Macheca Transp. Co. v. Phila. Indem. Ins. Co.
| Decision Date | 21 November 2013 |
| Docket Number | No. 12–3941.,12–3941. |
| Citation | 737 F.3d 1188 |
| Parties | MACHECA TRANSPORT COMPANY, doing business as Gateway Cold Storage; David Macheca; Starlin Macheca, Plaintiffs–Appellants v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
John F. Horvath, argued, Chicago, IL, for Appellant.
Martin John Buckley, argued, Saint Louis, MO, (Adrian Phillip Sulser, on the brief), for Appellee.
Before RILEY, Chief Judge, BRIGHT and BYE, Circuit Judges.
This is an insurance coverage dispute between Macheca Transport Company (Macheca) and Philadelphia Indemnity Insurance Company (Philadelphia) arising from an ammonia leak which occurred in a refrigerated warehouse in November 2001. The dispute has resulted in extended litigation. An initial appeal to our court reversed a summary judgment in favor of Philadelphia. See Macheca Transp. v. Phila. Indem. Co., 463 F.3d 827, 834 (8th Cir.2006) ( Macheca I ). On remand, the district court again granted summary judgment to Philadelphia on one of Macheca's two coverage theories and dismissed a vexatious refusal-to-pay claim. A jury then resolved the remaining issues in Philadelphia's favor. Macheca filed a second appeal. We concluded the district court erred in granting the second summary judgment to Philadelphia and remanded for further proceedings. See Macheca Transp. v. Phila. Indem. Co., 649 F.3d 661, 675 (8th Cir.2011) (Macheca II ). Following a second trial, a jury awarded Macheca $174,964 in damages.
Macheca now appeals for a third time. Macheca contends its damages were erroneously reduced by amounts it recovered from a separate insurance carrier, and further claims the district court erred in denying its request for prejudgment interest. We affirm in part, reverse in part, and remand.
We refrain from fully explaining the factual background involved in this case and instead focus on the facts relevant to the limited issues raised in this appeal.1 The second jury trial addressed solely the amount of damages Macheca claimed for certain categories of loss covered under Philadelphia's policy. Significantly, Macheca had a separate policy issued by another insurer, Travelers Insurance Company (Travelers), which provided coverage for some of the same losses covered by the Philadelphia policy. Travelers paid Macheca a total of $348,481.70 (hereinafter the Travelers payment) for losses resulting from the ammonia leak, which included payments for property damage and lost business income. In the jury instructions for the second trial, the district court told the jury it “must not award damages to [Macheca] for any amount already paid by Travelers Insurance Company.” Appellant's Appendix at 178.
The Travelers payment was at issue in the first jury trial. Macheca argued Philadelphia's refusal to pay for property damage prevented it from making necessary repairs to the warehouse and claimed it could not get its business back to full strength without the repairs, causing it to suffer additional lost business income. In fact, based on Philadelphia's breach of the insurance contract, Macheca claimed it could recover all the damages it suffered notwithstanding the $500,000 policy limits for lost business income.
The Travelers payment was relevant to Macheca's claim for the full amount of lost business income in two ways. First, the parties disputed whether the Travelers payment should have been sufficient to allow Macheca to make necessary repairs and thereby stem any ongoing damage for lost business income. Second, there was an issue whether Macheca's claims against Philadelphia should be reduced by the amount Travelers had already paid.
The parties filed motions in limine addressing both the claim for an amount in excess of the $500,000 lost business income policy limits, as well as the question about whether the Travelers payment should reduce Macheca's overall damages. With respect to the policy limits issue, Philadelphia filed a motion in limine seeking to prohibit Macheca's witnesses from testifying about any claim to recover alleged business interruption losses in excess of $500,000. Macheca, in turn, filed a motion in limine asking to be allowed to introduce evidence of the full amount of its lost business income without regard to the policy limits. With respect to the Travelers payment, Philadelphia's second motion in limine sought, in part, to prohibit Macheca from introducing evidence of damages covered by the Travelers payment, contending Missouri law did not allow a party “to obtain duplicate damages in excess of their actual injury [and thus] any damages recovered by [Macheca] must exclude those elements for which Travelers has already compensated [Macheca].” District Court Docket # 171 at 2–3.
At the motion hearing, Philadelphia's counsel clarified that Philadelphia did not actually seek to exclude evidence of the Travelers payment during the trial, but rather sought to prevent Macheca from “attempt[ing] to recover for those business income losses which were already paid by Travelers ... when it comes down to the analysis of submitting this to the jury.” First Trial Tr. at 29. In other words, Philadelphia argued Macheca's evidence should account for the amounts paid by Travelers, and the jury should be instructed to reduce those amounts from any damages it may award. Id. at 30. In response, Macheca's counsel 2 explained that all three motions in limine were related. Macheca argued Philadelphia wanted the damage testimony on lost business income to be artificially capped at $500,000 even if the overall damages were greater than that, and then have the jury further reduce its award by the amount Travelers had paid. Macheca posed the hypothetical of its lost business income totaling $1 million, and having recovered $200,000 from Travelers, with remaining damages of $800,000. Even assuming the district court ruled Macheca's lost business income would be capped by the $500,000 policy limits, Macheca contended it should be able to recover the full policy limits under the posed hypothetical because its remaining damages would exceed $500,000. Macheca claimed Philadelphia instead wanted the jury to be told the $500,000 policy limit was an absolute ceiling from which the Travelers payment would be further subtracted, leaving a net recovery of just $300,000. See id. at 86–90.
After the district court ruled that Philadelphia's alleged breach of contract did not permit Macheca to recover more than the $500,000 policy limits, Macheca's counsel twice stressed the importance of still allowing Macheca to present evidence of the full amount of its lost business income, irrespective of the $500,000 policy cap or the amount of the Travelers payment. In doing so, Macheca's counsel acknowledged the Travelers payment would have to be deducted:
If because of their breach of the insurance policy our business interruption claim now exceeds $500,000 and based upon Your Honor's ruling just now that we are limited to the $500,000, we should be entitled to put in evidence that our business interruption claim exceeded the $500,000 and then deduct that portion of the Travelers payment that relates to the business interruption so that we would be entitled ... to recover the maximum that the parties agreed to and that Your Honor is limiting us to: $500,000.
Id. at 30 (emphasis added). Later in the hearing, Macheca's counsel again explained Macheca's view of the district court's ruling that any recovery against Philadelphia would be capped by the policy limits, and acknowledged the Travelers payment would reduce the damage award:
We have no problem with reducing the universe of our lost business income; the totality of it. We have no problem with reducing it by what we got from Travelers. But you have to tell the jury what you are subtracting it from; otherwise, you wind up with the totally inequitable and artificial result that if you don't tell the jury that they're going to be under the impression that you only had [$500,000 in total losses at] best. “And now we're going to [further] reduce that by what Travelers gave you,” which is the worst of all possible worlds and utterly contrary to law.
Id. at 90 (emphasis added).
The district court ruled “the plaintiffs should be allowed to present evidence of their damages, even though they may not be able to recover the full amount of the loss of the damages they're claiming.” Id. at 93.
In the ensuing first trial, Macheca presented its damage evidence consistent with the district court's ruling, that is, it offered testimony regarding the full amount of its alleged lost business income, but acknowledged receipt of the Travelers payment and deducted it. Likewise, the closing argument given by Macheca's counsel tracked the evidence presented at trial by deducting the Travelers payment from each respective category of loss claimed against Philadelphia. When it came time to submit the issue to the jury, the district court told the jury it “must not award damages to [Macheca] for any amount already paid by Travelers Insurance Company.” District Court Docket # 281 at 9. The transcript from the first trial's jury charge conference does not indicate Macheca specifically objected to that sentence in the jury instructions. See First Trial Tr. at 1014–26.
As noted above, Macheca appealed after the first trial, raising a host of coverage, evidentiary, and post-trial issues. Notably absent from Macheca's appeal, however, was any claim the district court erred with respect to its rulings on the $500,000 policy limits, the manner in which Macheca was allowed/required to discuss the Travelers payment when introducing its damage evidence, or a challenge to the district court's instruction that the jury “must not award damages to [Macheca] for any amount already paid by Travelers Insurance Company.”
When this case went to trial for a second time, Macheca's evidence with...
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