Opinion ID: 10012
Heading Depth: 4
Heading Rank: 1

Heading: Out-of-pocket measure of damages

Text: 11 The district court found that the parties stipulated that the value of HemoTec stock on the date of sale was $4.1875 per share. The parties stipulated this was the closing price of the stock on that date. The district court must determine the fair market value of the stock to properly compute out-of-pocket damages. 12 Apprill advocates that the district court should have determined the fair market value of the stock by employing by analogy the valuation technique used in stock conversion cases. 6 Had it done so, the district court would have found evidence that HemoTec stock reached a high of $10.75 per share on August 28, 1989, and that Apprill testified he would not have sold his stock had he not been misled by Quest. 7 From these facts, the jury could have inferred that Apprill would have held his stock and profited from the large increase in its value, since the stock conversion method allows consideration of later values. See supra note 6. 13 That the parties stipulated that [o]n January 6, 1989, the closing price for Hemotec stock was $4.1875 per share is true. (Emphasis added). However, the distinction Apprill attempts to draw between the price at which HemoTec stock last traded on January 6 and the market value of HemoTec stock on that date is untenable, and so we find no error and the district court's use of the closing price to compute out-of-pocket loss. 14 According to the classic formulation, '[f]air market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.'  Amerada Hess Corp. v. Commissioner, 517 F.2d 75, 83 (3d Cir.) (citing United States v. Cartwright, 411 U.S. 546, 551, 93 S.Ct. 1713, 1716-17, 36 L.Ed.2d 528 (1973) (quoting Treas.Reg. § 20.2031-1(b))), certs. denied, 423 U.S. 1037, 96 S.Ct. 574, 46 L.Ed.2d 412 (1975). See also Keener v. Exxon Co., USA, 32 F.3d 127, 132 (4th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1108, 130 L.Ed.2d 1074 (1995); United States v. Campbell, 897 F.2d 1317, 1322 (5th Cir.1990); Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., 793 F.2d 1456, 1461 (5th Cir.1986), certs. denied, 479 U.S. 1034, 1089, 107 S.Ct. 884, 1089, 93 L.Ed.2d 837, 94 L.Ed.2d 154 (1987). Where ... the property to be valued consists of securities traded on a stock exchange, the general rule is that the average exchange price quoted on the valuation date furnishes the most accurate, as well as the most readily ascertainable, measure of fair market value. Amerada Hess Corp., 517 F.2d at 83 (footnote omitted). See also Barry v. Smith (In re New York, N.H. & H.R.R.), 632 F.2d 955, 962-63 (2d Cir.), cert. denied, 449 U.S. 1062, 101 S.Ct. 786, 66 L.Ed.2d 605 (1980). 15 When computing out-of-pocket loss, the valuation date is the date of sale--i.e., January 6, 1989. Although no evidence of the mean exchange price of HemoTec stock on this date was submitted, the parties did stipulate that the closing price on January 6 was $4.1875 per share. Under federal law, stipulations of fact fairly entered into are controlling and conclusive and courts are bound to enforce them, see United States Abatement Corp. v. Mobil Exploration & Prod. U.S., Inc. (In re U.S. Abatement Corp.), 79 F.3d 393, 400 (5th Cir.1996); Holiday Inns, Inc. v. Alberding, 683 F.2d 931, 935 (5th Cir.1982); A. Duda & Sons Coop. Ass'n v. United States, 504 F.2d 970, 975 (5th Cir.1974), unless manifest injustice would result therefrom or the evidence contrary to the stipulation was substantial, see Donovan v. Hamm's Drive Inn, 661 F.2d 316, 317 (5th Cir.1981); Loftin & Woodard, Inc. v. United States, 577 F.2d 1206, 1232 (5th Cir.1978). 16 The district court admitted as an exhibit reports prepared by NASDAQ 8 that detailed the high ($4.3125), low ($4.1875), and closing ($4.1875) price per share of HemoTec stock on January 6. Additionally, Apprill submitted an exhibit demonstrating the computation of his alleged damages under the TSA which represented the value of HemoTec stock on the date of sale to be $4.1875 per share. This evidence was supportive of, not contrary to, the parties' pretrial stipulation. Further, because Apprill prepared and submitted the TSA damages exhibit, we see no manifest injustice in requiring him to stand behind his evidence or in accepting the pretrial stipulation. Thus, for purposes of computing Apprill's out-of-pocket damages, the district court correctly used $ 4.1875 per share as the value of HemoTec stock on the date of sale. 17 Next, the record shows Apprill first argued that the jury's $270,000 actual damages figure could be arrived at by employing an out-of-pocket damages calculation based on an analogy to stock conversion cases in his memorandum in opposition to Quest's JNOV motion. The jury was never presented this theory. Instead, the jury received a single damages instruction: 18 If you find that material misrepresentation(s) by Quest caused some injury or damage to Apprill, you must then determine the amount of that injury or damage in monetary terms. In that respect, you should award to Apprill an amount of money shown by a preponderance of the evidence to be fair and adequate compensation for all loss or damage caused by Quest's wrongful conduct. 19 Apprill's damages can be measured in two ways: the out of pocket measure, which is the difference between the price he received for his HemoTec shares and the market value of those shares at the time of the transaction with Quest, or the benefit of the bargain measure, which is the difference between the value of the shares as represented by Quest and the value Apprill actually received. 20 Apprill's only objection to this charge was that it did not contain an instruction on the mandatory damages provision of the TSA or on this Circuit's Rule 10b-5 out-of-pocket measure of damages. 21 A district court has discretion to consider new theories raised for the first time in a post-trial brief, Abbott v. Equity Group, Inc., 2 F.3d 613, 629 n. 59 (5th Cir.1993) (citing United States ex rel. Am. Bank v. C.I.T. Constr. Inc. of Tex., 944 F.2d 253, 259 n. 8 (5th Cir.1991)), cert. denied, 510 U.S. 1177, 114 S.Ct. 1219, 127 L.Ed.2d 565 (1994), and an issue first presented to the district court in a post-trial brief is properly raised below when the district court exercises its discretion to consider the issue, Southwestern Eng'g Co. v. Cajun Elec. Power Coop., 915 F.2d 972, 979 (5th Cir.1990). The record does not indicate that the district court ever considered the applicability of the stock conversion analogy. Further, Apprill submitted this theory only after the jury, the ultimate fact finder in this case, rendered its verdict. Apprill, therefore, called upon the district court, and now calls upon us, to speculate that the jury not only divined this intricate formula for computing actual damages without any instruction from counsel or the court, but also extracted from the record the evidence Apprill alleges supports an award of $270,000. We decline to so speculate and note that [t]his Court does not look with favor upon tardy arguments that are brought to the lower court's attention post-trial after counsel has had the opportunity to salvage what [he] may from the record. 9 Risher v. Aldridge, 889 F.2d 592, 595 (5th Cir.1989). Consequently, we conclude this issue was not properly raised below, and therefore is raised for the first time on appeal. See First United Fin. Corp. v. Specialty Oil Co., Inc.-I, 5 F.3d 944, 948 & n. 9 (5th Cir.1993). 22 We are a court of errors, and will not consider matters raised for the first time on appeal, unless our failure to do so would result in manifest injustice. Brantley v. Surles, 804 F.2d 321, 324 (5th Cir.1986). Manifest injustice, however, exists in extreme circumstances. American Int'l Trading Corp. v. Petroleos Mexicanos, 835 F.2d 536, 540 (5th Cir.1987). We have found such circumstances lacking where a party raises for the first time on appeal an argument aimed at revising the method of computing damages. 10 Such circumstances likewise are lacking here, and so we refuse to consider Apprill's stock conversion analogy initially on appeal. 23