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Landmark Infrastructure Holding Company, LLC v. R.E.D. Investments, LLC

United States Court of Appeals, Eighth Circuit

August 9, 2019

Landmark Infrastructure Holding Company, LLC Plaintiff - Appellee
v.
R.E.D. Investments, LLC; Bobby Van Stavern Defendants - Appellants

          Submitted: April 15, 2019

          Appeal from United States District Court for the Western District of Missouri - Jefferson City

          Before SMITH, Chief Judge, ARNOLD and KELLY, Circuit Judges.

          ARNOLD, CIRCUIT JUDGE.

         This case involves a billboard deal gone bad. Lamar Advertising maintained and operated a billboard on land that it leased from R.E.D. Investments, LLC, and Lamar paid R.E.D. $70, 000 annually in rent (though that number was set to increase over the life of the lease) plus a percentage of the revenue that the billboard generated. Lamar had the right to terminate the lease at any time.

         About nine months into this arrangement, Landmark Infrastructure Holding Company, LLC, contacted Bobby Van Stavern, who represented R.E.D. in its business dealings, about purchasing R.E.D.'s interest in the lease. R.E.D. and Landmark eventually executed an agreement under which Landmark agreed to pay R.E.D. just over $900, 000 in exchange for, among other things, the right to receive rent from Lamar. In that agreement, Van Stavern, as R.E.D.'s "manager," represented that Lamar had not requested to have the rent lowered and that R.E.D. had no "notice of any fact, condition or circumstance" suggesting that Lamar might do so. But about a month after R.E.D. and Landmark executed the agreement, Lamar informed Landmark that it wanted to reduce the rent. Landmark and Lamar eventually entered into a new lease containing a ten-year term with annual rental payments of $30, 000 for the first five years and $36, 000 for the five years after that, plus the same percentage of the revenue as in the original lease.

         Because it came to believe that Van Stavern's representations had been false, Landmark sued R.E.D. for breach of contract and sued R.E.D. and Van Stavern for fraudulent and negligent misrepresentation. The case proceeded to trial, and a jury found in Landmark's favor on its breach-of-contract and negligent-misrepresentation claims, awarding $156, 000 and $381, 234.11 in damages, respectively. R.E.D. and Van Stavern moved for a new trial, or in the alternative, a remittitur or merger of the damages awards on the ground that they were duplicative, but the district court[1]denied the motion. The district court also awarded Landmark approximately $200, 000 in attorneys' fees.

         On appeal, R.E.D. and Van Stavern raise three primary issues. They say, first, that the district court erred by excluding testimony from their proposed expert witness. We review this evidentiary ruling "for clear and prejudicial abuse of discretion." See Am. Auto Ins. Co. v. Omega Flex, Inc., 783 F.3d 720, 722 (8th Cir. 2015). The appellants identified an expert who, as relevant, would opine that Landmark had mistakenly thought that the billboard required government permits for operation-a mistake that put Landmark at a significant disadvantage when negotiating with Lamar over a new lease because Landmark felt obliged to negotiate with Lamar (whom Landmark believed held the permits) rather than shop the market for another tenant who would pay a higher rent. R.E.D. and Van Stavern contend that this opinion was important because it related to the value of Landmark's billboard interest (and thus affected the damages calculation) and, relatedly, substantiated their defense that Landmark had failed to mitigate its damages, which Missouri law requires of those who suffer from a breach of contract. See Hertz Corp. v. RAKS Hosp., Inc., 196 S.W.3d 536, 548 (Mo.Ct.App. 2006).

         In excluding this evidence, the district court held essentially that the expert's opinions were not relevant because they were premised on facts that were not in the record. See Lawrey v. Good Samaritan Hosp., 751 F.3d 947, 952-53 (8th Cir. 2014). The expert's opinions here stemmed from his understanding that the billboard did not require permits, but as the district court explained, the record did not support that understanding. As the court noted, "whether a third party could erect a billboard at the site is a legal question as to which there was no legal expert testimony or other legal evidence," and none of the witnesses identified "has a legal understanding sufficient to make their testimony reliable and useful to the jury." At trial, R.E.D. and Van Stavern sought to cure this defect by making two offers of proof from witnesses who testified that the billboard did not require permits. Believing that the lack of evidentiary foundation was cured, R.E.D. and Van Stavern again requested that its expert be allowed to testify. The district court declined, explaining essentially that the gambit had come too late.

         R.E.D. and Van Stavern maintain on appeal that the district court abused its discretion by not allowing the expert's testimony even after their offers of proof had undergirded his proffered opinion. We disagree. "Decisions concerning the admission of expert testimony lie within the broad discretion of the trial court." See Neb. Plastics, Inc. v. Holland Colors Ams., Inc., 408 F.3d 410, 415 (8th Cir. 2005). A court acts within that broad discretion in excluding expert testimony when the basis of that testimony, and thus its reliability and helpfulness to the jury, is not made clear in a timely fashion. See Trost v. Trek Bicycle Corp., 162 F.3d 1004, 1008-09 (8th Cir. 1998). District court scheduling orders commonly feature deadlines for expert disclosures, reports, and Daubert challenges. R.E.D. and Van Stavern have not offered a substantial justification for their delay; they had ample time during years of discovery to ensure that their expert's opinions had the necessary factual support. On this record, affirmance would not result in "fundamental unfairness." See Wegener v. Johnson, 527 F.3d 687, 690 (8th Cir. 2008).

         The second primary contention that R.E.D. and Van Stavern advance on appeal is that the district court erred by denying their request to merge the two damages awards into a single one. They maintain that the jury awarded Landmark duplicative damages for the same injury. The district court began its consideration of this issue by deciding that federal law was applicable, and thus that there was a presumption that the damages awarded were not duplicative. See Matrix Grp. Ltd. v. Rawlings Sporting Goods Co., 477 F.3d 583, 592 (8th Cir. 2007). R.E.D. and Van Stavern contend that the court should have applied Missouri law instead.

         Even if, as appellants insist, Missouri law applies, all we have here is a false conflict since there is no discernable difference between federal and Missouri law on this matter. R.E.D. and Van Stavern take issue with presuming that damages awards are not duplicative, which federal law requires, but Missouri law functionally requires the same kind of deference to jury verdicts. Under that law, "verdicts should be construed to give them effect if it can reasonably be done," and "the jury's intent is to be arrived at by regarding the verdict liberally." See Morse v. Johnson, 594 S.W.2d 610, 616 (Mo. banc 1980). So in Missouri, courts are obligated to make every reasonable effort to reconcile a jury's verdicts before setting them aside, a rule that does not differ materially from the federal rule we followed in Matrix.

         Turning to the merits, R.E.D. and Van Stavern insist that the awards should be merged because they remedy the same injury. We first observe that, though not dispositive, the fact that the jury awarded different amounts on each claim suggests that the jury did not intend to duplicate the award. Cf. Sellers v. Mineta, 350 F.3d 706, 714 (8th Cir. 2003). More important, a careful examination of the verdicts does not bear out the appellants' contention. After Landmark bought its interest in the billboard, but before it had received word that Lamar might seek to reduce the rent, it sold its interest to a private equity fund owned in part and managed by Landmark's parent company for $1, 246, 177.55. Once it came to light that Lamar wanted to reduce the rent, the parties to the sale rescinded it, and after Lamar and Landmark agreed on the new lease with the lower rent, Landmark resold its interest for $521, 124.00. So the difference in value between what Landmark thought it would receive and what it actually received was $725, 053.55, which is the total amount Landmark asked the jury to award. But the total damages that the jury awarded were much less. The jury's aggregate award is well within the bounds of the evidence presented at trial, which is consistent with the jury having "rationally allocate[d] damages between the two different causes of action, one for breach of contract, and one for tort." See Matrix, 477 F.3d at 592. And, for the reasons that follow, that may very well be what the jury did here.

         The jury awarded Landmark $381, 234.11 on its negligent-misrepresentation claim. This amount corresponds (to the penny) to Landmark's out-of-pocket loss, that is, the difference between what Landmark bought the interest for and what Landmark sold it for. As it happens, this is the proper measure for rescission damages in an action for negligent misrepresentation, see Frame v. Boatmen's Bank of Concord Vill., 824 S.W.2d 491, 495-97 (Mo.Ct.App. 1992), though the jury was not explicitly told that. But the main point is that the jury's precision makes it clear that it had focused on very ...


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