Seubert v. FFE Transportation Services, Inc. et al

Filing 72

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Defendants' motion for summary judgment is DENIED. (Doc. No. 52.) Signed by District Judge Audrey G. Fleissig on 1/29/2013. (NCL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
JAMES G. SEUBERT,

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Plaintiff,
vs.
FFE TRANSPORTATION
SERVICES, INC., et al.,
Defendants.

Case No. 4:11CV01651 AGF

MEMORANDUM AND ORDER
This is a personal injury action arising out of a motor vehicle accident. Plaintiff
James G. Seubert alleges that his car was struck from behind by a truck driven by
Defendant William James Beatty, an employee of Defendant FFE Transportation
Services, Inc., (“collectively Defendants”). Plaintiff seeks damages for personal injuries
and lost wages and profits. Now before the Court is Defendants’ motion for partial
summary judgment. (Doc. No. 52.) For the reasons set forth below, Defendants’ motion
for summary judgment will be denied.
BACKGROUND
The pleadings, discovery responses, and statements of uncontroverted material
facts on file indicate the following.
Plaintiff is the owner and sole proprietor of Pride Cleaning and Restoration
(“Pride”). Pride provides cleaning, restoration and repair services following disasters
such as a fire or flood. In this action Plaintiff seeks recovery for physical injuries

sustained as a result of the accident and for lost profits and diminution in the value of his
business resulting. Doc. No. 8, at ¶ 10(b).
In his Rule 26 Disclosures, Plaintiff stated that he was claiming damages for lost
business income and diminished value, and asserted his injuries as the cause for those
claims. Plaintiff identified himself as a person with knowledge of such damages, and
stated that expert testimony might be necessary to prove such damages. Doc. No. 63-3,
at 3-4. With respect to the Rule 26 requirement that he provide a basis for the
computation of his damages, Plaintiff estimated the amount of work time he was forced
to miss due to his physical injuries; the decline in his business revenues after his injury;
his expectation that his business would have continued to grow but for the interruption
caused by his injuries; and his opinion that the decline in revenue diminished the value of
his business. Doc. No. 63-3, at 3-4.
Subsequently, Plaintiff produced tax returns, business records, professionally
prepared business valuations, and an estimate of his lost earning potential in support of
the claim for lost profits. Doc. Nos. 63-5, 63-10, 63-12. Plaintiff retained experts to
perform valuations of his business and estimates of his future earning capacity but has not
designated an expert witness to testify at trial. Doc. No. 63-12, at 1-5.
The record before the Court includes evidence of the following: Pride was
profitable in the year prior to the collision, but its revenues decreased by approximately
$700,000 in the year after the accident. Plaintiff placed the value of the business prior to
the collision at $750,000 and that amount was corroborated by a professional business
valuation he obtained. Doc. No. 63-7, at 97:8-15; 100:18-22; 115:6-118:6; 115:1-5,
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118:12-19. A business valuation performed by plaintiff’s expert estimated the value of
the business following the collision to be $461,065.00. Doc. No. 63-10, at inside cover.
The tax returns and expense records Plaintiff produced are consistent with these
valuations. Further, there is evidence that as a result of his injuries, Plaintiff worked forty
percent less than he had prior to the accident. Doc. No. 63-7, at 10:6-9; 16:8-10; 100:23–
103:6; 84:1-25; 25:5-8. The record also indicates that Plaintiff, as the owner and CEO of
Pride, was solely responsible for the generation of new business and that his reduced
capacity to work may have been a cause of Pride’s declining revenues. Doc. No. 63-8, at
13:15-18. The record also indicates that Pride’s revenues have varied significantly from
year to year. Doc. No. 63-9, at 19:25-20:3.
Defendants’ expert, relying on the documents and expert reports Plaintiff
produced, testified at deposition that there was a $134,000.00 decrease in Plaintiff’s
taxable income between 2008 and 2009. Doc. No. 63-15, at 72:14-25. The expert further
testified that the gross profits of the business decreased thirty to forty percent from 2006
to 2010, or from two years preceding the collision through the two years following the
collision. Id., at 63:19-64:6. Although Defendants’ expert noted a decline in the
profitability of the business, she opined that the decline was not attributable to the
injuries Plaintiff sustained in the collision. Id. at 52:4-7, 90:8-19, and Doc. No. 63-14, at
10.
The Parties’ Arguments
Defendants first assert that the evidence Plaintiff has adduced with respect to lost
profits should not be permitted at trial because Plaintiff has failed to provide Defendants
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with any computation of those damages, and failed to designate an expert to opine on his
behalf with regard to those damages. Doc. No. 53, at 3-4. Defendants further assert that
in the absence of such evidence, they are entitled to partial summary judgment with
respect to Plaintiff’s claims for lost profits, because Plaintiff has failed to provide a
reasonable and sufficient factual basis for this alleged loss.
In response, Plaintiff asserts that he is not required to offer expert testimony with
respect to lost profits and that the evidence on the record is legally sufficient to make a
submissible case for loss of business income and to create a genuine issue of material fact
with respect to such loss. In addition, Plaintiff contends that the ultimate determinations
as to the cause and amount of the alleged loss are questions of fact reserved for resolution
by the jury.
Summary Judgment Standard
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary
judgment shall be entered “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” In ruling on a
motion for summary judgment, the Court views the facts and inferences therefrom in the
light most favorable to the nonmoving party. Gibson v. Am. Greetings Corp., 670 F.3d
844, 853 (8th Cir. 2012) (citing Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th
Cir. 2011) (internal quotation marks and citation omitted). The moving party must
establish both the absence of a genuine issue of material fact and that it is entitled to
judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986);
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
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“Although the burden of demonstrating the absence of any genuine issue of
material fact rests on the movant, a nonmovant may not rest upon mere denials or
allegations, but must instead set forth specific facts sufficient to raise a genuine issue for
trial.” Wingate v. Gage Cnty. Sch. Dist., No. 34, 528 F.3d 1074, 1078-79 (8th Cir. 2008).
“The mere existence of a scintilla of evidence in support of the [nonmovant’s] position
will be insufficient; there must be evidence on which the jury could reasonably find for
[that party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). At the
summary judgment stage, the Court may not weigh evidence or decide the truth of the
matter, but need only determine if there is a genuine issue of material fact. Id. at 249.
Recovery of Lost Profits
Under Missouri law, “[t]he general rule as to the recovery of anticipated profits of
a commercial business is that they are too remote, speculative, and too dependent upon
changing circumstances to warrant a judgment for their recovery.” Coonis v. Rogers, 429
S.W.2d 709, 714 (Mo. 1968); see also Rebstock v. Evans Prod. Eng’g Co., No.
4:08CV01348 ERW, 2009 WL 4573981, at *3 (E.D. Mo. Dec. 3, 2009). “Recovery of
lost profits is prohibited when there is uncertainty or speculation as to whether the loss of
profits was the result of the wrong, and whether any such profits would have derived at
all.” Midwest Coal, LLC ex rel. Stanton v. Cabanas, 378 S.W.3d 367, 374 (Mo. Ct. App.
2012) (citation omitted).
Although a stricter level of proof is required for lost profits than for lost wages,
“[a]bsolute exactitude is not required.” Marvin Lumber and Cedar Co. v. PPG
Industries, Inc., 401 F.3d 901, 914 (8th Cir. 2005) (citation omitted). But “[t]he plaintiff
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must prove the reasonable certainty of future damages by a fair preponderance of the
evidence.” Such proof must be premised upon “actual facts, with present data for a
rational estimate of their amount.” Coonis, 429 S.W.2d at 714; see also Process Controls
Int’l., Inc. v. Emerson Process Mgmt, No. 4:10CV645 CDP, 2012 WL 5199583, at *3
(E.D. Mo. Oct. 22, 2012) (holding that the plaintiff must produce evidence that “provides
an adequate basis for estimating the lost profits with reasonable certainty”) (quoting
Ameristar Jet Charter, Inc. v. Dodson Int'l Parts, Inc., 115 S.W.3d 50, 54–55 (Mo.
2005)). In addition, “[i]t is indispensable that this proof include the income and
expenses of the business for a reasonable anterior period, with a consequent
establish[ment] of the net profits during the previous period.” Thoroughbred Ford, Inc.
v. Ford Motor Co., 908 S.W.2d 719, 735 (Mo. Ct. App. 1995) (internal quotation
omitted).
DISCUSSION
As a preliminary matter, Defendants argue that Plaintiff should not be permitted
to introduce evidence of lost profits because he failed to amend his discovery responses
to indicate that only Plaintiff, and not the experts who prepared the valuation and
earnings reports, would testify as to his claim for lost profits. Similarly, Defendants
argue that evidence of lost profits should not be permitted because Plaintiff failed to
amend his discovery response to provide a precise method for computation of his claim
for lost profits.
Upon review of the discovery responses, expert reports and deposition testimony
on file, the Court concludes that Plaintiff should not be precluded from introducing
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evidence of lost profits. Although far from perfect, Plaintiff’s disclosures and discovery
responses are sufficient to advise Defendants of the amount of losses claimed and the
basis for those claimed losses.
Plaintiff initially indicated in his Rule 26 disclosures and discovery responses that
he would testify and that an expert might testify as to the value of his business and lost
profits. Thereafter, Plaintiff retained experts to prepare valuations and estimates of lost
income and these reports were disclosed to Defendants and their expert. Although
Plaintiff did not amend his Rule 26 disclosures to indicate that the experts who prepared
the reports would not testify, there is no indication that Defendants have been prejudiced
by this lack of disclosure.
Moreover, Plaintiff is not required to present evidence or computation of lost
profits through expert testimony. “A business owner may be permitted to testify to the
damage he perceives has been done to his business as the result of another’s actions.”
Craig Outdoor Advertising, Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1016 (8th Cir.
2008); see also BBSerCo, Inc. v. Metrix Co., 324 F.3d 955, 963 (8th Cir. 2003)
(concluding that district court did not abuse its discretion by admitting damages
testimony from business owner with thirteen years' experience in industry). Plaintiff’s
testimony will, however, be restricted to those matters of which he has personal
knowledge such as his tax returns and business records. Having declined to designate the
drafters of the business valuations as experts, Plaintiff cannot testify with respect to the
reports prepared by his experts. Such reports constitute hearsay and expert testimony,
and cannot serve as the basis for Plaintiff’s own testimony.
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Defendants have had the opportunity to fully examine Plaintiff’s expert reports
and other evidence of lost profits, and they will have the opportunity at trial to present
their own evidence to refute Plaintiff’s evidence and testimony. See Spencer v. Stuart
Hall Co., 173 F.3d 1124, 1128 (8th Cir. 1999) (noting that “[w]here conflicting evidence
is presented at trial, it is the jury rather than this court which assesses the credibility of
the witnesses and decides which version to believe”).
The cases cited by Defendants in support of their position are distinguishable.
This is not a case where a new damage theory was disclosed on the eve of trial as in U.S.
Salt v. Broken Arrow, Inc., No. 07-1988, 2008 WL 2277602 at *5 (D. Minn. May 30,
2008). Nor is this a case where the plaintiff failed to include a claim for lost wages or
lost profits in his Rule 26 disclosures or to provide information necessary to calculate lost
profits, as in Rebstock, 2009 WL 4573981, at *3. Unlike the plaintiff in Midwest Coal,
LLC ex rel. Stanton v. Cabanas, Plaintiff has presented proof that Pride generated profits
in the period prior to his injury and has offered evidence of his business income and
expenses for that period. See Midwest Coal, 378 S.W.3d at 374.
Finally, the Court cannot agree with Defendants’ contention that Plaintiff has not
provided any factual evidence to support his assertion that his business has lost value or
income because of his injuries. Upon review of the record the Court is satisfied that even
in the absence of his expert reports, Plaintiff has set forth sufficient evidence to create a
genuine issue of material fact with respect to the question of lost business income or
profits. The record provides an adequate factual basis from which a jury could, with
reasonable certainty, make a finding of such damages. Disregarding the reports of
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Plaintiff’s experts, there is reasonable and sufficient factual evidence in the form of tax
returns, business records, and testimony indicating that the business previously had been
profitable. In addition, the record evidences proof of income and expenses for the time
periods before and after the collision to support Plaintiff’s claim that Pride lost value and
income as a result of his injuries. There is also evidence from which a jury could
determine that Defendants’ actions, and Plaintiff’s ensuing injuries caused the loss of
business income.
Although Plaintiff’s evidence of lost profits is not extremely strong, Plaintiff has
provided “an adequate basis for estimating the lost profits with reasonable certainty.”
Process Controls Int’l., Inc., 2012 WL 5199583, at *3. Whether the evidence will
ultimately prove sufficient to submit the issue to the jury, and if so, whether the jury will
find such evidence sufficiently credible to justify a damage award of lost profits, are
matters for trial. At this stage, the Court cannot say, as a matter of law, that Plaintiff
cannot provide an adequate basis to establish lost profits with reasonable certainty.
Accordingly,
IT IS HEREBY ORDERED that Defendants’ motion for summary judgment is
DENIED. (Doc. No. 52.)

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 29th day of January, 2013.

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