Opinion ID: 1643072
Heading Depth: 1
Heading Rank: 2

Heading: If the Court maintains Its Selection of Lost Future Profits, Rather Than Fair Market Value, It Should at a Minimum Correct the Award.

Text: The introductory sentence of this section of the News's rehearing brief states: In its briefs to the Court, The News described fundamental errors with the panel's award of lost future profitserrors that amount to manifest disregard of the law.  (Emphasis supplied.) Although the News now says that the panel's alleged errors amount to manifest disregard of the law, it never made that argument on original submission. We come to that conclusion only after examining and considering each citation the News makes in this section of its rehearing brief to its briefs on original submission. The first reference, to pages 69-70 of the News's original brief, relates only to a bullet point statement that is not a part of any argument, but is included in the statement of facts section of the original brief. Accordingly, the statement would have operative effect as an argument advanced in the brief only to the extent that it was properly brought forward to the argument section. The next of the News's citations, to page 74 of its original brief, is included as a part of the introductory summary of argument where the News asserted: The most dramatic examples of the arbitrary and irrational nature of this decision are the Panel's awards of damages. The Panel awarded the appellees double recovery, contrary to Alabama law and policy prohibiting double recovery, and the Panel awarded damages exceeding those actually sustained by each of the appellees. Even disregarding the fact that this statement represents only a summary of the argument to come, the ground that the award was arbitrary and irrational is the only ground referenced, and the only argument offered, aside from the double recovery issue, is the sparse assertion that the Panel awarded damages exceeding those actually sustained by each of the appellees. The next citation in the rehearing brief, to pages 110-11 of the original brief, does direct us to a subsection of the original brief captioned Lost Profits, containing the statement that, to the extent any award of lost profits was proper, the Panel should have deducted from that award the amount each plaintiff is currently earning in another occupation. That section of the original brief consisted of only six sentences, however, with no citations to the record or case authority, and, most importantly, as was the case earlier, was a part of the section of the brief asserting that the panel's decision was [a]rbitrary, [c]apricious, and [i]rrational. The News did not make this deduction argument in its separate argument section arguing the ground of manifest disregard of the law. Finally, with respect to the citation in the rehearing brief to pages 46-49 of the News's reply brief on original submission, those pages are a part of the subsection captioned The Panel's Decision is Arbitrary, Capricious, and Irrational. A separate section of the reply brief addressed the ground of manifest disregard of the law. Furthermore, the discussion at pages 46-49 is introduced by the statement, at the bottom of page 45, that no better example of the arbitrary, capricious, and irrational nature of the decision exists than in the award of damages. Granted, there is the statement at pages 48-49 of the reply brief that [h]ow such an award is anything other than in manifest disregard of the law, arbitrary, capricious, and irrational is beyond explanation. However, application of the term in manifest disregard of the law to this issue was not further explained, and the concept of manifest disregard of the law was not referenced in any way when this issue was discussed in the News's brief on original submission. [I]t is well-settled that [an appellant] may not raise an issue for the first time in a reply brief filed on appeal. Giambrone v. Douglas, 874 So.2d 1046, 1057 (Ala.2003). Furthermore, nowhere in this entire segment of the reply brief (pp. 46-49) is there a citation to any case or to any other law the panel supposedly disregarded. The News's next citation to either of its original briefs in section I-B of its brief on rehearing appears at page 7 and page 8, where the News twice refers to page 62 of the original brief. That page of the original brief formed a part of the lengthy statement of the case and would be pertinent only to the extent that it was brought forward as part of any of the arguments. Next, the News references in its rehearing brief page 64 of its original brief which, again, represents only a continuation of the extended statement of facts. In light of the foregoing review of all of references the News now makes to its original briefs, we simply cannot agree with its assertion on page 8 of its rehearing brief that [t]hroughout this proceeding and this appeal, the News has maintained that such an award [of lost future profits] is in manifest disregard of the law. Rather, the News attacked the propriety of the award of lost future profits only on the completely separate and distinct ground that it was arbitrary, capricious, and irrational, a ground we declined to entertain. At pages 9-10 of its brief on rehearing, the News asserts: In its briefs to this Court, The News again argued that an award of lost future profits in the manner calculated by the panel is inappropriate. (See, e.g., Brief, p. 110-111; Reply Brief, p. 48-50.) The News not only cited authority to the effect that the proper measure of damages in cases such as these is fair market value, not lost future profits, but that, in any event, an award of lost future profits that fails to take into account a plaintiff's current earnings is inappropriate. See Albrecht v. Herald Co., 452 F.2d 124 (8th Cir.1971); Simpson v. Union Oil Co. of Cal., 411 F.2d 897 (9th Cir.1969), rev'd on other grounds, 396 U.S. 13 (1969).... Another case along the same lines is Lehrman v. Gulf Oil Corp., 500 F.2d 659 (5th Cir.1974), which this Court cited in its opinion. As noted, however, on original submission the News discussed Albrecht, including its quote from Simpson, only in furtherance of its argument that double recovery should not be allowed, without any discussion of which method of calculating damages should be preferred. Lehrman v. Gulf Oil Corp., 500 F.2d 659 (5th Cir.1974), which the News did not cite originally, was cited in our June 11 opinion simply for the proposition that lost future profits could be an appropriate measure of damages when based on adequate data. 901 So.2d at 64. The News argued originally only that the award of lost future profits was arbitrary, capricious, and irrational; it did not attempt, as it now does, to relate those contentions to the ground of manifest disregard of the law, and it never argued selectively as between the two methods of calculating damages. III. The Court Overlooked or Misapprehended Significant Points of Law and Fact in Its Decision To Uphold the Panel's Finding of Promissory Fraud. In this section of its rehearing brief (consisting of only two sentences), the News asserts that it pointed out in its original briefs that the panel's finding of promissory fraud notwithstanding the absence of evidence of the essential elements of a present intent to deceive and intent not to perform constitutes a manifest disregard of the law. (Emphasis supplied.) Again, we must analyze the specific citations the News makes to its original briefs to determine the nature of the arguments it advanced at that time. The News cites to pages 67, 73, and 89-90 of its initial brief and to pages 38-39 and 50 of its reply brief. Taking those up in order, we find that at page 67 of its initial brief, the News simply included a bullet point as a part of its statement of the facts, charging that [n]owhere ... is there any evidence of a present intent to deceive any of these particular dealers. The only pertinent statement on page 73 of the original brief (included in the summary of the argument section) is that the panel knew that a present intent to deceive is an element of a claim of promissory fraud. Pages 89-90 are part of the argument section of the original brief relating to the contention that the panel disregarded the law of fraud, and we quoted in its entirety the argument the News made on those pages concerning the alleged absence of proof of present intent. See 901 So.2d at 59-60. We stand by the analysis we then undertook. 901 So.2d at 60-61. The News does not explain in its rehearing brief how our analysis on the issue was flawed, other than to claim that there was an absence of evidence of the requisite of intent. Its present citation to pages 38-39 of its reply brief directs us to a portion of that brief that did not address that issue, but addressed the more basic issue whether the panel had erred in concluding that the fraud in question was not promissory fraud. We agreed with the News that the essential nature of the fraud was that of promissory fraud, and we then analyzed the elements accordingly. Finally, at page 50 of its reply brief, the News simply again asserted that there was no evidence from which the panel could have, in effect, found evidence of a present intent to deceive and not to perform. Therefore, we respectfully disagree with the News's argument that we overlooked or misapprehended, as to the subject of this section of the rehearing brief, any points which the News chose to present in its original briefs. IV. The Court Overlooked or Misapprehended Significant Points of Law and Fact in Upholding the Panel's Refusal to be Governed by the Terms of the Arbitration Agreement. As the News implicitly acknowledges by its citation to pages 81-82 of its original brief (its only citation to its original brief), the News argued this issue in its original brief on the theory that the panel had exceeded its authority by disregarding what the News characterized as a limitation-on-damages clause. We fully addressed this issue in our June 11 opinion, 901 So.2d at 55-56, but the News takes no note in the paragraph of text it devotes to the issue in its brief on rehearing of our analysis, and it offers no argument in opposition to the rationale we presented in our June 11 opinion. Accordingly, there is nothing for us to reconsider. V. The Court Overlooked or Misapprehended Significant Points of Law and Fact in Declining to Adopt Standards of Review Recognized Under the [Federal Arbitration Act]. The final issue the News argues in its rehearing brief is simply that this Court should have recognized and adopted as appropriate additional, alternative standards of review for the vacatur of awards in arbitration cases the ground that an award is irrational and arbitrary (omitting the companion adjective capricious consistently used in this formulation in the original briefs) or that it fails to derive its essence from the underlying contract. As noted, we discussed in detail in our June 11 opinion why we believed our recognition of the ground of vacatur that the arbitrators exceeded their powers or that they acted in manifest disregard of the law, provided a scope of review appropriate to the aims and purposes of arbitration and why we consequently declined to adopt the other grounds the News proposed. On application for rehearing, the News states that [t]he U.S. Court of Appeals for the Eleventh Circuit recognizes [the ground that an award is `irrational' or `arbitrary,' and the ground that an award `fails to derive its essence' from the underlying contract]. See Montes v. Shearson Lehman Bros., Inc., 128 F.3d 1456, 1461-62 (11th Cir.1997). Although the pages of Montes v. Shearson Lehman Bros., Inc., 128 F.3d 1456 (11th Cir.1997), cited by the News contain no reference to the arbitrary and capricious ground other than to note an earlier decision in which that court held an arbitration award not to be arbitrary and capricious, we judicially know, and other portions of the Montes opinion confirm, that the United States Court of Appeals for the Eleventh Circuit recognizes as a nonstatutory reason for vacating an arbitration award that the award is arbitrary or capricious. Montes, 128 F.3d at 1458, 1459 n. 5. The appellant in Montes did not raise that ground, however, and the Montes opinion does not discuss or apply it. Rather, as we pointed out in our discussions of Montes in our June 11 opinion, that decision is noteworthy because in it the Eleventh Circuit Court of Appeals finally adopted the ground of manifest disregard of the law. 901 So.2d at 48-49, 50-51. The Montes opinion contains no reference to the other ground the News now says the Eleventh Circuit recognized in it for vacating an arbitration award, i.e., that the award fails to derive its essence from the underlying contract. The News also contends that this Court previously recognized the grounds of irrational and arbitrary and fails to derive its essence in H.L. Fuller Construction Co. v. Industrial Development Board of Vincent, 590 So.2d 218 (Ala.1991). In its application for rehearing, the News asserts that in Fuller, this court proceeded to determine whether an arbitration award was `inconsistent on its face,' lacked `fundamental rationality,' and was so `imperfectly executed' that it violated the [Federal Arbitration Act]. This contention is not revisited in the supporting brief. At any rate, it represents a serious misreading of Fuller. The terms the News quotes and states indicate our recognition of them in Fuller appear only in a preliminary statement in the opinion in which we explained that the appellant argues that the award is inconsistent on its face, that it lacks fundamental rationality, and that it is so `imperfectly executed' that it violated the [Federal Arbitration Act] and should not be allowed to stand. 590 So.2d at 221 (emphasis supplied). When the Court addressed Fuller's grounds for a determination, however, it addressed from among those contentions only the assertion that the arbitration award was so imperfectly executed that it violated the Federal Arbitration Act (the FAA): Fuller contends that the arbitration award is due to be vacated because it allegedly did not comply with the FAA, which permits the vacation of an arbitration award in the following instance: `(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.' 9 U.S.C. § 10(d). 590 So.2d at 223. After considering that contention, the Court concluded that it could not say that the arbitrators exceeded their powers or so `imperfectly executed' them that the arbitration award in this case should be vacated. 590 So.2d at 223. (The Court did address a second contention that the arbitrators abused their discretion in allowing an opposing party to file its fraud claim in arbitration approximately two years after the other claims had been filed, rejecting the argument on the basis of the FAA's rule, which allowed such amendments. No specific ground or scope of review was acknowledged in that discussion. 590 So.2d at 223-24.) In short, this Court did not determine in Fuller whether the challenged award lacked fundamental rationality or otherwise consider a ground that the award was irrational and arbitrary, and even less so did it take note of the ground that the award fails to derive its essence. The News attaches to its brief on rehearing two exhibits consisting of figures and calculations arranged in columnar form. The first, Exhibit A, is described as representing two of the plaintiffs' hearing exhibits, detailing lost profits for James and Teresa McLendon, and Jesse Glass, respectively. The second, Exhibit B, is described as representing calculations and a methodology for use by this Court in adjusting the awards of the McLendons, Glass, Hugh Stewart, and Kameron Hyde, to deduct each plaintiff's post-dealership earnings from his or her award of lost future profits. The plaintiffs have moved to strike Exhibit B as an item never introduced at the arbitration hearing and not otherwise a part of the record on appeal. The News counters in its Opposition to Motion to Strike that [a]ll of the information presented in Exhibit B can be, and was, ascertained from the record on appeal, citing various portions of the hearing testimony, various portions of depositions, and four hearing exhibits. Although no similar assembly of figures and computations was presented on original submission, we need not rule on the merits of the plaintiffs' motion to strike. The News offers the spreadsheets in question merely to demonstrate the mathematical implications of adjusting the awards to deduct each plaintiff's post-dealership earnings. Because we decline to grant such an adjustment, we need not rule on the motion to strike. Having painstakingly addressed each point of law or fact the News has argued in its brief on rehearing that we overlooked or misapprehended in our original opinion and finding none of those contentions to be well taken, we deny the application for rehearing. APPLICATION DENIED. HOUSTON, SEE, LYONS, BROWN, JOHNSTONE, and STUART, JJ., concur. WOODALL, J., recuses himself.