Case: 09-20234 Document: 00511112968 Page: 1 Date Filed: 05/17/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 17, 2010
No. 09-20234 Lyle W. Cayce
Clerk
MEAUX SURFACE PROTECTION, INC.,
Plaintiff - Appellee Cross-Appellant
v.
MIKE FOGLEMAN; CLEANBLAST, LLC; CHARLIE KOTRLA,
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
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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.
1
Because Fogleman and Kotrla are the members of CleanBlast, it is deemed a
Louisiana citizen for purposes of this litigation. See Harvey v. Grey Wolf Drilling Co., 542 F.3d
1077, 1080 (5th Cir. 2008).
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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 (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
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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.
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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
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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
We review district court decisions regarding amendment of pretrial orders
for abuse of discretion. Quick Techs., Inc. v. Sage Group PLC, 313 F.3d 338, 345
(5th Cir. 2002). “Because of the importance of the pre-trial order in achieving
efficacy and expeditiousness upon trial in the district court, appellate courts are
hesitant to interfere with the court’s discretion in creating, enforcing, and
modifying such orders.” Id. (quoting Flannery v. Carroll, 676 F.2d 126, 129 (5th
Cir. 1982)). It is axiomatic that under Federal Rules of Civil Procedure 15 and
16, a final pretrial order “supersede[s] all prior pleadings.” Rockwell Int’l, 549
U.S. at 474 (citations omitted). After a scheduling order deadline has passed, a
party must show good cause to obtain leave to amend the operative pleadings.
S&W Enters., L.L.C. v. SouthTrust Bank of Alabama, NA, 315 F.3d 533, 536 (5th
Cir. 2003) (citing F ED. R. C IV. P. 16(b)). The district court’s discretion to allow
amendment or modification of a pretrial order is guided by the following factors:
“(1) the explanation for the failure to timely move for leave to amend; (2) the
importance of the amendment; (3) potential prejudice in allowing the
amendment; and (4) the availability of a continuance to cure such prejudice.” Id.
(citations and internal alterations omitted).
The district court did not abuse its discretion in allowing Meaux to seek
lost profits. Defendants assert that the district court allowed amendment of the
pretrial order because this was Meaux’s counsel’s first federal trial, which is not
a reasonable excuse. The court did acknowledge that it gave some leeway in
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light of counsel’s lack of experience. This explanation is far from persuasive, and
weighs in defendants’ favor. See id. at 536 (noting that “inadvertence” as an
explanation “is tantamount to no explanation at all”). However, the court’s
remarks in this regard were minor relative to its careful sounding of other
germane factors, which reveal that there was good cause to allow amendment.
The court recognized that the amendment was very important to Meaux’s case.
See id. Without lost profits, Meaux would have no remaining theory of recovery.
Because disallowing the amendment would have left Meaux dead in the water,
the court held that modification of the pretrial order was “warranted to prevent
substantial injustice.” This finding is watertight.
Additionally, the prejudice to defendants was minor. See id. at 536-37. In
the two years between filing and trial, defendants obtained discovery and filed
motions concerning lost profits. Meaux’s inclusion of lost profits instructions,
which the court deemed part of the pretrial order, gave defendants a warning
shot across the bow months in advance of trial that this remedy was not
abandoned. It is unpersuasive for defendants to say that they believed
otherwise, especially when the pretrial order and proposed jury instructions
made no reference to other remedies. Defendants repeatedly bewail the
“ambush” they suffered when the district court allowed Meaux’s case to proceed.
As did the district court, we find such protestations empty and disingenuous.
Defendants were not waylaid by guerilla litigation tactics. Being denied the
ability to prevail on a technicality is not the kind of “prejudice” we must remedy.
Finally, a continuance was impracticable because trial was imminent. The
unfortunate timing was largely defendants’ fault. Defendants could have
challenged at any time that Meaux’s request for lost profits, either in the
original petition or the pretrial order, adequately met federal pleading standards
and the requirements of local rules. Defendants waited to do so, quite literally,
until the eve of trial. As far as the district court was concerned, the ship had
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sailed. In light of the facts and circumstances present in this case and the
solicitude we afford the district court’s hand on the tiller of trial management,
we cannot conclude that the court abused its discretion in allowing Meaux to
seek lost profits at trial. See id.; Quick Techs., 313 F.3d at 345.
B. H.M.S. SURPRISE WITNESS
Defendants also contend that they were “ambushed” by Meaux’s decision
to have Carsten Ennemann testify about lost profits, and not Rene Godoy, who
took over as president of Meaux after Fogleman’s resignation. Wrong again.
Whether we view the court’s decision to allow Ennemann to testify about lost
profits as a modification of the pretrial order or a ruling on the propriety of the
designation of the witness, we review for abuse of discretion. See Geiserman v.
MacDonald, 893 F.2d 787, 790 (5th Cir. 1990). Defendants contend that when
they deposed Ennemann, he denied having knowledge of the underlying
documents Meaux would rely on at trial to prove its quantum of damages. At
trial, the court rejected defendants’ assertion that allowing Ennemann to present
such evidence was unfair surprise. Counsel had the relevant documents prior
to Ennemann’s deposition and could have questioned him to plumb his
familiarity, or lack thereof, with Meaux’s operations and profitability. At trial,
the district court allowed counsel to engage in voir dire to test Ennemann’s
knowledge. The court concluded that Ennemann had personal knowledge of
Meaux’s profitability, which he garnered in his capacity as CFO of Muehlhan.
The foregoing conclusion is well supported in the court’s log.
Moreover, Meaux timely designated Ennemann in the pretrial order as a
fact or lay opinion witness. See United States v. Valencia, 600 F.3d 389, 416 &
n.4 (5th Cir. 2010) (recognizing that corporate officer who provides projections
or opinions about changes in profits is not an expert witness, but rather, a lay
witness under Federal Rule of Evidence 701); Tex. A&M Research Found. v.
Magna Transp., Inc., 338 F.3d 394, 403 (5th Cir. 2003) (same). As such, the
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heightened disclosure requirements for an expert witness were not implicated.
Cf. F ED. R. C IV. P. 26(a)(2); Bradley v. United States, 866 F.2d 120, 126-27 (5th
Cir. 1989) (holding that district court abused its discretion in allowing late-
designated expert witnesses to testify). Ennemann works on the starboard side
of the Atlantic and does not personally observe Meaux’s day-to-day operations.
He does not paint oil rigs or sandblast ships. However, as Chief Financial
Officer, he is intimately familiar with Meaux’s financial performance. It would
defy reason to say that the district court abused its discretion in allowing him
to testify about such matters. Finally, there was no surprise in Meaux’s election
to call Ennemann to testify, and not Rene Godoy. Meaux designated Ennemann
in the pretrial order as a witness “familiar with the financial damages sustained
by Meaux.” Merely because Godoy could have also testified about these matters
as well does not mean he had to. In sum, defendants have not shown that the
court abused its discretion in allowing Ennemann’s testimony to reach the jury.
III. TREASON’S HARBOUR
Defendants next say they are entitled to judgment as a matter of law
because the evidence (1) did not establish that their breach of fiduciary duties
caused Meaux to suffer losses, and (2) was too speculative to support the jury’s
award of $1.43 million. Neither harpoon pierces the jury’s verdict.
A. MASTER AND USURPER
We review the district court’s denial of a motion for judgment as a matter
of law de novo. Hamburger v. State Farm Mut. Auto. Ins. Co., 361 F.3d 875, 884
(5th Cir. 2004).
A motion for judgment as a matter of law . . . in an action tried by
jury is a challenge to the legal sufficiency of the evidence supporting
the jury’s verdict. If reasonable persons could differ in their
interpretation of the evidence, then the motion should be denied. A
post-judgment motion for judgment as a matter of law should only
be granted when the facts and inferences point so strongly in favor
of the movant that a rational jury could not reach a contrary verdict.
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We accord great deference to the jury’s verdict when evaluating the
sufficiency of the evidence, viewing all the evidence and drawing all
reasonable inferences in the light most favorable to the verdict.
Thomas v. Tex. Dep’t of Crim. Justice, 220 F.3d 389, 392-93 (5th Cir. 2000)
(internal citations and quotations omitted).
To succeed on a claim of breach of fiduciary duty, the plaintiff must show
that a fiduciary relationship existed between the plaintiff and defendant, that
the defendant breached his fiduciary duty, and that the defendant’s breach
caused injury to the plaintiff or a benefit to the defendant. Navigant Consulting,
Inc. v. Wilkinson, 508 F.3d 277, 283 (5th Cir. 2007) (citation omitted). Here,
defendants do not contest that they had a fiduciary relationship with Meaux, nor
that their actions breached a fiduciary duty. Rather, they assert that there has
been no showing that their actions caused harm to Meaux. A jury may infer
proximate cause from circumstantial evidence. Id. at 289 (citations omitted).
In Navigant, the evidence showed that the defendants solicited fellow employees
to join them in defecting to a competitor. Id. at 290. Following the defendants’
departure, their erstwhile employer lost many key employees to the competitor
and experienced a drop-off in business. Id. We held that the jury could
reasonably conclude, based on this evidence, that the defendants’ actions sent
the plaintiff’s business into a maelstrom. Id. at 290-91. “Alert avoidance of the
classical fallacy of post hoc, ergo propter hoc does not require rejection of common
sense inferences.” Id. at 291 (quoting Swanner v. United States, 406 F.2d 716,
718 (5th Cir. 1969).2
2
In their reply brief and again at oral argument, defendants suggested that the Texas
Supreme Court’s decision in Guevara v. Ferrer, 247 S.W.3d 662 (Tex. 2007), mandates that a
plaintiff introduce expert testimony to establish the element of causation. We normally
disregard arguments raised for the first time in a reply brief or at argument. Even so, we do
not read Guevara, which concerned complex medical causation questions, so expansively as
to create an expert testimony requirement for all but the most obvious torts. See id. at 668
(“Undoubtedly, the causal connection between some events and conditions of a basic nature
. . . are within a layperson’s general experience and common sense.”). In our view, the present
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The evidence showed that Fogleman and Kotrla set up CleanBlast several
months before they resigned from Meaux. Defendants informed many of
Meaux’s foremen and staff that they would form a new company, and indicated
that several of Meaux’s jobs would be commandeered by CleanBlast. Patricia
Duhon, an employee of Meaux, testified that prior to resigning, Kotrla actively
recruited many of Meaux’s employees. Duhon’s testimony was that Kotrla said
that once Meaux’s foremen were working for CleanBlast, CleanBlast would get
business from Meaux’s clients, because the clients “pretty much followed the
foremen.” Within days of Fogleman’s and Kotrla’s resignation from Meaux,
several of Meaux’s work crews were working under CleanBlast’s ensign. In
suspiciously short order, CleanBlast also procured insurance, master service
agreements (“MSAs”), and job contracts with several of Meaux’s largest
customers. Meaux’s sales to those customers sank like an anchor.
Defendants say Meaux’s fusillade of evidence fails to strike below the
waterline because Ennemann did not have direct knowledge of the above facts,
and because other factors could have caused a drop-off in business. Defendants
note that 2006 was a bumper year for their industry due to repairs necessitated
by hurricanes Katrina and Rita, and business was somewhat becalmed in 2007.
Defendants also say that their lawful competition could have caused a drop in
Meaux’s business, and note that there is a high degree of turnover in their
industry. But defendants cannot navigate a perilous shoal: such arguments are
matters for the trier of fact. They do not undermine the legal sufficiency of
properly admitted evidence in support of the verdict.
Based on the evidence submitted at trial, the jury was well within its
province to find that defendants’ recruitment of Meaux’s employees was not
mere palaver, but rather, directly caused Meaux to suffer a loss in business. See
case does not present an instance where a jury’s judgment is likely to fall prey to the siren
song of the post hoc ergo propter hoc fallacy.
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id. at 290-91. The district court properly denied defendants’ motions for
judgment as a matter of law as to causation. See Thomas, 220 F.3d at 392-93.
B. TREASURE ISLAND
So too with regard to the jury’s damage award. The Texas Supreme Court
instructs that “[r]ecovery of lost profits does not require that the loss be
susceptible to exact calculation.” Szczepanik v. First S. Trust Co., 883 S.W.2d
648, 649 (Tex. 1994) (citing Tex. Instruments v. Teletron Energy Mgmt., Inc., 877
S.W.2d 276, 279 (Tex.1994)). Nevertheless, the party claiming injury must show
more than some lost profits; “[t]he amount of the loss must be shown by
competent evidence with reasonable certainty.” Id. This inquiry is fact
intensive. Id. (citing Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.
1992)). “At a minimum, opinions or estimates of lost profits must be based on
objective facts, figures, or data from which the amount of lost profits may be
ascertained.” Id. (quoting Heine, 835 S.W.2d at 84). The proper measure is lost
net profits. Heine, 835 S.W.2d at 83 n.1. Unless the issues concerning lost
profits are “highly technical,” expert testimony is not required. Fairmont Supply
Co. v. Hooks Indus., Inc., 177 S.W.3d 529, 532 n.1 (Tex. App.—Houston [1st
Dist.] 2005, pet. denied).
Texas law recognizes that for enterprises with a record of profitability,
records of past profits, with other relevant facts and circumstances, may support
a finding of lost profits. See Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1098-
99 (Tex. 1938). In contrast, new or unestablished ventures must meet more
exacting standards to prove that the profits claimed are not “too uncertain or
speculative.” See id. The “requirement of ‘reasonable certainty’ in the proof of
lost profits is intended to be flexible enough to accommodate the myriad
circumstances in which claims for lost profits arise.” Tex. Instruments, 877
S.W.2d at 279. The proper focus is not on the business entity, but on whether
the activity in which it engages is generally profitable. See id. at 280.
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The jury heard an estimate from Carsten Ennemann that Meaux had
suffered a $2.3 million loss of treasure in 2007 thanks to their employees-turned-
freebooters. Ennemann was personally familiar with the drop in business
suffered by Meaux. Ennemann compared 2007 sales figures for several major
clients with the budget projections which were prepared by Fogleman himself
before he jumped ship. At trial, Fogleman stood by the projections as reasonable
estimates of Meaux’s likely business, taking into account the factors he deemed
relevant. Fogleman’s testimony supported Meaux’s case; he was keelhauled by
his own windlass. In light of the evidence tending to show that defendants’ acts
harmed Meaux, the jury was entitled to find that Fogleman’s and Kotrla’s acts
in derogation of a fiduciary duty to Meaux harmed it to the tune of $1.43 million.
See Navigant Consulting, 508 F.3d at 291.
The evidence also showed that Meaux’s operations, and marine painting
and sandblasting in general, were profitable for many years before Fogleman
and Kotrla left to form CleanBlast. Since time immemorial, “[t]hey that go down
to the sea in ships, that do business in great waters,” 3 have needed to protect the
hulls of their vessels. Because the company and industry were not nascent and
untested, copious evidence of lost profits was unnecessary. See Tex. Instruments,
877 S.W.2d at 280; accord Info. Commc’n Corp. v. Unisys Corp., 181 F.3d 629,
634 (5th Cir. 1999). Therefore, the evidence the jury heard about lost profits was
not so speculative that it was legally insufficient. In this instance, Meaux’s
election not to provide greater documentation of loss, or failure to preemptively
eliminate every potentially contributory factor to profitability, goes to the weight
of the testimony, not its sufficiency. See Heine, 835 S.W.2d at 84 (noting that
supporting documentation is helpful, but not required, to support an estimate
of lost profits); see also Nova Consulting Group, Inc. v. Eng’g Consulting Servs.,
3
Psalms 107:23 (King James).
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Ltd., 290 F. App’x 727, 739 (5th Cir. 2008) (unpublished) (holding that lost
profits were sufficiently proved by examining past profits and a budget prepared
by an employee immediately before leaving to form a competing venture).
Finally, the jury’s award of $1.43 million to Meaux was well within Meaux’s
estimated $2.3 million loss for 2007. See Nova Consulting, 290 F. App’x at 740.
In sum, legally sufficient evidence supported the jury’s damage award for lost
profits. Defendants are not entitled to judgment as a matter of law. See
Thomas, 220 F.3d at 392-93.
IV. INTEREST
On cross-appeal, Meaux argues that it is entitled to prejudgment interest
as a matter of course under Texas law and post-judgment interest under federal
law. Meaux requested pre- and post-judgment interest in its original state-court
petition, but did not reassert these requests in the pretrial order. We conclude
that the case must be remanded for further consideration of prejudgment
interest and an award of post-judgment interest.
A. PREJUDGMENT INTEREST: SUNKEN TREASURE?
“State law governs the award of prejudgment interest in diversity cases.”
Harris v. Mickel, 15 F.3d 428, 429 (5th Cir. 1994) (citations omitted). “In the
absence of a statutory right to prejudgment interest, Texas law allows for an
award of equitable prejudgment interest under Cavnar v. Quality Control
Parking, Inc., 696 S.W.2d 549 (Tex. 1985).” Bituminous Cas. Corp. v. Vacuum
Tanks, Inc., 75 F.3d 1048, 1057 (5th Cir. 1996). Under this standard, “an
equitable award of prejudgment interest should be granted to a prevailing
plaintiff in all but exceptional circumstances.” Id. (citation omitted).4
4
Texas Finance Code § 304.104, cited by Meaux, only applies to cases involving
wrongful death, personal injury, or property damage. See TEX . FIN . CODE ANN . § 304.101
(Vernon 2006). Claims for breach of fiduciary duty are not covered. See Johnson & Higgins
of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 530 (Tex. 1998) (applying previous
version of § 304.101); Welder v. Green, 985 S.W.2d 170, 180 (Tex. App.—Corpus Christi 1998,
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Defendants point out that Meaux omitted from the pretrial order any
request for interest. However, “in diversity cases, it is not necessary for the
plaintiff’s pleadings to contain a prayer or other request for pre-judgment
interest.” Consol. Cigar Co. v. Tex. Commerce Bank, 749 F.2d 1169, 1174 (5th
Cir. 1985) (citations omitted). If state substantive law provides for the recovery
of interest, Federal Rule of Civil Procedure 54(c) requires that such be included
where appropriate. Id.; see F ED. R. C IV. P. 54(c) (“Every [non-default] final
judgment should grant the relief to which each party is entitled, even if the party
has not demanded that relief in its pleadings.”). When the pleadings contain a
simple prayer for interest on the judgment, this suffices in any case to preserve
the request. See Consol. Cigar, 749 F.2d at 1174-75; see also Crown Cent. Petrol.
Corp. v. Nat’l Union Fire Ins. Co., 768 F.2d 632, 638 (5th Cir. 1985). Defendants’
waiver argument is not entirely without support. See Lindy Inv., LP v.
Shakertown Corp., 209 F.3d 802, 804 n.1 (5th Cir. 2000) (declining, without
citing Rule 54(c), to consider appeal of denial of prejudgment interest because it
was omitted from the pretrial order). However, under our rule of orderliness, we
are obliged to follow our earlier decision in Consolidated Cigar. See Jacobs v.
Nat’l Drug Intelligence Ctr., 548 F.3d 375, 378 (5th Cir. 2008). Therefore, we
hold that Meaux is not precluded from launching a sortie to recover prejudgment
interest.
Meaux and defendants disagree as to the proper standard of review. We
need not address this question because the district court did not state reasons
for denying interest, depriving us of any basis for review. Therefore, we must
vacate the district court’s denial of prejudgment interest and remand for further
consideration of such request and a more detailed analysis. See Jauch v.
Nautical Servs., Inc., 470 F.3d 207, 215 (5th Cir. 2006); Centerpoint Energy
pet. denied).
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Houston Elec. LLC v. Harris County Toll Road Auth., 436 F.3d 541, 550-51 (5th
Cir. 2006); Executone Info. Sys., Inc. v. Davis, 26 F.3d 1314, 1330 (5th Cir. 1994)
(“If the district court denies prejudgment interest without explanation, our
appropriate course is to remand the issue so that the court may either explain
the exceptional circumstances warranting the denial of interest or award
interest at the appropriate rate.”) (citing Concorde Limousines, Inc. v. Moloney
Coachbuilders, Inc., 835 F.2d 541, 549-50 (5th Cir. 1987)).
B. POST-JUDGMENT INTEREST: MARINE SALVAGE
Federal law governs post-judgment interest. Harris, 15 F.3d at 431 & n.4.
Post-judgment interest is awarded as a matter of course. 28 U.S.C. § 1961(a)
(2006) (“Interest shall be allowed on any money judgment in a civil case
recovered in a district court.”). The matter is not discretionary. E.g., Reeves v.
Int’l Tel. & Tel. Corp., 705 F.2d 750, 752 (5th Cir. 1983) (“The failure of the
district court to allow post-judgment interest on its original judgment . . . was
patently an oversight, for interest was allowable of right, not as a matter of
discretion.”). Moreover, failure to brief the matter is treated as “oversight, not
waiver.” Id.; accord Hall v. White, Getgey, Meyer Co., LPA, 465 F.3d 587, 594
(5th Cir. 2006) (rejecting argument that § 1961 did not apply because prevailing
party did not argue it on appeal). Because we will vacate the district court’s
denial of prejudgment interest, we do so with regard to post-judgment interest
as well, and remand for modification of judgment.
V. CONCLUSION
Defendants’ attempts to undermine the verdict are a white whale: elusive
and too crafty for their own good. The district court did not abuse its discretion
in allowing Meaux to seek the remedy of lost profits and in allowing Carsten
Ennemann to testify. Also, the district court correctly denied defendants’
motions for judgment as a matter of law. In all respects, the jury verdict is
affirmed. However, the district court’s denial of interest is vacated and the case
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No. 09-20234
remanded for further consideration and modification consistent with this
opinion.
AFFIRMED IN PART; VACATED IN PART; REMANDED.
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