Structural Polymer Group, Ltd. v. Zoltek Corp.

• Decision Date: 08 October 2008
• Docket Number: No. 07-2171.,No. 07-2057.,07-2057.,07-2171.
• Citation: 543 F.3d 987
• Parties: STRUCTURAL POLYMER GROUP, LIMITED; Structural Polymer Systems, Limited, Appellees/Cross-Appellants, v. ZOLTEK CORPORATION, Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

543 F.3d 987

STRUCTURAL POLYMER GROUP, LIMITED; Structural Polymer Systems, Limited, Appellees/Cross-Appellants, v. ZOLTEK CORPORATION, Appellant/Cross-Appellee.

No. 07-2057.

No. 07-2171.

United States Court of Appeals, Eighth Circuit.

Submitted: January 14, 2008.

Filed: October 8, 2008.

Thomas E.L. Dewey, argued, New York, NY, David S. Pegno, New York, NY, and Thomas B. Beaver and James G. Martin, on the brief, St. Louis, MO, for Appellant/Cross-Appellee.

Thomas C. Walsh, argued, Louis F. Bonacorsi and James M. Weiss, on the brief, St. Louis, MO, for Appellees/Cross-Appellants.

Before COLLOTON and SHEPHERD, Circuit Judges, and ERICKSON,¹ District Judge.

COLLOTON, Circuit Judge.

A jury awarded Structural Polymer Group and Structural Polymer Systems (together SP) $36,044,895 in lost profits from Zoltek Corporation for breach of a requirements contract for the sale of carbon fiber. The district court² reduced the award to $21,138,518, finding the remainder of the award duplicative. Zoltek appeals the district court's denial of its motion for a new trial and motion for judgment as a matter of law. Structural Polymer cross-appeals the district court's modification of the jury's damages award.³ We affirm.

I.

Zoltek is a Missouri corporation that manufactures and sells carbon fiber. SP are British corporations that manufacture a strong, light-weight building material produced using carbon fiber called "prepreg." Prepreg is made by weaving carbon fiber into textile-like sheets and then impregnating the sheets with liquid resin. The prepreg sheets are then sold to builders who can mold them into different shapes for a variety of applications. Used in this way, prepreg is a common substitute for fiberglass. One common application for prepreg is the manufacture of wind energy turbine blades.

The parties entered into a Supply Agreement in November 2000. Under the disputed agreement, Zoltek promised to manufacture and sell to SP all of SP's requirements between November 6, 2000, and December 31, 2010, for "Large Filament Count Carbon Fibers (Carbon Fibers) as defined by PANEX 33 specifications," at "then-current market price." SP, in turn, promised to "obtain their total requirements for suitable quality, in the reasonable opinion of [SP], Carbon Fibers from [Zoltek]," the volume not to exceed "the amount actually purchased by [SP] in the preceding Contract Year plus one million (1,000,000) pounds." "Large Filament Count," or large-tow carbon fiber, contains 48,000 or more filaments per bundle. "Small-tow" carbon fiber, by contrast, contains fewer than 48,000 filaments per bundle, commonly 24,000 or fewer filaments per bundle. Small-tow is more expensive to produce, but superior in quality.

When the Supply Agreement was formed, most manufacturers used small-tow carbon fiber. The purpose of the agreement was to develop a new market for large-tow fiber as a less expensive alternative to small-tow fiber in the wind-energy industry.

Before April 2002, Zoltek produced a large-tow carbon fiber product called Panex 33. SP purchased 28,219.17 and 20,943.91 pounds of Panex 33 from Zoltek under the Supply Agreement in 2000 and 2001, respectively. SP placed an order for 1,763.70 pounds of Panex 33 in 2002, but returned it due to alleged quality defects. In April 2002, Zoltek stopped manufacturing Panex 33, and started making a large-tow carbon fiber product called Panex 35. SP ordered no Panex 33 or 35 in 2003. SP ordered and received 548,935 pounds of Panex 35 in 2004.

The dispute in this case centers on two orders that SP placed with Zoltek in 2005 and 2006 that were never filled. SP ordered 1,480,138 pounds of Panex 35 in 2005, and claims that it was entitled to 2,480,138 pounds of Panex 35 in 2006.

On February 22, 2005, SP sued Zoltek for breach of contract alleging lost profits through December 31, 2006, and future lost profits through December 31, 2010. Because the parties disputed whether the Supply Agreement entitled SP to both Panex 33 and Panex 35, SP's damages expert made alternative lost profit calculations: $21,138,518 in then-current lost profits under Count I corresponding to 3,960,276 pounds of Panex 35, and $14,906,377 in then-current lost profits under Count II corresponding to 3,000,000 pounds of Panex 33.

On November 29, 2006, a jury awarded SP lost profits under both counts through December 31, 2006, but declined to award SP future lost profits. The district court vacated the award under Count II as duplicative, giving SP a final sum of $21,138,518. Zoltek filed motions under Federal Rule of Civil Procedure 59(a) for a new trial, and under Rule 50(b) for judgment as a matter of law, in connection with both the liability and damages phases of the proceedings, and the district court denied both motions. Zoltek appeals the district court's denial of those motions. SP cross-appeals the district court's vacation of the jury's award under Count II of the complaint.

II.

We review the district court's denial of Zoltek's motion for judgment as a matter of law de novo to determine whether there is sufficient evidence to support the verdict. Duty v. Norton Alcoa-Proppants, 293 F.3d 481, 488 (8th Cir.2002). In reviewing the sufficiency of the evidence to support the jury's verdict, we interpret the record in a light most favorable to the prevailing party, affirming unless no reasonable juror could have reached the same conclusion. Anderson Marketing, Inc. v. Maple Chase Co., 241 F.3d 1063, 1065 (8th Cir.2001). We review the denial of a motion for a new trial for an abuse of discretion. The Shaw Group, Inc. v. Marcum, 516 F.3d 1061, 1067 (8th Cir.2008). A new trial motion premised on a dispute about the strength of the supporting proof should be granted only "if the verdict is against the weight of the evidence and allowing it to stand would result in a miscarriage of justice." Id. (quotation omitted).

Zoltek argues that the district court erred in four ways. First, Zoltek argues that the district court erred by refusing to allow it to raise two arguments to the jury. Zoltek sought to urge that the Supply Agreement was void for lack of mutuality of obligation. The district court concluded that Zoltek's argument was an affirmative defense, which Zoltek waived by failing to plead it, and the district court then denied as untimely Zoltek's motion to amend its complaint to add a mutuality defense. Second, the district court ruled that Zoltek failed to make a submissible case that SP had abandoned the Supply Agreement. Third, Zoltek argues that the district court failed to remedy unfairly prejudicial testimony at trial. Fourth, Zoltek argues that the jury's damages award to SP was not based on adequate evidence, that the district court erred by allowing SP to amend its damages calculations twenty-two days before trial, that SP's revised damages calculations were inadequate as a matter of law, and that the district court instructed the jury incorrectly in connection with the damages phase of the proceedings.

A.

We first consider Zoltek's objection to the district court's resolution of arguments concerning mutuality of obligation. Zoltek urged that the Supply Agreement was "unenforceable as a requirements contract due to a lack of mutuality," which is in essence an argument that SP failed to show that the Supply Agreement was supported by valid consideration. See Restatement (Second) of Contracts § 79 (1981) ("If the requirement of consideration is met, there is no additional requirement of ... `mutuality of obligation.'"); USA Chem, Inc. v. Lewis, 557 S.W.2d 15, 24 (Mo.Ct.App. 1977); Famous Brands, Inc. v. David Sherman Corp., 814 F.2d 517, 521 (8th Cir.1987). We conclude that whether or not Zoltek's contention should not have been characterized as an affirmative defense, the district court correctly ruled in the alternative that the Supply Agreement contained mutuality as a matter of law.

SP contends that our decision in Overholt Crop Ins. Serv. Co. v. Travis, 941 F.2d 1361, 1368 (8th Cir.1991), establishes that "lack of consideration" is an affirmative defense that is waived if not raised in an answer. Overholt held that it was unnecessary to reach the merits of an argument that certain restrictive covenants in a contract were "void for lack of consideration," because the defendants "waived this affirmative defense by failing to raise it in their answer, see Fed.R.Civ.P. 8(c), and by failing to identify any relevant exceptions to this general rule." Id. at 1368. Zoltek counters with our statement in First Union Nat'l Bank v. Pictet Overseas Trust Corp., 477 F.3d 616 (8th Cir.2007), that whether a contention "is an affirmative defense is a question of [ ] state law," id. at 621-22, and with Missouri authority that distinguishes between "failure of consideration," which is an affirmative defense applicable where consideration that once existed becomes worthless or non-existent, and "lack of consideration," which is an element of the claim that cannot be waived through failure to plead. Ennis v. McLaggan, 608 S.W.2d 557, 561 (Mo.Ct.App. 1980); MFA Inc. v. Dettler, 817 S.W.2d 658, 663 (Mo.Ct.App.1991).

Assuming for the sake of argument that Zoltek's argument regarding lack of consideration need not be pleaded as an affirmative defense, we agree with the district court that the Supply Agreement was supported by adequate consideration as a matter of law. Under Missouri law, "whether consideration is sufficient to establish a contract is normally a question of law for the court and not a question of fact for the jury." Allison v. Agribank, FCB, 949 S.W.2d 182, 188 (Mo.Ct.App. 1997). Missouri law long has followed a rule that "[w]hen a party relies upon a writing or a number of writings to establish a contract, it is unquestionably the province of the court to determine from the writing or writings whether or not a contract was entered into." Nelson v. Cal Hirsch & Sons' Iron & Rail Co., 102 Mo. App. 498, 77...