Court Opinion

ID: 767268
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:31:06+00
Date Added: 2024-06-11T17:55:27.126399
License: Public Domain

200 F.3d 836 (D.C. Cir. 2000)
Tri County Industries, Inc., Appellantv.District of Columbia, et al., Appellees
No. 99-7028
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 12, 1999Decided January 18, 2000Rehearing and Rehearing En Banc Denied March 8, 2000*

[Copyrighted Material Omitted]
Appeal from the United States District Court for the District of Columbia, (No. 94cv02014)
Frank J. Emig argued the cause for the appellant.
Donna M. Murasky, Assistant Corporation Counsel, Office  of the Corporation Counsel, argued the cause for the appel- lees.  Robert R. Rigsby, Interim Corporation Counsel, and Charles L. Reischel, Deputy Corporation Counsel, Office of  the Corporation Counsel, were on brief for the appellees.
Before:  Edwards, Chief Judge, Silberman and Henderson,  Circuit Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge:

1
This appeal arises from proceedings determining what damages, if any, appellant Tri County Industries, Inc. (Tri County) should be awarded to compensate for what this court previously deter-mined to be the District of Columbia's (District) violation of its fifth amendment right to procedural due process.  See Tri County Indus., Inc. v. District of Columbia, 104 F.3d 455, 460-62 (D.C. Cir. 1997).  Following the first of two trials, the jury awarded $5,000,000.  The trial court then granted a new  trial, nisi remittitur to $1,000,000, which was refused.  At the  second trial, the district court admitted evidence excluded  from the first and the jury returned nominal damages of  $100.  Tri County challenges the court's order granting the  District's alternative motion for a new trial as well as several  evidentiary rulings in the second trial and requests reinstatement of the first award or, in the alternative, a new trial due  to allegedly erroneous evidentiary rulings during the second  trial.  For the reasons set forth below, we reverse the district  court's order of July 23, 1998 and reinstate the original jury  verdict of $5,000,000.

I.

2
On February 26, 1993 Tri County obtained a building  permit from the District authorizing conversion of an empty  warehouse into a facility for its business of decontaminating  soil tainted with oil and other hazardous materials.  While  securing the permit, Tri County also obtained an air quality  permit as well as a waiver of the required environmental  impact statement.  Even several months after it obtained the  necessary permits, however, it had not begun operating due  to equipment delivery delays.  On September 7 it received a  District citation for storing soil at the facility without the required certificate of occupancy.1  Tri County neither re- moved the soil nor paid the fine;  consequently, the District  issued a stop-work order on September 22.  Tri County did  not challenge the citation or order.  Its failure to respond led  to an order by the District Department of Consumer and  Regulatory Affairs (DCRA) dated October 13, 1993 purporting to suspend Tri County's building permit.

3
The building permit had already been suspended on September 20, however, when, prompted by a groundswell of  community opposition to the project, Hampton Cross, acting  DCRA director, summarily suspended Tri County's building  permit.The DCRA sent Tri County a letter requesting  further information on October 15, 1993 to which Tri County  did not respond.  On December 6 the DCRA sent another  letter, this time rescinding the environmental impact statement waiver and threatening imminent revocation proceedings on the building permit.  Tri County's only response was  to remove the soil that had caused the initial citation.  Tri  County's counsel advised it that an appeal likely would be  influenced by politics given the strong community opposition  and that he could not guarantee when such an appeal would  be heard.  Given the high rental cost of the property in  question and the necessity of purchasing, without delay,  costly equipment in high demand, Tri County estimated the  costs of an appeal at nearly $1,000,000.  With no assurance of  a prompt hearing and the prospect of a politically influenced  review process, Tri County abandoned its project.

4
Tri County brought suit under 42 U.S.C. § 1983 and succeeded in its challenge to the September 20 suspension of its  building permit when this court reversed the district court's  dismissal, holding that the suspension violated Tri County's  right to procedural due process.  See Tri County Indus., 104  F.3d at 460-62.  We remanded for consideration of damages.  See id. at 462.  The subsequent proceedings in the district  court are at issue in this appeal.

5
The first trial began on April 14, 1998.  Tri County presented evidence of its costs already incurred, evidence of lost  profits through the testimony of a mechanical engineer and  the report of an economist and evidence as to the local  market demand for a soil treatment facility through the  testimony of a geologist at an environmental consulting firm.   The District largely accepted the testimony, often failing to  object or seriously cross-examine.  Instead, the District re- lied on its argument that Tri County failed to mitigate its  damages when it refused to provide the information the  DCRA requested and when it declined to challenge the stop- work and suspension orders.  The District also sought to  demonstrate that Tri County might not have been allowed to  operate its facility because community opposition, arising  largely out of concern over the facility's effect on the health  and safety of the community, would derail the regulatory  procedures.  Hindering its argument was the trial court's  exclusion or striking of evidence relating to health and safety  concerns.  See Joint Appendix (JA) 186-89.  The court found  the District's permitting process had resolved the issues as a  matter of law.  See id. at 182-83, 189.  In the end, the jury  awarded $5,000,000.

6
The trial court denied the District's post-trial motion for  judgment as a matter of law but granted the alternative  motion for a new trial, nisi remittitur to $1,000,000.  Ad- dressing the District's primary argument, the court ruled that  the District had to establish both the standard for reasonable  mitigation under the circumstances and that Tri County failed  to meet it.  The District failed to sustain that burden, particularly in light of Tri County's evidence that it would have to  spend nearly $1,000,000 to recoup its expenses of $536,421.   The court reversed field, however, in reviewing the award for  future damages which, assuming the $536,421 in costs were  awarded, constituted $4,463,579 of the $11,628,174 figure Tri  County presented to the jury.  Emphasizing that Tri County  did not "invest[ ] a penny to seek reinstatement of the  unlawfully suspended building permit," the court ruled that the District need not have established a reasonableness standard because Tri County's failure to mitigate was unreason- able per se.  District Court's Memorandum Order filed July  23, 1998 (Memorandum Order), at 2.  The court also found  the lost profits evidence should not have been considered by  the jury without the District having the chance to prove that  the facility might not have been allowed to operate.  Accordingly, the court found the estimate of lost profits "too speculative and remote" and, in any event, found the award "grossly  excessive."  Id.

7
Tri County declined the $1,000,000 remittitur and a second  trial commenced on January 29, 1999.  In this trial, the  district court allowed the District to admit the health and  safety evidence originally excluded.  This time the District  challenged Tri County's experts and offered the testimony of  three new witnesses, one of whom refuted Tri County's  estimate of future profits.  Another witness discussed a potential zoning bar to the facility and the third discussed  health and safety hazards associated with soil remediation.   The second jury awarded Tri County nominal damages of  $100.

II.

8
We review the district court's grant of a new trial for abuse  of discretion.  See Langevine v. District of Columbia, 106  F.3d 1018, 1023 (D.C. Cir. 1997) (citing Hutchinson v. Stuck- ey, 952 F.2d 1418, 1420-21 (D.C. Cir. 1992)).  "[A] more  searching inquiry is required" if the new trial is granted than  if denied, however, because of "the concern that a judge's  nullification of the jury's verdict may encroach on the jury's  important fact-finding function."  Id. at 1023 (quoting Vander  Zee v. Karabatsos, 589 F.2d 723, 729 (D.C. Cir. 1978)).

9
In its post trial order, the trial court stated three reasons  for granting a new trial:  (1) Tri County's failure to mitigate;   (2) the speculativeness in Tri County's projections of future  profits;  and (3) the "grossly excessive" jury verdict.  Memorandum Order at 2.  The court also thought it had erred in its  evidentiary rulings excluding evidence related to community opposition to the project.  See Memorandum Order at 2  (plaintiff's expert testimony should not have been received  "without allowing [the District] to adduce proof that plaintiff's  soil remediation facility would never have been permitted to  operate").  Tri County challenges each ground.

10
First, the court found Tri County's failure to expend any  resources to seek reinstatement of its building permit per se  unreasonable in light of the $11,628,174 it claimed in lost  profits.  See id.  Tri County contends that the determination  of whether a party satisfied its duty to mitigate, a question  that turns on what action was reasonable under the circum- stances, see, e.g., Berger v. Iron Workers Reinforced Rodmen,  Local 201, 170 F.3d 1111 (D.C. Cir. 1999);  Lennon v. United  States Theatre Corp., 920 F.2d 996 (D.C. Cir. 1990), is a jury  question.  Here, we agree with Tri County that its alleged  failure to mitigate was an issue properly submitted to the  jury.  See Hilord Chem. Corp. v. Ricoh Elecs., Inc., 875 F.2d  32, 38-39 (2d Cir. 1989);  Waldorf v. Shuta, 142 F.3d 601, 623- 24 (3d Cir. 1998).  Moreover, failure to mitigate is an affirmative defense and the party asserting it bears the burden of  demonstrating the opposing party's failure to act reasonably  under the circumstances.  See Lennon, 920 F.2d at 1000;  see  also Mark Keshishian & Sons, Inc. v. Washington Square,  Inc., 414 A.2d 834, 842 n.19 (D.C. 1980) (burden of showing  mitigation is on party raising issue) (citing Camalier &  Buckley-Madison, Inc. v. Madison Hotel, Inc., 513 F.2d 407,  419-20 n.92 (D.C. Cir. 1975)).

11
Tri County created a jury issue when it offered an explanation for its failure to challenge the DCRA's suspension order  or otherwise pursue administrative remedies.  Its explanation  included evidence that it believed suggested the reviewing  body, the District's Board of Appeals and Review, might not  have acted impartially due to political influence and that an  appeal would have been indefinitely slow and expensive2.  Moreover, a jury justifiably could havefound it reasonable for Tri County not to contest the September 22 stop-work order and subsequent suspension resulting from the failure to pay the fine given the pre-existing September 20 suspension.  The District argues simply that the evidence it presented regarding Tri County's failure to mitigate "was firmer by far."  Brief of Appellee at 30.  Tri County responds that it is improper to now assess the relative strength of the parties' showings.  Indeed, the trial court properly gave the failure to mitigate issue to the jury and properly instructed the jury on that issue:

12
[T]he law requires that an injured party take all the reasonable steps it can to avoid further injury and reduce its loss.  Tri County may not recover damages for any portion of its injury which it could have avoided through the exercise of reasonable care and prudence....  The District asserts that Tri County by failing to pay the $500 fine ... and by failing to appeal the stop work order, is not entitled to any damages.

13
JA 193.  Thus, to the extent the district court based its new  trial decision on the mitigation issue, it abused its discretion  in declaring ex post that Tri County's failure to pursue  administrative remedies to reinstate its permit was per se  unreasonable, thereby withdrawing the mitigation issue from  the jury.  See generally Tatum v. Morton, 562 F.2d 1279,  1283 (D.C. Cir. 1977) ("[T]he district court's per se approach  of imposing an absolute duty to mitigate was not sound.").

14
The trial court also found that Tri County's evidence of lost  profits was "too speculative and remote" and that the award  of less than half of the amount Tri County estimated was  "grossly excessive."  Memorandum Order at 2.  Where, as  here, the fact of injury has been established and the defendant's action (suspension of the building permit) affected the  plaintiff's ability to present actual revenue and cost figures to support a lost profits projection, the applicable standard for  proving lost profits damages is the one this court enunciated  in Samaritan Inns, Inc. v. District of Columbia, 114 F.3d  1227 (D.C. Cir. 1997):

15
Where the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty, it would be a perversion of fundamental principles       of justice to deny all relief to the injured person....  In       such case, while the damages may not be determined by mere speculation or guess, it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate.  Thus, while a plaintiff seeking to recover lost profits must ordinarily prove the fact of injury with reasonable certainty, proof of the amount of damages       may be based on a reasonable estimate.  Although a court will not permit a plaintiff to recover damages based on "mere speculation or guess," the fact that an estimate       is uncertain or inexact will not defeat recovery....

16
114 F.3d at 1234-35 (quoting Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931)) (citations  omitted).

17
Tri County produced evidence indicating it sustained lost  profits of $11,628,174.  The evidence included the testimony  of eight witnesses3 and ranged from projections of tons of  contaminated soil the facility would treat per hour and the  number of hours it would operate per day to estimates of  equipment and labor costs.  With expert testimony regarding  the accessible market for soil remediation and a comparison  of service rates for similar operations, an economist projected  the profitability of Tri County's facility.  Their respective  opinions were left largely unchallenged by the District.  Regardless whether the estimates were on the highend, that is, "uncertain or inexact," Samaritan Inns, 114 F.3d at 1235, they were sufficiently well-founded to avoid characterization as "mere speculation or guess."  Id.

18
Moreover, we question the trial court's finding that the  award "shock[ed] the judicial conscience."  Memorandum Order at 2.  Tri County presented evidence that its costs  amounted to $536,421 and its lost profits amounted to  $11,628,174.  The jury awarded $5,000,000, less than half of  the total amount claimed and, for that matter, less than half  of the future profits estimate standing alone.  The award was  within the "reasonable range within which the jury may  properly operate."  Langevine, 106 F.3d at 1024.

19
As demonstrated above, the trial court tried to cover all  bases in its order granting a new trial but the order reveals  that the court's real concern was its exclusion of evidence  regarding health and safety issues which may have led to  community resistance and, perhaps, regulatory barriers to Tri  County's project.  For example, while declaring the award  grossly excessive, the district court expressed its dissatisfaction with its original evidentiary rulings:

20
[T]he jury's award ... shocks the judicial conscience,       particularly in view of the realistic prospect, which I did       not permit defendants to prove at trial, that there would       be continued community resistance to increased dump       truck traffic ... and a very real likelihood that the       District of Columbia would have closed down the remediation facility ... or that it never would have been       permitted to commence operations at all.

21
Memorandum Order at 2-3;  see also id. at 2 (plaintiff's  expert testimony should not have been received "without  allowing [the District] to adduce proof that plaintiff's soil  remediation facility would never have been permitted to  operate").

22
In the excerpt above, the district court alluded to the  District's argument under Carey v. Piphus, 435 U.S. 247,  266-67 (1978), that a plaintiff who suffers a procedural due  process violation is entitled only to nominal damages if he would have suffered the same "injury" absent the violation.   Thus, the District argues that here the procedural violation  caused no compensable injury because the action taken, suspension of the permit, was justified even if improperly executed.  The District claimed that Tri County's damages were  minimal because the facility either would not have become  operational or would not have been operational for long due  to community resistance.

23
The trial court excluded the District's health and safety  evidence under Rule 403 and determined that the permitting  process disposed of these issues as a matter of law.  See JA  178, 189.  The District argues that the evidentiary rulings  practically negated its argument under Carey that the project  would have been halted anyway.  Despite its reliance on this  argument, the District never met the trial court's repeated  injunction to show how the health and safety issue would have  triggered additional regulatory procedures or otherwise al- lowed the District to rescind its earlier approval.  See JA 172;   see also id. at 168-69, 172-75, 186-87.  In short, the District  failed to show that community concern would be brought to  bear on Tri County's operation, specifically through the regulatory process.  Accordingly, the district court did not abuse  its discretion in excluding the evidence.  In light of our  findings that Tri County's evidence was properly before the  jury and the District's evidence was properly excluded, we  conclude that the district court, in granting a new trial based  on a revised view of its original rulings, did abuse its discretion4.  See Langevine, 106 F.3d at 1023(a "more searching  inquiry" is particularly necessary "when the motion [for new  trial] is granted on the ground that the verdict is against the  weight of the evidence").

24
For the foregoing reasons, we reverse the district court's  order of July 23, 1998, reinstate the original jury verdict of  $5,000,000 and vacate the verdict and judgment resulting  from the second trial.

25
So ordered.

Notes:

*
 Circuit Judge Garland did not participate in this matter.

1
 A certificate of occupancy is issued when renovation of a structure has been completed in conformity with the earlier application  for a building permit and the building is found to be in compliance  with applicable zoning regulations and the building code.  See 12  DCMR § 118, 39 DCR 8711-12.

2
  Tri County's lawyer (in 1993) testified that Cross told him that  the Board of Appeals and Review would act at the direction of the  District's Mayor and the Mayor's chief of staff.  Tri County introduced Cross's deposition testimony indicating he had met with the Mayor and members of the community opposition following the  suspension of the permit.  Tri County's lawyer also testified that it  would have taken eight to twelve months to resolve the matter  administratively.  JA 76-77.

3
 The witnesses included its President, Glenn Selzer, its Vice  President and its CPA.  In addition, a chemical engineer, a remediation expert, a financial economist, a mechanical engineer and an  expert in soil remediation testified as to Tri County's costs and lost  profits.

4
 In light of our holding, we need not reach Tri County's alternative grounds for reversal based on the second trial.