[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 03-10480 August 19, 2004
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 98-00028 CV-HLM-4
LOWE'S HOME CENTERS, INC.,
Plaintiff-Appellee,
versus
GENERAL ELECTRIC COMPANY,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(August 19, 2004)
Before ANDERSON and BLACK, Circuit Judges, and NANGLE*, District Judge.
PER CURIAM:
This is an appeal of the district court's denial of General Electric Company's
*
Honorable John F. Nangle, United States District Judge for the Eastern District of
Missouri, sitting by designation.
("GE") post-trial motions for new trial and for judgment as a matter of law in a
diversity action brought by Lowe's Home Centers, Inc. ("Lowe's") to recover
damages as a result of GE's environmental contamination of Lowe's property in
Rome, Georgia. More specifically, Lowe's suit sought to determine GE's liability
for Lowe's inability to build a new, significantly larger Relocation Store at the
same location as their original Lowe's store in Rome. Although various arguments
were presented by GE in favor of the motions below, only three issues remain on
appeal: 1) whether GE was entitled to a new trial because the district court's jury
instruction on mitigation was inconsistent with Georgia law because it referenced
Lowe's own internal policies; 2) whether GE was entitled to judgment as a matter
of law with respect to the lost profit damages awarded by the jury because the
completion of the Relocation Store would have required the purchase of the
additional adjacent property; and 3) whether GE was entitled to judgment as a
matter of law with respect to the lost profit damages awarded by the jury because
the profits from a new Relocation Store are too speculative, remote, and uncertain.
I. BACKGROUND
From 1974 to 1998, Lowe's operated a small (16,000 square foot) retail
store in Rome, Georgia. Lowe's operated that store on a 5.8-acre parcel of land
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that it purchased in 1973. The parcel was located downhill from a GE plant,
which formerly manufactured and refurbished medium power transformers -- a
process which until relatively recently involved the use of polychlorinated
biphenyls ("PCBs").
In the early 1990s, Lowe's began to consider opening a much larger
Relocation Store in Rome; however, Lowe's current 5.8-acre parcel of land was
not large enough to support the proposed Relocation Store. In early 1994, Horne
Properties, Inc. ("Horne"), a developer that had built Relocation Stores for Lowe's
in the past, approached Lowe's about building a Relocation Store next to Lowe's
existing store in Rome. Lowe's determined that the best available site for the
Relocation Store was near their existing store and entered into a 20-year lease
agreement with Horne. Pursuant to the lease agreement, Horne would purchase
the necessary additional adjacent property as well as Lowe's current parcel, build
the new facility, and then lease the combined property and structure to Lowe's
pursuant to a 20-year lease. After entering into the lease agreement, Horne
secured options on adjoining property immediately south of Lowe's existing 5.8
acres and had that property tested for environmental contaminants. This test
revealed substantial amounts of PCBs on the adjacent property and the project was
abandoned. Lowe's then sought to build the Relocation Store using all of its
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existing parcel together with adjacent property on the north of its existing parcel.
Horne then secured an option on this second piece of adjacent property, and in
January 1995 Horne and Lowe's again entered into a 20-year lease agreement to
build the Relocation Store. During Horne's due diligence for this second attempt
at expansion, contamination in the form of PCBs from the GE facility was found
both on Lowe's existing parcel as well as on the adjacent property.
Lowe's brought suit in February 1998 against GE for damages relating to the
contamination of its property. Lowe's asserted: 1) federal statutory claims
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq., and the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901- 6992, as well as a
related claim for injunctive relief; and 2) common law tort claims for strict
liability, nuisance, trespass, negligence, and negligence per se under Georgia law.
On January 22, 2002, the suit proceeded to a jury trial in the district court with
respect to Lowe's claims for trespass, nuisance, negligence, and negligence per se
arising under Georgia law. On February 7, 2002, the jury returned a verdict in
favor of Lowe's on all four claims. The jury awarded Lowe's $18 million in lost
profits associated with the planned Relocation Store, $2 million in damages for
reduction of the rental value of Lowe's property, and $163,581 in damages
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incurred by Lowe's in investigating and responding to the contamination of its
property. The jury declined to award punitive damages to Lowe's.
After the jury's verdict, Lowe's CERCLA and RCRA claims, as well as
Lowe's related claim for injunctive relief, remained pending. The district court
delayed entering its judgment on the jury's verdict pending a bench trial on Lowe's
remaining claims.
On September 13, 2002, pursuant to an agreement between the parties, the
district court entered an order vacating the portions of the jury's verdict that
awarded Lowe's $2 million in damages for lost rental value and $163,581 in
damages for expenses incurred by Lowe's in investigating and responding to
contamination of its property. The district court order also indicated that the
parties had resolved Lowe's remaining claims and directed the clerk to enter
judgment for Lowe's in the amount of $18 million in lost profits.
On September 27, 2002, GE filed its motion for new trial and motion for
judgment as a matter of law. The district court denied both motions, and GE
timely appealed.
II. LEGAL ANALYSIS
A. Mitigation
GE argues that the district court's jury instruction with respect to mitigation
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was erroneous because it engrafted a company-specific business judgment rule
onto the objective inquiry of whether Lowe's acted reasonably by stating that the
jury could consider Lowe's "company policies." Lowe's replies that the portion of
the instruction cited by GE is taken out of context and that the instruction viewed
as a whole conveyed to the jury that the inquiry was objective. The district court
found that the instruction as a whole did not engraft a company-specific business
judgment rule. The district court stated that it had "merely listed company policies
as a factor that the jury could consider when determining whether [Lowe's] acted
reasonably." District Court Order at 12 (emphasis in original).
A trial judge is entitled to wide discretion over the wording and style of
instructions "as long as the instructions accurately reflect the law." Schafer v.
Time, Inc., 142 F.3d 1361, 1368 (11th Cir. 1998). We examine the jury
instructions as a whole to determine if the jurors understood the issues and were
not misled. Id. If the instructions as a whole properly express the law, "then no
reversible error has occurred 'even if an isolated clause may be inaccurate,
ambiguous, incomplete, or otherwise subject to criticism.'" Adams v. Sewell, 946
F.2d 757, 767 (11th Cir. 1991) (quoting Busby v. City of Orlando, 931 F.2d 764,
776 (11th Cir. 1991)), overruled on other grounds, McKinney v. Pate, 20 F.3d
1550 (11th Cir. 1994). Reversal is only warranted when the court is "left with a
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substantial and ineradicable doubt as to whether the jury was properly guided in its
deliberations." Shafer, 142 F.3d at 1368 (citations and quotations omitted).
We conclude that the instruction as a whole properly expressed the law.
The instruction plainly and correctly stated that "[y]ou, the jury, are the sole
judges of whether the plaintiff acted reasonably in avoiding or minimizing its
damages," and that "[a]n injured plaintiff may not sit idly by when presented with
an opportunity to reduce its damages." The mention of Lowe's policies as one of
many factors does not call into doubt the overall message conveyed that it was up
to the jury to determine whether Lowe's acted reasonably. Therefore, we conclude
that the district court did not err in denying GE's motion for new trial with respect
to this issue.
B. Lost Profits
GE presents two arguments as to why it is entitled to judgment as a matter
of law with respect to the lost profit damages awarded to Lowe's. First, GE argues
that because the construction of the Relocation Store required the purchase of
additional adjacent property not owned by Lowe's, the "economic loss rule" barred
the recovery of lost profits despite the physical damage to Lowe's existing 5.8-acre
parcel. Second, GE argues that the "new business rule" barred the recovery of lost
profits because the expected profits from the proposed Relocation Store are too
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speculative, remote, and uncertain to permit recovery.
Having examined these arguments, we conclude that the applicability of
these two distinct doctrines to the specific facts in the instant case presents
unanswered questions under Georgia law that are determinative of this appeal.
We therefore certify questions to the to the highest court of the State for
resolution. To assist that court in resolving these questions, we briefly lay out the
parties' arguments.
1. Economic Loss Doctrine
As the district court correctly pointed out below, "[u]nder Georgia law,
allegations that a defendant's actions negligently damaged the property of a third
party ordinarily will not entitle the plaintiff to relief." District Court Order at 35
(citing Union Camp Corp. v. Southern Bulk Indus., Inc., 193 Ga. App. 90, 92, 386
S.E.2d 866, 867-68 (1989), aff'd, 259 Ga. 828, 388 S.E.2d 524 (1990)). This
limitation on tort recovery has long been a part of Georgia case law. In 1903, the
Supreme Court of Georgia first applied this limitation to deny tort recovery in a
suit brought by a business owner to recover economic losses caused by a power
outage. Byrd v. English, 117 Ga. 191, 192, 43 S.E. 419, 419-20 (1903). The
business owner sought to recover those losses from the individual whose
employees caused the outage by negligently excavating on a third party's land, and
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thereby damaging power conduits belonging to the Georgia Electric Light
Company. Id. After noting that "this case is not an action for an injury to the
person or property of the plaintiff," the Georgia court, in explaining the rationale
for limiting recovery in the absence of a proprietary interest in the damaged
property, stated:
If the plaintiff can recover of these defendants upon this cause of
action, then a customer of his, who was injured by the delay
occasioned by the stopping of his work, could also recover from them,
and one who had been damaged through his delay could in turn hold
them liable, and so on without limit to the number of persons who
might recover on account of the injury done to the property of the
company owning the conduits. To state such a proposition is to
demonstrate its absurdity.
Id. at 193-94, 43 S.E. at 420.
GE argues that this limitation on tort recovery is applicable in the instant
case because the trial testimony established that Lowe's could not have built the
Relocation Store on its existing 5.8-acre parcel, and that therefore, the basis for its
lost profit claim was the frustration of its attempt to build a Relocation Store on a
composite property tract that included the additional adjacent property in which
Lowe's never possessed a protected property interest.1
1
GE argues that in substance Lowe's is seeking damages for negligent interference
with its contract rights; GE argues that such a cause of action is not recognized in Georgia.
Lowe's rejects GE's characterization of its cause of action, insisting that GE's injuries to Lowe's
property itself proximately caused Lowe's damages.
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Lowe's argues that having suffered injury to its own property, it was entitled
to recover all its damages proximately caused by GE's injuries to its property,
including lost profits. Crucial to Lowe's argument is the fact that its existing 5.8-
acre tract was necessary for the construction of the Relocation Store. Therefore,
Lowe's argues that the injury to its property alone was a sufficient proximate cause
to prevent Lowe's from constructing the Relocation Store regardless of whether
the additional adjacent property had also been contaminated.2
Because no Georgia case law resolves this issue of whether Lowe's can
recover lost profits, we respectfully certify the following question of law to the
Supreme Court of Georgia:
Can Lowe's recover lost profits when its own property was damaged,
but additional property, also damaged but not belonging to Lowe's
was necessary to complete the Relocation Store upon which the lost
profit award was premised?
2. New Business Rule
As a general rule, lost profits of a commercial venture "'are not recoverable
2
Although Lowe's has argued that the injury to its own property was a sufficient
proximate cause of its lost profits, we note that jury interrogatory 11 asked: "Do you find that
Lowe's has lost profits and that those lost profits were proximately caused by the spread of
chemicals on Lowe's and adjoining property after May 2, 1973." However, in denying GE's
motion for new trial the district court rejected GE's challenge to this interrogatory because the
remaining interrogatories consistently spoke of contamination to Lowe's property, and GE does
not challenge this ruling or this interrogatory on appeal, and does not seek a new trial on this
ground. Thus, GE has abandoned its challenge to interrogatory 11.
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as they are too speculative, remote, and uncertain.'" Molly Pitcher Canning Co. v.
Cent. of Ga. Ry. Co., 149 Ga. App. 5, 10, 253 S.E.2d 392, 396 (1979) (quoting Ga.
Grain Growers Ass'n Inc. v. Craven, 95 Ga. App. 741, 747, 98 S.E.2d 633 (1957)).
However, there is an exception to the above rule when lost profits are capable of
"reasonably accurate computation," such as when the damages belong to "an
established business with clearly defined business experience as to profit and
loss." Id. at 397. Lost profits are generally unavailable to new businesses which
lack such a track record. See id.
In the instant case, the district court denied GE's motion for judgment as a
matter of law with respect to lost profits despite the fact that the lost profit award
was premised upon the planned Relocation Store, which was never constructed on
the site and was several times larger than Lowe's existing store. The district
court's decision was premised 1) upon its conclusion that there was sufficient
evidence presented that the jury could have determined that the Relocation Store
would not be a new business in fact because, inter alia, it would be still selling the
same general products, and 2) its conclusion that the new business rule has little
application to new locations opened by chain stores or national franchises.
With respect to its latter finding, the district court acknowledged that neither
the Supreme Court of Georgia nor the Georgia Court of Appeals had previously
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determined whether the new business rule applied when the new business was part
of a chain of stores or a nationwide franchise; however, the district court believed
that the Georgia courts would allow recovery of lost profits with respect to these
businesses, thereby adopting the approach used in Washington and Kentucky as
illustrated in No Ka Oi Corp. v. National 60 Minute Tune, Inc., 863 P.2d 79, 83-84
(Wash. App. 1993), and Pauline's Chicken Villa, Inc. v. KFC Corp., 701 S.W.2d
399, 401-02 (Ky. 1985).
Lowe's has more reliable evidence to support the computation of lost profits
than a typical new business; Lowe's experts analyzed the performance of the
existing Rome store as well as extensive data regarding the performance of
numerous other Relocation Stores opened in existing markets. Nevertheless,
because no Georgia case law resolves this issue of whether Lowe's can recover
lost profits based upon a new Relocation Store, we respectfully certify the
following question of law to the Supreme Court of Georgia:
Are Lowe's losses due to the failure to open the Relocation Store
capable of reasonably accurate computation such that lost profit
damages would be recoverable?
Our statement of the questions to be certified with respect to the lost profit
damages is not meant to limit the scope of inquiry by the Supreme Court of
Georgia. "This latitude extends to the Supreme Court's restatement of the issue or
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issues." Washburn v. Rabun, 755 F.2d 1404, 1406 (11th Cir. 1985). Similarly, an
answer to one of the questions may render unnecessary resolution of the other one.
In order to assist the court's consideration of the case, the entire record,
along with the briefs of the parties, shall be transmitted to the court.
QUESTIONS CERTIFIED pursuant to O.C.G.A. § 15-2-9
III. CONCLUSION
We AFFIRM the district court's denial of GE's motion for new trial
premised upon the mitigation instruction. With respect to the lost profits issue, we
CERTIFY two state law questions. We WITHHOLD any decision on the district
court's denial of the motion for judgment as a matter of law until we receive from
the Supreme Court of Georgia its response to this certification.
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