Opinion ID: 2669470
Heading Depth: 2
Heading Rank: 1

Heading: Adequate Proof of the Damage Amount

Text: Gainey contends that General Electric Capital did not establish its damages at trial. We will overturn a district court’s damages calculation only for clear error. Canderm Pharmacal, Ltd. v. Elder Pharms., Inc., 862 F.2d 597, 606 (6th Cir. 1988). The district court awarded a total of $429,175.65 to General Electric Capital. It arrived at this number through five exhibits entered into evidence by General Electric Capital at trial through Kevin Partin: Exhibits 11, 12, 17, 18 and 21. Kevin Partin testified at trial on behalf of General Electric Capital concerning the appraisals and the final amounts received at auction for the returned equipment. These exhibits are the proof of claims filed by General Electric Capital in the Super Service bankruptcy proceeding and the appraisals of Taylor & Martin, Inc., and AccuVal, two professional appraisal companies used to value the returned trailers. Gainey did not object to introduction of any of these exhibits at trial. The district court added together the deficiency on the 2000 Super Service Equipment Lease of $392,602.98 and the cure amount under the 2004 lease with Lester Coggins Trucking of $36,571.67 to arrive at the total damage amount. -7- Case No. 12-2671 Gen. Elec. Cap. Corp. v. Gainey While the burden was on General Electric Capital to establish damages, Gainey provided little reliable counterproof or challenge in the district court to the accuracy of the amounts put forth by General Electric Capital. Gainey simply claims that there is no deficiency on the Super Service Lease because the monthly payments were made until October 2008. Gainey provided little more than conclusory statements to counter or rebut the extensive documentation submitted by General Electric Capital. B. October 6, 2006, Audit Letter Report from General Electric Capital to Super Service Gainey challenges the amount of indebtedness based on an audit report General Electric Capital sent to Super Service dated October 6, 2006. Defendant’s Ex. D. Gainey contends that an entry on the audit report that said “Remaining Balance: $269,859.48” was the full amount due and owing on the 2000 lease amount as of September 30, 2006. Based on this number, Gainey claims that it is impossible that he would owe more than that amount in 2008 when payments stopped on the August 1, 2000, lease agreement. Under the lease agreement, Super Service made a monthly rental payment. Also pursuant to the Equipment Lease, General Electric Capital was required to sell the trailers at the end of the lease term and Super Service was responsible for any amount less than 30% of the original cost. (This was to encourage the lessee, here Super Service, to maintain the equipment during the lease term.) Therefore, pursuant to the terms of the 2000 Equipment Lease and renewals of that lease, Super Service (and Gainey through the personal guaranty) owed monthly rent plus any shortfall below 30% of the original total cost of the trailers upon return of the trailers. The audit report shows only the monthly rent payments, not any resulting shortfall, which could not be calculated until the trailers were returned. Therefore, Gainey is incorrect that the October 2006 -8- Case No. 12-2671 Gen. Elec. Cap. Corp. v. Gainey audit report is evidence of Super Service’s total indebtedness to General Electric Capital as of that date. C. Mitigation of Damages General Electric Capital had the duty to mitigate damages with respect to any breaches under the equipment leases. Gainey contends that General Electric Capital failed to get a reasonable price for the trailers returned pursuant to the lease terms. General Electric Capital relied on expert testimony and documentation of the trailers’ value provided by professional appraisers. Gainey relied on the testimony of one of his employees and his own calculations and mostly anecdotal evidence that the trailers at issue were worth more than General Electric Capital had received for them. Gainey advances two arguments to demonstrate that General Electric Capital did not adequately mitigate its damages under the terms of the equipment leases. First, Gainey contends that Super Service made inquiries in January 2009, after commencement of the bankruptcy, about not rejecting the leases in the bankruptcy proceeding and buying back 94 trailers from General Electric Capital but that General Electric Capital refused to consider this option. The only evidence that Super Service tried to “unreject” the leases came from the testimony of Carl Oosterhouse, an employee of Gainey Corporation. No documentation was offered at trial to corroborate that such an offer was made to General Electric Capital. Gainey points us to a memorandum dated March 23, 2009, from Gainey to Oosterhouse, but it was not offered into evidence at trial and we may not consider it on appeal. In any event, General Electric Capital denies it knew of this memorandum or the desire of Super Service to buy back the trailers except the testimony of Oosterhouse, which the district court, as the fact finder, did not find credible. -9- Case No. 12-2671 Gen. Elec. Cap. Corp. v. Gainey Second, General Electric Capital had the duty to conduct a commercially reasonable sale of the trailers once Super Service returned them. Gainey contends that General Electric Capital “received far less than it should have” because it did not let potential buyers know about the auction of the trailers, and the appraisal of the trailers was faulty. The trailers were all 2001 Great Dane models and were eight years old by the time of the auction. The trailers all sold for between $2,500 and $3,610 in early 2009. Gainey points to appraisals ranging between $6,000 and $11,000 in August 2008. Defendant’s Exhibits Q, T and X. However, these appraisals were valuations based only on the make and age of the trailers without physically inspecting the actual trailers. Hence, these valuations used by Gainey are not particularly useful as true “appraisals.” In addition, the market in early 2009 for hauling had declined considerably since the summer of 2008 due to the economic downturn during the fall of 2008. Steven Phelps testified for General Electric Capital that he personally inspected the trailers and had Truck.com inspect the trailers. He testified that most of the trailers were in “poor” condition, citing a myriad of issues with the trailers. Gainey’s only rebuttal to Phelps’ testimony about the poor condition of the trailers was his own testimony about the condition of the trailers. On March 18, 2009, General Electric Capital conducted a liquidation auction of the trailers through the regularly scheduled auction process. From the auction and a separate sale after the auction to sell some of the unsold trailers, General Electric Capital received sale proceeds of $306,210. It also incurred additional expenses of $35,274.78 to sell the trailers. The deficiency after the liquidation was $392,603.98. Plaintiff’s Ex. 12. We find no clear error in the district court’s adoption of this calculation. D. Lester Coggins Trucking - 10 - Case No. 12-2671 Gen. Elec. Cap. Corp. v. Gainey Gainey maintains that the district court erred in awarding General Electric Capital $36,571.67 as the “cure amount” for the Lester Coggins Lease from 2004. Gainey argues that General Electric Capital pursued recovery of all it was owed under the Lester Coggins Trucking Lease in the bankruptcy court and recovered everything to which it is entitled. However, General Electric Capital expressly reserved in the bankruptcy court the right to pursue Gainey for payment under the personal guaranty for the difference between the “Disputed Cure Amount” and the “Revised Cure Amount.” Stipulated Order Resolving Disputed Cure Amount (Apr. 23, 2010). Ex. 17 at 2. The district court did not err in adding in the $36,571.67 “cure amount” to Gainey’s personal liability for the deficiency not recovered in the bankruptcy court. In sum, Gainey has not demonstrated that the district court’s damage award was clear error. For the foregoing reasons, we affirm the judgment of the district court. - 11 -