Court Opinion

ID: 35277
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:26:09+00
Date Added: 2024-06-11T17:13:23.982564
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                   May 7, 2004

                                                         Charles R. Fulbruge III
                                                                 Clerk
                             No. 03-20253

ALLIANZ VERSICHERUNGS, AG,

                                            Plaintiff - Appellant,

                              versus
PROFREIGHT BROKERS INC., ET AL

                                                         Defendants,

PROFREIGHT BROKERS INC.,

                                             Defendant - Appellee.

                      --------------------
          Appeal from the United States District Court
               for the Southern District of Texas
                       USDC No. H-00-2332
                      --------------------

Before HIGGINBOTHAM, DENNIS, and CLEMENT, Circuit Judges.

PER CURIAM:*

     Appellant Allianz Versicherungs, AG, appeals from a judgment

limiting its recovery from Profreight Brokers, Inc. to fifty

dollars based on a contractual limitation of liability.        Allianz

asserted below that Profreight waived its contractual limitation of

liability defense because it did not plead it as an affirmative

defense pursuant to FED. R. CIV. P. 8(c).    Assuming Profreight’s

limitation of liability defense constituted an affirmative defense

     *
        Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                           No. 03-20253
                                -2-

subject to Rule 8(c), the magistrate judge found that the defense

was not waived because Allianz was not prejudiced by Profreight’s

late assertion of it.

     On appeal, Allianz claims that the court erred by (1) finding

that Profreight’s failure to plead limitation of liability as an

affirmative defense did not result in waiver; (2) applying the

contractual limitation of liability to limit its damages because

the magistrate judge based the damage recovery on negligence, not

contract; (3) admitting a contract into evidence that, while

providing the same limitation of liability, was not the actual

contract governing the transaction at issue; (4) finding that

Allianz failed to present admissible and competent evidence of its

recoverable damages; and (5) granting Profreight’s bill of costs.

For the following reasons, we AFFIRM.

     FED. R. CIV. P. 8(c) provides that parties must plead all

affirmative defenses, and it is well-established that “[f]ailure to

follow this rule generally results in a waiver.”1       This rule,

however, is not without exception:   “Although failure to raise an

affirmative defense under rule 8(c) in a party’s first responsive

pleading ‘generally results in a waiver . . . ., [w]here the matter

is raised in the trial court in a manner that does not result in

     1
       FED. R. CIV. P. 8(c); Allied Chem. Corp. v. Mackay, 695 F.2d
854, 855-56 (5th Cir. 1983).
                              No. 03-20253
                                   -3-

unfair surprise . . . technical failure to comply precisely with

Rule 8(c) is not fatal.’”2

     Assuming   without    deciding    that   contractual   limitation     of

liability is an affirmative defense subject to FED. R. CIV. P. 8(c),

Profreight’s failure to plead it did not result in waiver because

no prejudice to Allianz resulted.             The facts do not support

Allianz’s contention that prejudice resulted because it was denied

the benefit of discovery and it incurred unnecessary legal fees.

Profreight first raised this contention in its Joint Pretrial Order

on December 26, 2001, and trial occurred on March 18-19, 2002,

nearly three    months    later.      The   magistrate   issued   its   final

judgment on February 11, 2003.         The fact that Allianz had three

months to consider and prepare for the limitations defense and

adequate time after judgment to move to alter or amend the judgment

refutes Allianz’s assertion that it was prejudicially surprised.3

Moreover, the fact that the applicability of a contract provision

is a pure question of law belies Allianz’s assertion that it needed

more time for discovery.      Finally, Allianz provides no authority

for its contention that a plaintiff can be prejudiced by incurring

more legal fees than it would have incurred if a defense fatal to

     2
       Giles v. General Elec. Co., 245 F.3d 474, 491-92 (5th Cir.
2001) (citing Allied Chem. Corp., 695 F.2d at 855-56).
     3
       See Giles, 245 F.3d at 492 (holding that no unfair surprise
could have resulted from a defense raised and heard “as a contested
issue of law in the joint pretrial order”).
                                No. 03-20253
                                     -4-

its claim had been raised earlier.         With these considerations in

mind, we hold that the defense was not waived.

      Second, Allianz’s claim that the court erred by applying the

contractual     limitation   of    liability    to   damages      based   on

Profreight’s extra-contractual actions was not properly presented

below.      Therefore, we review for plain error.4       “Under a plain

error analysis, the court can correct an error not raised at trial

only if there is (1) error, (2) that is plain, and (3) that affects

the appellant’s substantial rights, and further, if all three of

these conditions are met, the court may exercise its discretion to

notice the forfeited error only if (4) the error seriously affects

the   fairness,    integrity,     or   public   reputation   of    judicial

proceedings.”5     Under this standard, even if the court erred in

applying the contractual limitation, the error did not affect

      4
       Industrias Magromer Cueros y Pieles S.A. v. Louisiana Bayou
Furs Inc., 293 F.3d 912, 921 (5th Cir. 2002). Allianz’s contention
that it properly raised the argument below by “object[ing] to the
application of the limitation provision generally” is insufficient
to preserve error. To preserve error, a party must put a court on
notice regarding the substance of the issue. See Nelson v. Adams
USA Inc., 529 U.S. 460, 469 (2000) (“It is indeed the general rule
that issues must be raised in lower courts in order to be preserved
as potential grounds of decision in higher courts. But this
principle does not demand the incantation of particular words;
rather, it requires that the lower court be fairly put on notice as
to the substance of the issue.”). Although Allianz argued below
that (1) Profreight’s contract defense was waived because not
pleaded, (2) the contractual provision was invalid because not
bargained for, and (3) Profreight, as a broker, could not limit its
liability, Allianz never argued that it was improper for the court
to limit “extra-contractual” damages based on a contract provision.
As a result, the argument was not properly preserved for plenary
review.
      5
          United States v. Solis, 299 F.3d 420, 449 (5th Cir. 2002).
                                 No. 03-20253
                                      -5-

substantial rights and seriously affect the fairness, integrity, or

public reputation of judicial proceedings.

     Third, Allianz claims that the court erred by enforcing the

limitation    of    liability    because   the    contract    was   improperly

admitted into evidence, resulting in insufficient evidence to

support the court’s application of the contract. These claims were

not properly raised below, and are therefore reviewed for plain

error.6    Allianz concedes that it did not object to the contract’s

admission    when    it   was   offered,   but   contends    that   its   later

objection to the contract as irrelevant is sufficient because the

contract’s inadmissibility was only established later during cross-

examination.       FED. R. CIV P. 46 makes clear that “if a party has no

opportunity to object to a ruling or order at the time it is made,

the absence of an objection does not thereafter prejudice the

party.”7     The facts surrounding this case do not establish that

Allianz had no opportunity to object when the evidence was offered.

Allianz based its objection on the dates of the document, which

revealed that while the contract offered by Profreight may include

the same boilerplate limitation of liability as the contract

governing    the    disputed    transaction,     it   was   not   the   specific

contract at issue.        The date of the offered contract appeared on

its face, and the date of the actual transaction was undisputed.

The grounds for the objection were not “revealed” during cross-

     6
         Louisiana Bayou Furs Inc., 293 F.3d at 921.
     7
         FED. R. CIV. P. 46.
                               No. 03-20253
                                    -6-

examination and Allianz cannot now seek plenary review.8                 Because

any error did not affect substantial rights and seriously affect

the   fairness,   integrity,    or       public   reputation    of       judicial

proceedings, there is no plain error.

      Allianz next argues that the district court erred in rejecting

its evidence of recoverable damages. However, we need not consider

this issue because the contract’s limitation of liability clause

limits Allianz’s recovery to fifty dollars.

      Finally, Allianz claims that the court erred by awarding costs

to Profreight as a prevailing party under Fed. R. Civ. P. 54(d)(1).

The “prevailing party” determination is a clear, mechanical one;

when a    judgment   is   entered   in    favor   of   a   party,   it    is   the

prevailing party.9        Given that the court entered judgment for

Allianz, it is the prevailing party, and Profreight is not entitled

to costs under Fed. Rule Civ. P. 54(d)(1).

      AFFIRMED in part, and REMANDED for consideration of Allianz’s

costs.

      8
       Allianz’s actions also violated Local Rule 46 of the
Southern District of Texas, requiring that “[o]bjections to
admissibility of exhibits must be made at least three business days
before trial by notifying the Court in writing of the disputes,
with copies of the disputed exhibit and authority.”
      9
       See Baker v. Bowen, 839 F.2d 1075, 1081, (5th Cir. 1988);
see also 10 James Wm. Moore et al., Moore’s Federal Practice ¶
54.101[3] (3d ed. 1998) (“[T]he prevailing party is the party in
whose favor judgment was entered, even if that judgment does not
fully vindicate the litigant’s position in the case.”).