David J. Rice v. Community Health Association, d/b/a/ Jackson General Hospital

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DAVID J. RICE,
Plaintiff-Appellee,
v.
No. 99-1412
COMMUNITY HEALTH ASSOCIATION,
d/b/a/ Jackson General Hospital,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of West Virginia, at Parkersburg.
Charles H. Haden II, Chief District Judge.
(CA-97-1169-6)
Argued: December 2, 1999
Decided: February 8, 2000
Before NIEMEYER and MOTZ, Circuit Judges, and
BUTZNER, Senior Circuit Judge.
_________________________________________________________________
Affirmed in part, vacated in part, and remanded by published opinion.
Judge Motz wrote the opinion, in which Judge Niemeyer and Senior
Judge Butzner joined.
_________________________________________________________________
COUNSEL
ARGUED: Thomas Ryan Goodwin, GOODWIN & GOODWIN,
L.L.P., Charleston, West Virginia, for Appellant. Mark Alan Atkin-
son, ROSE & ATKINSON, Charleston, West Virginia, for Appellee.
ON BRIEF: Carrie Goodwin Fenwick, GOODWIN & GOODWIN,

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L.L.P., Charleston, West Virginia, for Appellant. Andrew L.
Paternostro, ROSE & ATKINSON, Charleston, West Virginia, for
Appellee.
_________________________________________________________________
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
This appeal arises from a jury verdict in favor of a doctor on his
breach of contract claim against the hospital that had employed him.
The jury found that the hospital's discharge of the doctor violated his
employment agreement and awarded the doctor both direct breach of
contract damages and consequential damages. We affirm the jury's
award of direct contractual damages, but vacate the consequential
damages award and remand for further proceedings on that issue
alone.
I.
Dr. David J. Rice and the Community Health Association, d/b/a
Jackson General Hospital ("Hospital"), entered a five-year written
employment agreement, which began on July 1, 1996, and which was
to end on July 1, 2001. In late September 1997, the Hospital sus-
pended Rice for alleged sexual harassment, refusal to treat certain
patients, and other violations of the employment agreement and
employee handbook. Rice, a citizen of Pennsylvania, initiated this
diversity action against the Hospital, a West Virginia corporation,
alleging two state law claims: defamation and breach of contract.
The district court granted summary judgment to the Hospital on
Rice's defamation claim, finding no evidence that the allegedly
defamatory statements contained in the Hospital's letter discharging
Rice had been published. See Rice v. Community Health Ass'n, 40 F.
Supp. 2d 788, 795 n.8 (S.D. W. Va. 1999). The breach of contract
claim proceeded to trial.
The jury found that the Hospital had wrongfully terminated Rice
in violation of the employment agreement, and that the termination
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was malicious. The jury awarded Rice the full amount requested for
direct breach of contract damages--$751,564.00--as well as
$1,418,829.00 for future consequential damages. The Hospital
appeals, challenging only the damages awards.
Although the Hospital filed post-trial motions for judgment as a
matter of law, and in the alternative, for a new trial, its failure to com-
ply with Fed. R. Civ. P. 50(a) and move for judgment before the case
was submitted to the jury limits the relief it can seek on appeal. As
the Hospital acknowledged at oral argument, in light of this failure the
only relief it can obtain is a new trial. See, e.g., Polanco v. City of
Austin, 78 F.3d 968, 974 (5th Cir. 1996) (citing Bunch v. Walter, 673
F.2d 127, 130 n.4 (5th Cir. 1982)); cf. 9 James Wm. Moore et al.,
Moore's Federal Practice §§ 50.09[3][a][ii], [3][c] (3d ed. 1999)
(explaining that when an appellant has not strictly complied with the
procedural requirements of Rule 50(b), an appellate court may order
a new trial but may not direct judgment for the appellant).
II.
Initially and principally, Rice maintains that the Hospital forfeited
its right even to seek a new trial because it "failed to timely object to
the alleged impropriety giving rise to" its new trial motion. Dennis v.
General Elec. Corp., 762 F.2d 365, 367 (4th Cir. 1985).
A.
We first consider this argument with regard to the jury's award of
direct breach of contract damages in the amount of $751,564.00. The
Hospital contends that the district court erred when it instructed the
jury that it could award Rice the full value of his contract, without
regard to Rice's mitigation efforts, if it found that the Hospital had
acted with malice in wrongfully discharging Rice. According to the
Hospital, under West Virginia law a defendant's malice frees a plain-
tiff from a duty to mitigate back pay damages, but not from a duty
to mitigate front pay damages. See Mason County Bd. of Educ. v.
State Superintendent of Sch., 295 S.E.2d 719, 725 (W. Va. 1982)
(holding that plaintiff entitled to flat back pay award if jury finds
employer acted maliciously in breaching contract).
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The Hospital, however, never objected to the jury instruction that
it now claims is erroneous. Rice maintains that for this reason the
Hospital failed to preserve its objection to that instruction. In
response, the Hospital argues that one of its motions in limine ade-
quately preserved the objection. Motions in limine"preserve issues
that they raise without any need for renewed objections at trial, just
so long as the movant has clearly identified the ruling sought and the
trial court has ruled upon it." United States v. Williams, 81 F.3d 1321,
1325 (4th Cir. 1996).
After careful review of the motion in limine and the memorandum
in support of the motion, we must agree with Rice--the Hospital
failed to preserve this objection. First, the Hospital's motion in limine
merely refers to its ability to address mitigation of damages generally
and cites Mason County; the motion does not"clearly identif[y]" the
distinction between front pay and back pay damages upon which the
Hospital now seeks to rely in arguing for a duty to mitigate despite
the jury's finding of malice. Williams, 81 F.3d at 1325. Moreover, in
denying the motion in limine, the district court, also citing Mason
County, held that "[m]alice is thus relevant to whether [Rice] is enti-
tled to a flat back pay award or whether, instead, mitigation will
reduce that award." Thus, the district court never "ruled" on the issue
of whether a defendant's malice relieves a plaintiff of his duty to miti-
gate front pay damages. Williams, 81 F.3d at 1325. Indeed, nothing
in the district court's order suggests that it even considered the ques-
tion of front pay damages. Because the Hospital failed to preserve its
objection to the jury instruction, we cannot consider its appellate chal-
lenge absent plain error. See Fed. R. Evid. 103(d).
Wisely, the Hospital does not contend that the instruction consti-
tuted plain error. Any such claim would be meritless, for it is not at
all clear that the jury instruction was in any way erroneous, let alone
plainly so. The district court did not even specifically instruct that
front pay damages were not subject to mitigation. Rather, the court
merely instructed the jury that if it found that the Hospital acted mali-
ciously it "need not consider the issue of mitigation at all, but . . .
[could] award [Rice] the full value of his contract." Moreover, even
if the court had specifically instructed that malice relieves a plaintiff
from mitigating front pay damages, such an instruction hardly consti-
tutes plain error. The holding in Mason County did limit the negating
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effect of malice on mitigation to back pay damages, but those were
the only damages at issue in that case. Nothing in Mason County or
in Mace v. Charleston Area Med. Ctr. Found., Inc., 422 S.E.2d 624,
632-33 (W. Va. 1992), another case cited by the Hospital, discusses
whether that rationale would or would not apply to front pay damages
when the employment contract at issue is one for a term of years.
In sum, the Hospital's failure to preserve its objection to the jury
instruction as to mitigation of front pay damages precludes our con-
sideration of this argument on appeal.
B.
We turn to the question of whether the Hospital preserved its
objection to the consequential damages award.
In resolving the Hospital's new trial motion, the district court held
that the Hospital had raised and preserved this issue. See Rice, 40 F.
Supp. 2d at 794. The court concluded that another motion in limine
filed by the Hospital, which the court had expressly ruled on (and
denied) prior to trial, raised the Hospital's objection to the consequen-
tial damages award. This motion sought to exclude all evidence of
Rice's potential income beyond July 1, 2001--the date when his
employment agreement with the Hospital ended; the district court
held that this motion "encompasse[d] an objection to consideration of
consequential damages sufficient to preserve this issue for review."
Id.
Rice acknowledges that the Hospital "identified" and the district
court "ruled upon," Williams, 81 F.3d at 1325, the issue of his ability
to recover consequential damages for potential income diminution.
But Rice maintains that the Hospital did not identify and the district
court did not rule on the propriety of consequential damages for "lost
professional opportunities," as Rice characterizes them, or for "injury
to reputation," as the Hospital characterizes them. Rice claims there-
fore that the Hospital has also failed to preserve its objection to the
consequential damage award. Acceptance of this argument would ele-
vate semantics over substance. The district court properly rejected it,
reasoning that "evidence of diminished earning capacity . . ., damage
to reputation . . ., [and] evidence of diminution in earning capacity
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beyond the term of the written contract are simply restatements of the
grounds so far considered by the Court as consequential damage
issues." Rice, 40 F. Supp. 2d at 796 n.11.
Thus, by timely objecting to Rice's claim for post-contract conse-
quential damages, the Hospital did preserve this issue for appellate
review, allowing us to consider whether the Hospital is entitled to a
new trial.
III.
The Hospital contends that West Virginia law does not permit a
claim for consequential damages like that pled and proved by Rice,
and maintains that the district court committed legal error in denying
its motion for a new trial on this ground.
Ordinarily, an appellate court reviews a district court's denial of a
motion for a new trial only for an abuse of discretion, and seldom
finds such abuse. See, e.g., Chesapeake Paper Prods. Co. v. Stone &
Webster Eng'g Corp., 51 F.3d 1229, 1237 (4th Cir. 1995). However,
in this case the parties agree that when the district court denied the
Hospital's motion for a new trial, rejecting the argument that the law
did not permit Rice's consequential damages claim, the court deter-
mined a legal question, which we review de novo. See Munn v. Algee,
924 F.2d 568, 575 (5th Cir.) (holding that "when the district court's
[new trial] ruling is predicated on its view of a question of law, it is
subject to de novo review," and "[b]ecause the availability of damages
is a question of law, we do not afford the district court's decision any
deference"), cert. denied, 502 U.S. 900 (1991); see also DeLong
Equip. Co. v. Washington Mills Electro Minerals Corp., 990 F.2d
1186, 1194 (11th Cir.), cert. denied, 510 U.S. 1012 (1993); Allstate
Ins. Co. v. Springer, 269 F.2d 805, 808 (6th Cir. 1959), cert. denied,
361 U.S. 932 (1960); 12 James Wm. Moore et al., Moore's Federal
Practice, § 59.54[2] (3d ed. 1999).
Under West Virginia contract law, a plaintiff may obtain an award
for consequential damages if he proves such damages with reasonable
certainty. See Kentucky Fried Chicken v. Sellaro , 214 S.E.2d 823, 828
(W. Va. 1975). In addition, a plaintiff must demonstrate that when the
parties entered the contract they "could reasonably have anticipated"
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that the claimed consequential damages "would be a probable result
of a breach." Desco Corp. v. Harry W. Trushel Constr. Co., 413
S.E.2d 85, 89 (W. Va. 1991) (citing Sellaro, 214 S.E.2d at 827). The
Hospital argues that Rice's claim for consequential damages does not
meet these requirements and is nothing more than a general allegation
of damage to reputation. Courts have universally rejected claims for
damages to reputation in breach of contract actions reasoning that
such damages are too speculative and could not reasonably be pre-
sumed to have been contemplated by the parties when they formed
the contract. See Skagway City Sch. Bd. v. J.W. Davis, 543 P.2d 218,
225 (Alaska 1975) (explaining that a primary reason for this rule is
any estimate of damages to reputation "must rest upon a number of
imprecise variables," including the causal connection between the
breach of contract and the harm, and the potential effect of other fac-
tors on any decrease of future earnings), overruled on other grounds
by Diedrich v. City of Ketchikan, 805 P.2d 362, 366 n.8 (Alaska
1991); see also O'Leary v. Sterling Extruder Corp., 533 F. Supp.
1205, 1209-10 (E.D. Wis. 1982) (citing various cases ascribing to pre-
vailing view that damages for injury to reputation are not available in
breach of contract actions).
To support his contention that his is not a "damage to reputation"
claim, but a true consequential damage claim, Rice relies exclusively
on Redgrave v. Boston Symphony Orchestra, 855 F.2d 888 (1st Cir.
1988). There the court carefully scrutinized the rationale underlying
the general rule barring damages to reputation for breach of contract.
The question arose when the Boston Symphony Orchestra (BSO) can-
celed its contract with the actress Vanessa Redgrave because of a con-
troversy surrounding her public support of the Palestine Liberation
Organization. Id. at 890. Redgrave sued the BSO for breach of con-
tract and sought consequential damages "for loss of future profes-
sional opportunities." Id. at 891. The First Circuit recognized that
Massachusetts, like "virtually all other jurisdictions" that had consid-
ered the question, had held that "damages for reputation are not avail-
able in contract actions," but concluded that Massachusetts would
permit recovery of contractual consequential damages when a plain-
tiff alleged and proved a claim like Redgrave's. Id. at 892.
The Redgrave court pointed out that Redgrave had not based her
consequential damages claim on "a general claim of damage to repu-
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tation." Id. at 893. Rather, she asserted"that a number of specific
movie and theatre performances that would have been offered to her
in the usual course of events were not offered to her as a result of the
BSO's cancellation." Id. For this reason, although the court substan-
tially reduced the jury's $100,000 consequential damage award, it
held that Redgrave was entitled to an award of $12,000 in consequen-
tial damages because she had alleged and proved such damages for
the "loss of identifiable professional opportunities" in that amount,
which the parties could reasonably have anticipated when they
entered into the contract. Id. at 894.
On appeal, Rice contends that he has made out a similar claim for
consequential damages against the Hospital. Specifically, he main-
tains that he "sought damages for lost professional opportunities
caused by the [Hospital]'s breach of contract." Brief of Appellee at
15. Rice further argues that West Virginia law permits the award of
such damages.
Although West Virginia law has not yet explicitly recognized a
claim for "consequential harm to [a plaintiff's] professional career" as
a result of a breach of employment contract, id. , West Virginia courts
are generally hospitable to claims for consequential damages. See,
e.g., Desco, 413 S.E.2d at 91; Sellaro, 214 S.E.2d at 828. Moreover,
no court--anywhere--has held that a plaintiff cannot recover conse-
quential damages if he has alleged and proved that breach of an
employment contract resulted in the loss of future"identifiable pro-
fessional opportunities," Redgrave, 855 F.2d at 894, which the parties
could have anticipated at the time they entered into the contract.
Therefore, we agree that West Virginia would recognize a claim like
Redgrave's. The difficulty with Rice's position is that his claim is not
like Redgrave's. In his complaint, Rice did not allege that the Hospi-
tal's breach of contract resulted in the loss of future "identifiable pro-
fessional opportunities" that would have been available to him absent
the breach, nor did the district court require him to prove this.
The only damages Rice alleged as resulting from the breach of con-
tract claim were his "monetary compensation" under the contract and
"all other damages, losses, and costs, including attorney's fees, which
the plaintiff has incurred and/or will incur as a result of the defen-
dant's breach of the Agreement." Rice did not assert that the Hospi-
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tal's breach of the employment agreement resulted in"harm to his
professional career," let alone "loss of identifiable professional oppor-
tunities." Rice also failed to offer any evidence to this effect. Compar-
ison of his proof and that found sufficient to support an award of
consequential damages to Redgrave is instructive.
Redgrave presented the testimony of New York producer Theodore
Mann of the Circle on the Square theatre. Mann testified that the BSO
cancellation was one of the reasons he and his partners did not offer
Redgrave a role in their production of Heartbreak House; he
explained that they "were affected by the BSO cancellation because
the BSO was a premier arts organization and was dependent on the
same type of support as Circle in the Square." Id. at 900. The First
Circuit held this testimony justified an award of $12,000 in conse-
quential damages, the contemplated fee for Redgrave's performance
in Heartbreak House, reasoning:
A jury reasonably could infer that the BSO's cancellation
did more than just highlight for Mann the potential problems
that hiring Redgrave would cause but was actually a cause
of Mann's decision, perhaps because Mann's theater support
was similar to that of the BSO or because Mann felt influ-
enced to follow the example of a "premier arts organiza-
tion."
Id.
By contrast, Rice failed to present any evidence that the Hospital's
breach actually influenced any identifiable potential job offers.
Instead he offered the expert testimony of two doctors who opined
generally that an emergency room physician who was fired for sexual
harassment or whose previous employer refused to comment on his
qualifications would experience substantial difficulty obtaining a full-
time position. These experts did not testify that Rice had applied for
employment with them or that they had reviewed applications Rice
had submitted to other hospitals. Thus, their testimony, unlike that of
the producer in Redgrave, "did [nothing] more than . . . highlight . . .
the potential problems" Rice might experience in obtaining compara-
ble employment. Id.
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Just as no precedent has held that a plaintiff would not be entitled
to consequential damages if he alleged and proved that a contractual
breach resulted in the "loss of identifiable professional opportunities,"
no precedent has held a plaintiff entitled to this sort of consequential
damages award in the absence of such specific allegations and proof.
We do not believe that a West Virginia court would so hold because,
regardless of how such a claim is characterized, it is plagued with the
same problems as a claim for consequential damages for injury to rep-
utation: such consequential damages are simply too speculative and
the contracting parties cannot reasonably be presumed to have antici-
pated such damages at the time they entered into a contract.
In the words of the Redgrave court, Rice's claim to date constitutes
only a "nonspecific allegation of damage to reputation." Redgrave,
855 F.2d at 894. Thus, we must conclude that the district court com-
mitted legal error in permitting Rice to seek consequential damages
for breach of his employment agreement without requiring proof of
loss of "identifiable professional opportunities." Because we find that
the district court's denial of the Hospital's motion for a new trial on
consequential damages was a "misapprehension of the law," Prytania
Park Hotel, Ltd. v. General Star Indem. Co., 179 F.3d 169, 173 (5th
Cir. 1999), we vacate the consequential damages award and remand
for further proceedings.
IV.
The only remaining question is the scope of any new trial. A court
may, in its discretion, grant the right to a new trial "on all or part of
the issues." Fed. R. Civ. P. 59(a). A partial new trial may be granted,
however, only 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 Refining Co.,
283 U.S. 494, 500 (1931). Most commonly courts have granted a par-
tial new trial confined only to damages, see, e.g., Great Coastal
Express, Inc. v. International Bhd. of Teamsters, 511 F.2d 839, 846-
48 (4th Cir. 1975), cert. denied, 425 U.S. 975 (1976), but a new trial
can be limited to any "separable matter[ ]." 11 Charles Alan Wright
et al., Federal Practice and Procedure § 2814 (2d ed. 1995); see also,
e.g., Atlas Food Sys. & Serv., Inc. v. Crane Nat'l Vendors, Inc., 99
F.3d 587, 599 (4th Cir. 1996) (rejecting argument that new trial
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should encompass liability and compensatory damages and upholding
new trial limited only to punitive damages); Boucher v. U.S. Suzuki
Motor Corp., 73 F.3d 18, 20-21 (2d Cir. 1996) (limiting new trial to
determination of past and future lost earnings).
In this case, we believe it clear that the issue of whether Rice is
entitled to consequential damages for "loss of identifiable profes-
sional opportunities" is distinct and separable from questions related
to his entitlement to direct breach of contract damages. Because these
two forms of damages not only require distinct elements of proof, but
also focus on different time frames, a partial new trial on the conse-
quential damages issue alone will not result in jury confusion and
uncertainty. Tellingly, the Hospital does not claim to the contrary.
Moreover, limiting any new trial to consequential damages serves
"[c]onsiderations of economy, fairness and repose." Atlas, 99 F.3d at
599. It permits a new jury to consider a proper claim for consequen-
tial damages but does not allow disturbance of the jury's award for
direct contractual damages in the full amount Rice requested; a retrial
of both damages issues would endanger the latter award, one which
the Hospital has forfeited its right to challenge, and could result in a
possible windfall to the Hospital. "Where the issues are separable and
error is found in the trial of only one, a new trial may be had as to
that issue alone where no injustice will result therefrom." Mason v.
Mathiasen Tanker Indus., 298 F.2d 28, 33 (4th Cir. 1962). This is
such a case. Accordingly, any new trial shall be limited solely to the
issue of consequential damages.
V.
In sum, we affirm the jury's verdict as to the direct breach of con-
tract damages in the amount of $751,564.00. We find, however, that
the district court committed legal error in denying the Hospital's
motion for a new trial on the basis of its challenge to the consequen-
tial damages award. Therefore, we vacate the jury's verdict awarding
consequential damages in the amount of $1,418,829.00 and remand
to the district court for further proceedings consistent with this opin-
ion.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED
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