City of Cleveland v. Peter Kiewit Sons' Co.

• Decision Date: 18 June 1980
• Docket Number: No. 78-3029,78-3029
• Citation: 624 F.2d 749
• Parties: CITY OF CLEVELAND, Plaintiff-Appellee, v. PETER KIEWIT SONS' CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 749

624 F.2d 749

CITY OF CLEVELAND, Plaintiff-Appellee, v. PETER KIEWIT SONS' CO., Defendant-Appellant.

No. 78-3029.

United States Court of Appeals, Sixth Circuit.

Argued Feb. 6, 1980.

Decided June 18, 1980.

Roman T. Keenen, Ray, Robinson, Keenen & Hanninen, Lucian Y. Ray, Cleveland, Ohio, for defendant-appellant.

James B. Davis, Director of Law, Nicholas M. DeVito, Asst. Director of Law, John H. Kless, Cleveland, Ohio, for plaintiff-appellee.

Before EDWARDS, Chief Judge, and WEICK and BROWN, Circuit Judges.

WEICK, Circuit Judge.

The suit in the District Court was instituted by the City of Cleveland (City) against Peter Kiewit Sons' Co. (Kiewit) to recover damages to an old 1908 dilapidated waterfront dock no longer used for its original purposes, a portion of which Kiewit had been using for a short time for loading purposes under a lease arrangement with the City. Jurisdiction was based on diversity of citizenship.

The case was tried before a jury which returned a verdict in the amount of $350,000 plus costs which was the full amount prayed for and judgment was entered therefor. Kiewit filed a motion for judgment n. o. v. or for a new trial.

Portions of the old dock collapsed sometime after the termination of the lease arrangement with the City when Kiewit was not in possession and the collapses occurred not only in the area which had been leased to Kiewit but in areas some distance away therefrom. It was the theory of the defense that the dock collapses resulted from old age of the dock and lack of repair over the years and were not caused or contributed to by Kiewit.

The District Court, in ruling on the motion for a new trial, ordered a 50 percent remittitur in the amount of $175,000 on the ground that the verdict was grossly excessive and that the jury had not followed its instructions on betterment which would result in the reconstruction of a practically new dock when all the City was entitled to recover, if liability existed, was damages to the old dock.

The City declined to accept the remittitur and the court granted a new trial but only on the issue of damages. Kiewit contends that the new trial should also be granted on the issue of liability for two reasons, namely, (1) the court held that the jury did not follow the court's instructions on betterment and (2) misconduct of counsel for the City in making deliberate and persistent appeals to passion and prejudice including that Kiewit is a "large, international corporation, with headquarters in Omaha and New Jersey"; that it has "a multi-million dollar contract with the Corps of Engineers"; "that it has insurance coverage and can pay any judgment which is awarded against it"; that the taxpayers of Cleveland should not have to pay the bill.

Objections to the misconduct were repeatedly made and sustained and the court continually admonished and finally reprimanded counsel but he paid no attention to the admonitions or reprimand and made prejudicial remarks in his closing argument to the jury.

Kiewit appealed from the judgment before the court ruled on its motion for judgment n. o. v. or for a new trial. While the case was pending in this court on appeal the trial court denied the motion for judgment n. o. v. and ordered the remittitur and when it was not accepted granted a new trial only on the issue of damages. The court then at our suggestion, certified the appeal to this court under the provisions of 28 U.S.C. § 1292(b) and we allowed it.

For the reasons hereafter stated, we reverse for misconduct of counsel for the City and remanded for a new trial on all issues.

I

Dock 34, the dock in question, was originally constructed in the year 1908. In recent years, because of its deterioration and lack of repair, it was no longer used for its original purpose and only a small portion of which was being used chiefly as a parking lot for nearby sporting events, and for the mooring of a schoolship and a pleasure boat. In 1973, Peter Kiewit Sons' Co., a contracting firm headquartered in Omaha, Nebraska (and incorporated in that state), was engaged in performing dike construction and dike modification at another place in the Cleveland Harbor, pursuant to a contract with the Corps of Engineers. Kiewit entered into the permit agreement with the City whereby Kiewit was permitted to use a portion of the dock to load blast furnace slag on barges to be transported to the dike project. Under the agreement, Kiewit was permitted to occupy and use a 100 X 400 foot portion of the southwest corner of the dock from July 9, 1973, to and including October 12, 1973 (except for six days in late July when the area would be occupied by a carnival). Kiewit agreed to pay the City therefor $2,000 a month.

Kiewit actually occupied the dock site from July 16 to and including October 6 (except for the period from July 21 through July 30 when it was used by the carnival); the dock was used for the slag loading operation from August 1 to October 6. The slag loading operation consisted of trucking slag to the dock, where the slag was piled and then loaded onto barges for transportation to the breakwall some distance away. The operations were concluded, and Kiewit vacated the dock on October 8, 1973.

On October 24, 1973, after Kiewit had surrendered possession to the City, portions of the dock collapsed. The portion that collapsed included only a small section of the area which had been leased to Kiewit; the major portion of the area which collapsed was not within the section that had been leased to and used by Kiewit.

The City of Cleveland filed suit against Kiewit in the Court of Common Pleas of Cuyahoga County in a three-count complaint. The three causes of action alleged reflected different theories of law under which the plaintiff sought to impose liability on defendant for the collapses of the dock. The action was removed on the basis of diversity of citizenship to the United States District Court for the Northern District of Ohio on August 28, 1974. The City sought recovery of $350,000 in compensatory damages plus interest. Following a November 1976 trial which lasted six days, the jury ¹ returned a general verdict in favor of the City and against Kiewit in the amount of $350,000. Judgment was entered thereon plus costs. Kiewit then filed a timely motion for judgment notwithstanding the verdict, or, in the alternative, for a new trial, alleging misconduct of counsel for the City as one of the three grounds that "the remarks, argument and questioning of witnesses by plaintiff's counsel regarding liability insurance and defendant's financial resources, considered in total, were prejudicial."

The District Judge ordered a remittitur of $175,000, and stated that, if the remittitur were not accepted within thirty days, he would grant a new trial on the issue of damages. In his November 15, 1977 memorandum opinion, Judge Green stated, inter alia:

As to the question of liability, the Court is satisfied that the record is sufficient to support a verdict in plaintiff's favor.

While defendant's arguments regarding plaintiff's knowledge and conduct are founded on evidence in the record and might be sufficient to convince the Court, as trier of fact, that plaintiff should not recover . . . , in the Court's opinion, the evidence presented enough contested questions of fact that the jury's rejection of defendant's defenses predicated upon waiver and contributory negligence cannot be set aside as a matter of law.

. . . the Court is convinced that the verdict is grossly excessive, and believes that the amount of the verdict may have been influenced in that regard by conduct of plaintiff's counsel. (emphasis added).

While the Court recognizes that the mention of insurance was inevitable in the course of the trial by reason of the fact that matters of insurance coverage were included in the contracts between the parties, in the Court's opinion plaintiff's counsel went beyond the bounds of necessity and propriety in certain questions and comments on the matter.

While . . . whenever the subject of insurance was improperly approached, the Court sustained defendant's objections, the import of the questioning cannot be eradicated from the jury's consciousness. (emphasis added)

Similarly, while there was a tenable argument that defendant's size was relevant to the question of its expertise which in turn could be relevant to its knowledge of conditions pertaining to the dock, it was not necessary to make mention of defendant's status as a leader in the field of marine engineering in the manner and with the frequency that plaintiff's counsel did.

It is the Court's belief that the foregoing course of conduct may have well influenced the jury's determination on damages . . . (emphasis added)

The City thereafter advised the District Court that it would decline to accept the remittitur, and would instead proceed to a new trial on the issue of damages. The court then ordered a new trial solely on the issue of damages, with the trial date to be set following this appeal. ²

The comments which are at issue here began early in the City's opening statement to the jury, when Nick DeVito, an Assistant Law Director of the City, stated that "the defendant is Peter Kiewit and Sons, a corporation whose headquarters are in Omaha, Nebraska . . . Peter Kiewit is one of the largest construction corporations." Counsel for Kiewit promptly objected; the Court explained that "if they (plaintiff) can prove that in their evidence, I will overrule the objection, but if they can't, I will then admonish the jury to disregard it." Mr. DeVito then proceeded to tell the jury that "Peter Kiewit Co. is one of the largest construction corporations in the United States . . . it has international operations throughout the world. Its marine division is headquartered in New Jersey, and . . . you will have . . . testimony . . . from some of its executives from that part of the country." Mr. DeVito then stated that...