Coal Resources, Inc. v. Gulf & Western Industries, Inc.

• Decision Date: 22 April 1992
• Docket Number: Nos. 90-3989,90-3990,No. 11,11,s. 90-3989
• Citation: 954 F.2d 1263
• Parties: 34 Fed. R. Evid. Serv. 1264 COAL RESOURCES, INC.;Coal & Construction, Inc.; Green Mountain Coal Company and Liquidating Trust, Plaintiffs-Appellees, Cross-Appellants, v. GULF & WESTERN INDUSTRIES, INC., Now named Paramount Communications, Inc.; the New Jersey Zinc Company; Jersey Kentucky Coal Company, Inc.; Virginia Met Coal Company, Inc., Defendants-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1263

954 F.2d 1263

34 Fed. R. Evid. Serv. 1264

COAL RESOURCES, INC.; No. 11 Coal & Construction, Inc. Green Mountain Coal Company and Liquidating Trust Plaintiffs-Appellees, Cross-Appellants, v. GULF & WESTERN INDUSTRIES, INC., Now named Paramount Communications, Inc.; the New Jersey Zinc Company; Jersey Kentucky Coal Company, Inc.; Virginia Met Coal Company Inc., Defendants-Appellants, Cross-Appellees.

Nos. 90-3989, 90-3990.

United States Court of Appeals Sixth Circuit.

Argued Sept. 19, 1991.

Decided Jan. 29, 1992.

Rehearing and Rehearing En Banc Denied

March 13, 1992.

Order Clarifying Opinion April 22, 1992.

Vincent B. Stamp (argued and briefed), Nancy C. Cody, Dinsmore & Shohl, Cincinnati, Ohio, James K. Robinson (briefed), Honigman, Miller, Schwartz & Cohn, Detroit, Mich., and Catherine M. White, Cincinnati, Ohio, for plaintiffs-appellees, cross-appellants.

Gerald W. Simmons, Jeffrey A. Lydenberg, and Jacob K. Stein (argued and briefed), Thompson, Hine & Flory, Cincinnati, Ohio, for defendants-appellants, cross-appellees.

Before KENNEDY, RYAN and BOGGS, Circuit Judges.

KENNEDY, Circuit Judge.

Defendant Gulf and Western ("G & W") appeals from a jury verdict for plaintiff Coal Resources, Inc. ("CRI") in CRI's diversity breach of contract action against G & W raising numerous evidentiary issues. ¹ CRI cross-appeals the District Court's denial of pre-judgment interest. We REMAND to the District Court for a new trial unless CRI remits $226,563 of the awarded damages.

I.

This is the third time this case has been tried and appealed to this Court. The case has been considered on original appeal, a rehearing of that appeal, an appeal following a second trial and now this appeal following the third trial. The basic facts of the case were adequately related in the opinion addressing the second appeal and we quote from that case:

Coal Resources, Inc. (CRI) obtained leases on coal properties in Virginia and Kentucky and began mining operations in the early 1970s. The leases required CRI to "diligently mine" the properties and to pay minimum royalties to the lessors regardless of the amount of coal mined. In 1975, CRI entered into negotiations for the sale of its assets to defendant Gulf & Western (G & W). On July 11, 1976, the parties reached an agreement. CRI's assets were transferred to G & W subsidiaries Virginia Met Coal Company and Jersey Kentucky Coal Company. G & W paid CRI $2.1 million, promised to pay $500,000 one year after the date of the sale on a promissory note CRI owed to a bank, assumed CRI's equipment debt of $1.7 million, and agreed to pay CRI 2.8 times any annual adjusted net profits ("the multiple") of Virginia Met Coal Company for the two years following the sale after deduction of certain amounts already paid and with a maximum limit of $11,666,000. In a separate agreement G & W also assumed CRI's obligations under the leases.

After acquiring the leases, G & W was unable to mine the leased property profitably. Eventually G & W lost the leases either through failure to pay minimum royalties to the lessors, through litigation settlements with its contract miner, or through voluntary surrender. No money was ever paid to CRI under the multiple because Virginia Met Coal operated at a loss. CRI then brought suit.

In 1981, following the first trial in this case, the jury found G & W liable for breach of contract, promissory fraud, and securities fraud. The jury awarded CRI more than $17 million in compensatory damages, and more the $11 million in punitive damages and attorneys fees. The trial court ordered a remittitur to $12,050,000 and granted G & W's motion for judgment notwithstanding the verdict on the securities claim.

On appeal, this court affirmed originally the judgment dismissing the securities law claim, reversed the judgment on the other claims and remanded those claims for a new trial. CRI then filed a petition for rehearing which was granted. Following supplemental briefing, the original hearing panel affirmed the j.n.o.v. on the securities law claim, reversed the judgment for CRI on the promissory fraud claim, vacated the judgment for CRI on the contract claim, and remanded for a new trial [in that claim]. Coal Resources, Inc. v. Gulf & Western Indus., Inc., 756 F.2d 443 (6th Cir.1985).

Coal Resources, Inc. v. Gulf & Western Indus., Inc., 865 F.2d 761, 764-65 (6th Cir.1989). At the second trial the jury again found in favor of CRI on the contract claim and returned an award of $7,850,000.

On appeal, this Court reversed the judgment of the District Court on the contract claim and once again remanded the case for a new trial. The Court found that the testimony of plaintiffs' expert witness was too speculative in some respects to be admissible and that the defendants had been unfairly treated by the denial of a witness. At the third trial, the jury again found for CRI on the contract claim, awarding damages of $8.9 million. At this third trial, G & W admitted breach of the contract to mine diligently. Thus, the only issue tried was damages.

G & W appeals claiming that CRI openly defied this Court by basing its case on the same testimony and expert this Court found to be speculative in 1989. Coal Resources, 865 F.2d at 761. G & W claims that CRI's testimony is inadmissible speculation under the "law in the case" doctrine and that as a result final judgment should have been rendered for G & W. G & W further contends that the trial court erred in excluding evidence of coal prices presented by its witness. CRI cross-appeals claiming that the trial court erred in denying pre-judgment interest.

II.

We first must decide whether the District Court and the parties in this case allocated appropriate weight to this Court's previous holdings. G & W asserts that CRI ignored the 1989 ruling of this Court which held that the expert testimony given by Coal Resources' experts, primarily Stonie Barker, was too speculative to be admissible. Coal Resources, 865 F.2d at 770. G & W argues that admission of testimony by the same expert at the retrial openly defies the previous rulings. Further, G & W contends that it is "law of the case" that CRI's damage theory is inadmissible speculation. During the course of the third trial, the defense objected to the testimony by Stonie Barker. When denying the motion, the District Court stated:

I acknowledge that the Court of Appeals rejected Mr. Barker's testimony as too speculative to be admissible on retrial. The Court finds that this is a different trial than the one perceived by the Court of Appeals in the last case. There are many--there have been some changes in it, particularly the stipulations of the defendant.

Joint App. at 2487.

The law of the case doctrine "precludes this Court from rehearing a previously decided issue unless one of three 'exceptional circumstances' exists [including] that the evidence in a subsequent trial was substantially different." 865 F.2d at 767 (quoting Kori Corp. v. Wilco Marsh Buggies & Draglines, Inc., 761 F.2d 649, 657 (Fed.Cir.1985). Thus, CRI may use similar testimony at the second trial where that testimony is now supported by new evidence presented by either the plaintiffs or defendants. The defendants' position on many issues did change since the earlier trials. Although G & W do not agree with CRI on every issue, the disagreements between the parties now center on five issues. ² Clearly, CRI still must provide some basis from which a jury could find that the witness' estimates had foundation and the opinions were grounded in reason. That the previous testimony was speculative does not now preclude Barker's testimony where a foundation for it is supplied. Barker's testimony is admissible since both G & W and CRI submitted substantially different testimony. G & W argues that this exception should not apply because Stonie Barker's testimony has remained the same. It is true that Barker's opinion is largely the same. However, there is no requirement that Barker's specific testimony must change; a change in the other testimony and evidence presented at trial which provides support for Barker's testimony removes the impediment of speculation.

III.

This Court's review of a civil jury verdict must determine if the verdict "is sufficient to support the judgment, [and] follow the traditional rule of viewing the evidence in the light most favorable to the prevailing party." Coal Resources, 865 F.2d at 767. Damages which are remote or speculative are not permitted. Grantham & Mann, Inc. v. American Safety Prods., Inc., 831 F.2d 596, 601 (6th Cir.1987). Further, "[o]nce the existence of damages has been shown, all that an award of damages requires is substantial evidence in the record to permit a factfinder to draw reasonable inferences and make a fair and reasonable assessment of the amount of damages." Id. at 602.

The defendants continue to complain that several of the assertions made by Barker and other plaintiff witnesses amount to inadmissible speculation. A Study Team ("Team") commissioned by G & W presented a property development report dated February 19, 1990. This report together with the testimony and evidence submitted by both sides narrow the areas of disagreement to five. We limit our discussion to issues still subject to disagreement which are not clearly waived by the defendants.

A. Percentage Of Coal Which May Be Sold As Metallurgical Coal

This Court noted at the last appeal that the percentage of steam coal and metallurgical coal produced by the mine was material. Coal Resources, 865 F.2d at 771. G & W warrants that CRI has failed to show any factual basis in the record for Barker's assumption that more than 60% of the mined coal could be sold in the metallurgical market. Barker's plan assumed that the mix of coal sold during the multiple years would be 80% metallurgical and 20% steam. G & W's plan allows that while the coal may be produced at that ration, only 60% of the coal could be...