq ui ta bl e es to pp el ba rs H&S’s
br each of c on tra ct cla im

as a m at te r of

law.

2. Fa il ure t o I ns truc t on Equi ta bl e Es to ppel

Nex t, Grah am arg ue s th at th e di st ric t co ur t ab us ed it s di sc ret io n by refu si ng to
in st ru ct th e jury o n Gra ha m ’s def en se of e qu it ab le es to pp el

. Grah am co nt en ds th at

ev id en ce in th e reco rd su pp or ts an es to pp el in st r u c t i o n an d th at th e di st ric t co ur t’s
fai lu re t o i ns tru ct th e jury in t hi s re sp ect ha d a pro ba bl e eff ect on th e v erd ic t.

“ A de ci si on by a di st ric t co ur t to refu se a req ue st ed jury in st ru ct io n is rev ie wed

fo r ab us e of di sc ret io n.” W ei tz Co . v. MH W

as hi ng to n , 63 1 F .3d 51 0, 5 33 (8t h C ir.

20 11 ). “ A par ty is en ti tl ed to ha ve an in st ru ct io n s et ti ng for th it s t he or y of t he cas e if th e in st ru ct io n is le ga ll y co rrec t an d su pp or t e d b y t h e ev id en ce.” Bur sc h v.
Bea rd sl ey & Pip er , 97 1 F .2d 10 8, 1 12 (8t h C ir. 1 99 2)

.

Grah am co nt en ds th at th e di st ric t co ur t erre d in refu si ng to in st ru ct th e jury on it s de fen se of eq ui ta bl e es to pp el

. The es to pp el in st ru ct io n te nd ered an d refu se d by

th e di st ric t co ur t cen te red on H&S’s al le ge d fai lu re “ to di sc lo se to Grah am th e Apr il 6, 2 01 0, re po rt o f Dr. Mar io n Rus so or th e May 20 , 20 10 , e-m ai l fr om Jo hn W il so n

to Jo se ph Dit tm ei er. ” B u t on ap pe al

, Grah am sh ift s it s th eo ry wit h res pe ct to

eq ui ta bl e es to pp el an d arg ue s th at it was en ti tl ed to an in st ru ct io n no t ba se d on
H&S’s fai lu re to di sc lo se , bu t on ev id en ce th at H& S made fal se rep res en ta ti on s whi ch Gr a ha m rel ie d up on to it s de tri m en t. Bec au se th e di st ric t co ur t refu se d to

su bm it an es to pp el in st ru ct io n ba se d ex cl us iv el y on fai lu re to di sc lo se , any erro r in

refu si ng th e in st ru ct io n can no t be pr ed ic at ed on ev id e n c e of affi rm at iv e

rep res en ta ti on s m ad e b y

H&S.

-9

-Mo reo ve r, to th e ex te nt th at Grah am arg ue s th at th e di st ric t co ur t sh ou ld ha ve

su bm it te d th e ge ne ral eq ui ta bl e es to pp el in st ru ct io n it fil ed wit h th e di st ric t co ur t th at
ad dr es se d bo t h fai lu re to di sc lo se an d rep res en ta ti on s, th at in st ru ct io n was ne ve r

te nd ered no r refu se d by th e di st ric t co ur t. Bec au se Grah am vo lu nt ari ly wit hd rew th at
in st ru ct io n at th e Ja nu ary 1 6

, 20 13

, ch arg e co nf eren ce, th e di st ric t co ur t m ad e no de ci si on on whe th er or no t to su bm it th e ge ne ral es to pp el in st ru ct io n. The refo re, we ha ve no ba si s fo r co nc lu di ng th at th e di st ric t co ur t erre d. Se e Sc ho ol fi el d v. Rho de s , 82 F. 15 3, 15 6 (8 th Ci r. 18 97 ) (co nc lu di ng th at th e di st ric t co ur t “ co m m it te d no erro r”
be cau se th e is su e “ was ne ve r pr es en te d to it an d it m ad e no ru li ng up on it ; an d th ere is th eref or e n o ru li ng be fo re u s t o re vi ew, an d n o e rro r to co rrec t” ).

3. Fa il ure t o I ns truc t on Miti ga tio n Grah am al so arg ue s th at th e di st ric t co ur t ab u s ed it s di sc ret io n in refu si ng to
in st ru ct th e jury on it s de fen se of fai lu re to m it ig at e. The di st ric t co ur t di d err in th is

reg ard

.

Und er Mi ss ou ri l a w, “ on e da m ag ed by br each of co nt ract m us t m ak e

reas on ab le effo rts to m in im iz e r e s u l ti ng da m ag es .” Rich ar ds on v. Co ll ie r Bld g. Co rp

. , 79 3 S.W .2d 36 6, 37 5 (Mo

. Ct

. App

. 19 90 ). “ [A] pa rty m ay no t reco ve r da m ag es th e pa rty ‘cou ld ha ve av oi de d wit ho ut un du e ris k, bu rd en or hu m il ia ti on .’ ”

Har vey v. Ti mbe r Res., In c. , 37 S.W .3d 81 4, 81 9 (Mo

. Ct

. App

. 20 01 ) (q uo ti ng
Res ta te m en t (S eco nd ) of

Co nt ract s § 35 0( 1) (19 81 )).

Grah am req ue st ed th at th e fo ll owi ng m it ig at io n in st ru ct io n be su bm it te d to th e jury w it h re sp ect to H&S’s b reac h o f co nt ract cla im :

If y ou fin d in f

av or of Ham

m er & St eel

, y ou m

us t fin d th at Ham m er & St eel fai le d t o m it ig at e d am ag es if you b el ie ve :

Fi rs t, Ham

m er & St eel rep la ced th e se co nd br ok en Kell y ba r on th e San y SR 25 0 dr il l rig wit h th e rep ai red Kell y ba r th at ha d be en te st ed

-1 0-by Dr. Mar io n Ru ss o an d / or Ham m er & St eel fai le d to di sc lo se to Grah am t h e M a y 20

, 20 10

, e-m ai l fro m Jo hn W il so n to Jo se ph Dit tm ei er, an d

Seco nd

, Ham

m er & St eel in on e or m or e of th e res pe ct s su bm it te d in th e ab ov e p arag rap h, t he reb y fai le d t o u se ord in ary care , and

Thi rd

, H a mm er & St eel th ereb y su st ai ne d da m ag e whi ch wou ld

no t h av e o th erwi se oc cu rred

.

Rec or d ev id en ce sh ows th at in Apr il 20 10

, H&S hi red Qua li ty Test in g Serv ic es , In c.,

to de te rm in e th e cau se of th e fir st Kell y ba r br eak

. Mar io n Ru ss o, th e en gi ne er who

p e r f o rm ed th e te st in g, is su ed a rep or t th at cal le d in to qu es ti on th e vi ab il it y of t h e

m et al th at co m

po se d th e Kell y ba r. Two da y s aft er th e se co nd Kell y ba r br eak

, Jo hn

W il so n, a sa le sp ers on fo r th e co m pa n y t h a t so ld th e dr il l to H&S, se nt an em ai l to
Jo se ph Dit tm ei er, H&S’s co

- o w ne r, st at in g th at Grah am ’s dr il li ng ex ceed ed th e

cap aci ty of th e le as ed dr il l an d th at “ [o ]the r da m ag e co ul d al so res ul t fro m us in g th e

m ach in e in ex ces s of its rat ed cap aci ty.” H &S d id no t in fo rm Grah am of th e Ru ss o

rep or t or W il so n’s em ai l. Fro m t h i s e v i d e n ce, a jury co ul d reas on ab ly in fer th at
Grah am wou ld no t ha ve co nt in ue d to o p e rat e th e le as ed eq ui pm en t ha d Grah am di sc lo se d th e Ru ss o rep or t or th e in fo rm at io n in Wil so n’s em ai l, th ereb y red uc in g
H&S’s da m ag es un de r th e le as e ag reem en t. Fu rth er, if H&S kn ew of th es e eq ui pm en t
li m it at io ns pr io r to th e fir st Kell y ba r br eak

, th e de fen se of m it ig at io n co ul d affe ct
H&S’s rec ov ery of

co nt ract ua l d am ag es

. 2

W e co nc lu de th at th e di st ric t co ur t ab us ed it s di sc ret io n in refu si ng to in st ru ct
th e jury be cau se Grah am ’s pr op os ed m it ig at io n in st ru ct io n is le ga ll y co rrec t an d th ere is ev id en ce t o s up po rt i t. Bursch

, 971 F.2d at 112; se e Fri ed man & Fri ed

man , Ltd . v.

We n o t e th at as a ba si s fo r award in g Grah am da m ag es on it s ne gl ig e n t 2

m is rep res en ta ti on cl ai m , th e jury fo un d th at H&S fal se ly rep res en te d to Grah am th at th e le as ed eq ui pm en t was ap pr op ri a t e fo r an d cap ab le of co m pl et in g th e dr il li ng pr ojec t.

-1 1-Ti m McCa nd le ss , In c. , 60 6 F.3 d 49 4, 50 1 (8 th Ci r. 20 10 ) (“ The refu sa l to in st ru ct th e

jury o n a de fen se th at was su pp or te d by s uf fic ie nt ev id en ce to crea te a tri ab le is su e

was an ab us e of di sc ret io n.” ). Bec au se th e di st ric t co ur t’s refu sa l to in st ru ct de pr iv ed

th e jury fro m co ns id eri ng a vi ab le de fen s e to H&S’s br each of co nt ract cl ai m , th e in st ru ct io na l er ro r “ was ha rm fu l, p reju di ci al , a nd rev ers ib le .” W he el in g Pi tt

sb ur gh

St eel Co rp

. v. Beel man Rive r Ter min al s, In c. , 25 4 F.3 d 70 6, 71 4 (8 th Ci r. 20 01 ).

The refo re, we va cat e th e jury’ s award of $1 97 ,23 8 in fav or of H&S on it s br each of

co nt ract cla im

an d re m an d t o t he di st ric t co ur t fo r a n ew tri al li m it ed to th e is su e o f

da m ag es

. Se e S

mal le y v. Dul ut h, Winn ip eg

& Pac

. Ry. Co

. , 94 0 F .2d 29 6, 2 99 (8t h
Ci r. 19 91 ) (h ol di ng th at th e di st ric t co ur t’s er ro r in in st ru ct in g t he jury wit h re sp ect

to m it ig at io n war ran te d a ne w tri al on th e is su e o f da m ag es ).

4. Uncl ea n Ha nds
Fi na ll y , G rah am arg ue s th at th e di st ric t co ur t erre d in de nyin g JM OL in it s fav or on H&S’s cl ai m fo r th e va lu e of th e au ge r be cau se Grah am ’s de fen se of un cl ean ha nd s ba rs t h a t c l a i m. Grah am co nt en ds th at it lo st th e au ge r as a di rect res ul t of

H&S’s m at er ia l m isr ep re se ntati on s reg ard in g th e su it ab il it y of th e dr il li ng eq ui pm en t.
Fu rth erm or e, Grah am arg ue s th at th e di st ric t co ur t “ was no t free to ig no re th e jury’ s fact ua l fi nd in gs ” reg ard in g H& S’s m is rep res en ta ti on s.

W e reject Grah am ’s arg um en t. “ The ‘clean ha nd s’ do c t r i n e do es no t ba r a cl ai m fo r m on ey da m ag es .” Uni on Elec

. Co

. v. Sw

. Bell Tel

. L.P.

, 37 8 F.3 d 78 1, 78 8 (8 th Cir

. 20 04 ) (ci ti ng Mar vi n E. Ni eb er g Real Est at e Co . v. Tay lo r- Mor le y-S imo n,
In c. , 86 7 S.W .2d 61 8, 62 6 (Mo

. Ct

. App

. 19 93 )). “ Onl y whe n a [p art y ’s] co nd uc t is

th e so ur ce of th e cl ai m is th e eq ui ta bl e cl ai m ba rred .” Id

. (ci ti ng Ka y v. Vat te ro tt , 65 7

S.W .2d 80

, 82 (Mo

. Ct

. App

. 19 83 )). Here, H&S’s cl ai m fo r th e va l u e o f t he lo st

au ge r ari se s fro m it s ren ta l ag reem en t wit h Grah am

. In de ed

, H&S ack no wled ge d an d

th e di st r i c t c ou rt fo un d th at th e cl ai m de pe nd ed up on th e va li di ty of th e ren ta l

ag reem en t. Bec au se H & S’s cl ai m so un ds in co nt ract , t he so ur ce of H&S’s rig ht to

reco ve r th e va lu e of th e au ge r st em s fro m th e pa rti es ’ ag reed al lo cat io n of ris k— no t

-1 2-ne gl ig en ce on th e pa rt of H&S. Se e id

. (co nc lu di ng th at a pa rty’ s po ss ib le ne gl ig en ce

di d no t ba r it s cl ai m fo r m on ey da m ag es b y v i rtu e of “ un cl ean ha nd s” be cau se th e

pa rty’ s “ rig ht to p r o c e e d

. . . so un ds in th e co nt ract be twee n th e pa rti es ” an d no t in

to rt)

. Thu s, th e do ct rin e of un cl ean ha nd s do es no t ba r H&S’s reco ve ry of th e va lu e of th e au ge r.

Bu t th at do es no t end ou r an al y si s. As dis cu ss ed ab ov e, th e jury sh ou ld ha ve be en in st ru ct ed as to Grah am ’s m it ig at io n de fen se , whi ch ap pl ie s to an y po te n t i al

d a mag es ari si ng fro m H&S’s br each of co nt ract cl ai m

. Bec au se th e cl ai m f o r t h e

va lu e of th e au ge r res ts on t h e l an gu ag e of th e ren ta l ag reem en t an d is th eref or e a br each of co nt ract c l a im

, we co nc lu de th at on rem an d th e jury sh ou ld as se ss th e

ex te nt to whi ch H&S co ul d ha ve m it ig at ed it s da m ag es un de r th e ren ta l ag reem en t as

to th e lo ss of th e au ge r. Acco rd in gl y , we va cat e th e di st ric t co ur t’s award in fav or of

H&S on th e va lu e of th e au ge r in th e am ou nt of $5 2,3 87 an d re m an d for a ne w tri al

on da m ag es as t o t ha t cl ai m

.

II I. Con cl us io n
W e rev ers e th e jury’ s ve rd ic t an d jud gm en t of $4 20 ,19 4.4 0 in fav or of Grah am

an d en te r jud gm en t in fav or of H&S o n G r ah am ’s cl ai m fo r ne gl ig en t

m is rep res en ta ti on as th e cl ai m is ba rred by th e eco no m ic lo ss do ct rin e. W e al so

va cat e th e jury award of $1 97 ,23 8 in fav or of H&S on it s br each of co nt ract cl ai m an d

va cat e th e di st ric t co ur t’s award of $5 2,3 87 in fav or of H&S fo r lo ss of th e au ge r an d

rem an d fo r a ne w t ria l on da m ag es as to th os e cl ai m s. W e ob se rv e th at on rem an d,
Grah am ’s m it ig at io n de fen se m ay red uc e al l, so m e, or no ne of H&S’s da m ag es de pe nd in g o n t he ev id en ce an d t he co nc lu si on s t he refr om

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ _

-1 3-