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Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com. Date: 01-20-2004 Case Number: WD61655, WD61800 , WD62141 Judge: Thomas H. Newton Court: Missouri Court of Appeals for the Western District Plaintiff's Attorney: Christopher S. Shank Defendant's Attorney: Donald G. Scott and Martin M. Montemore Description: This appeal stems from complex commercial litigation involving an airplane that made an emergency landing near Kansas City's Downtown Airport. The parties to this appeal include the airplane's owner/operator; the company that insured the airplane; and the company that hauled the airplane after the landing. The plane's owner/operator sued the insurance company and the hauler to recover damages purportedly incurred after the landing. While the trial court granted summary judgment in the insurance company's favor based upon the affirmative defense of release, the owner/operator obtained a jury verdict against the hauler. Both the owner/operator and the hauler now appeal. We conclude that the trial court erred when it entered summary judgment against the owner/operator and in favor of the insurance company because the release was not broad enough to include the owner/operator's tort claims against the insurance company under Texas law. We further conclude that the trial court incorrectly calculated the damages due from the hauler. In all other respects, we affirm.
On April 9, 1998, one of Ameristar's planes, a Falcon 20 Jet, made an emergency landing on a levee near Kansas City's Downtown Airport. Ameristar notified its insurance company, Houston Casualty Corporation (HCC), of the incident. HCC's claims adjuster, Howe Associates, Inc., (FN1) in turn dispatched Dodson International Parts, Inc. to remove the plane from the levee and haul it to the Kansas City Downtown Airport. To get the plane to the airport, Dodson had to disassemble it and haul the fuselage on a flatbed trailer. After Dodson hauled the plane to the Downtown Airport, some observers noticed a deflection in the plane's fuselage. While the fuselage was resting on the trailer at the Downtown Airport, Ameristar apparently asked three different companies to examine it and to submit written estimates; it is not clear from the parties' briefing what these three companies concluded. Ameristar also claimed that it asked HCC and Howe to remove the plane from the trailer during this time and that they failed to do so. After determining that the fuselage was bent and that the cost to repair the plane would be high, HCC submitted a proof of loss to Ameristar, proposing to treat the plane as a constructive total loss and obligating HCC to pay the policy limits of $1.5 million. Although Ameristar contends that HCC gave it no choice in the matter, Ameristar ultimately signed the proof of loss and accepted payment of the policy limits. Among other things, the proof of loss included the release that HCC now relies upon to avoid Ameristar's tort claims against it. But things are not always as they first appear. As it happens, the deflection in the fuselage was not permanent, but temporary. What HCC earlier had declared a constructive total constructive loss, Dodson later repaired for only $100,000. After Dodson outbid Ameristar for the plane at a salvage auction (FN2) and after Ameristar passed on Dodson's subsequent offer to sell the plane back to Ameristar for $1.5 million, Ameristar ultimately purchased another replacement airplane for approximately $2.1 million. (FN3) Ameristar contends that the crashed airplane was worth $1.8 million immediately before the crash. Ameristar asserted tort claims against HCC for negligence, negligent misrepresentation, and bad faith. The trial court granted HCC's motion for summary judgment on these claims. The trial court concluded that Texas law governed these claims and that the release contained in the proof of loss "mentioned" these claims under Texas law, thereby barring the claims. Ameristar also asserted a claim against Dodson for negligence in handling the airplane. The trial court submitted this claim to the jury on comparative fault instructions. The jury found in favor of Ameristar, assigning seventy percent of the fault to Dodson and thirty percent of the fault to Ameristar. The jury found Ameristar's actual damages to be $2.1 million. Based upon the jury's findings, the trial court entered judgment in favor of Ameristar for $1,435,000. Ameristar has appealed the summary judgment in favor of HCC. Ameristar also has appealed the judgment against Dodson as it pertains to the trial court's calculation of the damages award. We conclude that each of Ameristar's two points has merit. Dodson has appealed the judgment in favor of Ameristar. Dodson raises eight points on appeal. In its first point Dodson contends that the trial court erred in denying its motions for directed verdict and for judgment notwithstanding the verdict. In its second point, Dodson contends that Ameristar lacked standing to maintain any claims against Dodson because Ameristar assigned all of its claims against Dodson to HCC in the proof of loss. In its third point, Dodson contends that the trial court erred when it failed to take judicial notice of and to admit into evidence a document purporting to set forth certain federal aviation regulations relevant to the case. In its fourth point, Dodson contends that the trial court erred in failing to submit a contributory negligence instruction to the jury. In its fifth point, Dodson contends that the trial court erred in submitting affirmative defense comparative fault and mitigation of damages instructions that deviated from MAI. In its sixth point, Dodson contends that Ameristar failed to present sufficient evidence to support an award of damages for lost profits. In its seventh point, Dodson contends that the trial court committed plain error by failing to address objectionable comments made by counsel for Ameristar in closing argument. In its eighth and final point, Dodson contends that the trial court erred in denying its motion for new trial and request for remittitur. As discussed in detail below, we do not find Dodson's points persuasive.
Accordingly, we will apply Missouri law "to all procedural matters such as the rules of evidence, the competency of witnesses, the burden of proof, the weight of the evidence and to other matters that may relate to the remedy." Lukas v. Hays, 283 S.W.2d 561, 565-66 (Mo. 1955).
Although HCC filed a counterclaim against Ameristar in this case, that counterclaim did not figure in its motion for summary judgment. HCC's motion for summary judgment pertains solely to Ameristar's claims against it. Accordingly, HCC was a "defending party" for the purpose of analyzing its entitlement to summary judgment. See ITT, 854 S.W.2d at 382. As a defending party, HCC could establish its right to summary judgment by showing "(1) facts that negate any one of [Ameristar's] elements, (2) that [Ameristar], after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of Ameristar's elements, or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support [HCC's] properly-pleaded affirmative defense." Id. at 381. HCC relied upon the third method by invoking the affirmative defense of release to bar Ameristar's claims for damages.
In this case, the release provides, in pertinent part, that HCC "is hereby discharged and forever released from any and all further demand or liability whatsoever for said loss and damage, under the Policy herein referred to, repairs and/or replacements having been made to my satisfaction." The phrase "said loss" appears to refer to the loss of the airplane. (FN4) The policy referred to in the release is the liability policy that covered the airplane hull in the amount of $1,500,000.
Presented with a similar release, a Texas federal court recently concluded that the release was not broad enough to encompass a common law tort claim for bad faith and a statutory claim for deceptive trade practices under Texas law. Vaughan v. Hartford Cas. Ins. Co., 277 F.Supp.2d 682 (N.D. Tex. 2003). In Vaughan, an injured automobile passenger settled with his employer's uninsured/underinsured motorist carrier following an accident. Id. at 686-87. The passenger signed a release that, among other things, said:
The consideration hereinabove mentioned is accepted by me in full compromise and settlement of all claims and causes of action being asserted by me or which might have been asserted by me, whether for property damages, personal injury or other loss or damage, and said claim shall be dismissed with prejudice. I hereby acknowledge full satisfaction and discharge of all claims and demands against the said company under the Uninsured/Underinsured Motorist Endorsement attached to policy number 46 UEC RT5860 issued to [Vaughan's employer]. After signing the release, the passenger sued the insurance company for breach of its common law duty of good faith and fair dealing and for various violations of Texas statutes and the Texas Insurance Code pertaining to the handling of his claim. Id. at 683. The insurance company filed a motion for summary judgment, contending that the release barred the passenger's claims. Id.
Applying Texas law, the court concluded that the passenger did not release his bad faith claim against the insurance company and said: Id. at 689. (internal quotation marks and citations omitted). Accord Eastham v. Nationwide Mut. Ins. Co., 586 N.E.2d 1131, 1135 (Ohio Ct. App. 1990) (where insured executed release in favor of insurance company for all claims resulting from automobile accident, the release did not bar the insured from bringing an independent tort claim against the insurance company for bad faith, because the bad faith claim did not result from the accident but from the insurance company's handling of the claim). If the release in Vaughan was not broad enough to encompass a tort claim for bad faith, neither is the release in this case broad enough to encompass Ameristar's tort claims. The release in Vaughan purported to discharge "any and all claims, demands and causes of action, of whatsoever nature, whether in contract or in tort" but then qualified that language by specifying that it pertained to claims "for and on account of the incident/auto accident" and to claims and demands "under the Uninsured/Underinsured Motorist Endorsement . . . ." Vaughan, 277 F. Supp.2d at 687. Ameristar's release does not mention the release of any tort claims, but likewise qualifies otherwise broad language by specifying that it pertains to "said loss and damage, under the Policy herein referred to . . . ." As noted already, the phrase "said loss" appears to refer to the loss of the airplane, not to HCC's handling of the claim.
HCC cites Memorial Medical Center v. Keszler, 943 S.W.2d 433 (Tex. 1997), for the proposition that a release need not specifically list a claim to be "mentioned," but Keszler was a different case. In Keszler, a doctor was found guilty of tampering with government documents. Id. at 434. After the hospital for which he worked revoked his staff and clinical privileges, the doctor sued the hospital. Id. The parties eventually settled the lawsuit and executed a release. The settlement agreement said:
The release said: After executing the release, the doctor sued the hospital for fraud, negligence, and gross negligence. Id. The doctor "sought damages for injuries suffered as a result of his alleged exposure to ethelyne dioxide (ETO), a toxic sterilizing agent the hospital used during his employment." Id. Relying upon the previously executed release, the hospital moved for summary judgment, which the trial court granted and thereafter the Texas Court of Appeals reversed. Id. The Texas Supreme Court in turn reversed the judgment of the Court of Appeals. Acknowledging that the settlement agreement purported to release "only those claims related to the 'corrective action'" against the doctor, the court found that the release "contemplate[d] the release of other claims as well." Id. Even though the release did not expressly refer to the doctor's tort claims against the hospital, those claims were still "mentioned" because "the parties agreed that Keszler would release all claims 'relating to [Keszler's] relationship with [Memorial].' Keszler's claim of ETO exposure, because it is related to his relationship with Memorial, is 'mentioned' in the releasing document." Id. at 435. The release in our case is not correspondingly broad. It does not refer to all claims relating to Ameristar's relationship with HCC, but rather refers to all claims "for said loss and damage, under the Policy." Accordingly, Ameristar's first point is granted. Because we conclude that the release did not include Ameristar's tort claims as a matter of law, we do not consider Ameristar's related argument that genuine issues of material fact involving misrepresentation and lack of consideration should preclude summary judgment here.
A. The Trial Court Did Not Err in Denying Dodson's Motions for Directed Verdict and for Judgment Notwithstanding the Verdict In its first point, Dodson identifies three reasons why the trial court should have granted its motions for directed verdict and for judgment notwithstanding the verdict. First, Dodson argues that there was no substantial evidence that its handling of the airplane damaged the plane. Second, Dodson argues that there was no substantial evidence and insufficient evidence to show that it caused any loss in the market value of the plane. And, third, Dodson argues that there was no substantial evidence and insufficient evidence to show that it caused any loss at all because Ameristar chose not to re-purchase the plane on two occasions: once at salvage and once again when Dodson offered to sell it back to Ameristar for $1,500,000 -- the exact amount of the insurance settlement. Dodson reasons that if Ameristar had availed itself of these opportunities to repurchase the plane, then it would have suffered no loss. When we review the trial court's denial of motions for directed verdict and judgment notwithstanding the verdict, the question before us is whether the plaintiff has made a submissible case. See Giddens v. Kansas City S. Ry. Co., 29 S.W.3d 813, 818 (Mo. banc 2000). "To make a submissible case, a plaintiff must present substantial evidence that tends to prove the facts essential to the plaintiff's recovery." Ryan v. Maddox, 112 S.W.3d 476, 480 (Mo. App. W.D. 2003) (internal quotation marks and citation omitted). "Substantial evidence is evidence that, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide a case." Id. In determining whether the plaintiff has made a submissible case, we view the evidence in the light most favorable to the prevailing party, giving that party the benefit of all reasonable inferences and disregarding contrary evidence and inferences. Id. We will not, however, "supply missing evidence or give the prevailing party the benefit of unreasonable, speculative or forced inferences." Id. at 480-81.
We will reverse the jury's verdict only if there is a complete absence of probative facts to support it. Giddens, 29 S.W.3d at 818. But where reasonable minds can differ on the question before the jury, we will not disturb the jury's verdict. Ryan, 112 S.W.3d at 481.
It may be true, as Dodson contends, that the deflection in the plane's fuselage was merely temporary and that it popped back into shape when the plane was later removed from the trailer and reassembled. But temporary damage is not the same thing as perceived damage. Ameristar's evidence showed that the plane was actually damaged for a time, including the highly relevant time when HCC and Ameristar had to decide whether to settle the property loss claim. Even if the damage later "popped out," that did not make the damage any less real while it existed.
Furthermore, Mr. Sparks testified that he had no way of knowing in advance that the damage would pop out and that there was no guarantee that it would do so even if the plane were removed from the trailer: Dodson's argument assumes that if Ameristar or HCC had removed the plane from the trailer before settling the claim, then the deflection would have popped out at that time, just as it in fact later did. That the deflection later popped out does not mean that it would have done so if Ameristar and HCC had removed the plane from the trailer. In any event, the failure to remove the plane from the trailer earlier goes to Ameristar's comparative fault.
Apart from the standard of review, Dodson cites no relevant authority to support its argument and does not explain the absence of such authority. "It is an appellant's obligation to cite appropriate and available precedent if [the appellant] expects to prevail." Jenkins v. Manpower on Site at Proctor & Gamble, 106 S.W.3d 620, 624 (Mo. App. W.D. 2003) (internal quotation marks and citation omitted). "Where, as here, the appellant neither cites relevant authority nor explains why such authority is not available, the appellate court is justified in considering the point[] abandoned and in dismiss[ing] the appeal." Id. As we understand Ameristar's claim, Ameristar did not seek to recover for the loss of the damaged plane's market value but for the underinsured value of the plane, i.e ., the difference between the fair market value of the airplane before it was totaled -- $1,800,000, according to Ameristar's evidence -- and the amount of the insurance proceeds that Ameristar received from HCC -- $1,500,000. Assuming this to be an appropriate measure of damages -- an issue not raised by Dodson here -- Dodson does not explain why Ameristar's claim for the underinsured value is doomed by the failure to show a decrease in the plane's market value. We deem this argument to be abandoned.
Now, therefore, in consideration of the aforesaid payment, I/we hereby assign, transfer and subrogate to the said Insurance Company, all right, interest, or things in action against any person or corporation, who may be liable or hereafter adjudged liable for this loss, and I/we empower said Insurance Company to sue, compromise or settle in my/our name(s), to the extent of the money aforesaid.
In both states, a complete assignment of the claim to the insurance company bars the insured from suing a third-party tortfeasor in the insured's own name. Compare Duke v. Brookshire Grocery Co., 568 S.W.2d 470, 472 (Tex. Civ. App. 1978) ("If the owner of a cause of action assigns all of his interest therein, parting with both the legal and the equitable title, he cannot bring suit thereon unless he does so, in a representative capacity and upon proper authority, for the owner of the claim.") and Gregorcyk v. Al Hogan Builder, Inc., 884 S.W.2d 523, 525-26 (Tex. App. 1994) (where homeowners assigned to home insurer all of their claims, homeowners could not maintain Texas Deceptive Trade Practices Act claim against homebuilder) with Keisker v. Farmer, 90 S.W.3d 71, 74 (Mo. banc 2002) ("By an assignment, the insurer receives legal title to the claim, and the exclusive right to pursue the tortfeasor."). And, in both states, a third-party tortfeasor can rely upon such an assignment as a defense to suit, even though the tortfeasor was not a party to that assignment. Compare Duke, 568 S.W.2d at 473 ("And although Brookshire is not a party to the assignment, it nevertheless is permitted to interpose it as a bar to Duke's maintenance of the suit, for it has the right to require that the action be maintained only by one who has a legitimate interest therein.") with Steele v. Goosen, 329 S.W.2d 703, 711 (Mo. 1959) (trial court properly dismissed claim by insured against tortfeasor where insured had assigned his entire claim to the insurance company because insured was no longer a real party in interest). Conversely, in neither state does a transfer of less than the entire claim bar the insured from suing the tortfeasor. Compare Fort Worth & Denver Ry. Co. v. Ferguson, 261 S.W.2d 874, 880 (Tex. Civ. App. 1953) ("The plaintiff could bring the suit likewise where he had only transferred a part of the cause of action.") with Keisker, 90 S.W.3d at 74 ("In subrogation, the insured retains legal title to the claim. . . . The exclusive right to pursue the tortfeasor remains with the insured, which holds the proceeds for the insurer.").
The issue, therefore, boils down to whether the language in this case constitutes a complete assignment of Ameristar's claim. Ameristar paints with too broad a brush when it argues that the use of the word "subrogate" conclusively shows that the parties intended a subrogation or, in the alternative, that the document is ambiguous. Ameristar overlooks the use of the word "assign" alongside the words "transfer" and "subrogate." The use of the word "assign" alongside the words "transfer" and "subrogate" can create a complete assignment under Texas law, as it did in the following passage:
It likewise can create a complete assignment under Missouri law, as it did in this passage: We agree with Ameristar, however, that the phrase "to the extent of the money aforesaid" limits the words "assign, transfer, and subrogate" in this case. While it is true -- as Goosen demonstrates -- that such limiting words can appear in an assignment, "[t]he key is the context in which the limit appears." Keisker, 90 S.W.3d at 74. Thus, "[a]n instrument assigning a cause of action to an insurer and declaring the insurer is subrogated to the extent of its payment is an assignment." Almon H. Maus, 30 Missouri Practice, Insurance Law and Practice, section 5.34, at 275 (1997). "But, an assignment of a cause of action to the extent of the insurer's payment is a partial assignment and does not vest the insurer with legal title to the action." Id. at 275-76. A complete assignment occurred in Goosen because the phrase "to the extent of the amount hereby paid" modified the word "subrogated" but not the words "assign and transfer." 329 S.W.2d at 711. By contrast, a complete assignment did not occur in Warren v. Kirwan, because the phrase "to the extent of the payment above made" modified the word "assigns." 598 S.W.2d 598, 600 (Mo. App. S.D. 1980). In this case, the phrase "to the extent of the money aforesaid" refers not only to the word "subrogate" but also to the words "assign and transfer," thereby limiting the insurance company's rights and suggesting that the parties did not intend a complete assignment. See Keisker , 90 S.W.3d at 74. Accordingly, Ameristar is a real party in interest here. Warren, 598 S.W.2d at 601. Point denied.
In its third point, Dodson contends that the trial court erred when it excluded evidence of the Federal Aviation Regulation that defines "maintenance" and when it refused to take judicial notice of the definition, as set forth in defense exhibit 85. We review the trial court's exclusion of evidence for an abuse of discretion. Giddens, 29 S.W.3d at 819. The trial court abuses its discretion when its ruling is "clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration." Id. Federal law requires that courts take judicial notice of the "contents of the Federal Register." 44 U.S.C. section 1507. "Missouri courts have held that rules and regulations promulgated by government agencies, pursuant to delegation of authority by Congress, may have the force and effect of law and that such rules and regulations shall be judicially noticed." Kawin v. Chrysler Corp., 636 S.W.2d 40, 44 (Mo. banc 1982) (concluding, however, that trial court properly refused to take judicial notice of federal regulations where the regulations were not pertinent to the case). See also section 490.080 ("Every court of this state shall take judicial notice of the common law and statutes of every state, territory and other jurisdiction of the United States.") This includes regulations adopted by the Federal Aviation Administration. Macalco, Inc. v. Gulf Ins. Co., 550 S.W.2d 883, 887 (Mo. App. 1977) ("Regulations and rules promulgated by government agencies pursuant to delegation of authority from Congress have the force and effect of law and Missouri courts will judicially notice the rules and regulations adopted by such agencies, including those made by the Federal Aviation Agency (FAA)"). At trial, Ameristar argued that Dodson was negligent for failing to follow the aircraft manufacturer's maintenance manual when it hauled the plane from the levee to Downtown Airport. One of Ameristar's expert witnesses read into evidence the Federal Aviation Regulation (FAR) that defines maintenance and then concluded that Dodson's actions constituted maintenance under this definition. (FN5) Ameristar did not offer the regulation itself as evidence, however. When Dodson's counsel later offered defense exhibit 85 as evidence of the definition, Ameristar objected that the document was hearsay. The trial court sustained the objection and said: "If [Mr. Dodson] knows the definition he can use that to refresh his memory, if it's vague, but he can also testify to what the definition is, but that regulation, in and of itself is, in fact, hearsay and you can't admit it." Dodson's counsel then asked the court to take judicial notice of exhibit 85 and to allow its introduction. The court refused to do so absent "an agreement with opposing counsel that this is an authenticated copy of the document." Mr. Dodson subsequently testified from memory that maintenance means "to repair, inspect or preserve" and that the definition of maintenance does not encompass disassembly or transportation of an airplane. We do not discern an abuse of discretion in the trial court's ruling. While properly authenticated federal regulations may not be subject to hearsay objections, Dodson did not offer properly authenticated documents or ask the court to take judicial notice of such documents. Cf. 44 U.S.C. section 1507 (courts must take judicial notice of the "contents of the Federal Register") (emphasis added). Instead, Dodson offered an unauthenticated reprint bearing a private company's (FN6) copyright. Absent a showing that the reprint originated from an official, authenticated source, the trial court did not abuse its discretion in refusing to admit this document and in refusing to take judicial notice of it. Even if we agreed with Dodson that the trial court should have admitted the document and taken judicial notice of the definition contained therein, we still would deny Dodson's third point because we discern no prejudice resulting from the trial court's ruling. "Failure to admit evidence does not mandate a reversal of a judgment unless the error materially affected the merits of the action." Lay v. P&G Health Care, Inc., 37 S.W.3d 310, 331 (Mo. App. W.D. 2000) (internal quotation marks and citation omitted). We will reverse only where the error is so prejudicial that it denied the appellant a fair trial. Id. Dodson cannot demonstrate such prejudice because Ameristar's expert already had read into evidence the very definition that Dodson wanted the court to judicially notice. Moreover, Dodson's president testified from memory that the word "maintenance" means "to repair, inspect, or preserve" and that maintenance does not encompass disassembly and transportation of aircraft. In other words, even if exhibit 85 was not in evidence, the information contained in that document was. Cf. id. at 332 ("The court received the information into evidence but refused to admit the actual document. Therefore, assuming arguendo , even if the report was admissible, the trial court's refusal to receive it into evidence was not prejudicial."). We further disagree with Dodson that the trial court should have admitted exhibit 85 under the doctrine of curative admissibility. "The doctrine of curative admissibility allows a party to reply to inadmissible evidence introduced by the opposing party with similar evidence if its introduction would remove any unfair prejudice caused by the admission of the earlier inadmissible evidence." IMR Corp. v. Hemphill, 926 S.W.2d 542, 545 (Mo. App. E.D. 1996). Even if the definition that Ameristar's expert read into evidence was hearsay and not subject to judicial notice --a proposition that we cannot confirm since the record before us does not indicate whether Ameristar's expert read the official federal regulation -- Dodson did not suffer any unfair prejudice as a result because the definition read into evidence by Ameristar's expert was identical (FN7) to the definition that Dodson later attempted to introduce in exhibit 85 and nearly identical to the definition provided by Dodson's president. Point three is denied.
Dodson contends that the trial court erred in refusing to give a contributory negligence instruction or, in the alternative, in refusing to submit two packages of instructions, one for comparative fault and one for contributory negligence. Dodson reasons that a contributory negligence instruction was warranted because this case involves purely economic losses. "The issue of whether the jury was properly instructed is a question of law and is to be determined on the record with little deference given to the trial court's decision." Rudin v. Parkway Sch. Dist., 30 S.W.3d 838, 841 (Mo. App. E.D. 2000). "We review the evidence and inferences in a light most favorable to the submission of the instruction." Id. In the case of a comparative fault instructional error, we will reverse only where the error poses a substantial potential for prejudice. Id. As Dodson points out, contributory negligence remains an absolute defense in a case involving purely economic damages. Miller v. Ernst & Young, 892 S.W.2d 387, 388 n.1 (Mo. App. E.D. 1995). That is not true of cases involving personal injury or property damage, however. Chicago Title Ins. Co. v. Mertens, 878 S.W.2d 899, 902 (Mo. App. E.D. 1994). See also Blackstock v. Kohn, 994 S.W.2d 947, 952 (Mo. banc 1999) (court did not reach issue of whether trial court should have submitted a comparative fault instruction rather than a contributory negligence instruction, because the court concluded that the instruction submitted was not a contributory negligence instruction). Ameristar's claim against Dodson involves two categories of damages: (1) the difference between the fair market value of the airplane before it was totaled and the amount of insurance proceeds that Ameristar received from HCC (that is, the underinsured value of the airplane); and (2) lost profits deriving from loss of the airplane's use. Ameristar does not dispute Dodson's argument that the claim for lost profits involves an economic loss. But Ameristar equates the claim for the underinsured value of the airplane to a property damage claim. Dodson, on the other hand, contends that it is an economic loss because "it does not rest on the claim that Dodson damaged or harmed the aircraft itself."
We disagree with Dodson that Ameristar's claims are purely economic in nature. When a question of comparative fault arises, we will consult the Uniform Comparative Fault Act for guidance to the extent that it is not otherwise inconsistent with Missouri law. Mertens , 878 S.W.2d at 902. As the commentary accompanying the Uniform Comparative Fault Act explains: Ameristar's claim for underinsured value derives from the physical harm to the airplane, the ensuing settlement of the property damage claim with HCC, and the subsequent replacement of the damaged property. We, therefore, conclude that Ameristar's claim does not involve purely economic damages and that the trial court did not err in refusing to submit a contributory negligence instruction. Point denied.
Dodson next contends that the trial court erred in adding the words "if plaintiff reasonably should have done so" to each specification of Ameristar's conduct in the affirmative defense comparative fault and mitigation of damages instructions. Dodson contends that these instructions -- as modified -- amounted to a double submission of negligence that confused and misled the jury in its deliberations. "Whenever Missouri Approved Instructions contains an instruction applicable in a particular case that the appropriate party requests or the court decides to submit, such instruction shall be given to the exclusion of any other instructions on the same subject." Rule 70.02(b). When a submitted instruction deviates from MAI, we employ a four-step analysis: "(1) if MAI prescribes a particular form of instruction its submission is mandatory because if the MAI instruction is not given, prejudicial error is presumed; (2) the submitting party has the burden of demonstrating that the instruction did not create a prejudicial effect; (3) the court must determine if the instruction created such a prejudicial effect; and (4) in order to be grounds for reversal, the error must materially affect the merits of the case." Lay, 37 S.W.3d at 329. "We no longer automatically reverse instructional errors unless the record indicates that the error substantially prejudiced a party." Id. at 329-30.
Initially, we question Dodson's assertion that it objected to the addition of the words "if plaintiff reasonably should have done so" in both the comparative fault (No. 8) and mitigation of damages (No. 9) instructions. In the portion of the transcript cited by Dodson, Dodson objected only to the addition of this language to the mitigation of damages instruction: We have independently reviewed the transcript from the portion of the instruction conference that pertains to the comparative fault instruction (No. 8) and find no comparable objection to that instruction. Accordingly, the record does not demonstrate that Dodson objected to the addition of the tail to the comparative fault instruction. And "[n]o party may assign as error the giving or failure to give instructions unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection." Rule 70.03.
We agree with Dodson, however, that the affirmative defense mitigation of damages instruction (No. 9) deviated from the applicable MAI. Instruction number 9 said:
If you find in favor of plaintiff, you must find that plaintiff failed to mitigate damages if you believe: Because we conclude that the mitigation of damages instruction deviated from the applicable MAI, we must assess the prejudicial effect, if any, that this deviation created. Rule 70.02(c). We disagree with Dodson that it suffered prejudice because Ameristar's verdict director on comparative fault (No. 7) did not include parallel language. The problem with this argument is that Dodson did not object to the submission of No. 7 and cannot now complain that it suffered prejudice because of an asymmetry between that instruction and the affirmative defense instructions. We next consider Dodson's argument that it suffered prejudice because the mitigation of damages instruction focused repetitively upon the reasonableness of Ameristar's conduct: once when the jurors read the tail, and again when they read the second paragraph of the instruction. According to Dodson, the instruction thereby gave the jury permission to find that Ameristar used ordinary care even if the jury concluded that Ameristar behaved unreasonably. We agree that such a potential existed. When considering the prejudicial effect of an erroneous jury instruction, however, it is useful to look at what the jury actually did, as opposed to what it might have done. See, e.g., Cornell v. Texaco, Inc., 712 S.W.2d 680, 682-83 (Mo. banc 1986); Lay, 37 S.W.3d at 331. In this case, the jury assigned thirty percent of the fault to Ameristar and awarded Ameristar $700,000 less in damages -- before any offset for Ameristar's fault -- than Ameristar had requested. The jury's verdict confirms that the jury was not confused or misled by the deviation from MAI and that the jury nonetheless rendered its verdict after considering whether Ameristar was negligent. Apart from the tail, the instruction otherwise followed MAI verbatim. Thus, we conclude that the modified instruction neither caused a prejudicial effect nor affected the merits of the case. Cf. Lay , 37 S.W.3d at 331 (despite trial court's failure to submit mandatory modified comparative fault instruction, no prejudice resulted where jury allocated fault between parties, instruction contained required strict liability elements, and aside from discrepancy instruction followed MAI verbatim). Point denied. (FN9)
Ameristar calculated its lost profit in the following manner. First, Ameristar determined the average number of hours per month that each airplane flew and used the average as a basis for determining how often the subject aircraft would have flown. Second, Ameristar multiplied the average hourly rate by the average hourly utilization per month to calculate the lost gross revenues. Third, Ameristar then divided the gross revenue calculation by the total number of hours that the aircraft would have flown based upon average utilization. According to Ameristar, the resulting number represents the gross revenue per hour. Having determined how much revenue its airplanes generated per flight hour Ameristar then subtracted variable expenses incurred to operate its aircraft per hour. According to Ameristar, the resulting number represents its net profit per hour. Finally, Ameristar then multiplied its net profit per hour by the average aircraft utilization and by the number of days that the subject aircraft was unavailable. According to Ameristar, the resulting number represents its lost profit in this case.
In some cases the evidence weighed in common experience demonstrates that a substantial pecuniary loss has occurred, but at the same time it is apparent that the loss is of a character which defies exact proof. In that situation, it is reasonable to require a lesser degree of certainty as to the amount of loss, leaving a greater degree of discretion to the court or jury. This principle is applicable in the case of proof of lost profits. Ranch Hand Foods v. Polar Pak Foods, Inc., 690 S.W.2d 437, 444-45 (Mo. App. W.D. 1985). Accord, Harvey v. Timber Res., Inc., 37 S.W.3d 814, 819-20 (Mo. App. E.D. 2001) (holding that "'certainty' means that damages have been suffered and not exact proof of the amount of damages" and concluding that the "amount of damages is a matter for the jury to decide.") With these general principles in mind, we consider Dodson's arguments on this point.
Dodson first contends that Ameristar did not establish lost profits because it did not present evidence of income and expenses for a reasonable anterior period. On this subject, the Missouri Supreme Court many years ago said: Coonis v. Rogers, 429 S.W.2d 709, 714 (Mo. 1968) (internal quotation marks and citations omitted). See also Meridian Enters. Corp., 910 S.W.2d at 331 ("In the case of an established business, it is 'indispensable' for proof of anticipated profits that a plaintiff 'include the income and expenses of the business for a reasonable anterior period, with a consequent establishing of the net profits during the previous period.'") (quoting Brown v. McIBS, Inc., 722 S.W.2d 337, 341 (Mo. App. E.D. 1986)). As this court subsequently has clarified, however, "it is evidence of net profits, not proof of income and expenses, that is essential to a claim of lost profits." Whitman's Candies, Inc. v. Pet Inc., 974 S.W.2d 519, 527 (Mo. App. W.D. 1998) (distinguishing Coonis on the ground that the only proof of damages in that case was a gross, rather than net, figure). Evidence of income and expenses merely serves as a means by which to establish net profits. Id. But "[i]f there is sufficient evidence of net profits, there is no need to introduce evidence of income and expenses." Harvey, 37 S.W.3d at 818-19. Here, Ameristar furnished evidence of its net profit. Accordingly, we disagree with Dodson that Ameristar was required to present evidence of its income and expenses. Cf. Id . at 819 (accountant testified to probable net profits based upon calculation of expected gross revenue and expected expenses). We further disagree with Dodson that Ameristar was required to present additional historical evidence to establish the past profitability of its air cargo business. Where a loss pertains to one piece of property -- as it does here -- it is not necessary to calculate "such financial loss to encompass all phases of one's business and all elements of one's other business assets." Orr v. Williams, 379 S.W.2d 181, 190 (Mo. App. 1964) (owner of damaged truck did not have to calculate financial loss to encompass all of his business, but could instead testify as to evidence of lost profits on the damaged truck alone). See also All Star Amusement, Inc. v. Jones, 727 S.W.2d 930, 932 (Mo. App. W.D. 1987) (recognizing that "it is not necessary to show the income and expenses of the entire business where only a portion thereof has been lost"); Hanes v. Twin Gable Farm, Inc., 714 S.W.2d 667, 670 (Mo. App. W.D. 1986) ("The failure of the 37 cows to conceive, and the loss of the calf crop and profits therefrom, was directly traceable to and flowed from defendant's wrongful act in selling the sterile bull. It was not necessary, as defendant contends, for plaintiff to show his entire farming income and expenses. His loss was only applicable to a portion thereof -- the loss of the calf crop and the profit thereof."). Although Ameristar did not present evidence of its net profits for the months preceding its January 1998 purchase of the subject airplane, it did not need to do so because only a portion of its business -- one airplane -- was damaged. Orr, 379 S.W.2d at 190. When an entire business is damaged it makes sense to require proof of past profitability because that information helps to determine the profit that the business would have generated in the future absent the damage. In that situation, evidence of past profitability removes a lost profits award from the realm of speculation. Here, however, only one airplane was damaged and Ameristar presented evidence of profits generated by the undamaged airplanes after the accident. That evidence enabled the jury to determine Ameristar's damages without resort to speculation and with a reasonable degree of certainty.
Dodson next contends that Ameristar failed to deduct overhead expenses in calculating lost profits. "Overhead" generally refers to the continuous expenses required to run a business, regardless of the expenditures on a particular contract or portion of business. H. Kent Munson, Fixed Overhead Expenses: The Gremlins of Lost Profits Damages, 56 J.MO.B. 104, 104 (March-April 2000). "Thus, overhead expenses may include general office expenses, general supervision, depreciation, management, rent, insurance, taxes, furniture, general utilities, communication equipment, or other expenditures that are not directly related to the performance of a particular contract or segment of business." Id. Overhead comes in two varieties: fixed and variable. "Fixed overhead expenses are those expenses incurred regardless of the volume of output. They do not vary with the volume of business." Id. On the other hand, variable overhead expenses -- as the name implies -- "may fluctuate as the volume of business increases or decreases." Id. As one commentator has noted, Missouri appellate courts have struggled to treat overhead expenses in a consistent manner and the Missouri Supreme Court (FN10) has not decisively settled the matter. See Id. at 104-07. Some decisions have required plaintiffs to deduct all overhead expenses, including fixed overhead expenses, in calculating lost profits. See, e.g., Meridian Enters. Corp., 910 S.W.2d at 332. Yet other decisions have not required plaintiffs to deduct fixed overhead expenses. See, e.g., Forney v. Mo. Bridge & Concrete, Inc., 112 S.W.3d 471, 474 (Mo. App. W.D. 2003) (breach of contract case holding that "[o]verhead expenses are included in the contractor's total cost saved by nonperformance and, thus, deducted from the contract price only where the owner/defendant proves that such expenses were actually saved by the breach."); MFA Co-Op. Ass'n No. 86 v. Stone, 971 S.W.2d 885, 890 (Mo. App. S.D. 1998) ("Nothing in the record suggests Defendants' operating costs during the period in dispute would have been higher had the herd produced the customary amount of milk. Said another way, there was no evidence that it would have cost Defendants any more to produce the 'lost milk' plus the actual milk than it did to produce the actual milk alone."). We agree with the rationale for including fixed overhead in the lost profits damages award to the extent that the plaintiff would incur such expenses in any event. Cf. Forney, 112 S.W.3d at 474 ("In the absence of proof that the contractor/plaintiff saved overhead expenses as a result of the owner's breach of contract, overhead expenses are included in the lost profits damages award."). See also Munson, supra at 107 ("When overhead is fixed and the lost business produces no savings in overhead expenses, the lost business only costs plaintiff its direct expenses associated with such business, and no deduction from profits for fixed overhead should result. Therefore, the law should be that fixed overhead not be deducted in a lost profits damages calculation."). Absent decisive guidance from our Missouri Supreme Court, we therefore agree with those decisions that include fixed overhead expenses as a component of the plaintiff's lost profits award. The record reveals that Ameristar subtracted variable overhead expenses when calculating its lost profits. Ameristar's president testified that he subtracted all variable expenses, including such things as fuel costs and maintenance costs. He did not subtract fixed overhead expenses, including such things as hanger rental, advertising, and telephones, because he explained that Ameristar would have such expenses regardless of the airplane accident. Dodson contends that Ameristar should have subtracted "employee costs, rents, depreciation, debt service, insurance costs, training, advertising, telephone and a variety of other expenses." But Dodson cites nothing to show that these expenses were variable expenses for Ameristar. Dodson simply concludes that such expenses "certainly would be incurred with the operation of an additional aircraft." On the contrary, Ameristar's president testified that many of these expenses were not variable expenses. Furthermore, it is not self-evident that all of these expenses are variable expenses. To take only one example, "generally accepted accounting principles permit depreciation to be classified as a fixed overhead cost . . . because this expense is not tied to the volume of a producer's output." Universal Power Sys., Inc. v. Godfather's Pizza, Inc., 818 F.2d 667, 674 (8th Cir. 1987). Thus, that expense need not be classified as a variable expense, as Dodson maintains.
Dodson argues that Ameristar was required "to produce the best evidence available." Meridian Enters. Corp., 910 S.W.2d at 332. While a party must indeed produce the best evidence available, "the best evidence rule does not exclude evidence based on personal knowledge even if documents would have provided the same information." Whitman's Candies, 974 S.W.2d at 527. Nor does it prohibit the introduction of summaries in cases where the underlying business records are "voluminous." Gasser , 761 S.W.2d at 733 ("The exhibits prepared by Hauber represented summaries of information extracted from Gasser's own business records. The records herein were obviously voluminous and it is perfectly acceptable to use summaries of records under these circumstances.").
Here, Ameristar's president testified that the summaries were based upon Ameristar's business records and explained how the figures were derived. We do not discern error here. In any event, Dodson did not object to the admission of the summaries at trial and cannot complain now that Ameristar should have submitted its business records as the best evidence or that the summaries contain inconsistent numbers. Defense counsel cross-examined Ameristar's president about the summaries and could have inquired into such inconsistencies at that time.
In its seventh point, Dodson contends that counsel for Ameristar repeatedly and improperly exhorted jurors to put themselves in Ameristar's position. Dodson argues that the trial court "erred in not granting a mistrial, reprimanding counsel for [Ameristar], or cautioning the jury to disregard" counsel's comments and "in denying [Dodson's] motion for new trial and entering judgment in favor of [Ameristar]. . . ." Dodson concedes that it failed to object to these comments during closing argument, and that it failed to request a reprimand or instruction to disregard the comments. Dodson argues, however, that it requested relief in its post-trial motion. Dodson now requests that we review the point for plain error. Although Dodson raised the issue in its motion for new trial, "[a]n issue of error concerning closing argument is not preserved if raised for the first time in a motion for new trial." Guess v. Escobar, 26 S.W.3d 235, 241 (Mo. App. W.D. 2000). Because Dodson failed to preserve the issue for appeal, we may review it solely for plain error. In our discretion, we may consider "[p]lain errors affecting substantial rights" when we find that "manifest injustice or miscarriage of justice has resulted therefrom." Rule 84.13(c). We rarely review for plain error in civil cases, however. Roy v. Mo. Pac. R.R. Co., 43 S.W.3d 351, 363-64 (Mo. App. W.D. 2001). Even then, an appellant may not invoke plain error "to cure the mere failure to make proper and timely objections." Id. at 364 (quoting Guess, 26 S.W.3d at 241).
We will review a claim for plain error only "if it facially establishes substantial grounds for believing that a manifest injustice or miscarriage of justice would result if left uncorrected." Coats v. Hickman, 11 S.W.3d 798, 805 (Mo. App. W.D. 1999) (internal quotation marks and citation omitted). "Plain error occurs in the case of closing argument if the closing argument contains reckless assertions, unwarranted by proof and intended to arouse prejudice, which, therefore, may be found to have caused a miscarriage of justice." Id. (internal quotation marks and citation omitted). Special considerations arise in closing argument, however, as this court recognized in Coats:
Moreover, plain error review as to alleged objectionable closing argument should, as a practical matter, be denied in that trial strategy looms as an important consideration [in deciding whether to object] and such assertions are generally denied without explanation.
As this court further recognized in Wright v. Barr, a party's failure to object to objectionable comments can be viewed in two ways: 62 S.W.3d 509, 532 (Mo. App. W.D. 2001) (internal quotation marks and citations omitted) (declining to review a veritable laundry list of improper statements for plain error after concluding that there was "no merit in appellants' claim that the comments of the respondent's counsel in any way changed the outcome of this case . . . ."). The remarks in this case were undoubtedly improper. See, e.g., Faught v. Washam, 329 S.W.2d 588, 602 (Mo. 1959) (recognizing that an appeal to jurors to put themselves in the plaintiff's place "is consistently condemned and uniformly branded as improper"). The question boils down to whether the record "facially establishes substantial grounds for believing that a manifest injustice or miscarriage of justice would result if left uncorrected." Coats, 11 S.W.3d at 805 (internal quotation marks and citation omitted). Dodson has not identified how the improper comments affected the jury. Among other things, we note that the jury assigned thirty percent of the fault to Ameristar notwithstanding the improper comments. We cannot say that the record "facially establishes substantial grounds for believing that a manifest injustice or miscarriage of justice would result if left uncorrected." Point seven is denied.
In its final point, Dodson contends that the verdict is excessive because Ameristar did not present substantial evidence to show that Dodson damaged the airplane, to show that Dodson caused any decrease in the plane's market value, or to show that Dodson caused Ameristar's loss of use of the plane. Dodson further contends that Ameristar did not present any non-speculative evidence of lost profits. Finally, Dodson contends that the jury's verdict demonstrates bias, passion and prejudice, because it resulted from counsel's improper appeals for jurors to put themselves in Ameristar' s position. This point essentially mirrors Dodson's first, sixth, and seventh points. Dodson invokes the remittitur statute for the general proposition that a court "may enter a remittitur order if, after reviewing the evidence in support of the jury's verdict, the court finds that the jury's verdict is excessive because the amount of the verdict exceeds fair and reasonable compensation for plaintiff's injuries and damages." Section 537.068. Dodson does not invoke any other authority to explain why remittitur is justified here.
When considering whether the trial court erred in failing to find the verdict excessive, the question before us is a narrow one: Because we have already determined that the grounds on which this point are based lack merit, Dodson has failed to meet this standard. See Id. ("KCS has failed to meet this standard, for it has failed to identify any trial event that could have caused the bias and prejudice it claims occurred. The errors specifically alleged have not been found to be meritorious; therefore, they cannot serve as a predicate for a finding of excessiveness of the verdict."). Accordingly, Dodson's eighth point is denied. * * * Click the case caption above for the full text of the Court's opinion. Outcome: For the reasons explained above, we affirm in part, reverse in part, and remand the case for additional proceedings as explained in this opinion. Affirmed in Part; Reversed in Part; Remanded in favor of Plaintiff for $1,500,000. Plaintiff's Experts: Unavailable Defendant's Experts: Unavailable Comments: Reported by L. Hargraves |
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