Meaux Surface Prot. Inc v. Fogleman, 09-20234.

Citation607 F.3d 161
Decision Date17 May 2010
Docket NumberNo. 09-20234.,09-20234.
PartiesMEAUX SURFACE PROTECTION, INC., Plaintiff-Appellee Cross-Appellant,v.Mike FOGLEMAN; CleanBlast, LLC; Charlie Kotrla, Defendants-Appellants Cross-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

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Conrad Henry Kollenberg (argued), Kimberly Stuart, Crain, Caton & James, Houston, TX, for Plaintiff-Appellee Cross-Appellant.

Robert M. Roach, Jr. (argued), Roach & Newton, L.L.P., Houston, TX, for Defendants-Appellants Cross-Appellees.

Appeals from the United States District Court for the Southern District of Texas.

Before DeMOSS, ELROD and HAYNES, Circuit Judges.

DeMOSS, Circuit Judge:

In this diversity jurisdiction case, we review a jury verdict and judgment in favor of Plaintiff Meaux Surface Protection, Inc. (Meaux) on a claim for breach of fiduciary duty. Defendants Mike Fogleman, Charlie Kotrla, and CleanBlast, LLC (collectively defendants) contend that the district court abused its discretion in allowing an eleventh-hour amendment of the pretrial order, and erred in failing to grant defendants' motions for judgment as a matter of law. Meaux cross-appeals the denial of prejudgment and post-judgment interest. After careful review, we find no reason why we should upset the jury verdict and judgment. However, we order that that the case be remanded to its port of call for the district court to consider the appropriateness of prejudgment interest and to award post-judgment interest.

I. FACTS AND PROCEDURE: MUTINY ABOARD MEAUX

Meaux is in the maritime sandblasting and painting business. It is a Texas corporation and a wholly owned subsidiary of Muehlhan AG (“Muehlhan”), based in Germany, which acquired Meaux in 2003. Mike Fogleman was a project manager for Meaux at that time; he took the helm as Meaux's president in late 2005. Charlie Kotrla was an operations manager for Meaux. Both are Louisiana citizens. In December 2006, Fogleman and Kotrla resigned and, via their jointly owned venture CleanBlast, LLC, began competing with Meaux.1 When Fogleman and Kotrla left, many of Meaux's work crews and clients soon sailed with the tide, defecting to CleanBlast. Smelling a rat, Meaux sued defendants in Texas state court in early 2007, contending that Fogleman and Kotrla had surreptitiously and unlawfully poached employees and clients while working for Meaux. Defendants removed the case to federal court. Meaux's state-court petition, which remained the operative pleading, alleged inter alia, that its “loss of business” due to defendants' actions was “significant.”

The district court entered a scheduling order on September 12, 2007, which set a deadline of January 31, 2008 for amended pleadings. Meaux did not file an amended complaint. Per the court's scheduling order, the parties filed a joint pretrial order on October 31, 2008. Meaux's statement of the case relayed the thrust of the facts recounted above, but did not indicate what remedies Meaux sought. Along with the pretrial order, the parties filed proposed jury instructions and witness lists. Meaux's submission included a jury instruction and interrogatory for lost profits, past and future, caused by defendants' actions. In a simultaneously filed witness list, Meaux designated Muehlhan's Chief Financial Officer, Carsten Ennemann, as a witness “familiar with the financial damages sustained by Meaux.”

A final pretrial conference was set for February 17, 2009. The parties would embark on jury selection and trial the next day. On February 16, 2009, defendants filed a brief in opposition to Meaux's requested jury instructions for lost profits. Defendants asserted that Meaux's failure to state that it sought lost profits in the body of the pretrial order meant such claim was waived. At the pretrial conference on February 17, the district court indicated that it would allow Meaux to amend the pretrial order to conform its claims to those presented in its pleadings. The court preliminarily stated that it would not allow Meaux to insert claims which had not heretofore been raised. The court reserved ruling pending further briefing. Meaux filed a brief asserting that, under Rockwell International Corp. v. United States, 549 U.S. 457, 474, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007), it could raise lost profits for the first time in the pretrial order. Defendants disagreed and filed a motion to dismiss Meaux's claims under Federal Rule of Civil Procedure 12(b)(6).

The following day, February 18, the court tentatively stated that it would allow amendment of the pretrial order, but only to conform to the pleadings. On the second day of trial, February 19, after considering additional arguments and authorities, the court charted a new course. It first noted that Meaux's original state-court petition had asserted that defendants' tortious acts caused Meaux to suffer lost revenues and actual damages. Moreover, defendants filed pretrial motions concerning lost profits, including a motion to compel production of documents pertinent to lost profits and a summary judgment motion challenging Meaux's evidence of damages. The court pointed out that defendants at no time asserted that Meaux failed to plead lost profits with sufficient specificity to satisfy federal notice pleading standards. Moreover, the court's own procedures manual indicated that counsel shall submit as part of the Final Joint Pretrial Order proposed jury instructions.” Meaux had included lost profits instructions in its proposed jury instructions. Defendants did not argue that this was insufficient under the local rules until just before trial. The court reasoned: “Given the foregoing, it cannot be said that the defendants were totally unaware of or surprised by the plaintiff's claim for lost profits submitted in the proposed jury instruction or unprepared to litigate this issue at trial.” The court further found that “modification of the Pretrial Order to include lost profits is warranted to prevent substantial injustice.” Thus, the court held that lost profits could be submitted to the jury.

At trial, Meaux called Ennemann to testify about lost profits for fiscal year 2007. Defendants objected that Ennemann lacked personal knowledge regarding the operations and profits of Meaux's business, and that Meaux had failed to designate him to testify about these matters. The court overruled the objection, but indicated that defense counsel could take Ennemann on voir dire before the jury to challenge his familiarity with Meaux's operations and profitability. Counsel did so. Ennemann's testimony revealed that accounting and budgeting data produced at Meaux were regularly transmitted back to the mother ship in Germany. As CFO of Muehlhan, Ennemann monitored Meaux's financials and was cognizant of factors affecting Meaux's profitability, such as oil prices and hurricane activity in the Gulf of Mexico. Defense counsel also objected that at the time of his deposition, Ennemann was not familiar with all relevant facts and source documents concerning Meaux's accounts and budgeting. He became familiar with such matters after his deposition. Counsel moved to disallow Ennemann's testimony on the basis of unfair surprise. The court denied the motion, reasoning that defense counsel had the documents prior to the deposition and could have used the documents to demonstrate Ennemann's purported lack of familiarity with Meaux's business practices.

In sum, the court held, and explained to the jury, that Ennemann was not an expert witness, but rather a corporate fact witness whom Meaux would present to estimate the lost profits suffered by Meaux in 2007 as a result of CleanBlast's efforts to corral its employees and clients. The court observed that Ennemann was familiar with such matters in his capacity as CFO of Muehlhan, and that a lack of specificity or detail in his familiarity with day-to-day operations at Meaux should affect the weight assigned to his testimony by the jury. Ennemann then explained month-by-month and client-by-client the projected revenues and actual revenues received. The projected revenue figures came from a 2007 budget report prepared by Fogleman himself prior to his departure. In total, Ennemann estimated that Meaux lost $2.3 million in 2007 due to defendants' malfeasance. At trial, Fogleman stood by his budget figures as reasonable estimates of revenues.

At the close of Meaux's case and at the close of evidence, defendants moved for judgment as a matter of law, which the court denied. The court charged the jury, which returned a verdict in favor of Meaux and awarded $1.43 million in lost profits. The court entered judgment on February 24, 2009. Defendants re-urged their motions for judgment as a matter of law or a new trial. Meaux moved the court to amend judgment to add pre- and post-judgment interest. The court denied all motions without stating reasons. This appeal followed.

II. AMENDMENT: THE UNKNOWN SHORE

Defendants first argue that the amendments to the pretrial order allowed Meaux “to engage in trial by ambush.” Defendants insist that the absence of the precise term “lost profits” in the pretrial order led them to the “inescapable conclusion that Meaux's theory of damages would not include lost profits.” They contend that the at-trial amendments to the pretrial order left no time to depose additional witnesses or obtain an expert to counter Meaux's lost profits projections and calculations. Meaux responds that it was perfectly apparent throughout discovery and pretrial litigation that it would seek lost profits. Meaux notes that lost profits were mentioned in its proposed jury charge, which was filed simultaneously with, and pursuant to local rule was deemed part of, the pretrial order. Moreover, defendants sought discovery on Meaux's lost profit claim and unsuccessfully sought summary judgment on the claim. Thus, any claim of “ambush” is an unfathomable yarn.

A. TWO YEARS BEFORE THE AMENDMENT

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