Court of Appeals of Missouri, Eastern District, Fourth Division
AMERICAN EAGLE WASTE INDUSTRIES, LLC, MERIDIAN WASTE SERVICES, LLC, and WASTE MANAGEMENT OF MISSOURI, INC., Respondents/Cross-Appellants,
ST. LOUIS COUNTY, MISSOURI, Appellant/Cross-Respondent
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Appeal from the Circuit Court of St. Louis County. 08SL-CC02198-02. Honorable Barbara W. Wallace.
FOR APPELLANT/CROSS-RESPONDENT: Patricia Redington, County Counselor, St. Louis, MO.
FOR RESPONDENTS/CROSS-APPELLANTS: Jane E. Dueker, Kimberly M. Steuterman, St. Louis, MO.
Patricia L. Cohen, P.J., and Roy L. Richter, J., concur.
ROBERT M. CLAYTON III, Judge.
St. Louis County, Missouri (" the County" ) appeals the trial court's judgment awarding American Eagle Waste Industries, LLC (" American Eagle" ), Meridian Waste Services, LLC (" Meridian" ), and Waste Management of Missouri, Inc. (" Waste Management" ) (collectively " Haulers" ) damages on their declaratory judgment claim arising out of the County's liability for violating section 260.247 RSMo Supp. 2008. Section 260.247 required the County to give Haulers two-year notice by certified mail before the County commenced its own trash collection services. State ex rel. American Eagle Waste Industries v. St. Louis County, 272 S.W.3d 336, 341-44 (Mo. App. E.D. 2008); sections 260.247.1 and .2. In deciding a previous appeal involving the County and Haulers, the Missouri Supreme Court held that the County was liable to Haulers for violating section 260.247, set forth the standard for measuring Haulers' damages, and remanded the cause to the trial court for both parties to engage in discovery, present evidence, and cross-examine witnesses with respect to the amount of damages Haulers were entitled. American Eagle Waste Industries, LLC v. St. Louis County, 379 S.W.3d 813, 831-33 (Mo. banc 2012). Upon remand, the trial court held a bench trial and entered the judgment at issue in the instant case awarding American Eagle $593,489.00 in damages, Meridian $384,486.00 in damages, and Waste Management $4,944,790.00 in damages. The County appeals the award of damages and Haulers cross-appeal the calculation of damages. We affirm the trial court's judgment in all respects.
A. The Procedural History
This case has a lengthy procedural history. Prior to December 2006, Haulers, a group of private trash and waste collectors, provided trash and waste collection (" trash collection" ) services to residents of unincorporated St. Louis County. On December 12, 2006, the St. Louis County Council enacted an ordinance creating significant changes in the regulation of trash collection in unincorporated areas, enabling the County to establish trash collection districts and begin trash collection responsibilities. The County requested bids to contract with trash collection companies for each newly-established trash collection district, and each Hauler submitted at least one bid.
In June 2007, before the County had accepted any bids, the Missouri General Assembly amended section 260.247, effective January 1, 2008, to impose requirements on political subdivisions. The amendment provides, inter alia, that in the event a political subdivision commences its own trash collection services, the political subdivision must give companies currently providing trash collection services two-year notice by certified mail before the political subdivision may commence such services. Sections 260.247.1 and .2.
1. Haulers' Declaratory Judgment Claim and American Eagle I
Following the 2007 amendment to section 260.247, the County continued with the implementation of its new trash collection program and did not award Haulers
any of the contracts for trash collection. On May 29, 2008, Haulers filed a petition seeking a declaratory judgment that the County's plan to contract with the trash companies submitting the winning bids violated section 260.247. The County filed a motion to dismiss Haulers' declaratory judgment claim for failure to state a claim on which relief could be granted. The County's motion to dismiss asserted that section 260.247 could not be constitutionally applied to the County because its status as a charter county allows it to regulate municipal functions including trash collection. The trial court granted the County's motion to dismiss, and Haulers appealed.
On appeal, this Court reversed the dismissal of Haulers' declaratory judgment claim and remanded the cause to the trial court for further proceedings. State ex rel. American Eagle Waste Industries v. St. Louis County, 272 S.W.3d 336, 339-44 (Mo. App. E.D. 2008) (" American Eagle I " ). To give guidance to the trial court on remand, our Court addressed the merits of Haulers' declaratory judgment claim. Id. at 341-44. We held that section 260.247 applied to the County, despite its charter status, because it involves the state-wide public policy to " provide an entity engaged in [trash] collecting with sufficient notice to make necessary business adjustments prior to having its services terminated in a given area." Id. at 341-42 (quotations omitted). Accordingly, we also held the County must comply with the two-year notice provision set forth in section 260.247 if the County chose to enter the business of trash collection and take it out of the hands of existing private collectors. Id. at 343.
2. The First Trial and American Eagle II
On remand, Haulers filed an amended petition and added a claim for breach of implied contract, seeking monetary damages for the County's failure to comply with section 260.247. In September 2010, the trial court entered summary judgment in Haulers' favor on the issue of liability.
On May 31, 2011, the trial court held a bench trial and heard evidence of Haulers' damages (" the first trial" ). Haulers presented testimony from expert witness C. Eric Ficken, who was a certified public accountant, a certified valuation analyst, and certified in financial forensics. Ficken's opinion as to Haulers' damages was based on unaudited records provided to him by Haulers, and the County objected to Ficken's testimony on the grounds that it lacked foundation and constituted inadmissible hearsay. The trial court overruled the County's objections. After the conclusion of the first trial, the trial court entered a judgment collectively awarding Haulers $1.2 million in damages, finding that the correct measure of damages was the amount of net profit Haulers would have realized during the relevant two-year waiting period.
The County appealed the trial court's judgment to the Missouri Supreme Court, and Haulers cross-appealed. American Eagle Waste Industries, LLC v. St. Louis County, 379 S.W.3d 813, 823 (Mo. banc 2012) (" American Eagle II " ). Each party raised two arguments which are relevant to this appeal. As the County previously asserted in its motion to dismiss Haulers' declaratory judgment claim, the County argued to the Missouri Supreme Court that section 260.247 does not apply to the County because its status as a charter county allows it to regulate municipal functions
including trash collection. Id. at 823, 824. The County also argued to the Missouri Supreme Court that the trial court erred in finding the County liable to Haulers on the theory of breach of implied contract. Id. at 824. Finally, Haulers argued to the Supreme Court that the trial court erred in its measurement and calculation of damages. Id.
a. The Applicability of Section 260.247
The Missouri Supreme Court declined to consider the merits of the County's claim that section 260.247 does not apply to the County. Id. at 824-25. Instead, the Supreme Court quoted this Court's decision in American Eagle I, found that the " [t]he court of appeals previously considered th[e] argument on the merits and discussed the proper interpretation of section 260.247 at length before rejecting [the] County's position," and found there was " no demonstrable error in the first appellate decision." Id. Accordingly, the Supreme Court held that " it is the law of the case that [the] County was required to adhere to section 260.247's requirements" and " [the] County cannot have multiple bites at the apple in attempting to determine this issue favorably." Id. at 825.
b. The County's Liability
With respect to the County's other argument, the Missouri Supreme Court agreed with the County that the trial court erred in finding the County liable to the Haulers on the theory of breach of implied contract. Id. at 829, 831. Nevertheless, the Supreme Court found that the trial court " still reached the correct result in finding [the] County liable" and affirmed the trial court's judgment as to liability. Id. at 831. The Court reasoned that, (1) the facts of Haulers' amended petition adequately alleged a claim for an implied private right of action for violating a statute, section 260.247; (2) a private right of action is created in favor of Haulers under section 260.247; (3) " [t]he legislature intended for Haulers to provide service and receive their contract price for two-years following notice [from the County]" ; and (4) " the legislature intended a right to damages in this situation." Id. at 829-831.
c. The Measurement and Calculation of Damages
In addressing Haulers' arguments on cross-appeal that the trial court erred in its measurement of damages and its calculation of damages, the Supreme Court first determined Haulers' rights and obligations under section 260.247. Id. at 824, 831-32. The Court found that pursuant to the language in subsections 1, 2, and 3 to section 260.247, " Haulers were entitled to continue providing [trash] collection services for two years" and " Haulers have the right to seek damages from [the] County for the violation of section 260.247." Id. at 832 (emphasis in original).
In determining the appropriate measure of damages, the Supreme Court held that " [the] County must pay Haulers that to which they were entitled: the amount they 'would have received' under their contract during the two-year waiting period." Id. (quoting section 260.247.3). The Supreme Court specifically found Haulers were entitled to " their projected receipts from their contract price [for their services], minus any business and operational costs Haulers
would have incurred while providing [trash] collection services, considering all the circumstances." Id. at 833. In other words, Haulers were entitled to the net profit they would have received during the two-year waiting period, i.e., the " expected revenue, set off by expenses, costs, and other circumstances." Id. at 833, 834. Stated yet another way, Haulers were entitled to damages for lost business profits. See id. at 833 (citing Ameristar Jet Charter, Inc. v. Dodson Intern. Parts, Inc., 155 S.W.3d 50, 55 (Mo. banc 2005)).
The Supreme Court also held that while the trial court correctly concluded that the measure of Haulers' damages was the amount of net profit Haulers would have realized during the two-year waiting period, the trial court erred excluding discovery or evidence of Haulers' expenses or net profit. American Eagle II, 379 S.W.3d at 833. Therefore, the Supreme Court reversed the trial court's calculation of damages and remanded the cause to the trial court for both parties to engage in discovery, present further evidence, and cross-examine witnesses with respect to the correct amount of damages Haulers were entitled, which brings us to the instant case. Id. at 833, 835.
B. The Instant Case
Upon remand from the Missouri Supreme Court, the trial court held a second bench trial on damages which took place on August 12, 2013. The County did not present any witnesses or other evidence. However, as in the first trial, Haulers presented the expert testimony of C. Eric Ficken. Ficken testified as his opinion of Haulers' damages for lost profits, and the trial court allowed Haulers to incorporate Ficken's testimony in the first trial as evidence in the second trial. Ficken's opinion as to each Hauler's lost profits for the two-year waiting period was based on information provided to him by Haulers, specifically Haulers' databases of customers and Haulers' unaudited profit and loss statements from 2006 through 2010. Once again, the County objected to Ficken's testimony on the grounds that it lacked foundation and constituted inadmissible hearsay, and the trial court overruled the County's objections.
Ficken testified that, due to the County's failure to comply with the two-year waiting period set forth in section 260.247, American Eagle suffered lost profits in the amount of approximately $1.49 million, Meridian suffered lost profits in the amount of approximately $771,200.00, and Waste Management suffered lost profits in the amount of approximately $7.87 million. Ficken's assessment of lost profits included damages for growth, rate increases, disposal fees, uncollectible accounts receivable, and layoff costs.
Subsequently, the trial court entered a judgment in favor of Haulers. The trial court found that Ficken was qualified as an expert witness to testify as to Haulers' damages on the basis of his knowledge, experience, and education. The trial court rejected the portion of Ficken's opinion which included damages for growth, rate increases, disposal fees, uncollectible accounts receivable, and layoff costs in his assessment of lost profits, finding that those categories of damages were too speculative or were otherwise inappropriate for the calculation of damages. However, the trial court found that Ficken otherwise appropriately calculated the lost profits of each Hauler by calculating lost revenue based upon the number of customers each Hauler lost in the two-year waiting period and then deducting the overhead expenses tied to the production of that revenue. The trial court also found that the facts and data relied on by Ficken were of a type reasonably relied upon by experts in
the field and that the facts and data were otherwise reasonably reliable.
The trial court's judgment awarded American Eagle $593,489.00 in damages, Meridian $384,486.00 in damages, and Waste Management $4,944,790.00 in damages. After the trial court entered its judgment, Haulers filed a motion to amend the judgment, which the trial court denied. The County appeals, and Haulers cross-appeal.
The County raises three points on appeal, claiming the trial court erred in awarding Haulers damages. Haulers present one point on cross-appeal, arguing the trial court's calculation of damages was erroneous.
A. General Standard of Review
In reviewing a court-tried case, our Court will affirm the trial court's judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Scheck Indus. Corp. v. Tarlton Corp., 435 S.W.3d 705, 717 (Mo. App. E.D. 2014). We view the evidence and all reasonable inferences therefrom in the ...