Opinion
Civil Action No. 00-2043-CM
March 6, 2003
MEMORANDUM AND ORDER
This case was tried to a jury on plaintiff Western Resources's claims of breach of contract and material breach of contract against defendants Union Pacific Railroad Company ("UP") and The Burlington Northern and Santa Fe Railway Company ("BNSF"). Plaintiff's claims related to the alleged breach of Rail Transportation Agreements entered into between the parties. On September 12, 2002, the jury returned a verdict in defendants' favor. Accordingly, on September 16, 2002, the Clerk of the Court entered judgment for defendants. This matter is before the court on plaintiff Western Resources, Inc.'s Motion for New Trial (Doc. 578). As set forth below, plaintiff's motion is denied.
• Rule 59(a) Standard
Pursuant to Federal Rule of Civil Procedure 59(a), a "new trial may be granted to all or any of the parties on all or part of the issues . . . in an action in which there has been a trial by jury. . . ." Motions for a new trial are committed to the sound discretion of the trial court. McDonough Power Equip., Inc. v. Greenwood, 464 U.S. 548, 556 (1984); Hinds v. Gen. Motors Corp., 988 F.2d 1039, 1046 (10th Cir. 1993). They are "not regarded with favor and should only be granted with great caution." United States v. Kelley, 929 F.2d 582, 586 (10th Cir. 1991). In reviewing a motion for a new trial, the court must view the evidence in the light most favorable to the prevailing party. Griffin v. Strong, 983 F.2d 1544, 1546 (10th Cir. 1993). A new trial based upon an error of law is unwarranted unless that error affected the substantial rights of the parties. Fed.R.Civ.P. 61; Heyen v. United States, 731 F. Supp. 1488, 1489 (D.Kan. 1990), aff'd, 945 F.2d 359 (10th Cir. 1991). Moreover, the party "seeking to set aside a jury verdict must demonstrate trial error which constitutes prejudicial error or that the verdict is not based on substantial evidence." White v. Conoco, Inc., 710 F.2d 1442, 1443 (10th Cir. 1983). The court should "ignore errors that do not affect the essential fairness of the trial." McDonough Power Equip., 464 U.S. at 553.
• Discussion
Plaintiff contends that the court committed, both before and during trial, eleven separate errors which were prejudicial to plaintiff and which entitle it to a new trial. Plaintiff contends that each of the eleven purported errors independently provides a basis for a new trial. Specifically, plaintiff contends the following decisions by the court constitute error necessitating a new trial:
º Determination that Rail Contracts do not the limit number of train sets plaintiff was required to supply;
º Exclusion of evidence of defendant Railroads' cycle times from 1988 to 1992;
º Exclusion of Thomas Crowley testimony regarding reasonable cycle time;
º Exclusion of evidence regarding defendant Railroads' actions to assist other shippers during service crisis;
º Exclusion of evidence concerning the profitability of the plaintiff's movement;
º Exclusion of trial exhibit 118;
º Decision not to administer a preliminary jury instruction describing implied contract terms;
º Denial of plaintiff's request for judicial notice;
º Determination of the appropriate measure for restitution damages; and
º Denial of plaintiff's request for leave to file its Second Amended Complaint.
Moreover, plaintiff contends that when considered collectively, the Rule 59(a) standard for an award of a new trial is met. The court disagrees that error requiring a new trial occurred.
After examining the parties' arguments on these eleven separate bases for a new trial; examining the pertinent portions of the record in this case, including the dispositive motions hearings, the opening and closing arguments, relevant portions of the trial transcript such as witness testimony and evidentiary arguments, and the charge conference arguments; and considering the relevant law, the court finds that only one basis presented provides a colorable argument for a new trial. Therefore, given the court's extensive rulings on the record in this case, the court will address specifically only that argument set out by plaintiff that the court finds raises this colorable argument regarding error. Where not addressed, the court finds that plaintiff's arguments have failed to establish under the Rule 59(a) standard either that an error has occurred, or that an error occurred that entitles plaintiff to a new trial. That is, where not specifically addressed, the court finds that plaintiff's asserted bases do not merit a new trial. The court now turns to the plaintiff's assertion that the court's determination that the Rail Contracts did not obligate defendants to transport all of plaintiff's coal requirements to the Jeffrey Energy Center (JEC) was in error.
• Determination that Rail Contracts Do Not Obligate Defendants to Transport All of Plaintiff's Coal Requirements to JEC
Plaintiff contends that the court's granting of plaintiff's own Motion for Partial Summary Judgment and the court's subsequent labeling of the Rail Contracts as "requirements contracts," as requested by plaintiff, provides the basis for prejudicial error. Specifically, plaintiff contends that the court improperly determined that a requirements contract imposed a lessened "best efforts" standard on the parties' performance of their contractual obligations. Plaintiff contends the court improperly arrived at the best efforts standard by applying the standard set out for "exclusive dealing contracts," rather than the separate standard set out for "requirements contracts." Plaintiff contends that the court's failure to apply the proper obligations that correspond to the requirements contract label resulted in prejudice to it in that defendants were held to a lesser performance standard under the Rail Contracts. Plaintiff contends that the appropriate standard for defendants' performance should have been the requirement "to transport all of Western's coal requirements purchased for use at JEC." (Pl.'s Mem. at 5). Plaintiff further contends the court improperly relied upon the Kansas Uniform Commercial Code (UCC) in issuing its ruling regarding requirements contracts.
First, the court notes that the Kansas UCC provisions were cited as persuasive, rather than controlling, authority in this case. As noted by plaintiff in its Reply, the UCC may properly be used as guidance in non-UCC cases. United States v. Hunter, 652 F. Supp. 774, 777 (D.Kan. 1986) (noting the "Court is aware of the great respect accorded the UCC, and agrees that its principles should be considered even when not technically applicable"); Wille v. Southwestern Bell Tel. Co., 219 Kan. 755, 757-58, 549 P.2d 903, 906 (1976) (noting that "although the UCC's application is primarily limited to contracts for the present or future sale of goods, many courts have extended the statute by analogy into other areas of the law"). The court finds no error in its consideration of the Kansas UCC.
Next, the court finds that even if it did commit error by failing to properly distinguish between the "requirements contract labels" and the "exclusive dealings label," such error did not harm the plaintiff as the moving party here. That is, the court finds that the imposition of a "best efforts" standard on defendants in this case did not prejudice plaintiff.
Following a hearing on plaintiff's Motion for Partial Summary Judgment, the court labeled the Rail Contracts "requirements contracts" and imposed the "best efforts" obligation upon the defendants' actions under the Rail Contracts. In making this ruling, the court did not contemplate that its labeling of the Rail Contracts as requirements contracts imposed upon defendants the more stringent obligation to transport all of plaintiff's coal requirements, as plaintiff proposes. In fact, the court explicitly ruled that the plain language of the contracts did not create this obligation. Moreover, it is clear from the court's rulings that it did not intend its labeling of the Rail Contracts as requirements contracts to disturb or override any of its separate decisions regarding the parties' obligations under the Rail Contracts. Instead, the court contemplated that the requirements contract label merely imposed the best efforts obligation upon the parties, and specific to plaintiff's claim of breach of contract, that this label imposed a best efforts obligation upon defendants' performance of specific terms of the Rail Contracts.
The court noted on the record that it believed, based upon the parties' arguments and relevant law, that its imposition of the requirements contract label was not inconsistent with its prior rulings regarding the Rail Contracts' terms.
The court notes that it did have concerns at the time of its ruling regarding the designation of the Rail Contracts as requirements contracts. Specifically, the court questioned the parties regarding the potential that such ruling would create inconsistencies with its prior findings regarding the parties' obligations under the plain language of the Rail Contracts. At the dispositive motions hearing, the court asked the parties to address what they believed the effect of declaring the Rail Contracts as requirements contracts could be and what additional obligations this label would impose upon the parties that were not present under general contract law principles. After hearing the parties' responses, the court indicated what it believed the effect of the requirements contract label to be. That is, the court indicated that it believed the effect of the label of requirements contract would be to impose a "best efforts" standard upon the parties, requiring both parties to "operate in good faith and be reasonably diligent in performing under the contract."
Consistent with its ruling, the court provided guidance to the jury on the parties' obligations under the Rail Contracts by, in relevant part, instructing the jury that "The 2801 Agreement is a requirements contract, which obligates the parties to act in good faith, to use best efforts, and to act in a reasonably diligent manner when performing their obligations under the contract." The issues presented to the jury were whether defendants' conduct breached or materially breached the Rail Contracts.
Plaintiff argues that the court's imposition of a best efforts standard was prejudicial to it because it "improperly lessened the Railroads' obligations under the transportation requirements contracts. The Railroads' obligation was not merely to use their best efforts to supply Western its transportation needs, but rather was to provide those transportation needs." (Pl.'s Reply at 9).
Even if the court's designation of the Rail Contracts as requirements contracts and its subsequent imposition of a best efforts standard under the Rail Contracts were to be found in error, the court finds that these decisions were not prejudicial to plaintiff. Instead, plaintiff benefitted from any such error in that defendants were held to a higher standard of conduct than the court found was contemplated under the explicit terms of the Rail Contracts or through their implied terms, such as the duty of good faith and fair dealing. See T.S.I. Holdings, Inc. v. Jenkins, 260 Kan. 703, 719, 924 P.2d 1239, 1250 (1996) (noting that the "duty of best efforts is more onerous than that of good faith"). Therefore, the alleged error created an advantage for plaintiff in that defendants were held to an additional and higher standard of conduct when performing their contract obligations — best efforts — rather than only the less exacting standards, such as good faith. Under the instructions given, the jury could have concluded that a breach occurred if they determined that any one of the standards set out for defendants' conduct under the contracts was not met. However, the reverse is also true. That is, under the instructions given, the jury could not have found no breach occurred where they determined that any one of the standards set out for defendants' conduct was not met. Therefore, because the jury determined no breach occurred, the court must conclude that the jury determined that all of the standards of conduct set out in the instructions were met by defendants.
T.S.I. Holdings, Inc., 260 Kan. at 719, 924 P.2d at 1250 ("Good faith is a standard that has honesty and fairness at its core and that is imposed on every party to a contract. Best efforts is a standard that has diligence as its essence and is imposed on those contracting parties that have undertaken such performance." (quoting Restatement (Second) of Agency § 13, comment a (1957))).
In addition, to the extent that the court's decision to label the Rail Contracts as requirements contracts and its indication that the only significance this label had upon the obligations of the parties was to impose a best efforts standard upon their performance obligations, the court finds, for the reasons set out above, that such decision was not prejudicial to plaintiff.
Accordingly, plaintiff's motion is denied on this basis. Based on the court's determination that its ruling regarding the imposition of a best efforts standard did not affect the substantial rights of plaintiff as the moving party, the court finds that its evidentiary rulings stemming from this ruling also created no prejudicial error.
• Remaining Bases
As to the additional ten bases set out by plaintiff in support of its Motion for a New Trial, after reviewing the arguments of the parties, the relevant portions of the record, and considering the applicable law, the court finds that no error has occurred, or that no prejudicial error occurred that affected the substantial rights of the parties or affected the essential fairness of the trial, thereby entitling plaintiff to a new trial under Rule 59(a). Plaintiff's motion is denied as to these additional bases.
IT IS THEREFORE ORDERED that plaintiff Western Resources, Inc.'s Motion for New Trial (Doc. 578) is denied.