Nationwide Mut. Ins. Co. v. Nall's Newton Tire

• Decision Date: 07 December 2015
• Docket Number: CIVIL ACTION NO. 14-110-CG-M
• Citation: Nationwide Mut. Ins. Co. v. Nall's Newton Tire, CIVIL ACTION NO. 14-110-CG-M (S.D. Ala. Dec 07, 2015)
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. NALL'S NEWTON TIRE a/k/a NALL'S NEWTON TIRE SERVICE, INC., Defendant.
• Court: U.S. District Court — Southern District of Alabama

NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff, v. NALL'S NEWTON TIRE a/k/a NALL'S NEWTON TIRE SERVICE, INC., Defendant.

CIVIL ACTION NO. 14-110-CG-M

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

December 7, 2015

ORDER

This matter is before the Court on the motion of Nationwide Mutual Insurance Company ("Nationwide") for new trial or, alternatively for remittitur (Doc. 128), opposition thereto by Nall's Newton Tire ("NNT") (Doc. 129), NNT's motion to tax costs and prejudgment interest (Doc. 130), Nationwide's opposition to NNT's motion to tax costs and prejudgment interest (Doc. 134), Nationwide's reply in support of new trial or remittitur (Doc. 135), Nationwide's motion for reconsideration of order granting NNT leave to file surreply (Doc. 138), NNT's reply in support of prejudgment interest (Doc. 139), and NNT's surreply in opposition to new trial or remittitur (Doc. 140). As an initial matter, the Court declines to reconsider the granting of NNT's leave to file a surreply. The Court has already ruled on the motion and reviewed NNT's "surreply" and will not reexamine that decision here. As to Nationwide's motion for new trial or remittitur, for reasons that will be explained below, the Court finds that Nationwide's motion for remittitur should be granted to the extent that the damage award will be reduced to $318,500.00. Lastly, the Court finds below that NNT's motion for prejudgment interest should be granted and that costs should be taxed in the amount of $5,344.67.

BACKGROUND

This case arises from insurance claims made for damage resulting from a fire that occurred at NNT's premises on December 18, 2012. Nationwide filed the action seeking a declaratory judgment that no coverage exists for NNT's claims under their policy of insurance. (Doc. 1). NNT asserted counterclaims for breach of contract and bad faith refusal to pay. (Doc. 9). The Court granted summary judgment in favor of Nationwide as to NNT's bad faith claim (Doc. 91) and the case proceeded to trial on Nationwide's declaratory judgment claim and NNT's claim for breach of contract.

The parties' joint pretrial document stated that NNT "will be seeking all contractual damages which it is entitled to: $168,500 appraised value or $225,015 replaced value for the loss of the building and $150,000 for loss of contents." (Doc. 85, p. 51). Nationwide moved to prohibit the admission of evidence relating to the replacement value of the property because the insurance policy excluded such coverage until the damaged property "is actually repaired or replaced" and "[u]nless the repairs or replacement are made as soon as possible after the loss or damage."(Doc. 96). That motion was granted by the Court. (Doc. 127). There was evidence at trial that the policy limits for the building at the time of the accident were $405,000 for the building and $150,000 for the contents. (Doc. 129-2, p. 5). There was also testimony that the policy limits of $405,000 could only be collected if the property was rebuilt. (Doc. 129-2, p. 8). The testimony also indicated that Mr. Nall had claimed the actual cash value, of $168,500 for the building, not replacement cost. (Doc. 129-2, p. 8).

The jury instructions regarding damages included the following:

If you decide that Nall's Newton proved its claim against Nationwide for breach of contract, and that Nationwide's defenses fail, then you must decide how much money will reasonably compensate Nall's Newton for the harm caused by the breach. This compensation is called "damages." The purpose of such damages is to put Nall's Newton in as good a position as it would have been if Nationwide had not broken the contract. Nall's Newon is claiming $168,500.00 for the building and $150,000.00 for the contents, for a total damages award of $318,500.00.

The jurors were also advised that their "verdict must not be based on mere speculation or conjecture but must be based upon the evidence and the just and reasonable inferences shown thereby." The verdict form provided a blank line on which the jurors were to write the amount of damages awarded if they found in favor of NNT as to its breach of contract claim. (Doc. 126). Neither party objected to the verdict form or the above described jury charges. The jury returned a verdict in favor of NNT as to its breach of contract claim and awarded damages in the amount of $510,000.00. (Doc. 126).

DISCUSSION

A. New Trial or Remittitur

A district court which finds that a jury's award of damages is excessive may grant the defendant a new trial on this basis. Peer v. Lewis, 2008 WL 2047978, *17 (S.D. Fla. May 13, 2008) aff'd, 2009 WL 323104 (11th Cir. Feb. 10, 2009) (citing Johansen v. Combustion Eng'g, Inc., 170 F.3d 1320, 1329 (11th Cir. 1999)). Alternatively, "the court can order remittitur and reduce the damages." Id. (citing Simon v. Shearson Lehman Bros., Inc., 895 F.2d 1304, 1310 (11th Cir. 1990); Wilson v. Taylor, 733 F.2d 1539, 1549-50 (11th Cir. 1984)). A court has discretion to issue a remittitur if the "jury's award is unreasonable on the facts." Johansen, 170 F.3d at 1331.¹ However, the Seventh Amendment requires that a plaintiff be given the option of a new trial in lieu of a court's discretionary remittitur of a portion of thejury's award. Id. at 1329. In contrast, "where a portion of a verdict is for an identifiable amount that is not permitted by law, the court may simply modify the jury's verdict to that extent and enter judgment for the correct amount." Id. at 1330 (citation omitted). "The Seventh Amendment is not offended by this reduction because the issue is one of law and not fact." Id. A jury award may be unconstitutionally excessive, for instance "the Constitution provides an upper limit on punitive damage awards so that a person has 'fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose.' " Id. at 1330-1331 (citation omitted). "[A] court has a mandatory duty to correct an unconstitutionally excessive verdict so that it conforms to the requirements of the due process clause." Id. at 1330. The court should also correct a verdict that goes beyond the damage evidence presented at trial. "In general, a remittitur order reducing a jury's award to the outer limit of the proof is the appropriate remedy where the jury's damage award exceeds the amount established by the evidence." Sands v. Kawasaki Motors Corp. U.S.A., 513 Fed. Appx. 847, 855 (11th Cir. 2013) (quoting Goldstein v. Manhattan Indus., Inc., 758 F.2d 1435, 1448 (11th Cir.1985)). Where there is only one basis for liability alleged, then the trial court may base a remittitur order on the maximum amount proved, without providing the opportunity for a new trial. Goldstein, 758 F.2d at 1448.

In the instant case, the only damage claim allowed at trial was NNT's counterclaim for breach of contract.² The evidence at trial established that NNT had submitted a claim to Nationwide for the actual cash value of the building in the amount of $168,500.00 plus $150,000.00 for the contents of the building, for a total claim of $318,500.00. Although there was evidence that the limits of the policy exceeded this amount, there was no evidence that NNT had claimed additional sums or that it was entitled to additional sums under the insurance contract. Uncontradicted evidence established that NNT had not rebuilt the property and was not entitled under the insurance policy to replacement costs. There was no evidence that NNT was entitled to anything more under the policy than the $318,500.00 it had claimed. The jurors were even instructed by the court that NNT was claiming $168,500.00 for the building and $150,000.00 for the contents, for a total damages award of $318,500.00.

The Court can only speculate as to how the jury arrived at a damage award in the amount of $510,000.00. Perhaps the jurors thought it appropriate to award damages for intangible, emotional harms, due to Nationwide's failure to pay NNT's claim. However, because NNT's claim for bad faith failure to pay had been dismissed by the court as a matter of law, there were no claims for emotional harms before the jury. After reviewing the evidence and the claims before the jury, the Court finds that an award of $510,000.00 unquestionably exceeds the amountestablished by the evidence. There is only one basis for liability and the maximum amount of damages proved at trial was $318,500.00.

B. Prejudgment Interest

After reviewing the facts and circumstances of this case, the Court finds it appropriate to award prejudgment interest to NNT. It is well established under Alabama law that prejudgment interest may be available in the breach of contract context where, as here, damages were reasonably certain at the time of breach. See Goolesby v. Koch Farms, LLC, 955 So.2d 422, 429 (Ala. 2006) ("Prejudgment interest may be available in a breach-of-contract case, ... but only if damages were reasonably certain at the time of the breach.") (citations omitted). Prejudgment interest serves to return the injured party to the position it would have been in had the contract been fully performed.³ See City of Milwaukee v. Cement Div., Nat. Gypsum Co., 515 U.S. 189, 195 (1995) ("The essential rationale for awarding prejudgment interest is to ensure that an injured party is fully compensated for its loss."); Systrends, Inc. v. Group, 8760, LLC, 959 So.2d 1052, 1075 (Ala. 2006) ("Damages for breach of contract should return the injured party to the position he would have been in had the contract been fully performed.") (citations and internalquotation marks omitted). Once it was established that NNT was entitled to damages, Alabama law provides that NNT is entitled to prejudgment interest at the statutory rate of 6% per annum. See Maddox v. Alfa Mut. Ins. Co., 577 So. 2d 457, 458 (Ala. 1991) ("The only disputed issue at the trial was the amount of damages, if any, to which the insured was entitled. ...