Opinion ID: 1695998
Heading Depth: 1
Heading Rank: 5

Heading: Defendant's Third Assignment of Error

Text: In its third assignment of error, FNBJ contends that any breach which it allegedly committed was not a proximate or foreseeable cause of Trans-Global's damages. It argues that protracted litigation was required to establish that the FNBL letter of credit did indeed expire on July 24, 1982, and that there was no way for the bank to foresee the resulting loss to Trans-Global. Nor, FNBJ maintains, were its actions the cause-in-fact of Trans-Global's damages. It asserts that the FNBL letter of credit was defective in that it was technically not a revolving letter of credit, as guaranteed in Pel-Star's contract with Trans-Global, and because, by its terms, it was subject to the discretion of the Lafayette bank. FNBJ submits that although letters of credit are, as a general rule, independent contracts from the underlying obligations, the FNBL letter of credit was not typical in that it allowed the bank, and thus the bank's customer, Pel-Star, to decide whether the terms of the underlying contract had been met in order to honor a draft upon the letter of credit. FNBJ also refers to testimony by Bill Oury, president of FNBL, that he would not have permitted any draft on the letter of credit without the approval of Pel-Star's president, David Fitzgerald. Without that approval, which Fitzgerald testified he would not have given, Oury stated that the letter of credit would have expired for the remaining shipments. FNBJ additionally cites the fact that Pel-Star, having cancelled its agreement with Trans-Global after delivery of the first shipment, obtained injunctive relief to prevent FNBL from honoring the draft upon the second shipment. Therefore, FNBJ notes, the Lafayette bank would have been unable to honor the draft even if it had been timely presented. The bank further argues that under the shipment and delivery schedules established in Trans-Global's contracts with CCSI and Pel-Star, the letter of credit would have expired regardless of any action that it did or did not take. It notes that Trans-Global barely met the deadline to draw upon the FNBL letter of credit for the first shipment, which was done simply on documents. The bank claims that Trans-Global could not possibly have met the deadlines for the second through tenth shipments, which required delivery, customs clearance, and acceptable test results, by the 24th of each month, in order to maintain the letter of credit. FNBJ also contends that there was an amendment to the Trans-GlobalPel-Star contract which specified that shipments three through ten (not just six through ten) were to be of threaded couplings. It notes that Trans-Global concedes that in order for the threaded couplings to have the required API monogram, CCSI would have to have API certification, and that such certification was not obtained until May of 1983. FNBJ concludes that it would thus have been impossible for Trans-Global to draft timely upon any of those shipments. In addition to claiming that its actions were not the cause of Trans-Global's damages, FNBJ contends that the award of lost profits in this case was entirely speculative. The $1,079,672 jury award was based on the testimony of William Legier, Trans-Global's expert in financial planning and certified public accounting. FNBJ argues that in order for Legier's calculations to be correct, Trans-Global would have had to prove that every draft on the FNBL letter of credit would have been timely made, with proper documentation and Pel-Star's approval, and that the Lafayette bank would have agreed to pay them. FNBJ strenuously argues that Trans-Global failed to prove that fulfillment of these conditions would have been possible, much less probable. The bank notes that the trial court agreed with it that the damages awarded by the jury were entirely too speculative, and, as a matter of law, had to be set aside. FNBJ contends, however, that there is no more basis in this case for an award of $500,000 than for an award of $1,079,642. Finally, FNBJ contends that Trans-Global failed to make any attempt to mitigate its damages. It argues that even when Wyatt and Naquin knew that the bank was not going to issue a revolving letter of credit as required in the CCSI contract, and that the issuance of subsequent letters would be conditioned on performance, they did not seek alternative financing. We first address whether the court of appeal was correct in reversing the district court's judgment NOV which reduced the damage award to $500,000, and in reinstating the jury award of $1,079,642. Before rendering a judgment NOV, the trial court was required to evaluate the foregoing evidence in the light most favorable to the plaintiff, in order to determine whether the verdict was one which a reasonable jury could have reached. Campbell v. Mouton, 373 So.2d 237 (La.App. 3d Cir.1979). A judgment NOV cannot be granted merely when there is a preponderance of evidence for the mover, but only where [t]he facts and inferences from the evidence strongly and overwhelmingly point to a conclusion different than that reached by the jury. Scott v. Hospital Serv. Dist. No. 1, 496 So.2d 270 (La.1986) (quoting Blum v. New Orleans Pub. Serv., Inc., 469 So.2d 1117 (La.App. 4th Cir.1985)). We conclude that the trial judge correctly applied the standard in this case. As FNBJ argues, the jury award as calculated by Legier depended on the fulfillment of all of the conditions in Trans-Global's contracts with both CCSI and Pel-Star. FNBJ presented persuasive evidence that this eventuality was unlikely to occur. Such factors as the tight delivery schedule specified in the contracts, Pel-Star's attempt to cancel its contract with Trans-Global, and CCSI's inability to acquire API certification (for the threaded couplings) within the necessary time period strongly suggest that the transaction would not have progressed smoothly through all ten shipments, even had FNBJ timely issued its own second and subsequent letters of credit. In sum, we find that there was strong support in the record for the trial court's judgment NOV, and that therefore the court was correct in reducing the damages award. We next address FNBJ's contention that the reduced amount awarded by the trial court was itself excessive and impermissibly speculative. Because that court did not explain the reasoning behind its award of $500,000, we are relegated to determining whether the record supports a conclusion that that amount lies within the wide range of discretion accorded the trier of fact. We find that although the award is at the high end of that range, it is one which reasonable people might have rendered. First, despite FNBJ's argument that the first two shipments of blank couplings did not meet the specifications in either Trans-Global's contract with Pel-Star, or in the FNBL letter of credit, Trans-Global produced at trial the reports of an approved testing firm, A.M.F. Tubiscope, which had inspected samples from both shipments and found them to meet API specifications. Conformity with API specifications was the only requirement regarding the quality of the couplings in either the Trans-Global Pel-Star contract or the FNBL letter of credit. Furthermore, when FNBJ attempted to make its second draft on the FNBL letter of credit, its own officer, Don Lathrop, stated under oath that all necessary and required documentation is attached to the draft. Moreover, even if, as FNBJ claims, Trans-Global had agreed to provide additional documents of inspection to Pel-Star, the FNBL letter of credit stood as a separate contract. If its terms were met, the bank was obligated to honor the holder's draft, regardless of whether the underlying contract terms were fulfilled, the customer for whom it had issued the letter was insolvent, or the bank was facing litigation with its own customer. See Cromwell v. Commerce & Energy Bank of Lafayette, 464 So.2d 721 (La.1985); Schweibish v. Pontchartrain State Bank, 389 So.2d 731 (La. App. 4th Cir.1980); LSA-R.S. 10:5-114. Therefore, despite Pel-Star's cancellation of its contract with Trans-Global, its resort to litigation to prevent FNBL from honoring Trans-Global's drafts, and its subsequent bankruptcy, FNBL was legally obligated to pay the drafts if they were presented in a timely manner and with the requisite accompanying documentation. Trans-Global categorically denies FNBJ's claim that the Trans-GlobalPel-Star contract had been amended to state that only the first two, rather than the first five shipments would consist of blank couplings. It maintains that the proposed amendment contemplated that Pel-Star would have its bank strike any time requirement from its letter of credit, a change which Pel-Star was evidently unable to accomplish. Therefore the amendment was never adopted. Nor does it seem unreasonable to assume that had FNBJ issued its second letter of credit in May, as contemplated, the second shipment of couplings could and would have arrived in the United States and been tested in time for FNBJ to present a draft to FNBL by July 24th, and that had FNBJ continued to issue the letters on a monthly basis, the subsequent deadlines could and would have been met. For example, the second shipment was evidently placed on board on July 31 (trial testimony indicated that the actual loading date may have been later), and arrived in Houston on September 17th. If that consignment had been shipped in early June, the couplings could have arrived and been tested by July 24th. Perhaps the most difficult damages to quantify are those associated with the shipments six through ten of threaded couplings. FNBJ introduced copies of telexes between CCSI and Trans-Global which indicated that as late as September 1982, there were still serious obstacles to CCSI's acquiring the certification necessary to manufacture threaded couplings with the requisite API stamp. Further, CCSI did not actually obtain API certification until May of 1983. However, there was testimony that Trans-Global, following FNBL's refusal to honor a second draft on its letter of credit, had attempted to stall the Chinese and the accreditation process until it found another buyer for the couplings. Wyatt testified that We could have expedited the process to get them approved if we'd wanted to. As previously related, the trial judge found that the jury award, which granted the plaintiff 100% of the profits that it would have made if the remaining nine monthly shipments had been successfully completed as planned, was impermissibly speculative and conjectural. [8] He thereupon reduced the award by slightly more than 50%, to $500,000. We realize that the reduced award also reflects some speculation regarding how many shipments could and would have been successfully completed if FNBJ had posted its second and subsequent letters of credit in a timely manner. As discussed above, however, there is support in the record for the court's determination. When damages are insusceptible of precise measurement, much discretion is left to the court for their reasonable assessment. La.C.C. art. 1999; see also Coco v. Winston Ind., 341 So.2d 332, 335 (La.1977) (Realistically, in quantum issues, as in other issues, there must necessarily be a degree of uncertainty in predicting the ultimate result in a given case.); Brantley v. Tremont & Gulf Ry. Co., 226 La. 176, 75 So.2d 236 (1954) (when plaintiff has sustained damage as the result of the defendant's fault, trial court must fix quantum as best it can, and in this connection, trial judge is vested with much discretion). Any recalculation by this court of the amount owed to the plaintiff in this case would itself be based on speculation, and would constitute a substitution of our judgment for that of the trial judge. For the foregoing reasons, therefore, we reinstate the trial court award of $500,000.