Long v. Faenas Transport ( 2021 )

Case: 21-40268 Document: 00516080232 Page: 1 Date Filed: 11/03/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
November 3, 2021
No. 21-40268
Lyle W. Cayce
Clerk
Jasper Long,
Plaintiff—Appellee,
versus
Faenas Transport, L.L.C.,
Defendant—Appellant.
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 1:19-CV-200
Before Clement, Southwick, and Willett, Circuit Judges.
Per Curiam:*
A jury returned a verdict in favor of Jasper Long in the amount of
$500,000 for damage to his leased property caused by the negligence of an
employee of Faenas Transport, L.L.C. (“Faenas”). Following the district
court’s entry of judgment on the verdict, Faenas moved for judgment as a
matter of law and, in the alternative, for a new trial and/or remittitur. It
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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argued that Mr. Long failed to present sufficient evidence of the fair market
value of the leasehold to support the jury’s damages verdict. The district
court denied Faenas’ motion in all respects, and Faenas timely appealed. For
the following reasons, we AFFIRM.
I.
In 1999, Mr. Long paid approximately $60,000 for a 50-year lease of a
warehouse in Jasper, Texas. Mr. Long opened and operated a welding
business out of that warehouse until his retirement in June of 2014. During
that time, Mr. Long made a variety of improvements to the warehouse,
including installing three overhead cranes, interior office space, large bay
doors, a new metal roof and walls, and commercial grade electrical wiring.
Also during that time, at least three companies—Terra BioChem, Etex, and
Traeger—maintained facilities on the same street as the warehouse.
Following his retirement in June of 2014, Mr. Long subleased the
warehouse to an industrial welding company—STI Group—for two years at
a rate of $4,600 per month. STI apparently vacated the property in April of
2014—about four months prior to the expiration of its lease—due to “lack of
work.” But it still paid rent to Mr. Long through the end of the lease term.
Mr. Long did not immediately place the warehouse back on the market
for a subleasing tenant after STI vacated the premises because he “had to do
some work on [the warehouse] before [he] put it back on lease.” In
particular, the warehouse needed, among other things, a new roof and new
electrical wiring. Sometime between April 2016 and February 2017, Mr.
Long made improvements to the electrical wiring in the warehouse.
Moreover, in late February or early March of 2017, Mr. Long hired a
construction company to install a new roof on the warehouse.
Then in June of 2018, a fire occurred at the warehouse after one of
Faenas’ employees hit a nearby electrical power pole with his truck. The fire
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completely destroyed the warehouse and its contents. Subsequently, Mr.
Long sued Faenas, alleging that the negligence of Faenas’ employee caused
the fire. At the close of Mr. Long’s case in chief, Faenas orally moved for
judgment as a matter of law on the ground that the evidence presented was
insufficient to prove liability or damages. The district court orally denied
Faenas’ motion.
The jury returned a verdict for Mr. Long, finding Faenas liable for
negligently causing the fire and awarding Mr. Long $500,000 in damages.
The district court entered judgment on the verdict. Following the district
court’s entry of judgment, Faenas moved for judgment as a matter of law and,
in the alternative, for a new trial and/or remittitur. Faenas argued that Mr.
Long failed to present legally competent evidence as to the fair market value
of his leasehold prior to the fire.
The district court disagreed and upheld the verdict. First, it denied
Faenas’ motion for judgment as a matter of law, holding that sufficient
evidence existed to support the jury’s verdict. Second, it denied Faenas’
motion for a new trial, holding that the verdict was not against the great
weight of the evidence, the damage award was not excessive, the trial was not
unfair, and that prejudicial error was not committed. Third, it denied
Faenas’ motion for remittitur, holding that the jury’s damage award was
appropriate because it was not so large as to appear contrary to right reason,
nor was it excessive or disproportionate to the loss sustained. Faenas timely
appealed.
II.
A.
“This court reviews de novo a district court’s denial of a motion for
judgment as a matter of law, applying the same standard as the district
court.” Goodner v. Hyundai Motor Co., 650 F.3d 1034, 1039 (5th Cir. 2011).
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“[W]hen a case is tried by a jury, a Rule 50[] motion is a challenge to the legal
sufficiency of the evidence.” Foradori v. Harris, 523 F.3d 477, 485 (5th Cir.
2008) (citing Int’l Ins. Co. v. RSR Corp., 426 F.3d 281, 296 (5th Cir. 2005)). 1
“In resolving such challenges, we draw all reasonable inferences and resolve
all credibility determinations in the light most favorable to the nonmoving
party.” Id.“Our review of jury verdicts ‘is especially deferential.’” Orozco v.
Plackis, 757 F.3d 445, 448 (5th Cir. 2014) (quoting Baisden v. I’m Ready
Prods., Inc., 693 F.3d 491, 498–99 (5th Cir. 2012)). “[J]udgment as a matter
of law should not be granted unless the facts and inferences point ‘so strongly
and overwhelmingly in the movant’s favor that reasonable jurors could not
reach a contrary conclusion.’” Flowers v. S. Reg’l Physician Servs. Inc., 247
F.3d 229, 235 (5th Cir. 2001) (quoting Omnitech Int’l, Inc. v. Clorox Co., 11
F.3d 1316, 1322 (5th Cir. 1994)). “[T]he court may not make credibility
determinations or weigh evidence, as those are jury functions.” Brennan’s
Inc. v. Dickie Brennan & Co. Inc., 376 F.3d 356, 362 (5th Cir. 2004).
B.
“A new trial may be granted if the trial court finds that ‘the verdict is
against the weight of evidence, the damages awarded are excessive, the trial
was unfair, or prejudicial error was committed.’” Seidman v. Am. Airlines,
Inc., 923 F.2d 1134, 1140 (5th Cir. 1991) (quoting Smith v. Transworld Drilling
Co., 773 F.2d 610, 613 (5th Cir. 1985)). The court should not grant a motion
1
We apply the same standard of review to both motions for judgment as a matter
of law brought under Rule 50(a) and renewed motions for judgment as a matter of law
brought under Rule 50(b). See Foradori, 523 F.3d at 485 n.8; Lubbock Feed Lots, Inc. v. Iowa
Beef Processors, Inc., 630 F.2d 250, 269 n.22 (5th Cir. 1980).
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for a new trial “unless the verdict is against the great weight, not merely the
preponderance, of the evidence.” Id. (emphasis added).
We review the denial of a motion for a new trial for abuse of discretion.
Lincoln v. Case, 340 F.3d 283, 290 (5th Cir. 2003). “Where a jury verdict is
at issue, ‘there is no . . . abuse of discretion unless there is a complete absence
of evidence to support the verdict.’” Benson v. Tyson Foods, Inc., 889 F.3d
233, 234 (5th Cir. 2018) (per curiam) (quoting Sam’s Style Shop v. Cosmos
Broad. Corp., 694 F.2d 998, 1006 (5th Cir. 1982)).
C.
Similarly, we review a district court’s order denying a motion for
remittitur for abuse of discretion. Lincoln, 340 F.3d at 290. “We set aside a
decision to deny remittitur only when ‘left with the perception that the
verdict is clearly excessive.’” Salinas v. O’Neill, 286 F.3d 827, 830 (5th Cir.
2002) (quoting Eiland v. Westinghouse Elec. Corp., 58 F.3d 176, 183 (5th Cir.
1995)). “A verdict is excessive if it is ‘contrary to right reason’ or ‘entirely
disproportionate to the injury sustained.’” Eiland, 58 F.3d at 183 (quoting
Caldarera v. Eastern Airlines, Inc., 705 F.2d 778, 784 (5th Cir. 1983)).
III.
The parties do not dispute that the warehouse had no value after the
fire. Nor do they dispute that the proper measure of damages is the fair
market value of the leasehold immediately prior to the fire, as measured by
the “income approach.” They dispute only whether Mr. Long presented
sufficient evidence of the fair market value of his leasehold prior to the fire to
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support the jury’s verdict of $500,000. The district court concluded that he
did, and we agree.
A.
Under Texas law, “fair market value” is “the price the property will
bring when offered for sale by one who desires to sell, but is not obliged to
sell, and is bought by one who desires to buy, but is under no necessity of
buying.” Singleton v. Elephant Ins. Co., 953 F.3d 334, 338 (5th Cir. 2020) (per
curiam) (quoting Balderas-Ramirez v. Felder, 537 S.W.3d 625, 628 (Tex.
App.—Austin 2017, pet. denied)). And there are three traditional methods
used to calculate a property’s fair market value: the comparable sales
approach, the replacement cost approach, and the income approach. See,
e.g., State v. Cent. Expressway Sign Assocs., 302 S.W.3d 866, 871 (Tex. 2009).
The “income approach” is considered a reliable method when, as
here, the property in question is priced on the open market based on the
income it generates. See, e.g., City of Harlingen v. Est. of Sharboneau, 48
S.W.3d 177, 183 (Tex. 2001). Generally, fair market value based on the
“income approach” is calculated by estimating the amount of future income
the property will generate and then applying a capitalization rate to arrive at
its present value. Id. Neither party disputes the propriety of the income
approach as the method of calculating damages in this case.
Under the “property owner rule” in Texas, property owners are
qualified to testify as to the value of their property. Nat. Gas Pipeline Co. of
Am. v. Justiss, 397 S.W.3d 150, 155 (Tex. 2012). However, that testimony
must be based on market value, not merely speculative or intrinsic value. Id.A property owner’s mere ipse dixit is not enough; his testimony must be
accompanied by objective evidence supporting his estimation of the
property’s value. Id. at 156 (discussing Porras v. Craig, 675 S.W.2d 503, 505
(Tex. 1984)).
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1.
The evidence that Mr. Long presented at trial relevant to the fair
market value of his leasehold consisted primarily of: (1) his wife’s testimony,
(2) the testimony of Raymond Horn, (3) the testimonies of Derrick Boykin
and Eddie Marshall, and (4) his own testimony.
Mrs. Long’s testimony was the most substantial. She testified, inter
alia, that: (i) there remained just over thirty-one years (373 months) on Mr.
Long’s lease at the time of the fire; (ii) following his retirement, Mr. Long
initially marketed the warehouse by “word of mouth” and by “putting
contacts out”; (iii) Mr. Long subleased the warehouse to STI in 2014 for a
total of twenty-four months and for a rate of $4,600 per month; (iv) after STI
vacated the premises, Mr. Long advertised the warehouse in a local flier, used
a sign designating it as “for lease,” and consulted Jasper Economic
Development Corporation (“JEDCO”) to help with marketing; (v) at the
time of the fire, other businesses were operating on the street that the
warehouse was located on, and the number of commercial businesses
operating there was “[d]efinitely increasing”; (vi) there was a repair shop on
the leasehold property that was rented out at a rate of $1,000 per month at
the time of the fire; (vii) the Jasper County Appraisal District assigned the
warehouse a value of $64,680; and (viii) JEDCO had informed her and Mr.
Long that it knew of a party potentially interested in subleasing the
warehouse.
Mr. Horn, whose construction company installed a new roof on the
warehouse, testified, inter alia, that: (i) he installed the roof around February
or March of 2017, at which time the warehouse was vacant; (ii) he charged
Mr. Long $11,300 to install the new roof; and (iii) the warehouse was
“basically set up and ready for a big organization to come in and do
manufacturing or prefab work or whatever.”
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Mr. Boykin and Mr. Marshall both testified, inter alia, as to the area in
which the warehouse was located. Their testimonies confirmed that the
warehouse was located in the same area—indeed, on the same street—as
facilities maintained by Traeger, Terra BioChem, and Etex.
Mr. Long testified about the fair market value of his leasehold
immediately prior to the fire. Based on the improvements that he made to
the warehouse, as well as the amounts he received per month in lease
payments from STI during its tenancy, Mr. Long testified that the fair market
value of his leasehold just before the fire was between $600,000 and
$650,000. When asked on direct examination to explain this estimate, Mr.
Long stated that he based his valuation on “what [the warehouse] could do”
and “the shape the inside was in.”
2.
Faenas argues that Mr. Long’s evidence is legally insufficient to
establish the fair market value of his leasehold immediately prior to the fire
to support the jury’s verdict. The thrust of its argument is twofold. First, it
argues that Mr. Long’s opinion testimony valuing his property between
$600,000 and $650,000 is incompetent evidence because it was not
supported by objective market data. Second, Faenas argues that there was
no evidence of demand for a sublease on the warehouse at the time, even
quipping that Mr. Long “failed to put the ‘market’ in ‘fair market value.’”
Mr. Long rejoins that his testimony was competent evidence, given
that it was based on objective facts and data regarding the warehouse’s
attributes and proven ability to generate income. Specifically, he points to
the rental income he received from STI from 2014 to 2016, the amount of
time remaining on the lease, the improvements he made to the warehouse,
its suitability and readiness for lease, and its desirable location in an already
growing area.
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We agree with Mr. Long. To be sure, Faenas elicited testimony from
both Mr. and Mrs. Long that strongly cut against Mr. Long’s opinion on the
fair market value of his leasehold. Specifically, when counsel for Faenas
pressed Mr. Long on cross examination, Mr. Long conceded that he did not
have any evidence supporting his estimate of the fair market value of the
leasehold beyond its value to him. Similarly, Mrs. Long testified on cross
examination that she had no evidence of market demand for a sublease of the
warehouse at the time of the fire.
But the balance of the evidence is sufficient such that a reasonable jury
could have reached the same verdict. First, both Mr. and Mrs. Long testified
that following Mr. Long’s retirement, STI subleased the warehouse for two
years at a rate of $4,600 per month. The value of that two-year sublease alone
exceeds $110,000. From this evidence, combined with the fact that there
were thirty-one years remaining on the lease, a reasonable jury could infer
that the warehouse had significant income-generating potential.
Second, Mr. Long presented evidence that the warehouse was in better
condition immediately prior to the fire than it was during STI’s sublease.
Namely, it had an expensive new roof and new electrical wiring. And, as Mr.
Horn testified, it was in ready condition to be subleased. A reasonable jury
could infer from this evidence that the warehouse could command at least a
similar monthly rate on future subleases.
Third, testimony from multiple witnesses suggested that the
warehouse was located in a commercially active area that was experiencing at
least some level of growth. At least three companies with industrial
operations—and from three separate industries—maintained facilities on the
same street that the warehouse was on. In addition, Mrs. Long’s testimony
suggested that JEDCO had identified a party potentially interested in
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subleasing the warehouse. A reasonable jury could infer from this evidence
that the warehouse had sufficient potential to attract future tenants. 2
While it may be true that reasonable juries could draw other, and
perhaps even more plausible, inferences from the evidence presented, that is
not the question before us. The question is whether any reasonable jury could
reach the same verdict. And in answering that question, we must view all the
evidence and draw all reasonable inferences in favor of Mr. Long. In so doing,
we cannot say that no reasonable jury could have concluded that the fair
market value of Mr. Long’s leasehold was $500,000.
Accordingly, the district court did not err in denying Faenas’ motion
for judgment as a matter of law.
B.
For substantially the same reasons, the district court did not abuse its
discretion in denying Faenas’ motion for a new trial. As previously
discussed, there was not a complete absence of evidence to support the jury’s
damages verdict awarding Mr. Long $500,000 for the fair market value of his
leasehold.
C.
Neither did the district court abuse its discretion in denying Faenas’
motion for remittitur. Faenas does not argue—nor did it argue before the
district court—that similar jury awards in cases within Texas were smaller
2
To the extent that Faenas argues that STI’s early termination of its sublease is
evidence of lack of demand for a sublease of the warehouse, we find this argument
unpersuasive. That STI ended its tenancy because of “lack of work” very likely could
mean that there was just no demand for STI’s services. It is not necessarily evidence that,
at the time, there was insufficient demand for a sublease of the warehouse—at least not
strong enough to warrant overturning the jury’s verdict. In any event, the jury was free to
weigh this fact and draw whatever reasonable inferences it saw fit.
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than the jury award here. Rather, it argues only that the district court should
have reduced the jury’s damages award to $64,680—the value assigned to
the warehouse by the Jasper County Appraisal District when it appraised Mr.
Long’s property—which Faenas claims is the one and only amount
supported by the evidence.
We disagree. Faenas is incorrect that $64,680 is the only amount
supported by legally competent evidence. As already explained, the district
court properly allowed the jury to consider Mr. Long’s opinion in conjunction
with the rest of the evidence submitted—including without limitation the
$110,000 in rental income received from 2014 to 2016 alone; the time
remaining on the lease; the lead on a potential tenant; and the improvements
made to the warehouse, its desirable location, and its suitability and readiness
for lease. From this evidence, the jury was permitted to make reasonable
inferences about the income-generating potential of Mr. Long’s leasehold,
and its verdict was not clearly excessive or contrary to all reason in light of
the evidence.
Notably, Faenas even acknowledges this, conceding that “the jury’s
award is within the range of what the district court erroneously allowed the
jury to consider as evidence.” But contrary to Faenas’ suggestion, the
district court did not err in what it allowed the jury to consider. In the end,
Faenas ventures fairly close to asking us to substitute our judgment for that
of the jury. We will not.
Accordingly, the district court did not abuse its discretion by denying
Faenas’ motion for remittitur.
IV.
Based on the totality of the evidence presented, and affording the
jury’s verdict the high level of deference it is due, we simply cannot say that
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no reasonable jury would have reached the same verdict, that there was a
complete absence of evidence supporting it, or that it was clearly excessive.
The judgment is AFFIRMED.
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