Cohee v. Global Horizons Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1848
JOHN M. COHEE, JR., trading as Cohee Farms; DIANA B. COHEE,
trading as Cohee Farms,
Plaintiffs - Appellees,
v.
GLOBAL HORIZONS INCORPORATED, doing business as AgriLabor,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. William D. Quarles, Jr., District
Judge. (1:05-cv-03359-WDQ)
Argued: December 3, 2008 Decided: February 6, 2009
Before NIEMEYER and MICHAEL, Circuit Judges, and Rebecca Beach
SMITH, United States District Judge for the Eastern District of
Virginia, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Matthew S. Gibbs, Los Angeles, California, for
Appellant. Craig Forrest Ballew, FERGUSON, SCHETELICH & BALLEW,
P.A., Baltimore, Maryland, for Appellees. ON BRIEF: Chrystal L.
Bobbitt, LITIGATION COUNSEL FOR GLOBAL HORIZONS, INC., Los
Angeles, California, for Appellant. Tracey Dallahan-McLauchlin,
FERGUSON, SCHETELICH & BALLEW, P.A., Baltimore, Maryland, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Appellees John M. Cohee, Jr., and his wife, Diana B.
Cohee, operate Cohee Farms in Preston, Maryland. (We refer to
the appellees as “Cohee.”) The present dispute involves a
contract between Cohee and appellant Global Horizons, Inc.
(“Global”), in which Global agreed to provide Cohee a labor
force to harvest watermelon and sweet corn in 2005. Global
failed to furnish the promised labor because it could not find
housing in the area for its workers. Cohee sued Global for
breach of contract in state court, and the action was removed to
U.S. District Court on the basis of diversity jurisdiction. A
jury determined that the contract was breached and awarded Cohee
damages that included lost profits for 2005 and future profits
for 2006 and 2007. Global argues that it did not breach any
obligation to Cohee because it was not responsible for housing.
It also challenges the damages awarded to Cohee on several
bases. For the reasons below, we affirm.
I.
We recount the evidence, presented in a four-day
trial, in the light most favorable to Cohee, who obtained a
favorable verdict. Global is a California corporation that
provides foreign agricultural labor to farmers in the United
States. Foreign agricultural workers are eligible to enter the
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United States on a temporary basis through the H-2A visa
program. The process of securing H-2A visas is sufficiently
complex that Global has a customer base of farmers who are
willing to pay Global to navigate that process for them. In
late 2003 or early 2004 Global met with several Maryland farmers
to provide them information about the availability of H-2A labor
and about Global’s services. Cohee was among those in
attendance.
In need of labor, Cohee entered a contract with Global
for H-2A labor for his 2004 harvest, and Global provided the
laborers needed. In early 2005 Cohee again decided to use H-2A
labor furnished by Global for that year’s harvest. In March
2005 the parties executed the Farm Labor Contractor H-2A
Agreement (the Agreement), drafted by Global, that is at issue
in this case. Around April 1, 2005, Cohee began planting 55
acres of watermelon and 65 acres of sweet corn.
Under the Agreement Global committed to furnish labor
“at its own expense” to Cohee from June 25, 2005 through
September 10, 2005. J.A. 695. The Agreement left open the
number of workers required by Cohee, but Cohee requested ten
workers in a separate letter of intent that was signed the same
day as the Agreement. In return Cohee promised to pay Global an
agreed upon hourly wage for each worker plus a certain
surcharge. The Agreement provided that the surcharge would be
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35 percent if Cohee provided transportation and housing to the
workers; 40 percent if Global provided either transportation or
housing; and 45 percent if Global provided both transportation
and housing. Although Cohee had housed workers in a farmhouse
on the property and paid a surcharge of 35 percent in 2004, the
farmhouse was torn down after the 2004 harvest. Cohee says that
when he approached Global about providing his labor force for
the 2005 harvest, he informed Global that he could not provide
housing for the laborers during that harvest season. By
regulation, housing must be provided to H-2A workers at no cost
to the workers. See 20 C.F.R. § 655.102(b).
Global investigated housing possibilities near Cohee
Farms during the spring and summer of 2005. In late spring
Global inquired about prices at local hotels and booked rooms at
the local Econo Lodge Motel, although Global representatives
later asserted that that arrangement was always intended to be
temporary. In late June Global sent a representative to Cohee
Farms and the surrounding area to search for an affordable place
to house the workers. Despite these efforts, Global contacted
Cohee in late June and, citing difficulties in securing housing,
asked to push back the start date from June 25 to July 1. Cohee
agreed to the postponement.
Global failed to furnish Cohee with any labor as of
July 1 or at any other point during the 2005 harvest. During
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Cohee’s multiple conversations with Global representatives in
June, July, and August about his pressing need for workers,
Global representatives informed Cohee that Global “had workers
ready to come, but they . . . didn’t have any housing.” J.A.
848.
Without his anticipated labor force, Cohee turned to
family and neighbors for help harvesting his crops. A cousin
was able to locate a source of labor in Delaware in mid-July,
and five to ten workers began traveling from Delaware to Cohee
Farms each day to help with the harvest. In mid- to late July
or August, a neighbor with a larger farming operation began
loaning Cohee between six and twenty-six workers, but only for a
few hours each morning. And through a different neighbor, Cohee
worked out an arrangement with a broker, C & L Packing, to
harvest part of the Cohee Farms watermelon crop in exchange for
a favorable price for the watermelons and a broker’s fee for the
neighbor who arranged the transaction. According to Cohee, the
assistance he received in harvesting “did not even come close”
to replacing the workers that Global had contracted to provide.
J.A. 855. Roughly fifty percent of his crop was left in the
field unharvested at the end of the season.
As a result, Cohee had “nowhere close” to enough sweet
corn or watermelon to satisfy his direct market and wholesale
customers. J.A. 862. Because of Cohee’s inability to meet
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customer demand in 2005, he lost some of his direct market and
wholesale customers. In the next season (2006) Cohee decided to
grow small grains instead of the more profitable watermelon and
sweet corn because of a combination of factors, including the
damage that Global had caused to his customer base and
independent concerns about the availability of labor that
season. Cohee’s profits in 2006 and 2007 were reduced as a
result, and a sweet corn packaging shed that Cohee had built was
rendered useless.
At the conclusion of Cohee’s evidence, Global moved
for judgment as a matter of law, and the motion was denied. The
jury found Global in breach of its contract with Cohee and
awarded Cohee $490,000 for lost profits in 2005, $37,186 for
unnecessary expenses in 2005, $150,000 for lost profits in 2006,
and $142,500 for lost profits in 2007. Following the verdict
Global renewed its motion for judgment as a matter of law and
alternatively moved for a new trial. Global also filed a motion
to alter or amend the judgment. The district court denied each
of these motions. Global now appeals.
II.
Global makes several arguments on appeal. First, it
argues that the jury improperly found that it breached the
Agreement. Second, it argues that any consequential damages
7
awarded by the jury were improper because the terms of the
Agreement, which is governed by California law, prohibited
consequential damages. Third, Global argues that each of the
specified damages awards -- lost profits in 2005, 2006, and 2007
and unnecessary expenses incurred in 2005 -- were improperly
awarded.
We review de novo the district court’s denial of
Global’s motion for judgment as a matter of law. Adkins v.
Crown Auto, Inc., 488 F.3d 225, 231 (4th Cir. 2007); Brown v.
CSX Transp., Inc. 18 F.3d 245, 248 (4th Cir. 1994). “A court
may award judgment as a matter of law only if there is no
legally sufficient evidentiary basis for a reasonable jury to
find for the non-moving party.” Saunders v. Branch Banking &
Trust Co. of Va., 526 F.3d 142, 147 (4th Cir. 2008). And the
court must view the evidence in the light most favorable to the
nonmoving party, drawing all reasonable inferences in that
party’s favor. Dennis v. Columbia Colleton Medical Ctr. Inc.,
290 F.3d 639, 645 (4th Cir. 2002).
We review the district court’s decision not to order a
new trial for clear abuse of discretion, and we will not reverse
the decision absent exceptional circumstances. Id. at 650;
Bristol Steel & Iron Works v. Bethlehem Steel Corp., 41 F.3d
182, 186 (4th Cir. 1994). A new trial is only appropriate when
“an error occurred in the conduct of the trial that was so
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grievous as to have rendered the trial unfair.” Bristol Steel &
Iron Works, 41 F.3d at 182 (quoting DMI, Inc. v. Deere & Co.,
802 F.2d 421, 427 (Fed. Cir. 1986)).
We review the denial of a Rule 59(e) motion to alter
or amend judgment for abuse of discretion. Bogart v. Chapell,
396 F.3d 548, 555 (4th Cir. 2005). There are only three grounds
for granting such a motion: “(1) to accommodate an intervening
change in controlling law; (2) to account for new evidence not
available at trial; or (3) to correct a clear error of law or
prevent manifest injustice.” Pacific Ins. Co. v. Am. Nat’l Fire
Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998).
A.
Global first argues that it did not breach the
Agreement with Cohee because it was not obligated under the
Agreement to provide housing to its H-2A workers. Rather,
Global contends that it had the option to provide housing, but
if it elected not to provide housing, Cohee was responsible for
providing it. In rejecting Global’s post-trial motions, the
district court determined that the Agreement “place[d] the
burden of securing worker housing squarely on Global Horizon’s
shoulders.” Cohee v. Global Horizons, Inc., No. WDQ-05-3359 (D.
Md. July 19, 2007); J.A. 1412. Under California law, which
governs here, “[i]f contractual language is clear and explicit,
9
it governs.” Powerine Oil Co., Inc. v. Superior Court, 118 P.3d
589, 598 (Cal. 2005).
The language is sufficiently clear and explicit if it
is not reasonably susceptible to materially different meanings.
Hayter Trucking, Inc. v. Shell W. E&P, Inc., 18 Cal. App. 4th 1,
15 (Ct. App. 1993). Moreover, “[l]anguage in a contract must be
construed in the context of that instrument as a whole.” Bay
Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 855
P.2d 1263, 1271 (Cal. 1993) (emphasis removed). We conclude as
a matter of law that the language of the Agreement, particularly
when construed as a whole, is sufficiently clear to obligate
Global to provide housing.
The Agreement is an H-2A labor agreement under which
Global committed to providing labor “at its own expense.” J.A.
695. The Agreement’s specific provisions make clear that it
allocated to Global the responsibility for all of the specific
expenses attendant to providing H-2A labor. There are no
exceptions to the expenses Global agreed to cover when it agreed
to provide labor “at its own expense,” much less an exception
that might reasonably be read as carving out responsibility for
housing costs. See J.A. 695. The Agreement provided that
Global was solely responsible for paying the salaries, benefits
and “all other expenses relating to [its] workers.” J.A. 696.
Global also agreed to “provide, at its sole expense, whatever
10
ancillary support, equipment, supplies, transportation and
facilities as required by law and for its workers to adequately
and properly perform their respective tasks.” J.A. 696. These
laundry lists of expenses include a number of broad categories,
such as “ancillary support” and “facilities,” that, read in the
context of the Agreement as a whole, indicate that the agreement
was intended to include housing expenses. Moreover, Global
represented in the Agreement that it would comply with all
applicable laws and regulations, including H-2A visa program
regulations, which require that housing be provided to H-2A
workers at no cost to the workers. Global’s representations in
the Agreement that “[t]he housing provided to [its] workers[]
meets or exceeds all legal requirements,” J.A. 697, would be odd
if the Agreement did not also contemplate that Global was
responsible for housing.
Global argues that the Agreement’s integration clause
precluded the introduction of any extrinsic evidence that might
have indicated that the parties intended for Global to provide
housing. The integration clause states that the Agreement is
the “entire agreement between the parties hereto, and there have
been no oral or written representations affecting this
Agreement, or the provisions hereof, except as set forth
herein.” J.A. 699. Of course, in the case of an ambiguity,
California law allows the admission of extrinsic evidence when
11
it “is relevant to prove a meaning to which the language of the
instrument is reasonably susceptible.” Dore v. Arnold
Worldwide, Inc., 139 P.3d 56, 60 (Cal. 2006); Pac. Gas & Elec.,
Co. v. G.W. Thomas Drayage & Rigging Co., 442 P.2d 641, 644
(Cal. 1968). Even if we assumed an ambiguity with respect to
the obligation to provide housing, the extrinsic evidence at
trial permitted a reasonable finding that at the relevant times
Global interpreted the Agreement as assigning to it the housing
obligation.
The notice of deposit requirement that Global drafted
and required Cohee to sign revealed that Cohee was responsible
for paying a deposit calculated using an anticipated surcharge
of “45% (housing and transportation).” J.A. 27 (emphasis
added). Further, Cohee sent Global’s president a letter to
confirm several details pertaining to the Agreement. That
letter included the following sentence: “The workers will be
recruited, housed, transported, paid, and supervised by Global
Horizons, Inc.” J.A. 28 (emphasis added). Global negotiated
with a local Econo Lodge to provide housing for the workers. In
late June 2005 Global sent a representative to Maryland to look
for additional housing possibilities for its workers. Finally,
Global sought Cohee’s permission to delay the arrival of the
workers until it was able to secure housing. Insofar as the
Agreement leaves any room for ambiguity, extrinsic evidence was
12
admissible, and that evidence makes clear that both parties
understood that Global would provide housing under the 2005
Agreement.
Global contends that one provision in the contract,
paragraph 8(iv) reserved to it the option to determine whether
or not it would provide housing. That paragraph provides that
if transportation or housing is provided by Global, Cohee would
pay a 40 percent surcharge (instead of 35 percent) against the
applicable wage rate. The surcharge is 45 percent if Global
provided both transportation and housing. Read in the context
of the other contractual provisions that assigned to Global the
ultimate responsibility to provide housing, paragraph 8(iv)
simply gave Cohee the option to provide housing, an option he
exercised in the 2004 season. Before the Agreement was signed,
Cohee advised Global that he could not provide housing in 2005.
We conclude that the district court did not err when
it concluded that the Agreement made Global responsible for
providing H-2A labor and for satisfying the attendant expenses
of making that labor available. This responsibility, the
district court properly determined, included the ultimate
responsibility to provide housing. There was sufficient
evidence to support the jury’s finding that Global breached the
agreement to provide housing.
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B.
Global also argues that the jury should not have been
permitted to award consequential damages because the Agreement
expressly precluded liability for such damages. For this
argument Global relies on paragraph 8(g) of the Agreement, which
provides as follows:
If the CLIENT is delayed in making any payments due to
[Global] hereunder, [Global] reserves the right to
remove its workers and cease providing Services
hereunder, until such balance has been paid by CLIENT.
Payment for work performed and hours lost will be the
responsibility of the CLIENT. In no event shall
[Global] be held responsible or liable for any
consequential or incidental damages, including without
limitation any lost profits that CLIENT may suffer as
a result of [Global]’s actions under this Agreement.
J.A. 698. Global argues that the last sentence of paragraph
8(g) limits its liability. Global is correct that “limitation
of liability provisions have long been recognized as valid in
California.” Markborough Cal., Inc. v. Superior Court, 227 Cal.
App. 3d 705, 714 (Ct. App. 1991). Here, however, the last
sentence of paragraph 8(g) is not a broad limitation of
liability.
As noted above, “the context in which a term appears
is critical.” Century Transit Sys., Inc. v. Am. Empire Surplus
Lines Ins. Co., 42 Cal. App. 4th 121, 126 (Ct. App. 1996)
(emphasis in original). Like the district court, we conclude
that the context in which the liability limitation provision
14
appears indicates that it has narrow applicability. If the
parties intended a broad liability limitation, paragraph 8(g)
was not the appropriate place in this agreement for it.
Paragraph 8 addresses the subject of Global’s “compensation,”
and paragraph 8(g), where the liability limitation appears, is a
narrow provision that addresses the consequences when Cohee is
delayed in making payments to Global. If the parties had
intended a broad provision limiting liability for damages, the
proper place for it would have been paragraph 9. Paragraph 9 is
entitled “Governing Law and Waiver,” and it contains three
stand-alone provisions that are broadly applicable to all
litigation and legal disputes arising under the Agreement: (a)
California law governs the Agreement, (b) the prevailing party
in any litigation with respect to the Agreement will be entitled
to costs and expenses, including reasonable attorneys’ fees, and
(c) Cohee may not deduct damages from amounts owed on Global
invoices. On the other hand, paragraph 8, which includes the
liability limitation sentence, is titled “Compensation,” and its
provisions are essentially limited to that topic. Its
provisions address such issues as Global’s rates and fees and
when billing invoices become due. If the parties had agreed on
a broadly applicable liability limitation, common sense dictates
that it would appear in paragraph 9. The fact that the
limitation on liability provision was the third sentence of
15
paragraph 8(g) -- relating to Global’s right to withdraw workers
in the event of delay in the payment of its compensation --
suggests that the provision has a narrow application.
The provisions in paragraph 8 that surround paragraph
8(g) fit a pattern that further supports the narrow reading of
the liability limitation. The previous paragraph, 8(f),
provides that Global will submit a bill every Tuesday and that
Cohee must pay all undisputed amounts within two days of the
billing date. But in the event of a dispute “arising from the
billing statements,” the final sentence of paragraph 8(f)
provides: “the parties shall meet and use their best efforts to
resolve the matter in question.” J.A. 698. Paragraph 8(h)
provides for a two percent finance charge for overdue invoices.
It then provides for the possibility that “said percentage [is]
considered under any applicable law to be usurious or otherwise
illegal.” J.A. 698. In that event, according to the last
sentence of paragraph 8(h), “the percentage shall be
automatically adjusted to the maximum rate allowed by law.”
J.A. 698. Both paragraphs 8(f) and 8(h) state the parties’
intentions with respect to an aspect of or obligation related to
compensation and then provide for the possibility and resolution
of a dispute as to that specific aspect or obligation.
Especially given the incongruity of appending a broad
limitation on liability to a narrow compensation-related
16
provision, paragraph 8(g) ought to be read to follow the same
pattern as paragraphs 8(f) and 8(h). Like the final sentences
in paragraphs 8(f) and 8(h), the final sentence of paragraph
8(g) provides for the possibility of a dispute concerning the
obligations contained earlier in the same paragraph -- a dispute
arising from Global’s removal of workers due to a delayed
payment. In that event alone, Global is not “responsible or
liable for any consequential or incidental damages, including
without limitation any lost profits that [Cohee] may suffer as a
result of [Global’]s actions under this Agreement.” J.A. 698.
Because the dispute here did not involve the situation
contemplated by paragraph 8(g) -- Global’s removal of workers
due to late payment by Cohee -- consequential damages were
available.
C.
Global also separately challenges each of the specific
categories of damages awarded on the grounds that the evidence
was insufficient and that certain damages were too speculative
and were not reasonably foreseeable to Global.
1.
With respect to the $490,000 awarded for lost profits
in 2005, Global argues that these damages were “speculative
because they were based solely on the hypothetical value of what
plaintiff might have earned if he had been able to harvest all
17
of his crops.” Appellant Br. at 21. Global does not question
whether the evidence submitted as to the expected yield or
prices for watermelon and sweet corn were ascertainable with
reasonable certainty in 2005, the standard for determining
whether damages are speculative or not. See Parlour Enters.,
Inc. v. Kirin Group, Inc., 152 Cal. App. 4th 281, 287-88 (Ct.
App. 2007). Instead, Global argues that the jury calculated
damages assuming that Cohee would have harvested all 120 acres
of watermelon and sweet corn planted if Global had not breached,
yet there was not sufficient evidence to establish that 120
acres of the two crops would have been harvested. Global failed
to raise this argument before the district court, and we decline
to find error, much less plain error. First, the jury did not
necessarily assume that all 120 acres would have been harvested
but for Global’s breach. The verdict form reflected the jury’s
determination that Cohee suffered $490,000 in lost profits in
2005, but not how the jury determined that figure. The evidence
supports a finding of $490,000 in damages even absent a
determination that 120 acres of sweet corn and watermelon would
have been harvested but for the breach. Cohee’s expert
calculated $492,811 in lost profits in 2005, using conservative
estimates with respect to corn prices and watermelon yield.
Further, there was sufficient evidence for a
reasonable juror to conclude that all 120 acres would have been
18
harvested absent Global’s breach. Cohee indicated to Global his
need for ten H-2A workers on March 28, 2005. Cohee then began
planting his sweet corn and watermelon crops “by the last of
March or the 1st of April.” J.A. 807. There was thus a basis
for the jury to find that Cohee would not have planted more
acres than he would be able to harvest with the ten-person labor
force he anticipated. This is true even though Cohee was unable
to harvest 120 acres despite ultimately getting between five and
ten workers each day from Delaware and between five and twenty-
six workers for several hours each day from a neighbor. These
workers became available late in the harvest season, and the
laborers that Cohee secured from his neighbor only worked for
several hours a day. We have no basis for concluding that the
$490,000 damages award for 2005 amounted to plain error.
2.
Global also challenges the damages awarded for future
lost profits in 2006 and 2007 as speculative and unsupported by
the evidence. Global raised these arguments before the district
court in its post-trial motions. Global first argues that the
evidence is not sufficient to support the jury’s implicit
finding that Global’s breach caused Cohee to stop growing sweet
corn and watermelon. According to Global, the evidence shows
that Cohee decided to stop growing those crops because he was
concerned about the availability of a labor force, not because
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he had lost his customer base. While the record does contain
some evidence from which a juror could make such a finding, the
jury in this case obviously made a different finding. It found
that Cohee stopped growing sweet corn and watermelon because of
Global’s breach and the consequences of that breach.
There was sufficient evidence to support the jury’s
finding. Three farmers, including Cohee, testified that direct
market and wholesale customers will not give a farmer who “drops
the ball” a second chance. J.A. 945. A gap in a farmer’s
product supply will likely result in direct market and wholesale
customers buying elsewhere. Indeed, Cohee testified that he was
not prepared to grow sweet corn or watermelon in 2006 because of
a combination of factors including the damage that Global had
caused to his direct market and wholesale customer base. The
jury was free to credit this testimony rather than certain other
evidence relied upon by Global.
Global also argues that the damages awarded for lost
profits in 2007 were overly speculative because Cohee’s expert
did not quantify a damages estimate for 2007. But California
courts have upheld damages awarded for future lost profits in
the case of an established business.
Where an established business’s operation is prevented
or interrupted, “damages for the loss of prospective
profits that otherwise might have been made from its
operation are generally recoverable for the reason
that their occurrence and extent may be ascertained
20
with reasonable certainty from the past volume of
business and other provable data relevant to the
probable future sales.”
Parlour Enters., Inc., 152 Cal. App. 4th at 287 (quoting Kids’
Universe v. In2Labs, 95 Cal. App. 4th 870, 883 (Ct. App. 2002)).
Cohee Farms is an established business, and Cohee
introduced evidence about his “past volume of business and other
provable data relevant to the probable future sales.” Parlour
Enters., Inc., 152 Cal. App. 4th at 288. There was evidence
that Cohee planted about 55 acres of watermelon per season,
produced an average yield of 40,000 pounds of watermelon per
acre, received at least 10 cents per pound, and paid around
$1,800 per acre for labor. Similarly, the record contains
evidence that Cohee planted about 65 acres of sweet corn per
season; produced an average yield of 1,500 dozen ears of sweet
corn per acre, received $2 per dozen ears, and paid $1,200 per
acre for labor. Using these average yields and prices, Cohee’s
expert was able to estimate the damages that Cohee suffered by
planting less profitable crops in 2006. Using the same data,
the jury could itself estimate damages for 2007.
Global correctly notes that the expert witness did not
himself calculate estimated lost profits for 2007, but the
expert testified that “there is a strong probability that
[Cohee’s] earnings have been adversely affected prospectively
[beyond 2006].” J.A. 995. He also testified that his analysis
21
for 2006 was relevant to future years. This testimony is
sufficient to demonstrate the occurrence of lost profits in
2007, and the data relating to average yield and pricing
provided the data necessary to calculate the extent of those
damages to a reasonable certainty.
3.
Global’s final argument is that the award of $37,186
for unnecessary expenses incurred in 2005 should be reversed.
Cohee recovered damages for the unnecessary expenses he incurred
because the sweet corn packaging facility he built in 2004
suffered diminished utility as a result of Global’s breach.
Global argues on appeal that this damages award was improper for
two reasons: (1) there was insufficient evidence of a causal
connection between Global’s breach and the damages awarded and
(2) those damages were not reasonably foreseeable to Global.
Because Global failed to raise these arguments before
the district court, we review for plain error. In this analysis
we inquire whether “(1) there is an error; (2) the error is
plain; (3) the error affects substantial rights; and (4) . . .
the error seriously affects the fairness, integrity or public
reputation of judicial proceedings.” Celotex Corp. v. Rapid Am.
Corp., 124 F.3d 619, 630-31 (4th Cir. 1997). We find no plain
error with respect to Global’s challenge to the sufficiency of
the evidence as to causation. For the same reasons the evidence
22
bore out a causal connection between Global’s breach and lost
profits in 2006 and 2007, the evidence establishes a causal
connection between the breach and the alleged damage due to
unnecessary expenses. Cohee was forced to stop growing sweet
corn and watermelon as a result of Global’s breach, thereby
diminishing the utility of Cohee’s sweet corn packaging
facility. The evidence supporting these determinations is
sufficient to withstand plain error review.
We also decline to find plain error with respect to
whether the diminished utility of the packaging facility was
reasonably foreseeable to Global at the time of formation of the
Agreement.
[S]econdary or derivative losses arising from
circumstances that are particular to the contract or
to the parties . . . are recoverable if the special or
particular circumstances from which they arise were
actually communicated to or known by the breaching
party (a subjective test) or were matters of which the
breaching party should have been aware at the time of
contracting (an objective test).
Lewis Jorge Constr. Mgmt., Inc. v. Pomona Unified Sch. Dist.,
102 P.3d 257, 261 (Cal. 2004). There is no evidence that Cohee
in fact informed Global that he had constructed a sweet corn
packaging shed -– evidence which would have satisfied the
subjective test. The question is thus whether Global ought to
have been aware that Cohee would suffer losses to sweet corn-
specific investments by its breach. It is not a stretch to
23
conclude that anyone (such as Global) supplying labor to harvest
sweet corn would know that a packing shed would be a routine
expense for the grower.
But even if we assume that these losses were not
reasonably foreseeable, that it was plain error for the district
court to submit the foreseeability issue to the jury, and that
the error affected Global’s substantial rights, we decline to
conclude that any error “seriously affect[ed] the fairness,
integrity or public reputation of judicial proceedings.”
Celotex Corp., 124 F.3d at 631; see also Matco Mach & Tool Co.
v. Cincinnati Milacron Co., 727 F.2d 777, 781 (8th Cir. 1984)
(declining to find that error in damages instruction to jury
“seriously affected the fairness of the proceedings”). Not only
did Global fail in district court to argue lack of
foreseeability as a matter of law, it failed to raise factual
arguments about foreseeability during the trial. The jury found
by a preponderance of the evidence that “both parties could have
reasonably foreseen the harm as the probable result of the
breach.” J.A. 761 (Jury instruction no. 14). As a result, we
perceive no serious effect on the fairness of the proceedings.
We thus conclude that it was not plain error for the district
court to submit the issue of packing shed damages to the jury.
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* * *
The judgment is
AFFIRMED.
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