UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


TRI CTY INDUST INC

v.

DC


99-7028c

D.C. Cir. 2000


*	*	*


Karen LeCraft Henderson, Circuit Judge: This appeal  arises from
proceedings determining what damages, if any,  appellant Tri County
Industries, Inc. (Tri County) should be  awarded to compensate for
what this court previously deter- mined to be the District of
Columbia's (District) violation of  its fifth amendment right to
procedural due process. See Tri  County Indus., Inc. v. District of
Columbia, 104 F.3d 455,  460-62 (D.C. Cir. 1997). Following the first
of two trials, the  jury awarded $5,000,000. The trial court then
granted a new  trial, nisi remittitur to $1,000,000, which was
refused. At the  second trial, the district court admitted evidence
excluded  from the first and the jury returned nominal damages of 
$100. Tri County challenges the court's order granting the  District's
alternative motion for a new trial as well as several  evidentiary
rulings in the second trial and requests reinstate- ment of the first
award or, in the alternative, a new trial due  to allegedly erroneous
evidentiary rulings during the second  trial. For the reasons set
forth below, we reverse the district  court's order of July 23, 1998
and reinstate the original jury  verdict of $5,000,000.


I.


On February 26, 1993 Tri County obtained a building  permit from the
District authorizing conversion of an empty  warehouse into a facility
for its business of decontaminating  soil tainted with oil and other
hazardous materials. While  securing the permit, Tri County also
obtained an air quality  permit as well as a waiver of the required
environmental  impact statement. Even several months after it obtained
the  necessary permits, however, it had not begun operating due  to
equipment delivery delays. On September 7 it received a  District
citation for storing soil at the facility without the 


required certificate of occupancy.1 Tri County neither re- moved the
soil nor paid the fine; consequently, the District  issued a stop-work
order on September 22. Tri County did  not challenge the citation or
order. Its failure to respond led  to an order by the District
Department of Consumer and  Regulatory Affairs (DCRA) dated October
13, 1993 purport- ing to suspend Tri County's building permit.


The building permit had already been suspended on Sep- tember 20,
however, when, prompted by a groundswell of  community opposition to
the project, Hampton Cross, acting  DCRA director, summarily suspended
Tri County's building  permit. The DCRA sent Tri County a letter
requesting  further information on October 15, 1993 to which Tri
County  did not respond. On December 6 the DCRA sent another  letter,
this time rescinding the environmental impact state- ment waiver and
threatening imminent revocation proceed- ings on the building permit.
Tri County's only response was  to remove the soil that had caused the
initial citation. Tri  County's counsel advised it that an appeal
likely would be  influenced by politics given the strong community
opposition  and that he could not guarantee when such an appeal would 
be heard. Given the high rental cost of the property in  question and
the necessity of purchasing, without delay,  costly equipment in high
demand, Tri County estimated the  costs of an appeal at nearly
$1,000,000. With no assurance of  a prompt hearing and the prospect of
a politically influenced  review process, Tri County abandoned its


Tri County brought suit under 42 U.S.C. s 1983 and suc- ceeded in its
challenge to the September 20 suspension of its  building permit when
this court reversed the district court's  dismissal, holding that the
suspension violated Tri County's  right to procedural due process. See
Tri County Indus., 104  F.3d at 460-62. We remanded for consideration
of damages. 




__________

n 1 A certificate of occupancy is issued when renovation of a struc-
ture has been completed in conformity with the earlier application 
for a building permit and the building is found to be in compliance 
with applicable zoning regulations and the building code. See 12  DCMR
s 118, 39 DCR 8711-12.


See id. at 462. The subsequent proceedings in the district  court are
at issue in this appeal.


The first trial began on April 14, 1998. Tri County pre- sented
evidence of its costs already incurred, evidence of lost  profits
through the testimony of a mechanical engineer and  the report of an
economist and evidence as to the local  market demand for a soil
treatment facility through the  testimony of a geologist at an
environmental consulting firm.  The District largely accepted the
testimony, often failing to  object or seriously cross-examine.
Instead, the District re- lied on its argument that Tri County failed
to mitigate its  damages when it refused to provide the information
the  DCRA requested and when it declined to challenge the stop- work
and suspension orders. The District also sought to  demonstrate that
Tri County might not have been allowed to  operate its facility
because community opposition, arising  largely out of concern over the
facility's effect on the health  and safety of the community, would
derail the regulatory  procedures. Hindering its argument was the
trial court's  exclusion or striking of evidence relating to health
and safety  concerns. See Joint Appendix (JA) 186-89. The court found 
the District's permitting process had resolved the issues as a  matter
of law. See id. at 182-83, 189. In the end, the jury  awarded


The trial court denied the District's post-trial motion for  judgment
as a matter of law but granted the alternative  motion for a new
trial, nisi remittitur to $1,000,000. Ad- dressing the District's
primary argument, the court ruled that  the District had to establish
both the standard for reasonable  mitigation under the circumstances
and that Tri County failed  to meet it. The District failed to sustain
that burden, particu- larly in light of Tri County's evidence that it
would have to  spend nearly $1,000,000 to recoup its expenses of
$536,421.  The court reversed field, however, in reviewing the award
for  future damages which, assuming the $536,421 in costs were 
awarded, constituted $4,463,579 of the $11,628,174 figure Tri  County
presented to the jury. Emphasizing that Tri County  did not "invest[ ]
a penny to seek reinstatement of the  unlawfully suspended building
permit," the court ruled that 


the District need not have established a reasonableness stan- dard
because Tri County's failure to mitigate was unreason- able per se.
District Court's Memorandum Order filed July  23, 1998 (Memorandum
Order), at 2. The court also found  the lost profits evidence should
not have been considered by  the jury without the District having the
chance to prove that  the facility might not have been allowed to
operate. Accord- ingly, the court found the estimate of lost profits
"too specula- tive and remote" and, in any event, found the award
"grossly  excessive." Id.


Tri County declined the $1,000,000 remittitur and a second  trial
commenced on January 29, 1999. In this trial, the  district court
allowed the District to admit the health and  safety evidence
originally excluded. This time the District  challenged Tri County's
experts and offered the testimony of  three new witnesses, one of whom
refuted Tri County's  estimate of future profits. Another witness
discussed a po- tential zoning bar to the facility and the third
discussed  health and safety hazards associated with soil remediation.
 The second jury awarded Tri County nominal damages of  $100.


II.


We review the district court's grant of a new trial for abuse  of
discretion. See Langevine v. District of Columbia, 106  F.3d 1018,
1023 (D.C. Cir. 1997) (citing Hutchinson v. Stuck- ey, 952 F.2d 1418,
1420-21 (D.C. Cir. 1992)). "[A] more  searching inquiry is required"
if the new trial is granted than  if denied, however, because of "the
concern that a judge's  nullification of the jury's verdict may
encroach on the jury's  important fact-finding function." Id. at 1023
(quoting Vander  Zee v. Karabatsos, 589 F.2d 723, 729 (D.C. Cir.


In its post trial order, the trial court stated three reasons  for
granting a new trial: (1) Tri County's failure to mitigate;  (2) the
speculativeness in Tri County's projections of future  profits; and
(3) the "grossly excessive" jury verdict. Memo- randum Order at 2. The
court also thought it had erred in its  evidentiary rulings excluding
evidence related to community 


opposition to the project. See Memorandum Order at 2  (plaintiff's
expert testimony should not have been received  "without allowing [the
District] to adduce proof that plaintiff's  soil remediation facility
would never have been permitted to  operate"). Tri County challenges
each ground.


First, the court found Tri County's failure to expend any  resources to
seek reinstatement of its building permit per se  unreasonable in
light of the $11,628,174 it claimed in lost  profits. See id. Tri
County contends that the determination  of whether a party satisfied
its duty to mitigate, a question  that turns on what action was
reasonable under the circum- stances, see, e.g., Berger v. Iron
Workers Reinforced Rodmen,  Local 201, 170 F.3d 1111 (D.C. Cir. 1999);
Lennon v. United  States Theatre Corp., 920 F.2d 996 (D.C. Cir. 1990),
is a jury  question. Here, we agree with Tri County that its alleged 
failure to mitigate was an issue properly submitted to the  jury. See
Hilord Chem. Corp. v. Ricoh Elecs., Inc., 875 F.2d  32, 38-39 (2d Cir.
1989); Waldorf v. Shuta, 142 F.3d 601, 623- 24 (3d Cir. 1998).
Moreover, failure to mitigate is an affirma- tive defense and the
party asserting it bears the burden of  demonstrating the opposing
party's failure to act reasonably  under the circumstances. See
Lennon, 920 F.2d at 1000; see  also Mark Keshishian & Sons, Inc. v.
Washington Square,  Inc., 414 A.2d 834, 842 n.19 (D.C. 1980) (burden
of showing  mitigation is on party raising issue) (citing Camalier & 
Buckley-Madison, Inc. v. Madison Hotel, Inc., 513 F.2d 407,  419-20


Tri County created a jury issue when it offered an explana- tion for
its failure to challenge the DCRA's suspension order  or otherwise
pursue administrative remedies. Its explanation  included evidence
that it believed suggested the reviewing  body, the District's Board
of Appeals and Review, might not  have acted impartially due to
political influence and that an  appeal would have been indefinitely
slow and expensive.2 




__________

n 2 Tri County's lawyer (in 1993) testified that Cross told him that 
the Board of Appeals and Review would act at the direction of the 
District's Mayor and the Mayor's chief of staff. Tri County intro-
duced Cross's deposition testimony indicating he had met with the 


Moreover, a jury justifiably could have found it reasonable for  Tri
County not to contest the September 22 stop-work order  and subsequent
suspension resulting from the failure to pay  the fine given the
pre-existing September 20 suspension.  The District argues simply that
the evidence it presented  regarding Tri County's failure to mitigate
"was firmer by  far." Brief of Appellee at 30. Tri County responds
that it is  improper to now assess the relative strength of the
parties'  showings. Indeed, the trial court properly gave the failure
to  mitigate issue to the jury and properly instructed the jury on 


[T]he law requires that an injured party take all the  reasonable steps
it can to avoid further injury and reduce  its loss. Tri County may
not recover damages for any  portion of its injury which it could have
avoided through  the exercise of reasonable care and prudence.... The 
District asserts that Tri County by failing to pay the  $500 fine ...
and by failing to appeal the stop work  order, is not entitled to any
damages.


JA 193. Thus, to the extent the district court based its new  trial
decision on the mitigation issue, it abused its discretion  in
declaring ex post that Tri County's failure to pursue  administrative
remedies to reinstate its permit was per se  unreasonable, thereby
withdrawing the mitigation issue from  the jury. See generally Tatum
v. Morton, 562 F.2d 1279,  1283 (D.C. Cir. 1977) ("[T]he district
court's per se approach  of imposing an absolute duty to mitigate was


The trial court also found that Tri County's evidence of lost  profits
was "too speculative and remote" and that the award  of less than half
of the amount Tri County estimated was  "grossly excessive."
Memorandum Order at 2. Where, as  here, the fact of injury has been
established and the defen- dant's action (suspension of the building
permit) affected the  plaintiff's ability to present actual revenue
and cost figures to 




__________

n Mayor and members of the community opposition following the 
suspension of the permit. Tri County's lawyer also testified that it 
would have taken eight to twelve months to resolve the matter 
administratively. JA 76-77.


support a lost profits projection, the applicable standard for  proving
lost profits damages is the one this court enunciated  in Samaritan
Inns, Inc. v. District of Columbia, 114 F.3d  1227 (D.C. Cir. 1997):


Where the tort itself is of such a nature as to preclude  the
ascertainment of the amount of damages with cer- tainty, it would be a
perversion of fundamental principles  of justice to deny all relief to
the injured person.... In  such case, while the damages may not be
determined by  mere speculation or guess, it will be enough if the 
evidence show the extent of the damages as a matter of  just and
reasonable inference, although the result be only  approximate. Thus,
while a plaintiff seeking to recover  lost profits must ordinarily
prove the fact of injury with  reasonable certainty, proof of the
amount of damages  may be based on a reasonable estimate. Although a 
court will not permit a plaintiff to recover damages based  on "mere
speculation or guess," the fact that an estimate  is uncertain or
inexact will not defeat recovery....


114 F.3d at 1234-35 (quoting Story Parchment Co. v. Pater- son
Parchment Paper Co., 282 U.S. 555, 563 (1931)) (citations  omitted).


Tri County produced evidence indicating it sustained lost  profits of
$11,628,174. The evidence included the testimony  of eight witnesses3
and ranged from projections of tons of  contaminated soil the facility
would treat per hour and the  number of hours it would operate per day
to estimates of  equipment and labor costs. With expert testimony
regarding  the accessible market for soil remediation and a comparison
 of service rates for similar operations, an economist projected  the
profitability of Tri County's facility. Their respective  opinions
were left largely unchallenged by the District. Re- gardless whether
the estimates were on the high end, that is, 




__________

n 3 The witnesses included its President, Glenn Selzer, its Vice 
President and its CPA. In addition, a chemical engineer, a remedi-
ation expert, a financial economist, a mechanical engineer and an 
expert in soil remediation testified as to Tri County's costs and lost


"uncertain or inexact," Samaritan Inns, 114 F.3d at 1235,  they were
sufficiently well-founded to avoid characterization  as "mere
speculation or guess." Id.


Moreover, we question the trial court's finding that the  award
"shock[ed] the judicial conscience." Memorandum Or- der at 2. Tri
County presented evidence that its costs  amounted to $536,421 and its
lost profits amounted to  $11,628,174. The jury awarded $5,000,000,
less than half of  the total amount claimed and, for that matter, less
than half  of the future profits estimate standing alone. The award
was  within the "reasonable range within which the jury may  properly
operate." Langevine, 106 F.3d at 1024.


As demonstrated above, the trial court tried to cover all  bases in its
order granting a new trial but the order reveals  that the court's
real concern was its exclusion of evidence  regarding health and
safety issues which may have led to  community resistance and,
perhaps, regulatory barriers to Tri  County's project. For example,
while declaring the award  grossly excessive, the district court
expressed its dissatisfac- tion with its original evidentiary


[T]he jury's award ... shocks the judicial conscience,  particularly in
view of the realistic prospect, which I did  not permit defendants to
prove at trial, that there would  be continued community resistance to
increased dump  truck traffic ... and a very real likelihood that the 
District of Columbia would have closed down the remedi- ation facility
... or that it never would have been  permitted to commence operations
at all.


Memorandum Order at 2-3; see also id. at 2 (plaintiff's  expert
testimony should not have been received "without  allowing [the
District] to adduce proof that plaintiff's soil  remediation facility
would never have been permitted to  operate").


In the excerpt above, the district court alluded to the  District's
argument under Carey v. Piphus, 435 U.S. 247,  266-67 (1978), that a
plaintiff who suffers a procedural due  process violation is entitled
only to nominal damages if he 


would have suffered the same "injury" absent the violation.  Thus, the
District argues that here the procedural violation  caused no
compensable injury because the action taken, sus- pension of the
permit, was justified even if improperly execut- ed. The District
claimed that Tri County's damages were  minimal because the facility
either would not have become  operational or would not have been
operational for long due  to community resistance.


The trial court excluded the District's health and safety  evidence
under Rule 403 and determined that the permitting  process disposed of
these issues as a matter of law. See JA  178, 189. The District argues
that the evidentiary rulings  practically negated its argument under
Carey that the project  would have been halted anyway. Despite its
reliance on this  argument, the District never met the trial court's
repeated  injunction to show how the health and safety issue would
have  triggered additional regulatory procedures or otherwise al-
lowed the District to rescind its earlier approval. See JA 172;  see
also id. at 168-69, 172-75, 186-87. In short, the District  failed to
show that community concern would be brought to  bear on Tri County's
operation, specifically through the regu- latory process. Accordingly,
the district court did not abuse  its discretion in excluding the
evidence. In light of our  findings that Tri County's evidence was
properly before the  jury and the District's evidence was properly
excluded, we  conclude that the district court, in granting a new
trial based  on a revised view of its original rulings, did abuse its
discre- tion.4 See Langevine, 106 F.3d at 1023 (a "more searching 
inquiry" is particularly necessary "when the motion [for new  trial]
is granted on the ground that the verdict is against the  weight of


For the foregoing reasons, we reverse the district court's  order of
July 23, 1998 and reinstate the original jury verdict of  $5,000,000,
with interest pursuant to 28 U.S.C. s 1961. The interest shall be
calculated at a rate of 5.391% per annum, beginning on April 20, 
1998, and computed daily until the date of payment. See 28 U.S.C. s
1961 (West 1994 & Supp. 2000). We vacate the verdict and judgment
resulting  from the second trial.


So ordered. 


__________

n 4 In light of our holding, we need not reach Tri County's alterna-
tive grounds for reversal based on the second trial.