Conte v. General Housewares Corp

• Decision Date: 16 March 2000
• Docket Number: Nos. 98-4315,99-4137,s. 98-4315
• Parties: (6th Cir. 2000) Erik Conte, Plaintiff-Appellee, v. General Housewares Corporation, Defendant, Dayton Power & Light Company, Defendant-Appellant. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 628

215 F.3d 628 (6th Cir. 2000)

Erik Conte, Plaintiff-Appellee, v. General Housewares Corporation, Defendant, Dayton Power & Light Company, Defendant-Appellant.

Nos. 98-4315, 99-4137

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: March 16, 2000

Decided and Filed: June 14, 2000

Appeal from the United States District Court for the Southern District of Ohio at Dayton; No. 95-00451--Susan J. Dlott, District Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Steven B. Ayers, CRABBE, BROWN, JONES, POTTS & SCHMIDT, Columbus, Ohio, Thomas R. Murphy, ROCHE, HEIFETZ, MURPHY & WHOLLEY, Boston, Massachusetts, for Appellee.

Scott R. Thomas, Robert R. Furnier, Norman J. Frankowski II, FURNIER & THOMAS, Cincinnati, Ohio, for Appellant.

Before: NORRIS, MOORE, and COLE, Circuit Judges.

OPINION

KAREN NELSON MOORE, Circuit Judge.

Plaintiff-appellee Erik Conte successfully sued defendant General Housewares Corp. ("GHC") and defendant-appellant Dayton Power and Light Co. ("DP&L") in connection with severe personal injuries that he received as a result of a large electrical shock and obtained a verdict of $3.5 million. DP&L now appeals several of the district court's rulings with respect to that verdict and with respect to the award of prejudgment interest against DP&L. Because there was no error in the district court's decisions to award prejudgment interest against DP&L and to deny DP&L's motions for judgment as a matter of law, a new trial, and relief from the award of prejudgment interest, we AFFIRM those rulings of the district court, and we REMAND for recalculation of DP&L's liability in light of the partial satisfaction of the judgment by GHC and the accrued postjudgment interest.

I. BACKGROUND

Erik Conte, an employee of Kessler Tank Co., was sent, along with two other Kessler employees, to paint an elevated water tank on the premises of General Housewares Corp. in Sidney, Ohio on June 10, 1995. The water tank was surrounded by high-voltage electrical wires, some of which had been de-energized by a DP&L employee at the request of GHC. Conte was severely injured when the extension pole he was using came into contact with one or more of the energized power lines, causing him to receive a large electrical shock.

The facts surrounding this accident were disputed. It seems that GHC's maintenance manager, Don Doll, contacted Dayton Power & Light to inquire about having some power lines de-energized in preparation for the painting. The DP&L employees who initially inspected the GHC site recommended a total power outage, but a GHC representative told Mike Nowicki, a supervisor at DP&L, that GHC was not willing to undergo a total outage, because it needed to have enough power to run the computers and other devices in its factory building. All the parties agree on these facts, but they do not agree on what happened next. There was conflicting testimony at trial concerning which power lines were to be left energized and who made that decision. Ultimately, Mike Large, a technician from DP&L, appeared at GHC on June 10, 1995, and de-energized only those secondary wires attached to the legs of the water tank, leaving the primaries and the other secondaries energized.¹ The Kessler employees proceeded to paint the tank and, while suspended from a botswain chair, Erik Conte accidentally allowed his sixteen-foot extension pole to make contact with one or more of the primary lines, which caused him severe burns and disfigurement.

Conte filed suit against GHC and DP&L in federal court on November 29, 1995, for negligence, misrepresentation, and breach of contract.² He subsequently amended his complaint to omit the claims of misrepresentation and breach of contract against DP&L. The defendants moved for summary judgment. The magistrate judge recommended granting the summary judgment motions, finding in particular that Conte's injuries were not foreseeable by DP&L, since DP&L did not know that the Kessler workers would use a long extension pole to paint the tank; furthermore, the magistrate judge found that DP&L exercised ordinary care in de-energizing the power lines. The district court denied the summary judgment motions, however, finding instead that there were material questions of fact as to who determined which lines were to be de-energized and whether the process of de-energizing was performed with due care. The case went to trial, and Conte received a $3.5 million verdict. On September 11, 1998, the district court granted Conte's motion for prejudgment interest in the amount of $958,904.10 against DP&L only, finding that DP&L had failed to negotiate in good faith with Conte. The jury had erred, however, by apportioning liability for the verdict between the defendants ($3 million to GHC and $500,000 to DP&L) where the defendants were jointly and severally liable under Ohio law. The district court, with the agreement of counsel for all sides, therefore amended the judgment on October 14, 1998, to reflect the joint and several liability of GHC and DP&L for $3.5 million and the prejudgment interest award against DP&L. DP&L then filed a motion to amend the amended judgment entry, requesting that it state that prejudgment interest against DP&L would be calculated only after contribution rights between DP&L and GHC had been determined, or, alternatively, that the prejudgment interest award against DP&L be calculated only on the amount of $500,000. The district court then denied the motion to amend the amended judgment, and DP&L appealed.

Meanwhile, on September 28, 1998, GHC settled with Conte for $3.675 million. DP&L therefore filed a motion pursuant to Federal Rule of Civil Procedure 60(b)(5) for relief from the judgment to the extent of the settlement amount. The district court denied the order as superfluous. DP&L then appealed that order.

On appeal, DP&L makes several claims of error. First, it argues that the district court abused its discretion in granting prejudgment interest to Conte. It also claims that the district court erred in denying DP&L's motion for judgment as a matter of law and abused its discretion in denying DP&L's motion for a new trial. Finally, DP&L contends that the district court's denial of DP&L's motion for relief from the judgment was in error.

II. ANALYSIS

A. Prejudgment Interest

In a diversity case, state law governs the district court's decision whether to award prejudgment interest, see Diggs v. Pepsi-Cola Metro. Bottling Co., 861 F.2d 914, 924 (6th Cir. 1988), which is reviewed by this court for an abuse of discretion, see Stallworth v. City of Cleveland, 893 F.2d 830, 836 (6th Cir. 1990) (applying Ohio law). The Ohio courts have defined an abuse of discretion, in the context of prejudgment interest awards, as a result "so palpably and grossly violative of fact and logic that it evidences not the exercise of will but perversity of will, not the exercise of judgment but defiance thereof, not the exercise of reason but rather of passion or bias." State v. Jenkins, 473 N.E.2d 264, 313 (Ohio 1984) (quoting Spalding v. Spalding, 94 N.W.2d 810, 811-12 (Mich. 1959)), cert. denied, 473 U.S. 1032 (1985).

Under Ohio law, a plaintiff is entitled to prejudgment interest if the court determines "that the party required to pay the money failed to make a good faith effort to settle the case and that the party to whom the money is to be paid did not fail to make a good faith effort to settle the case." Ohio Rev. Code Ann. § 1343.03(C) (Banks-Baldwin 1994). The Ohio Supreme Court has held that a party has not failed to make a good-faith effort to settle under the statute if that party has

(1) fully cooperated in discovery proceedings, (2) rationally evaluated his risks and potential liability, (3) not attempted to unnecessarily delay any of the proceedings, and (4) made a good faith monetary settlement offer or responded in good faith to an offer from the other party. If a party has a good faith, objectively reasonable belief that he has no liability, he need not make a monetary settlement offer.

Kalain v. Smith, 495 N.E.2d 572 (Ohio 1986), syllabus. In Moskovitz v. Mt. Sinai Medical Center, 635 N.E.2d 331 (Ohio), cert. denied, 513 U.S. 1059 (1994), the Supreme Court of Ohio noted that the last sentence "should be strictly construed so as to carry out the purposes of R.C. 1343.03(C)." Id. at 348. Although the burden of proof is on the party seeking the prejudgment interest, that burden does not require showing bad faith by the other party, but rather only a lack of good faith. See id.

The district court held that DP&L failed to make a good-faith effort to settle, because it did not rationally evaluate its risks and potential liability, nor did it make a good-faith settlement offer or respond in good faith to Conte's offer. DP&L claims that the district court abused its discretion, because DP&L maintained a good-faith, reasonable belief that it was not liable for Conte's injuries throughout this litigation. DP&L points first to the magistrate judge's recommendation to grant summary judgment in DP & L's favor as evidence of the reasonableness of DP&L's belief in its own lack of liability. Furthermore, DP&L claims that, contrary to the district court's findings, DP&L personnel constantly discussed the possibility and desirability of settlement with DP&L's counsel. Finally, DP&L disputes the district court's finding that DP&L believed there was more than a fifty percent chance that a jury would award Conte a verdict of up to $500,000, which was based on the statement of DP&L's counsel that he thought that "[t]he likelihood of Plaintiff recovering an award in excess of $500,000.00 from DP&L [was] less than 50%." J.A. at 2505 (Thomas Dep.).

We hold that the district court did not abuse its discretion in awarding prejudgment interest to Conte. DP&L does not dispute that it never made a real settlement offer to Conte, despite Conte's efforts to negotiate.³ Furthermore,...