Opinion ID: 2971901
Heading Depth: 3
Heading Rank: 4

Heading: NCI’s liability for consequential damages

Text: Crossley next argues that, assuming NCI breached its contractual duties, NCI should be held responsible for the consequential damages resulting from the breach. It contends that the clause in the contract specifying that “NCI shall not be liable for any consequential damages to buyer” is -9- Nos. 03-6512 & 03-6540 Crossley Constr. Corp. v. NCI Bldg. Sys. inapplicable because, “if given the effect sought by NCI, it would leave Crossley with no effective remedy.” Furthermore, Crossley argues that “the trial court should have found NCI’s limitation of liability provision to be unconscionable under the facts and circumstances in the case.” Because the question of whether Crossley is entitled to consequential damages is a legal one, the district court’s decision is reviewed de novo. NCI, however, did not breach the contract for all of the reasons discussed above. We therefore have no need to address the question of consequential damages. E. Evidentiary determinations by the district court Crossley also asserts that the district court made two key evidentiary errors during trial. This court “review[s] factual components of the district court’s evidentiary determinations under an ‘abuse of discretion’ standard, and review[s] its legal conclusions de novo.” Kalamazoo River Study Group v. Menasha Corp., 228 F.3d 648, 661 (6th Cir. 2000). Crossley first complains that the district court erred when it “discredit[ed] virtually all the live testimony in favor of the videotape deposition of a non-NCI employee.” The videotaped deposition in question was that of Stewart, the former NCI employee who served as NCI’s representative to Crossley in the early stages of negotiation. Without supporting authority, Crossley asserts that the “videotaped testimony should be reviewed de novo without any presumption of correctness to the lower court’s credibility determination inasmuch as neither the appellate court nor the trial court actually saw Mr. Stewart testify live.” This argument, however, is effectively undercut by the fact that Crossley did not object at trial to the use of the videotaped deposition. To -10- Nos. 03-6512 & 03-6540 Crossley Constr. Corp. v. NCI Bldg. Sys. the contrary, Crossley excerpted various segments of the videotaped testimony in presenting its own case in chief. Rule 103(a)(1) of the Federal Rules of Evidence provides that “error may not be predicated upon a ruling which admits or excludes evidence” unless a timely objection has been made. Crossley is therefore precluded from asserting this objection for the first time on appeal, unless it can show that it meets the “plain-error” exception of Rule 103(d) (“Nothing in this rule precludes taking notice of plain errors affecting substantial rights although they were not brought to the attention of the court.”). Crossley, however, does not argue that it has satisfied the plain-error standard, see United States v. Koeberlein, 161 F.3d 946, 949 (6th Cir. 1998), nor are we persuaded that Crossley’s substantial rights were adversely affected by the district court’s evaluation of the videotaped testimony. Crossley further argues that the district court erred by not applying the “missing witness” rule. Under this rule, an “adverse inference is permitted from the failure of a defendant to call witnesses if they are ‘peculiarly within [his] power to produce’ and if their testimony would ‘elucidate the transaction.’” United States v. Blakemore, 489 F.2d 193, 195 (6th Cir. 1973) (quoting Wynn v. United States, 397 F.2d 621, 625 (D.C. Cir. 1967)). Application of this rule, Crossley argues, would have meant that “NCI’s failure to call any of its employees to testify impairs its evidence and enhances the testimony of Crossley witnesses who testified based on their personal knowledge from working at the site.” The missing witness rule, however, does not require the trier of fact to draw a negative inference. To the contrary, the rule operates to permit the trier of fact to draw the negative inference. Id. Crossley, moreover, neither raised this objection at trial nor -11- Nos. 03-6512 & 03-6540 Crossley Constr. Corp. v. NCI Bldg. Sys. presents more than unsupported assertions regarding what the NCI employees would have said. We therefore conclude that the district court did not abuse its discretion with respect to the missing witness rule. F. Prejudgment interest In its order, the district court required Crossley to pay $86,131.21 for the balance due NCI plus interest that had accumulated to the date of trial, which started on February 8, 2001. NCI, in its cross-appeal, contends that the district court “erred by awarding prejudgment interest only up to the date of trial rather than the date of judgment, October 16, 2003.” It argues that “unless prejudgment interest is awarded up to the date of judgment, NCI will not be fully compensated for its loss and Crossley will be given a windfall despite its unjustified retention of NCI’s money.” “The primary purpose in awarding prejudgment interest is to assure that the plaintiff is fully compensated for the lost use of funds to which he or she was entitled.” Harrison v. Laursen, 128 S.W.3d 204, 209 (Tenn. Ct. App. 2003). Prejudgment interest in a diversity action must be determined under state law. Mass. Benefit Ass’n v. Miles, 137 U.S. 689 (1891); see Conte v. General Housewares Corp., 215 F.3d 628, 633 (6th Cir. 2000). In Tennessee, “[a]n award of prejudgment interest is within the sound discretion of the trial court and the decision will not be disturbed by an appellate court unless the record reveals a manifest and palpable abuse of discretion.” Myint v. Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn. 1998); see also Alexander v. Inman, 974 S.W.2d 689, 698 (Tenn. 1998) (“Under this deferential standard, an appellate court may not substitute its judgment for that of the trial court. Rather, an abuse of discretion occurs only when the evidence does not support the trial court’s decision.”). -12- Nos. 03-6512 & 03-6540 Crossley Constr. Corp. v. NCI Bldg. Sys. In the present case, however, the district court did not explain why it awarded prejudgment interest only up to the commencement of trial. Perhaps as NCI argued on appeal, the gap between the dates of trial and judgment was simply an oversight. Logic would indicate, after all, that prejudgment interest should normally run to the date of judgment. The district court’s silence on this issue, however, prevents us from determining whether an abuse of discretion has occurred. In the absence of an explanation for its rationale, we cannot afford the district court the substantial deference on this issue to which it is entitled under Tennessee law. We therefore remand the determination of how long the prejudgment interest should run to the district court for reconsideration.