Opinion ID: 170933
Heading Depth: 1
Heading Rank: 5

Heading: duplication of equitable adjustments

Text: MK next argues the judgment includes GIT's costs for equitable adjustment claims twice, resulting in a duplication of damages. MK moved to amend the judgment under Fed.R.Civ.P. 59(e), asking the district court to reduce the judgment by $3,986,279, the amount of damages awarded for equitable adjustments. The district court denied the motion. Whether an award is duplicative is a question of fact, which we review for clear error. United Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1235 (10th Cir.2000). The contract allowed GIT to recover equitable adjustments. [13] To collect equitable adjustments, GIT had to show liability, causation, and injury. Morrison Knudsen I, 175 F.3d at 1244. The contractor must not only prove that the government specifically caused its increased costs, but must prove that those costs were reasonable, allowable, and allocable under the contract. Id. In Morrison Knudsen I, the judgment was vacated, in part, because GIT failed to present sufficient evidence that it was entitled to equitable adjustments. Id. at 1245 (GIT presented very little or no evidence of how MK's actions specifically caused GIT to incur the costs claimed in its damage exhibits nor did they show that those costs were reasonable.). Due to the district court's failure to employ a special-verdict form, this court was unable to affirm those awards that were permissible and remanded for a new trial on damages. Id. at 1254-55. At the second trial, the district court employed a special-verdict form in which the several categories of damages were listed. The jury was asked to award damages in Category 1 for work performed under the contract before the effective date of termination. Category 2 included the cost of storage, transportation, and other expense items incurred that were necessary for the preservation, protection or disposition of the termination inventory and equipment, i.e. post-termination costs. [14] Category 3 was entitled Equitable Adjustments and the special-verdict form asked the jury to identify each equitable adjustment to which GIT was entitled and specify the award on each item. MK argues the equitable adjustments awarded in Category 3 were already included in the jury's damage calculations in Categories 1 and 2. The purpose of Category 3, MK asserts, was simply to list the equitable adjustments in order for this court to provide meaningful appellate review and ensure each equitable adjustment was properly awarded. Specifically, MK relies on Defense Exhibit K7, GIT's damage exhibit. That exhibit organized GIT's costs by two alternative methods. Exhibit K7 first organized GIT's damages by pre-termination and post-termination costs, excluding bonding, overhead, and profit. Pre-termination costs were valued at $5,273,480. Post-termination costs were valued at $1,433,458. These calculations included all equitable adjustments and total $6,706,938. Next, Exhibit K7 presented an alternative way of organizing the damages by presenting the same costs, but categorizing the damages in terms of equitable adjustments and non-equitable adjustments. Equitable adjustment costs, excluding bonding, overhead, and profit, were calculated to be $3,903,771 while non-equitable adjustment costs were valued at $2,803,166. This calculation is nearly identical, totaling $6,706,937. GIT also sought costs for bonding, overhead, and profit [15] in the amount of $2,046,936. [16] Out of this sum, $1,278,947 is for non-equitable adjustment costs and profit. Thus, GIT sought $4,082,113 in non-equitable adjustment costs, $4,671,760 in equitable adjustments, and $8,753,873 total. [17] Following closing arguments, a juror sought clarification on where specific awards should be placed on the jury verdict form. The juror asked: Category 1 states for GIT's work performed under the MK-GIT contract, I could interpret all work to be under the contract, including [equitable adjustments], since the contract includes the notion of [equitable adjustments.] Should or should not the number in category 1A include the [equitable adjustments]? R. Vol. XII at 115. MK argued to the district court that equitable adjustments should only be placed in Category 3. Id. at 110. The district court agreed and informed MK it would instruct the jury to place its equitable adjustment awards only in Category 3. Id. at 111. To the jurors, the district court answered the juror's question, ... the answer is you should see instruction 3.2 and [] that's related to category 3. Id. at 115. [18] The jury awarded GIT a total of $7,375,808 in pre-termination and post-termination costs, including bonding, overhead, and profit. [19] It then awarded GIT $3,986,279 in equitable adjustments. The district court added these sums together in the judgment. Thus, MK argues the jury award must be an improper double recovery that the jury reached by including equitable adjustments in the pre- and post-termination award as well as under Category 3. This court will only disrupt a jury verdict for duplication if the verdict amount is not within the range of evidence. See United Phosphorus, Ltd., 205 F.3d at 1228; Midwest Underground Storage, Inc. v. Porter, 717 F.2d 493, 501-03 (10th Cir. 1983). It is well settled that a verdict will not be upset on the basis of speculation as to the manner in which the jurors arrived at it. Midwest Underground Storage, 717 F.2d at 501. As we explained in United Phosphorus, even where the chance is slight that the jury arrived at the award without erroneously duplicating, if the verdict is within the range of the evidence it will be upheld. 205 F.3d at 1228 (quotation omitted). Where, however, the jury verdict cannot be explained by evidence in the record and duplication is apparent, the court, either sua sponte or on motion of a party, should reduce the judgment by the amount of the duplication, and thereby prevent double recovery. Mason v. Okla. Tpk. Auth., 115 F.3d 1442, 1459 (10th Cir. 1997). GIT contends because the total jury award of $15,644,582 was less than the $16,692,818 supported by Exhibit K7, a finding of duplication would be purely speculative. This argument, however, fails to account for the special verdict form used by the parties. For each category of damages, therefore, the jury was limited to awarding a sum supported by evidence for that specific category. The jury awarded GIT a total of $7,375,808 in pre-termination and post-termination costs. There is no evidence, however, supporting this award without including equitable adjustments. Based on GIT's damage exhibits, the maximum amount the jury could have awarded for pre- and post-termination costs, excluding equitable adjustments, was $4,082,113. Thus, MK is correctthe jury awarded GIT equitable adjustments in Categories 1 and 2. [20] It is clear on the face of the jury verdict form that duplication occurred, and this court must therefore reduce the verdict by the amount duplicated. MK asks this court to reduce the verdict by $3,986,279, the amount the jury awarded in Category 3. There are several approaches we may take in fashioning a remedy: (1) reduce the jury verdict by the total of all equitable adjustments awarded in Category 3 and order a remittitur, as suggested by MK; (2) reduce the jury verdict by the amount of damages in Categories 1 and 2 not supported by the evidence and order a remittitur; or (3) remand for a new trial on damages. This court concludes a remittitur is the most appropriate remedy in this case. MK's liability was established in Morrison Knudsen I and is not at issue in this case. See, e.g., Malandris v. Merrill Lynch, Pierce, Fenner & Smith Inc., 703 F.2d 1152, 1168 (10th Cir.1981) (explaining new trial unnecessary where a court concludes no error occurred on liability). Although MK successfully proved duplication occurred, it cannot prove every equitable adjustment awarded in Category 3 was also present in Categories 1 and 2. We therefore will employ approach number two and fashion a remedy based on the maximum amount of damages that are reasonably supported by the evidence in the record. See K-B Trucking Co. v. Riss Int'l Corp., 763 F.2d 1148, 1161-62 (10th Cir.1985); see also Dixon v. Int'l Harvester Co., 754 F.2d 573, 590 (5th Cir.1985) (using a maximum recovery rule to determine the size of the remittitur by reducing the verdict to the maximum sum the jury could have properly awarded). GIT established it incurred $4,082,113 in non-equitable adjustment pre-termination and post-termination costs, $3,293,695 less than the $7,375,808 awarded by the jury. Accordingly, we remand to the district court with directions to enter a remittur order for acceptance of a judgment reducing the award by $3,293,695, or, if GIT chooses, a new trial on damages. See Malandris, 703 F.2d at 1178.