Plm Investment Management, Inc. v. Dakota Southern Railway Company, George A. Huff, Iv, Individually and as President and General Manager of Dakota Southern Railway Company. Plm Investment Management, Inc. v. Dakota Southern Railway Company, George A. Huff, Iv, Individually and as President and General Manager of Dakota Southern Railway Company. Plm Investment Management, Inc. v. Dakota Southern Railway Company, George A. Huff, Iv, Individually and as President and General Manager of Dakota Southern Railway Company

Citation: 930 F.2d 1333Docket: 90-5333

Court: Court of Appeals for the Eighth Circuit; May 29, 1991; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

In the case PLM Investment Management, Inc. v. Dakota Southern Railway Company, the Eighth Circuit Court of Appeals addressed a breach of contract dispute involving a lease agreement for 125 railroad cars. PLM Investment Management (PLM) leased the cars to Dakota Southern Railway Company (Dakota Southern) in November 1985, with a provision for per diem rental payments to PLM when the cars were rented to other railroads. PLM retained 70% of these earnings and was entitled to terminate the lease if monthly earnings fell below $190 per car, provided written notice was given.

On December 9, 1986, PLM notified Dakota Southern of its intent to terminate the lease due to insufficient earnings, but Dakota Southern did not offer to cover the losses to prevent termination. Following this, PLM withheld $2,400 in payments owed to Dakota Southern, anticipating issues with the return of the cars. The lease was officially terminated on December 30, 1986, and most cars were returned without objection.

Subsequently, Dakota Southern directed railroads to pay it directly instead of PLM, leading to further withholdings between the parties: Dakota Southern withheld $99,098 from PLM, while PLM retained $31,213 from Dakota Southern. PLM filed a lawsuit in federal district court, claiming Dakota Southern wrongfully failed to remit the agreed percentage of per diem payments and sought damages for the unpaid amounts. Dakota Southern counterclaimed for the withheld payments and additional damages due to PLM's alleged improper lease termination and unreimbursed car repair costs. The appellate court's decision affirmed some aspects while reversing others concerning the awarded prejudgment interest and the denial of PLM’s motion for judgment notwithstanding the verdict on Dakota Southern's counterclaim.

Before trial, Dakota Southern withheld $99,098 in per diem payments from PLM, while PLM withheld $31,213 from Dakota Southern. The jury determined both parties wrongfully refused to remit these payments, awarding PLM $99,098 and Dakota Southern $150,000 for its withheld payments and additional damages for breach. The jury also rejected PLM's defense of waiver regarding Dakota Southern's termination procedures. The district court subsequently granted prejudgment interest, awarding PLM $45,110 and Dakota Southern $14,402. Dakota Southern contested the award of prejudgment interest to PLM, citing S.D. Codified Laws Ann. Sec. 21-1-11, which allows interest only on damages that are certain or calculable. Dakota Southern argued that its counterclaim created uncertainty regarding PLM's damages until the jury's verdict. However, the court found that the absence of an offset meant PLM's damages were ascertainable prior to the verdict, as they were entitled to 70% of the withheld payments. Thus, the court upheld the award of prejudgment interest to PLM, consistent with South Dakota law.

Dakota Southern contends that the district court incorrectly awarded PLM prejudgment interest, arguing equity favors it due to the jury’s award of $150,000 to Dakota Southern versus $99,098 to PLM. However, the court finds this argument lacking, noting that Dakota Southern provides no supporting case law and that South Dakota law does not require equitable balancing in this context. The jury determined both parties wrongfully withheld funds, making prejudgment interest appropriate. Citing the South Dakota Supreme Court, the rationale for such interest is to ensure justice for the party that suffered a loss.

On cross-appeal, PLM asserts that the district court erred by not granting its motion for judgment notwithstanding the verdict (JNOV) regarding waiver. PLM agrees with $31,213 of the jury's verdict but contests the remaining $118,787 awarded for improper termination, claiming Dakota Southern waived its right to written notice of termination. Waiver requires a clear intention to relinquish a right, either express or implied, as defined by the South Dakota Supreme Court. PLM argues that Dakota Southern's return of the cars after receiving PLM's termination letter indicates waiver of the notice requirement.

In response, Dakota Southern argues that a jury question on waiver exists, centering on whether its representative, George Huff, fully understood the termination's implications. However, the court agrees with PLM, asserting that Huff, as the railroad's president and a signer of the lease, was aware of the agreement’s terms and the termination procedures. Consequently, the court concludes that Huff's actions constituted a waiver of Dakota Southern's right to proper notice.

The jury awarded Dakota Southern $150,000, which included $31,213 for wrongfully withheld remittance and $118,787 claimed as damages for hiring other railroad cars. Dakota Southern also sought $8,580 for unreimbursed car repairs, unrelated to the termination of the contract by PLM. The jury's verdict did not itemize these components. A remand for a new trial on the unreimbursed car repair expenses was deemed unnecessary. Instead, it was determined that an equitable resolution would involve awarding PLM $99,098 and Dakota Southern $39,793, which comprises the withheld remittance and repair expenses. Consequently, the district court's judgment is affirmed in part and reversed in part, directing the entry of judgment for PLM at $99,098.83 and for Dakota Southern at $39,793.72.