Ramaco Resources, LLC v. Federal Insurance Company

USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 1 of 20
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 22-1459
RAMACO RESOURCES, LLC,
Plaintiff - Appellant,
v.
FEDERAL INSURANCE COMPANY; ACE AMERICAN INSURANCE COMPANY,
Defendants - Appellees,
and
CHUBB INA HOLDINGS INC.,
Defendant.
Appeal from the United States District Court for the Southern District of West Virginia, at
Charleston. John T. Copenhaver, Jr., Senior District Judge. (2:19-cv-00703)
Argued: January 27, 2023 Decided: July 20, 2023
Before WYNN, THACKER, and RICHARDSON, Circuit Judges.
Reversed in part, affirmed in part, and remanded by published opinion. Judge Richardson
wrote the opinion, in which Judge Wynn and Judge Thacker joined.
ARGUED: Elbert Lin, HUNTON ANDREWS KURTH, LLP, Richmond, Virginia, for
Appellant. Jonathan D. Hacker, O’MELVENY & MYERS LLP, Washington, D.C., for
Appellees. ON BRIEF: Evan H. Jenkins, JENKINS FENSTERMAKER, PLLC,
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 2 of 20
Huntington, West Virginia; Robert M. Rolfe, David M. Parker, HUNTON ANDREWS
KURTH LLP, Richmond, Virginia, for Appellant. Matthew Ponzi, John Eggum, FORAN
GLENNON, Chicago, Illinois; Heather Welles, O’MELVENY & MYERS LLP, Los
Angeles, California, for Appellees.
2
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 3 of 20
RICHARDSON, Circuit Judge:
This is a dispute between a coal company and its insurer. Ramaco Resources
suffered a coal silo collapse and submitted a claim for losses to Federal Insurance
Company. When Federal denied the claim, Ramaco sued. After a twelve-day trial, a jury
awarded Ramaco $7.6 million in contract damages and prejudgment interest. The jury also
awarded $25 million under West Virginia’s Hayseeds doctrine, which permits an insured
party to claim consequential damages when it prevails after suing to collect on its insurance
policy. But post-trial, the district court reduced Ramaco’s contract damages and interest
to $1.8 million and entirely rejected the Hayseeds damages as a matter of state law. The
district court also conditionally granted a new trial on the Hayseeds award, reasoning
that—even if Hayseeds damages were theoretically permissible—the jury’s $25 million
award was punitive, and thus invalid. Ramaco appealed, and we reverse in part and affirm
in part. We reverse the district court’s reduction of contract damages and prejudgment
interest because the insurance policy’s plain language and the trial evidence support the
jury’s original $7.6 million award. And we reverse the district court’s wholesale rejection
of Hayseeds damages. But we affirm its conditional grant of a new Hayseeds damages
trial as the district court reasonably concluded that the amount awarded was punitive.
I. Background
Ramaco mines and processes coal in Logan County, West Virginia. Mined coal is
trucked to a nearby processing facility. There, the coal first passes through a “scalping
building” for initial sorting and processing. It is then fed by conveyer belt into three
concrete silos. These silos serve as bulk storage and allow a consistent, steady flow of coal
3
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 4 of 20
into a preparation plant. Each silo uses a large metal hopper to regulate the coal flow onto
another conveyer belt running below the silos. That second conveyer belt takes coal from
all three silos to the preparation plant, where it is processed and cleaned.
On November 5, 2018, the hopper in Silo 1 collapsed. The collapse damaged Silo
1’s concrete wall and the conveyer belt under the silos, completely shutting down
Ramaco’s operations. Ramaco immediately filed an insurance claim with Federal. The
engineer that Ramaco used to inspect the collapse recommended that Ramaco demolish
Silo 1. The engineer also recommended installing steel supports underneath the hoppers
in Silos 2 and 3 to prevent similar collapses. Ramaco adopted the engineer’s
recommendations and demolished Silo 1. It also rigged a temporary bypass belt using parts
of the belt underneath Silos 2 and 3 so it could partially resume operations on November
30, 2018.
But the temporary bypass belt was not a perfect fix. It was less efficient, so Ramaco
had to run the preparation plant overtime to produce the same amount of marketable coal.
And, because it took longer to process the raw coal from the mine, Ramaco also had to
create coal stockpiles, increasing the manpower needed to process it. To improve
operations, Ramaco designed and built a permanent bypass belt. It began operating the
permanent bypass belt on March 3, 2019.
While Ramaco was operating the temporary bypass belt, Federal was investigating
Ramaco’s coverage claim. Federal denied the claim in January 2019. It concluded that
the hopper collapse in Silo 1 was caused by corrosion, which was not covered by the policy.
Ramaco thought that corrosion in Silo 1 was unlikely, so it requested that Federal conduct
4
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 5 of 20
another investigation. 1 Yet, after more investigation, Federal again denied Ramaco’s claim
in August 2019.
Believing that it was entitled to coverage, Ramaco sued Federal. 2 Ramaco sought
two types of damages. First, it sought contract damages under the policy for its lost
business income and extra expenses incurred. Second, it sought damages under West
Virginia’s Hayseeds doctrine, which allows an additional recovery for an insured party
who “substantially prevails” in a suit against their insurer. See generally Hayseeds, Inc. v.
State Farm Fire & Cas., 352 S.E.2d 73 (W. Va. 1986). The trial was bifurcated for the
two types of damages. Phase One, which lasted eleven days, established liability and
damages under the policy. The jury held for Ramaco, concluding that the policy covered
Silo 1’s collapse. It awarded $7.1 million in contract damages and $500,000 in
prejudgment interest, for a total award of $7.6 million. Phase Two addressed Hayseeds
damages. There, the jury awarded Ramaco $25 million in aggravation and inconvenience
damages.
After trial, the district court reduced the contract damages and vacated the Hayseeds
damages. During the contract-damages trial, the court had initially allowed Ramaco to
1
At trial, Ramaco’s theory was that a “coal arch” in Silo 1 caused its collapse. A
coal arch is essentially a clog that forms when coal sticks together and blocks egress from
a silo. Coal below the arch can drain onto the conveyer belt, but coal above the arch cannot,
creating a cavity in the silo. Ramaco alleged that such an arch formed in Silo 1, that the
arch eventually broke apart, and that the falling mass caused the hopper’s collapse. Coal
arches, Ramaco said, were covered by the policy.
2
Ramaco also sued Federal’s affiliate, Ace Insurance Co., but we refer to the
defendants collectively as Federal.
5
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 6 of 20
present evidence of damages through March 3, 2019. But, after the trial, the court changed
its mind and held as a matter of law that the period of restoration—the period during which
Ramaco could recover contract damages—ended on November 30, 2018. Shortening that
period meant that Ramaco was only entitled to $1.6 million in contract damages, for a total
of $1.8 million after including prejudgment interest. In turn, this reduction meant that
Ramaco did not substantially prevail and was thus no longer entitled to Hayseeds damages,
so the court vacated the jury’s $25 million Hayseeds award. The court also conditionally
ruled that, even if the jury’s original $7.6 million award was reinstated on appeal, Federal
would still be entitled to a new trial on Hayseeds damages because the jury’s $25 million
award was punitive and excessive. Ramaco appealed, and we have jurisdiction. See 28
U.S.C. § 1291.
II. Discussion
Ramaco argues that the district court should not have disturbed either set of
damages. First, it argues that the district court misinterpreted the insurance policy when it
held as a matter of law that the policy’s “period of restoration” ended on November 30.
We agree. Under the jury’s instructions, which properly described the insurance policy,
the jury could reasonably have concluded that the “period of restoration” lasted at least
until March 2019. So we must reinstate the jury’s original $7.6 million award in contract
damages and prejudgment interest. Once we do so, Ramaco argues that we must also
reinstate the $25 million Hayseeds award. We disagree. While Ramaco is entitled to
Hayseeds damages, the district court properly held that a new trial is necessary to calculate
them.
6
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 7 of 20
A. The jury properly awarded contract damages
We begin with the district court’s reduction of contract damages and prejudgment
interest from $7.6 million to $1.8 million. The district court reduced the jury’s award
because it concluded that the contractual “period of restoration” 3 ended on November 30,
2018, when Ramaco’s throughput of coal 4 returned to pre-collapse levels. Reviewing this
legal conclusion de novo, we conclude that the district court misread how the policy defines
the “period of restoration.” Normally such an error would require that we remand. Here,
though, we need not. The district court properly instructed the jury on how to determine
the period of restoration. The court’s misreading only occurred post-trial when it changed
course and entered judgment as a matter of law, reducing the jury’s award. Based on the
evidence presented, the jury reasonably concluded that the period of restoration lasted well
beyond November 30. So we need only reinstate the jury’s award. 5
3
Under the policy, Ramaco is entitled to damages incurred throughout the period of
restoration. There’s no question that the period began when the hopper collapsed:
November 5, 2018. But when the period ended was a question for the jury.
4
Throughput is the amount of coal passing through the preparation plant.
5
On this point, Ramaco tries to have its cake and eat it too. It disputes an evidentiary
ruling that barred it from submitting evidence of losses after March 3, 2019. So it wants a
limited remand to show the jury evidence of loss between March and June 2019. But it
only wants that remand if we lock in the $7.6 million award for damages accrued through
March. In other words, it does not want a retrial if it also must re-litigate pre-March
damages.
We will not order the partial retrial that Ramaco requests. A partial retrial is only
appropriate if “it clearly appears that the issue to be retried is so distinct and separable from
the others that a trial of it alone may be had without injustice.” Gasoline Prods. Co. v.
Champlin Refin. Co., 283 U.S. 494, 500 (1931); see also Rice v. Cmty. Health Ass’n, 203
F.3d 283, 290 (4th Cir. 2000). Ramaco has not made this showing.
7
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 8 of 20
The district court held that “the policy measures the end of the period of restoration
in throughput of coal.” J.A. 273. In other words, it said the period of restoration ended
when Ramaco’s coal throughput levels reached where they would have been without the
collapse. Throughput caught up in November. So, the district court reasoned, the period
of restoration ended in November as well.
But the district court used the wrong indicator for the end of the period of
restoration. Because we are sitting in diversity, we must interpret the policy as the West
Virginia Supreme Court of Appeals would. See Whitmire v. S. Farm Bureau Life Ins. Co.,
52 F. 4th 153, 157 (4th Cir. 2022). And, in West Virginia, courts give insurance policies
their “plain, ordinary meaning.” Syl. Pt. 2, Chafin ex rel. Est. of Bradley v. Farmers &
Mechs. Mut. Ins. Co., 751 S.E.2d 765, 766 (W. Va. 2013). The policy’s plain language
does not condition the period of restoration solely upon coal throughput.
The policy states that the “[p]eriod of restoration will continue until your operations
are restored, with reasonable speed, to the level which would generate the business income
amount that would have existed if no direct physical loss or damage occurred.” J.A. 595.
And the policy defines “business income” as “net profit or loss.” J.A. 567. So the policy’s
plain language ties the period of restoration to Ramaco’s net profits. It says that the period
ends when operations are restored to the level which would generate the net profits that
would have existed if the collapse had not occurred.
Put differently, the period of restoration ends when Ramaco reaches a certain level
of operations. That level is determined by asking a counterfactual question: What would
8
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 9 of 20
Ramaco’s net profits be but for the collapse? Once Ramaco reaches the level of operations
that would generate these net profits, the period of restoration has ended.
In a simplified sense, Ramaco’s net profits depend on three things: the price of coal,
output, and costs. See Net Profit, Black’s Law Dictionary (11th ed. 2019) (“Total sales
revenue less the cost of the goods sold and all additional expenses.”). Coal’s price is set
by the market and appears unaffected by the collapse or Ramaco’s actions. So, after
suffering a collapse, Ramaco’s ability to return to pre-collapse net profits 6 depends on both
(1) how much coal it can process, and (2) how much it costs to process that coal. If
Ramaco’s processing costs stay the same, then it is true that it would only need to return to
its pre-collapse throughput of coal. But if the collapse causes Ramaco’s processing costs
to go up, then Ramaco would not return to its pre-collapse net profits unless it also
processes more coal (or cuts costs). Either way, determining when the period of restoration
ends requires us to consider both throughput and cost. Looking at throughput alone—like
the district court did—isn’t enough.
A concrete hypothetical example makes this clear. Assume the price of coal remains
at a constant $100 per short ton. Before the collapse, imagine that Ramaco produced
50,000 short tons at a cost of $80 per ton. Without the collapse, Ramaco would have
6
Technically, as discussed above, the period of restoration does not hinge on
Ramaco’s ability to return to its actual “pre-collapse” net profits, but instead the
hypothetical net profits “that would have existed if no [collapse] occurred.” J.A. 595.
Because the price of coal can fluctuate, these two values might not always be the same
thing. But, because coal’s price appears unrelated to Ramaco’s collapse, we will hold it
constant for illustrating our point: that calculating net profits requires considering both
throughput and costs.
9
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 10 of 20
continued to produce 50,000 tons at the same cost of $80 per ton for a net profit of
$1,000,000 (50,000 tons x $20 profit per ton). After the hopper collapse, imagine that
Ramaco’s throughput quickly returned to 50,000 tons of coal. But it achieved this only by
spending more on labor, so its cost to produce each ton was $85 instead of $80. Ramaco’s
net profits would then be $750,000 (50,000 tons x $15 profit per ton), or $250,000 less than
in our no-collapse counterfactual. To produce the same net profits as would have existed
without the collapse ($1,000,000), Ramaco would have to increase its level of operations
to 66,666 tons of coal at its cost of $85 per ton (66,666 tons x $15 profit per ton). If instead
Ramaco could reduce its costs, then the level of operations needed to generate the
counterfactual net profits would decrease. So a court needs to consider both throughput
and costs before it can identify the end of the restoration period.
Yet the district court focused only on coal throughput. Throughput is, at best, a
measure of total revenue. But it does not account for costs and expenses eating into that
revenue. It therefore does not approximate net profits. The level of throughput that
Ramaco needed to generate the net profits that it would have made but for the collapse
depends on the corresponding costs. The higher the increased costs resulting from the
collapse, the higher the throughput that Ramaco needed to generate those net profits. The
district court was therefore wrong to determine the end of the restoration period by looking
solely at coal throughput.
Luckily, the district court provided the jury with the correct standard. The court
read the policy’s definitions of the period of restoration and business income during the
jury instructions. And, as discussed, the policy tied the end of the period of restoration to
10
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 11 of 20
Ramaco’s net profits. By awarding damages for losses through March, the jury must have
determined that the period of restoration lasted through March 2019, rather than November
2018. We will uphold those damages if we can uphold that determination.
In reviewing the jury’s verdict, we look only to see if it is supported by substantial
evidence. See Konkel v. Bob Evans Farms, Inc., 165 F.3d 275, 279 (4th Cir. 1999).
Substantial evidence is a low bar: The verdict must stand unless no rational factfinder
could agree with the jury. Cavazos v. Smith, 565 U.S. 1, 2 (2011).
There was indeed substantial evidence to support the jury’s conclusion that the
period of restoration lasted through March: i.e., that it took Ramaco until March to restore
its operations to the level that would generate the net profits that would have existed but
for the collapse. As discussed, Ramaco’s total coal output had returned to the pre-collapse
level by November. But Ramaco presented evidence that it was still suffering from
collapse-related increased costs until March. 7 So the jury could have reasonably concluded
that it was not until March that Ramaco restored its operations to the level that would
7
To provide a few examples, Ramaco presented evidence about the costs that it
incurred in demolishing Silo 1 and building the bypass belts—construction that it obviously
would not have needed to do absent the hopper collapse. Ramaco also presented evidence
that it had to create coal stockpiles due to the collapse. This increased costs because, rather
than transporting coal directly from the mine to the silos, Ramaco had to “double handle”
the coal, taking it from the mine to the stockpile and then from the stockpile to the
preparation plant. Additionally, Ramaco ran its processing plant overtime in December:
it kept the plant running for 27.5 days that month, whereas pre-collapse the plant operated
15–16 days a month.
11
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 12 of 20
generate the net profits that would have existed but for the collapse. 8 And, viewed most
favorably to Ramaco, the evidence also established that—during the period of restoration
(November 2018 to March 2019)—Ramaco incurred $7.1 million in increased costs and
lost revenue from contracts that it could not fulfill because of the collapse. Sufficient
evidence thus supports the jury’s $7.6 million award of contract damages and prejudgment
interest. 9 Accordingly, we reverse the district court’s grant of judgment as a matter of law
to Federal.
8
Federal protests, arguing that Ramaco presented its increased costs as “extra
expenses,” rather than evidence of lower net profit, and so failed to preserve this argument.
But extra expense is just another way to say increased costs. The policy defines extra
expense as “necessary expenses you incur . . . in an attempt to continue operations, over
and above the expenses you normally would have incurred.” J.A. 570. And, as already
explained, added costs are integral to calculating net profit.
9
Federal also effectively argues that Ramaco did not act with “reasonable speed” to
restore its operations. According to Federal, the policy did not cover the time needed to
fix Silos 2 and 3 by adding steel supports. And so the period of restoration should have
ended when Ramaco was able—using reasonable speed—to resume operations using Silos
2 and 3, which Federal claims was November 30. The jury evidently rejected this
argument, since otherwise it would not have awarded damages through March.
After the trial, the district court disagreed, finding that Ramaco could have restored
its throughput of coal by using Silos 2 and 3 as of November 30, and that the policy did
not cover time needed to upgrade those silos. But a court should not disturb the jury’s
decision when there is substantial evidence to support it. Ramaco’s expert testified that it
would have been “ludicrous” for Ramaco to resume using Silos 2 and 3 before installing
steel supports to the hoppers in those silos. J.A. 1042. He explained that doing so would
have “jeopardize[d] worker safety” and “could have exposed some of their employees to
injury or death.” Id. So choosing not to resume using Silos 2 and 3 until installing the
supports “was the only thing [Ramaco] could have done.” Id. From this testimony, the
jury could reasonably have concluded that “reasonable speed” did not demand that Ramaco
use Silos 2 and 3 in November 2018, before it had the chance to install the steel supports.
Because substantial evidence supports the jury’s conclusion, we will not replace it with a
judgment that Ramaco could have restored its level of operations by using Silos 2 and 3
without installing those supports.
12
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 13 of 20
B. Ramaco may seek Hayseeds damages in a new trial
We now turn to the Hayseeds award. Under West Virginia’s Hayseeds doctrine, a
policyholder seeking coverage under an insurance policy who “substantially prevails” in a
suit against their insurer is entitled to a damages award for net economic loss and
aggravation and inconvenience from the delay in receiving coverage, as well as attorney’s
fees. Syl. Pt. 1, Hayseeds, 352 S.E.2d at 74. The jury awarded Ramaco $25 million in
aggravation and inconvenience damages. The district court vacated this award. It reasoned
that, under its interpretation of the period of restoration, Ramaco was only entitled to $1.6
million in contract damages, rather than $7.1 million. This decreased contract damages
award meant that Ramaco did not substantially prevail and was thus not entitled to
Hayseeds damages. 10 The court also conditionally granted Federal a new trial on Hayseeds
damages in case we determined Ramaco did substantially prevail. We address each ruling
in turn.
1. Ramaco substantially prevailed, so it is entitled to Hayseeds
damages
An insured party “substantially prevails” against its insurer when the jury awards
“an amount equal to or approximating the amount claimed by the insured.” Syl. Pt. 1,
10
Because it ultimately held that Ramaco did not substantially prevail, the district
court had no reason to award Ramaco attorney’s fees under Hayseeds. See Syl. Pt. 1,
Hayseeds, 352 S.E.2d at 74 (“Whenever a policyholder substantially prevails . . . against
its insurer, the insurer is liable for . . . the insured’s reasonable attorney’s fees in vindicating
its claim.”); Syl. Pt. 3, Richardson v. Ky. Nat’l. Ins. Co., 607 S.E.2d 793, 795 (W. Va.
2004) (explaining that a judge calculates the amount of attorney’s fees awarded under
Hayseeds).
13
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 14 of 20
Jordan v. Nat’l. Grange Mut. Ins. Co., 393 S.E. 2d 647, 647–48 (W. Va. 1990). When
determining whether an insured substantially prevailed, “a court should look at the
negotiations as a whole from the time of the insured event to the final payment of the
insurance proceeds.” Syl. Pt. 4, Miller v. Fluharty, 500 S.E.2d 310, 313 (W. Va. 1997).
Yet this is not a “purely mathematical calculation.” Hadorn v. Shea, 456 S.E.2d 194, 198
(W. Va. 1995). A court must consider each party’s efforts to settle and the need for an
insured to hire an attorney to receive coverage. Syl. Pts. 3 & 4, Miller, 500 S.E.2d at 313–
14; Hadorn, 456 S.E. 2d at 198–99.
Considering all these factors, the district court held that, once Ramaco’s contract
damages were reduced to $1.6 million, it no longer substantially prevailed. This ruling can
no longer stand, as it was based on the district court’s erroneous interpretation of the period
of restoration. The proper inquiry is whether Ramaco substantially prevailed based on the
reinstated jury award of $7.1 million. 11 It did. 12
11
When it considered whether Ramaco had substantially prevailed under the
reduced damages award, the district court considered only Ramaco’s new contract damages
($1.6 million), and did not include prejudgment interest (which increased Ramaco’s award
to $1.8 million).
We do not take position on whether it is appropriate to exclude prejudgment interest
when deciding whether a party “substantially prevailed” under Hayseeds. But, because the
parties did not raise this issue and it has no effect on our conclusion, we’ll mirror what the
district court did in its post-trial order, and will consider whether Ramaco substantially
prevailed based on its contract-damages award alone ($7.1 million), rather than considering
Ramaco’s contract damages plus prejudgment interest ($7.6 million).
12
Before reducing Ramaco’s contract damages and prejudgment interest to $1.8
million, the district court itself determined that Ramaco had substantially prevailed under
the original jury award of $7.6 million.
14
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 15 of 20
Ramaco substantially prevailed because the $7.1 million contract-damages verdict
is about equal to what Ramaco claimed throughout the litigation. See Miller, 500 S.E.2d
at 321 (instructing courts to look to “totality of the policyholder’s negotiations with the
insurance carrier”). As the district court noted, Ramaco explained to Federal in March
2019 that it had suffered roughly $6 million in damages. And Ramaco’s final settlement
offer before trial was for $11.8 million. This settlement offer was all-inclusive, comprised
of both contract damages and Hayseeds damages. Excluding the Hayseeds portion of this
demand, it approximates the $7.1 million in contract damages that Ramaco won at trial.
And that award is far more than the $2.1 million that Federal offered. See Syl Pt. 2, Thomas
v. State Farm Mut. Auto. Ins. Co., 383 S.E. 2d 786, 787 (W. Va. 1989) (“Where the
insurance company has offered an amount materially below the damage estimates
submitted by the insured, and the jury awards the insured an amount approximating the
insured’s damage estimates, the insured has substantially prevailed.”).
Other considerations also suggest that Ramaco substantially prevailed. Federal did
not offer to settle the claim for anything until after Ramaco filed suit. See Syl. Pt. 1, Jordan,
393 S.E.2d at 648 (noting that courts should consider whether an “attorney’s services were
necessary to obtain payment of the insurance proceeds”). Even then, Federal’s initial
settlement offers were for $100,000 and $200,000, respectively, and it continued to dispute
liability until the jury returned its verdict. Looking at “the negotiations as a whole,”
Ramaco substantially prevailed. See Syl. Pt. 4, Miller, 500 S.E.2d at 313.
Federal’s arguments to the contrary are unpersuasive. Federal first argues that
Ramaco cannot receive aggravation and inconvenience damages under Hayseeds because
15
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 16 of 20
it is a large, publicly traded corporation. But this argument is belied by Hayseeds itself.
The only defendant in Hayseeds was a corporation, Hayseeds Inc. 352 S.E.2d at 73. In
that case, the Court affirmed the jury’s $69,000 award of attorney’s fees and consequential
damages. Id. at 74–75. The Court explained that the consequential damages included the
“net economic loss caused by the delay in settlement” and “an award for aggravation and
inconvenience.” Id. at 80. Hayseeds thus suggests that a corporation can receive
aggravation and inconvenience damages. 13
Federal also argues that, even considering the $7.1 million award, Ramaco did not
substantially prevail. Federal points to Ramaco’s identification of $19.6 million in contract
damages during discovery and Ramaco’s settlement offers during litigation: $32 million,
$25 million, and $11.8 million. Comparing these figures to the $7.1 million in contract
damages that the jury awarded, Federal argues that Ramaco cannot have substantially
prevailed because it did not receive “an amount equal to or approximating the amount
claimed by the insured.” Syl. Pt. 1, Jordan, 393 S.E.2d at 647.
13
Federal points to dicta in a later West Virginia case in which the Supreme Court
of Appeals said that it is “open to debate” whether a corporation can receive “personal
damages in the nature of aggravation, annoyance, and inconvenience.” AIG Domestic
Claims, Inc. v. Hess Oil. Co., 751 S.E.2d 31, 39 (W. Va. 2013). But AIG did not concern
a Hayseeds claim. And, in Hayseeds itself, the Court was clear that a corporation can
receive aggravation and inconvenience damages. See 352 S.E.2d at 80. Further, despite
proclaiming in AIG that this question was “open to debate,” the Supreme Court of Appeals
has not addressed it since. Nor has it ever held that a corporation cannot receive Hayseeds
damages for aggravation and inconvenience. So we decline to depart from Hayseeds’s
explicit holding.
16
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 17 of 20
These comparisons are misplaced. The $19.6 million figure is unimportant because
it represents only one estimate proffered in discovery by Ramaco. Focusing solely on that
number ignores the directive to “look at the negotiations as a whole.” Syl. Pt. 4, Miller,
500 S.E. 2d at 313. And Federal’s focus on Ramaco’s settlement offers ignores the fact
that those offers were all-inclusive—containing demands for contract damages,
aggravation and inconvenience damages, and attorney’s fees. So we can’t compare the
whole settlement figures against the jury’s $7.1 million, because that award represents only
one part of the settlement figure: contract damages. Taking that into account, Ramaco did
substantially prevail. So it is entitled to Hayseeds damages.
2. The district court reasonably required a new Hayseeds trial
Because Ramaco may receive Hayseeds damages, we turn to the district court’s
conditional holding that Federal is entitled to a new trial on this issue. We agree with the
district court that a new trial on Hayseeds damages is necessary.
A “district court ha[s] a duty to order a new trial if . . . required in order to prevent
injustice.” Wilhelm v. Blue Bell, Inc., 773 F.2d 1429, 1433 (4th Cir. 1985) (cleaned up);
see also Fed. R. Civ. P. 59(a). We review a district court’s order granting a new trial only
for abuse of discretion, “giv[ing] the benefit of every doubt to the judgment of a trial judge”
and remembering that they are best positioned to weigh evidence and consider witness
credibility. See Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 305 (4th Cir. 1998) (cleaned
up); see also Stamathis v. Flying J, Inc., 389 F.3d 429, 436 (4th Cir. 2004) (explaining that
whether a new trial is warranted “rests with the sound discretion of the trial judge”).
17
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 18 of 20
The district court correctly pointed out that punitive damages are unavailable under
Hayseeds. 14 See Syl. Pt. 2, Hayseeds, 352 S.E.2d at 74. And it determined that the jury’s
Hayseeds award included punitive damages. So it held that Federal was entitled to a new
trial on Hayseeds damages. 15 After all, awarding damages that are not legally available
would constitute injustice. Our question is thus whether it was an abuse of discretion to
find that some part of the $25 million Hayseeds award was punitive.
It was not. The only evidence that Ramaco presented in the trial’s Hayseeds phase
was the testimony of its Chief Operating Officer, Christopher Blanchard. Blanchard
testified that Federal’s coverage denial drove Ramaco to the brink of bankruptcy. He
explained that bankruptcy “would have meant 350 families without a job,” J.A. 1140, and
that the denial “was stressful for the business and it was stressful for me,” J.A. 1145. This
testimony might support some aggravation and inconvenience damages. But it is hard to
conceive how the jury extrapolated the $25 million figure from Blanchard’s testimony
There is an exception to this rule if the insurer acted with actual malice. Syl. Pt.
14
2, Hayseeds, 352 S.E.2d at 74. But that exception is not at issue here.
15
In doing so, the district court also held that Hayseeds damages are necessarily
excessive under West Virginia law if they are punitive. It is not clear that this is correct,
given that Hayseeds itself set aside a Hayseeds damages award as “punitive” without also
calling those damages “excessive.” See Hayseeds, 352 S.E.2d at 81. And West Virginia
has a separate standard for determining when a damage award is excessive that does not
obviously include all improperly punitive damages. See Syl. Pt., Addair v. Majestic
Petroleum Co., 232 S.E.2d 821, 821 (1977) (explaining a court may only set aside a jury’s
verdict as excessive if it is “monstrous, enormous, at first blush beyond all measure,
unreasonable, outrageous, and manifestly show[s] jury passion, partiality, prejudice or
corruption”). But we need not decide whether an improperly punitive Hayseeds award is
also excessive since a punitive Hayseeds award by itself, in this context, would be
unlawful.
18
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 19 of 20
without deciding that it had to punish Federal. Cf. Hayseeds, 352 S.E.2d at 80 (“[A] large
corporation with an in-place, organized collective intelligence that must litigate a claim for
several years may suffer substantial net economic loss but little aggravation and
inconvenience.”); Andrews v. Reynolds Mem’l Hosp., Inc., 520 S.E.2d 185, 185 (W. Va.
1998) (Maynard, J., dissenting) (“Because 1.2 million dollars’ worth of inconvenience and
aggravation is hard to imagine, I believe it was obvious this was a punitive damage award
in clear violation of Hayseeds.” (cleaned up)). Given the award’s size compared to the
limited trial evidence, the district court did not abuse its discretion in concluding that the
award must have been punitive. Cf. Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415,
438 (1996) (holding that district courts have the “primary responsibility” for applying the
state-law excessiveness standard because they have “the unique opportunity to consider the
evidence in the living courtroom context, while appellate judges see only the cold paper
record.” (cleaned up)).
Therefore, we affirm the district court’s alternative holding ordering a new trial on
Hayseeds damages. 16 On remand, the district court should also calculate attorney’s fees
for Ramaco. See Syl. Pt. 1, Hayseeds, 352 S.E.2d at 74 (“Whenever a policyholder
16
Ramaco has asked that we give it the option of remittitur. To determine an
appropriate remittitur, we must identify “the outermost award that could be sustained.”
Eshelman v. Puma Biotechnology, Inc., 2 F.4th 276, 285 (4th Cir. 2021) (quoting Konkel,
165 F.3d at 282)). When damages are inherently difficult to quantify—as the aggravation
and inconvenience damages are—calculating “the outermost award that could be
sustained” is no easy task. Given this difficulty, and the fact that we need not offer a
remittitur, we decline to do so here. See id.at 285 (declining to offer a remittitur when the
court could not determine the outermost award that could be sustained).
19
USCA4 Appeal: 22-1459 Doc: 41 Filed: 07/20/2023 Pg: 20 of 20
substantially prevails . . . against its insurer, the insurer is liable for . . . the insured’s
reasonable attorney’s fees in vindicating its claim.”); Syl. Pt. 3, Richardson, 607 S.E.2d at
795 (noting that “the amount of the attorney’s fee is to be determined by the [trial] judge
and not by a jury”).
* * *
West Virginia law requires courts to give insurance policies their plain, ordinary
meaning whenever possible. See Syl. Pt. 2, Chafin, 751 S.E.2d at 766. Here, the policy’s
plain language extended the period of restoration until Ramaco’s operations were restored
to the level generating the net profits that would have existed but for the collapse. To
determine that level, a court must consider both throughput and expenses. The district
court did not. Using the proper measure of the period of restoration, there was sufficient
evidence for the jury to award $7.1 million in contract damages (for a total of $7.6 million
including prejudgment interest). And considering that $7.1 million award, Ramaco
“substantially prevailed” against its insurer, so it is entitled to Hayseeds damages. But a
Hayseeds award cannot include punitive damages. So the district court did not abuse its
discretion in ordering a new trial on Hayseeds damages. Accordingly, the district court’s
order is
REVERSED IN PART,
AFFIRMED IN PART,
AND REMANDED.
20