Western Insulation, LP v. Moore

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-1219
WESTERN INSULATION, LP,
Plaintiff – Appellee,
v.
HAL MOORE; MELANIE MOORE,
Defendants – Appellants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. James R. Spencer, Chief
District Judge. (3:05-cv-00602-JRS)
Argued: January 27, 2009 Decided: March 12, 2009
Before MICHAEL, GREGORY, and AGEE, Circuit Judges.
Affirmed by unpublished opinion. Judge Agee wrote the opinion,
in which Judge Michael and Judge Gregory joined.
ARGUED: John B. Simpson, MARTIN & RAYNOR, P.C., Charlottesville,
Virginia, for Appellants. Paul James Kennedy, LITTLER
MENDELSON, Washington, D.C., for Appellee. ON BRIEF: Ronald S.
Sofen, GIBBS, GIDEN, LOCHER, TURNER & SENET, L.L.P., Los
Angeles, California, for Appellants. Stephen C. Tedesco,
LITTLER MENDELSON, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
AGEE, Circuit Judge:
I. Background
In March 2001 the sole shareholder of Western Insulation,
Inc. (“Insulation, Inc.”), Hal Moore, sold the company to
Western, L.P. (“Western”), for $41,990,000.00. At the time of
the sale, Hal's wife Melanie was an employee and the Chief
Financial Officer of Insulation, Inc. Both Hal and Melanie
entered into identical Confidentiality, Non-Competition, and
Non-Solicitation Agreements (collectively, “Agreements”), which
were to be interpreted and enforced in accordance with Virginia
law.
Within the time period encompassed by the Agreements
Melanie used Hal’s longstanding relationship with a bank to
obtain financing for two new insulation companies that would
compete with Western. In March 2005 she signed a personal loan
guaranty for a $1.41 million line of credit to assist her friend
and former Insulation, Inc. employee, Stephanie Schulkamp, in
forming one of those companies, American Insulation, Inc.
(“American”). Without Melanie’s guarantee and assistance,
Schulkamp would not have qualified for the bank financing for
American.
The loan guaranty agreement for American subjects Schulkamp
to various restrictions and bestows certain benefits on Melanie.
For example, Schulkamp can only earn $90,000 per year and must
2
obtain Melanie's consent to make any purchase for American
exceeding $25,000. The agreement also entitles Melanie to
certain financial information regarding American. In return for
the guaranty, Melanie received a security interest in American's
assets and an option to purchase 90 percent of American for
$9,000. Schulkamp secured the guaranty with her home and her
shares in American and is prohibited from transferring any
collateral without Melanie’s consent.
In addition to the guaranty for Schulkamp, Melanie signed a
separate personal loan guaranty for a $1.015 million commercial
line of credit to aid Dave Barnes, another former Insulation,
Inc. employee. With Melanie’s assistance Barnes obtained
financing to start his own insulation business, Empire
Insulation, Inc. (“Empire”). Melanie advised Barnes on the loan
amount he should seek and, as with Schulkamp, took advantage of
Hal’s relationship with a bank to obtain financing for Barnes,
which he would not have received without her guarantee and
assistance.
Hal leased a building and some trucks to American, sold
some of his trucks to Empire and hired two former employees of
Insulation, Inc.
Alleging that the foregoing acts violated the Agreements,
Western sought compensatory damages and injunctive relief from
the Moores in the Circuit Court of Henrico County, Virginia.
3
The Moores removed the action to federal district court.
Following a bench trial the district court ultimately found that
the Moores breached the Agreements and awarded Western
$943,659.00 in compensatory damages but denied Western’s request
for injunctive relief.
On appeal to this Court, we affirmed certain portions of
the district court’s judgment, but reversed other parts and
remanded the case for further proceedings. Although we agreed
with the district court that Hal breached his Agreement by
hiring the two former Insulation, Inc. employees, Western proved
no compensable damages for that breach. Hal’s other actions
were deemed to be arms-length transactions not in violation of
his Agreement. “We conclude[d] the district court erred in
finding that Hall breached his noncompete (other than by hiring
two former employees.” Western Insulation, LP v. Moore, 242 F.
App'x 112, 118-19 (4th Cir. 2007) (unpublished) (“Western I”).
We affirmed the district court’s decision that Melanie breached
her Agreement, but held that the district court erred in (1)
placing a value of $500,000 on Western’s damages arising solely
as a result of the Moores’ various breaches, (2) awarding
damages for Western’s reduced profit margins because such
evidence was speculative and (3) awarding damages for Western’s
lost profits. Id. at 123-24. However, we agreed with Western
that the district court erred in denying its request for
4
injunctive relief and accordingly remanded for further
consideration by the district court. Id. at 124.
Consistent with our holding on appeal Western asked the
district court for injunctive relief
to enjoin Melanie from (1) breaching her Agreement by
providing any form of support to any of [Western’s]
competition or to Schulkamp or Barnes personally; (2)
controlling or monitoring the finances of American or
Empire; and (3) exercising the option agreement or the
security agreement that she formed with American,
entering into an option agreement or a security
agreement with Empire, or obtaining any other
ownership interest arising from a loan guarantee in
either of those companies. Western also ask[ed] the
court (4) to enjoin Hal from breaching his Agreement
by, directly or indirectly, soliciting, hiring, or
employing any person who was formerly employed by
[Western], or soliciting work from any of [Western’s]
customers. Finally, Western ask[ed] the Court (5) to
toll the Moores’ Agreements until March 12, 2009,
extending them by two years, the period of time that
the Moores allegedly breached their Agreements.
Western Insulation, L.P. v. Moore, No. 3:05-CV-602, 2008 WL
191335, at *2 (E.D. Va. Jan. 22, 2008). These measures were
necessary, Western asserted, because the Moores’ actions reduced
the value of the goodwill for which Western had paid and it
would suffer further harm if the Moores continued to assist
Western’s competitors. Western also asked the district court to
enter an award for nominal damages against both Hal and Melanie
based on the adjudicated breach of the Agreements.
The Moores argued that our decision absolved them of
liability for breaching their Agreements and implied that they
5
were unlikely to breach them in the future. Based on this
interpretation of our prior decision they asked the district
court to reject Western’s request for nominal damages and enter
judgment in their favor because (a) Western’s prior failure to
prove compensatory damages necessarily foreclosed a successful
cause of action for breach of contract under Virginia law, and
(b) the doctrine of judicial estoppel barred Western’s request
for nominal damages.
The district court conducted a thorough analysis of the
requirements for equitable relief and found such relief was
warranted as to Melanie, but not Hal. Accordingly, the district
court forbade Melanie from:
(1) providing any form of support to any of the
Company's competitors or to Stephanie Schulkamp or
David Barnes personally; (2) controlling or monitoring
the finances of American or Empire; and (3) exercising
the option agreement or the security agreement that
she formed with American, entering an option agreement
or a security agreement with Empire, and obtaining any
other ownership interest in either of those companies
arising from a loan guarantee.
Id. at *5. Having determined that Melanie “breached her
Agreement for a total of two years, ten months, and seventeen
days-the period from March 5, 2005 to the date of [its]
Memorandum Opinion” (January 22, 2008), the court extended her
6
obligations under the Agreement for that period of time. 1 Id.
The court then determined that Western had not been irreparably
harmed by Hal’s breach of his Agreement and refused to “extend
his obligations under [his] Agreement” or enjoin him from
“soliciting, hiring, or employing any other people who worked
for [Western]”. Id.
The district court also determined that language in the
Agreements “relieve[d] Western of the burden of proving damages
to establish a claim” for breach of contract and that this
Court’s determination that Western’s evidence on compensatory
damages was insufficient to support an award did not preclude an
award of nominal damages. Id. at *6. The district court
rejected the Moores’ arguments, entered judgment against both
Hal and Melanie, and awarded nominal damages of $100.00 against
both defendants.
The Moores timely appealed the judgment of the district
court and we have jurisdiction under 28 U.S.C. § 1291. For the
reasons that follow, we affirm the district court’s judgment in
all respects.
1
Absent injunctive relief the Moores’ obligations under
their Agreements would have expired on March 12, 2008.
7
II. Injunctive Relief
As an initial matter, we note that “we review the grant of
a permanent injunction for abuse of discretion.” Virginia Soc’y
for Human Life, Inc. v. Federal Election Comm'n, 263 F.3d 379,
392 (4th Cir. 2001). This same standard applies to our review of
an injunction’s scope. Id. “With respect to injunctive relief,
‘[w]hat we mean when we say that a court abused its discretion,
is merely that we think that [it] made a mistake.’” Wilson v.
Office of Civilian Health and Med. Programs of the Uniformed
Servs., 65 F.3d 361, 363 (4th Cir.1995) (quoting Direx Israel,
Ltd. v. Breakthrough Medical Corp., 952 F.2d 802, 814 (4th
Cir.1991)).
On appeal Melanie challenges the district court’s grant of
injunctive relief on several grounds. First, she contends the
restrictions imposed on her are overly broad. Second, she
argues that injunctive relief was inappropriate because there
was no evidence establishing that she would violate the terms of
her Agreement in the future. Finally, Melanie avers the
district court erred in extending the terms of her Agreement for
two years, ten months, and seventeen days from the date of the
district court’s order. For the reasons below we reject these
arguments.
8
A. Overbreadth of the Injunction
The relevant portion of the district court’s Order granting
equitable relief to Western provides as follows:
Melanie Moore is hereby ENJOINED from
(1) providing any form of financial
assistance, including a loan guarantee, to
any competitor of Western Insulation, Inc.,
or to Stephanie Schulkamp or David Barnes
personally;
(2) engaging in any financial control or
oversight of American Insulation, Inc.
(“American”) or Empire Insulation, Inc.
(“Empire”); and
(3) exercising any option agreement and
security agreement that she entered with
American, entering any option agreement or
security agreement with Empire, or obtaining
any other form of ownership or business
interest in American or Empire,
for a period of two years, ten months, and seventeen
days from the date of this Order.
J.A. 852-53. Melanie contends this language is impermissibly
broad because sections (1) and (2) are unlimited in duration and
thus are indefinite time restrictions on her. She also avers
that section (1) exceeds the scope of her Agreement by
precluding even personal financial assistance to either Barnes
or Schulkamp. We find Melanie’s arguments unavailing.
A plain reading of the Order’s language indicates the time
limitation applies with equal force to all three sections, not
just the last prohibition against exercising options and
agreements with American or Empire. Moreover, the Order itself
9
makes clear that the district court’s rationale is “explained in
the Memorandum Opinion accompanying this Order.” J.A. 852. In
its Memorandum Opinion the district court stated that
Melanie has breached her [Non-Compete Agreement] for a
total of two years, ten months, and seventeen days –
the period from March 5, 2005 to the date of this
Memorandum Opinion. Accordingly, the Court will issue
an injunction that will, in effect, extend her
obligations under her Agreement for a period of that
length.
J.A. 845 (emphasis added). The reference to “obligations,” in
plural form, provides additional evidence that all of the
prohibitions in the district court’s order were subject to the
time limitation. The district court’s Order and the record show
unequivocally, contrary to Melanie’s strained interpretation,
that she is enjoined from all the enumerated activities for a
period of two years, ten months, and seventeen days from January
22, 2008.
Melanie also contends that the district court’s prohibition
against personal financial assistance to Barnes or Schulkamp
goes beyond the terms of her Agreement with Western. However,
if Melanie had not breached the Agreement by providing
substantial financial assistance to establish businesses in
direct competition with Western, as she had agreed not to do,
she would remain free to offer personal financial assistance to
Barnes or Schulkamp if she wished. As the district court no
doubt realized, equitable relief prohibiting direct financial
10
assistance to Empire and American but permitting a virtually
unlimited subsidy for the personal expenditures of those
companies’ principals would naturally and impermissibly accrue
to the benefit of Empire and American by simply moving funds
from one pocket to another. The relief designed by the district
court was “no more burdensome to the defendant than necessary to
provide complete relief to the plaintiffs.” Califano v.
Yamasaki, 442 U.S. 682, 702, 99 S.Ct. 2545, 61 L.Ed.2d 176(1979). As such, the district court did not err.
B. Future Violations
Melanie asserts that the award of injunctive relief was
unwarranted because there was no evidence she would violate the
Agreement in the future. She argues that under Virginia law the
decision to enter an injunction prohibiting “the future
commission of an anticipated wrong depends, in each case, upon
the nature of the wrong and upon the likelihood that the wrong
will be committed.” WTAR Radio-TV Corp. v. City of Virginia
Beach, 216 Va. 892, 895, 223 S.E.2d 895, 899 (1976). She
asserts that because there is no evidence in the record
suggesting that she will violate the Agreement in the future,
entry of injunctive relief was improper. These arguments are
unpersuasive for several reasons.
In Western I we addressed Western’s cross-appeal, which
challenged the district court’s refusal to grant injunctive
11
relief because “indispensable parties [were] not before the
Court, whose presence would be necessary in order . . . to
fashion complete injunctive relief.” 242 Fed.Appx. at 124. We
determined that “[a]lthough clearly some of the injunctive
relief that Western requested would ‘undermin[e] legitimate
commercial contracts or employment agreements,’ [a] subset of
relief Western” requested would not. Id. Accordingly, we
reversed the district court’s denial of injunctive relief and
remanded to the district court to determine in the first
instance whether to award such relief. The relief granted by
the district court compares favorably, indeed almost
identically, to that approved by this Court in Western I.
Melanie’s arguments also rest on the false premise that
Western does not suffer continuing damage from Melanie’s breach.
Her loan guaranties enabled Empire and American to exist as
continuing competitors to whom Western may still lose business.
Absent the injunction Melanie’s intimate financial entanglement
with American and Empire could continue unabated, to Western’s
detriment. In short, the likelihood that Melanie may commit a
“new” breach in the future is irrelevant when her breach and the
resulting damage continue.
C. Time Limitation
Melanie further claims the district court erred because the
extension of the non-compete provisions of her Agreement should
12
have been for one year, five months, and twenty-three days,
instead of two years, ten months, and seventeen days as imposed.
She argues that because we determined in Western I certain
injunctive relief would have been proper, the extension of her
obligations under the Agreement should be limited to the time
between her breach on March 5, 2005 and the date of the district
court’s original (albeit erroneous) decision on August 29, 2006
instead of the date of its judgment entered on remand. In
short, Melanie says she should not be penalized because the
district court erred in her favor by refusing to enter
injunctive relief in its first decision on August 29, 2006.
Again, we disagree.
The thrust of Melanie’s argument is that although the
Moores successfully opposed the entry of injunctive relief
against them in the district court, she should benefit from our
subsequent determination in Western I that injunctive relief was
appropriate as to her. This argument disregards the fact that,
absent injunctive relief, Melanie’s breaches were permitted to
continue during the pendency of the appeal until entry of the
district court’s Order on January 22, 2008. See Western
Insulation, L.P., No. 3:05-CV-602, 2008 WL 191335, at *5
(finding that Melanie “breached her Agreement on March 5, 2005,
when she obtained the right to purchase American, a breach that
has continued to this day.”). The district court did not abuse
13
its discretion in forging its injunctive remedy and extending
Melanie’s obligations as provided in the district court’s
judgment.
III. Nominal Damages
The Moores make two principal arguments in support of their
contention that the district court erred in awarding nominal
damages to Western. They assert that Western’s failure to prove
compensatory damages as determined by this Court in Western I
precludes Western from establishing all the elements necessary
for a breach of contract claim under Virginia law. In addition,
they argue the principle of judicial estoppel applies.
A. Breach of Contract Damages
Under Virginia law “[t]he elements of a breach of contract
action are (1) a legally enforceable obligation of a defendant
to a plaintiff; (2) the defendant’s violation or breach of that
obligation; and (3) injury or damage to the plaintiff caused by
the breach of obligation.” Filak v. George, 267 Va. 612, 619,
594 S.E.2d 610, 614 (2004)); Ulloa v. QSP, Inc., 271 Va. 72, 79,
624 S.E.2d 43, 48 (2006); see also Sunrise Continuing Care, LLC
v. Wright, Record No. 072501, 2009 WL 103320, at *3 (Va. Jan.
16, 2009).). “Proof of damages is an essential element of a
breach of contract claim, and failure to prove that element
warrants dismissal of the claim.” Id. at *5. “The plaintiff
14
also has the ‘burden of proving with reasonable certainty the
amount of damages and the cause from which they resulted;
speculation and conjecture cannot form the basis of the
recovery.’” Id. (quoting Shepherd v. Davis, 265 Va. 108, 125,
574 S.E.2d 514, 524 (2003)). The Moores argue that in light of
our determination in Western I that Western failed to prove its
claim for compensatory damages, the district court improperly
awarded nominal damages in satisfaction of the third element of
a breach of contract claim. We believe the Moores misconstrue
Virginia law related to damages in the context of the facts of
this case.
"[I]t is . . . well-settled that parties to a contract may
specify the events or pre-conditions that will trigger a party's
right to recover for the other party's breach of their
agreement.” Ulloa, 271 Va. at 79, 624 S.E.2d at 48. This
includes the right to contract in such a way as “to eliminate
damages as a required element of a breach of contract action.”
Id. at 80, 624 S.E.2d at 48. Like the Ulloa Court, “the focus
of our analysis is to determine whether the parties in fact
agreed to modify the traditional elements of a breach of
contract action so as to permit [Western] to obtain a valid
breach of contract verdict in the absence of a finding of
damages.” Id.Section 5 of each Agreement provided as follows:
15
5. Remedies. Moore hereby acknowledges that his
covenants and obligations hereunder are of special,
unique, unusual, extraordinary, and intellectual
character, which gives them a peculiar value, the
actual and threatened breach of which shall result in
substantial injuries and damages, for which monetary
relief may fail to provide an adequate remedy at law.
Accordingly, Moore agrees that the Partnership shall
be entitled, in the event of an actual or threatened
breach of this Agreement, to seek remedies including,
but not necessarily limited to (i) temporary or
permanent injunctive relief; (ii) specific
performance, and (iii) monetary relief, to the extent
that monetary relief may constitute an adequate remedy
in whole or in part . . .
J.A. 762 (emphasis added).
Based on paragraph 5 of the Agreements, the district court
concluded that because a breach by Hal or Melanie “shall result
in substantial injuries,” and shall entitle Western “to seek
remedies including, but not necessarily limited to . . .
monetary relief, to the extent that monetary relief may
constitute an adequate remedy in whole or in part,”
identification of the remedies would be “superfluous unless it
was intended to emphasize that Western would not have to prove
it suffered harm.” J.A. 847-48. The Moores contest this
interpretation of paragraph 5. 2
2
Although Ulloa, like this case, involved the breach of the
“confidentiality, no-solicitation, and non-competition
provisions” of a contract, it is not dispositive of the issues
presented in this appeal. 271 Va. at 76, 624 S.E.2d at 46. The
Virginia Supreme Court’s determination that Ulloa’s employer was
not required to prove damages as an element of its breach of
contract claim rested on the parties’ consent to jury
(Continued)
16
“A court's primary focus in considering disputed
contractual language is to determine the parties' intention,
which should be ascertained, whenever possible, from the
language the parties employed in their agreement.” Pocahontas
Mining LLC v. CNX Gas Co., LLC, 276 Va. 346, 352, 666 S.E.2d
527, 531 (2008). Here, in the first sentence of section 5 of
the Agreements, the Moores explicitly acknowledge that any
breach on their part “shall result in substantial injuries and
damages . . . .” By this plain language the parties have agreed
that a breach by Hal or Melanie necessarily results in damage to
Western for which Western “shall be entitled to . . . to seek”
various remedies, including injunctive relief and/or monetary
damages. Thus, the parties contractually agreed that a breach
of contract claim could be established absent proof of
compensatory damages. While the language in the Moores’
Agreements permitted Western to establish a breach of contract
claim under Virginia law once the first two elements were
proven, Western’s compensatory damages were limited to those
monetary damages it could prove with “reasonable certainty”
instructions mandating a verdict adverse to Ulloa if his
employer proved only two elements – that there was a contract
and Ulloa breached it. Once the jury found a breach of contract
on those instructions, it became the law of the case. 271 Va.
at 80, 624 S.E.2d at 48.
17
which, in this case, were none. The question remains, however,
whether Western, once it proved a breach, could recover nominal
monetary damages under Virginia law when it did not prove
compensatory damages.
“[U]pon the breach of a valid and binding contract the law
infers nominal damages, it does not infer or presume substantial
or compensatory damages. The latter must be proven by competent
evidence. [Compensatory damages] are such as indemnify the
plaintiff and generally measure the plaintiff's actual loss and
provide amends therefor.” Orebaugh v. Antonious, 190 Va. 829,
834, 58 S.E.2d 873, 875 (1950).
In Crist v. Metropolitan Mortg. Fund, Inc., 231 Va. 190,
195, 343 S.E.2d 308, 311 (1986), the Supreme Court of Virginia
affirmed a lower court’s award of nominal damages. The Virginia
trial court had determined that the plaintiff established the
defendant’s breach of contract but failed to prove compensatory
damages. The trial court awarded nominal damages in the amount
of $100.00. On appeal, the Supreme Court of Virginia affirmed
“the judgment of the trial court denying compensatory damages
but awarding nominal damages of $100” because when “damages, if
any, cannot be established with reasonable certainty, no actual
damages can be recovered.” Id. (emphasis added).
Virginia law, as expressed in Orebaugh and Crist,
distinguishes between nominal and compensatory damages. Nominal
18
damages do not, by definition, compensate the aggrieved party –
they merely recognize that the aggrieved party’s rights have
been violated by the party in breach. Virginia law thus
provides for an award of nominal damages in cases where the
plaintiff proves that a breach of contract occurred but does not
prove compensatory damages, as in this case. Although not
specifically adopted by the Supreme Court of Virginia, this view
comports with Section 346 of the Restatement (Second) of
Contracts and other secondary sources:
(1) The injured party has a right to damages for any
breach by a party against whom the contract is
enforceable unless the claim for damages has been
suspended or discharged.
(2) If the breach caused no loss or if the amount of
the loss is not proved under the rules stated in this
Chapter, a small sum fixed without regard to the
amount of loss will be awarded as nominal damages.
Restatement (Second) Contracts § 346 (1981).
Only nominal damages are recoverable upon the breach
of a contract, if no actual or substantial damages
result from the breach or no damage is shown.
Examples include those cases in which:
(1) actual damage is uncertain or not
susceptible of proof;
(2) damages are too remote, conjectural, and
speculative to form the basis of a legal recovery;
. . . .
22 Am. Jur. 2d Damages § 17.
To hold, as the Moores urge, that Western’s failure to
prove compensatory damages extinguishes a remedy of nominal
19
damages for breach of contract would contradict Virginia law as
expressed in Orebaugh and Crist. Accordingly, the district
court did not err in entering judgment against Hal and Melanie
and awarding nominal damages to Western from both. 3
B. Judicial Estoppel
We also reject the Moores’ argument that Western’s request
for nominal damages on remand from this Court is barred by the
doctrine of judicial estoppel.
Judicial estoppel is a principle developed to prevent
a party from taking a position in a judicial
proceeding that is inconsistent with a stance
previously taken in court. See John S. Clark Co. v.
Faggert & Frieden, P.C., 65 F.3d 26, 28 (4th
Cir.1995). Three elements must be satisfied before
judicial estoppel will be applied. ‘First, the party
sought to be estopped must be seeking to adopt a
position that is inconsistent with a stance taken in
prior litigation.’ Lowery v. Stovall, 92 F.3d 219,
224 (4th Cir.1996). The position at issue must be one
of fact as opposed to one of law or legal theory. Id.‘Second, the prior inconsistent position must have
been accepted by the court.’ Id. Lastly, the party
against whom judicial estoppel is to be applied must
have ‘intentionally misled the court to gain unfair
advantage.’ Tenneco Chems., Inc. v. William T.
3
We observe that, as a practical matter, few plaintiffs
will find a purpose in pleading nominal damages when they
primarily seek to recover compensatory damages. That being
said, we note that a properly pled request for nominal damages
is not negated if a claim for compensatory damages fails. See,
generally, Orebaugh, 190 Va. at 834, 58 S.E.2d at 875. We also
note that our affirmance of Western’s award of nominal damages
against the Moores does not address whether that award qualifies
Western as a “prevailing party” under the Agreements. That
issue is not before us in this appeal and we express no opinion
in that regard.
20
Burnett & Co., 691 F.2d 658, 665 (4th Cir.1982).
This bad faith requirement is the ‘determinative
factor.’ John S. Clark Co., 65 F.3d at 29.
Zinkand v. Brown, 478 F.3d 634, 638 (4th Cir. 2007). “The
purpose of the doctrine is to prevent a party from playing fast
and loose with the courts, and to protect the essential
integrity of the judicial process.” 4 Lowery, 92 F.3d at 223.
1996). In the present case, the doctrine of judicial estoppel
does not bar Western’s request for, nor the district court’s
award of, nominal damages.
Western’s argument on remand that it was entitled to
recover nominal damages was legal, not factual, and was a direct
response to this Court’s determination on appeal in Western I
that it had failed to prove compensatory damages. Prior to our
decision in Western I, there was no reason for Western to assert
its entitlement to nominal damages in light of its steadfast
belief that it should recover (and could prove) compensatory
damages. For the same reason, it is plainly evident that
Western did not act in bad faith or intentionally mislead the
district court. The doctrine of judicial estoppel simply does
not apply to the district court’s award of nominal damages on
remand in this matter.
4
As we have noted, “judicial estoppel is a matter of
federal law, not state law. . . .” Lowery, 92 F.3d at 223 n.3.
21
IV.
In conclusion, we affirm the district court’s judgment,
including the award of injunctive relief, the entry of judgment
against Hal and Melanie and the award of nominal damages against
both.
AFFIRMED
22