Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Hot Stuff Foods, LLC v. Houston Casualty Co.

United States District Court, Eighth Circuit

January 2, 2014

HOT STUFF FOODS, LLC, Plaintiff,
v.
HOUSTON CASUALTY COMPANY, Defendant.

MEMORANDUM OPINION AND ORDER

KAREN E. SCHREIER, District Judge.

Hot Stuff Foods, LLC, brought an action against its insurer, Houston Casualty Company, seeking indemnification for losses Hot Stuff sustained due to a product recall. This court found that the insurance contract the parties entered into covered the losses incurred from the recall and, therefore, found in favor of Hot Stuff on the issue of liability. Hot Stuff Foods, LLC v. Houston Cas. Co., Civ. No. 11-4055, 2012 WL 2675225 (D.S.D. July 5, 2012). The case proceeded to a jury trial on the issue of damages. The jury awarded Hot Stuff $755, 268.07 for recall expense and crisis response/consultant expenses and $200, 000 for lost gross profit. Docket 97.

HCC moves for a judgment as a matter of law on the issue of lost gross profit, arguing there was no legally sufficient basis for the jury to find Hot Stuff was entitled to lost profits. Hot Stuff resists the motion and separately moves for attorneys' fees under SDCL 58-12-3, claiming HCC's refusal to pay under the insurance policy was vexatious or without reasonable cause. For the following reasons, HCC's motion for judgment as a matter of law is denied and Hot Stuff's motion for attorneys' fees is also denied.

BACKGROUND

The underlying facts of this lawsuit were laid out in detail in this court's previous summary judgment order. Hot Stuff Foods, LLC v. Houston Cas. Co., Civ. No. 11-4055, 2012 WL 2675225 (D.S.D. July 5, 2012); Docket 43. In that order, this court found HCC is required to indemnify Hot Stuff for losses Hot Stuff incurred due to a product recall. A jury trial was held to determine the amount HCC was required to indemnify Hot Stuff.

During the trial, Hot Stuff alleged it was entitled to damages under two separate provisions in the insurance policy. First, Hot Stuff claimed it was entitled to $755, 268.07 for recall expenses and crisis response/consultant expenses ("recall expenses"). Second, Hot Stuff claimed it was entitled to $933, 227.24 for lost profits.

The jury trial lasted four days. During the trial, Hot Stuff called five witnesses and introduced multiple exhibits. HCC called three witnesses[1] and introduced multiple exhibits.

The witnesses that Hot Stuff called who are relevant to this order are Steve Watkins, Jeff Seccombe, and Jason Gaddes. Watkins is the president of Hot Stuff. He received a degree in business and accounting and passed the Certified Public Accountant exam. He has worked at Hot Stuff, or at one of Hot Stuff's parent/affiliate companies, for nearly 27 years. He served in various roles over those 27 years, including acting as a sales representative, financial manager, director, secretary and treasurer, managing director, and chief financial officer. At the time of trial, Watkins had served as president of the company for over a year.

Seccombe is a central regional sales manager for Hot Stuff.[2] He has worked at Hot Stuff for about eight years. As the central regional sales manager, he manages seventeen states and is involved in Hot Stuff's military business. Gaddes is also a member of Hot Stuff's sales force. His territory includes twelve states. He also manages a vending distributor that has twenty-two divisions nationally. He has worked at Hot Stuff for over eight years.

At the conclusion of the trial, the jury returned a verdict which found Hot Stuff was entitled to $755, 268.07 for recall expenses and $200, 000 for lost profits. The award of $200, 000 for lost profits forms the basis for HCC's motion for judgment as a matter of law.

I. JUDGMENT AS A MATTER OF LAW

A. Standard of Review

Under Federal Rule of Civil Procedure 50, a party can move for judgment as a matter of law if the party against whom relief is sought has been fully heard on that issue. Fed.R.Civ.P. 50(a)(1). If the court does not grant the motion, "the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion." Fed.R.Civ.P. 50(b). In deciding a renewed motion for judgment as a matter of law, the court may enter a judgment on the jury's verdict, order a new trial, or enter judgment on the motion. Id.

"When federal jurisdiction is premised on diversity of citizenship, a federal district court applies the sufficiency standards of the state in which it sits." In re Levaquin Prods. Liab. Litig., 700 F.3d 1161, 1165 (8th Cir. 2012). Thus, South Dakota's sufficiency standards apply for purposes of HCC's motion. Under South Dakota law,

the trial court must determine whether there is any substantial evidence to sustain the action. The evidence must be accepted which is most favorable to the nonmoving party and the trial court must indulge all legitimate inferences therefrom in [its] favor. If sufficient evidence exists so that reasonable minds could differ, [judgment as a matter of law] is not appropriate.

Roth v. Farner-Bocken Co., 667 N.W.2d 651, 658-59 (S.D. 2003); see also SDCL 15-6-50(a). Furthermore, in a diversity case, the court applies the substantive law of the forum state, which here is South Dakota, to determine if the standard was satisfied. Hinz v. Neuroscience, Inc., 538 F.3d 979, 984 (8th Cir. 2008).

A jury verdict should not be set aside "unless there is a complete absence of probative facts to support the verdict." Walsh v. Nat'l Computer Sys., Inc., 332 F.3d 1150, 1158 (8th Cir. 2003) (internal citation omitted). But "when the record contains no proof beyond speculation to support the verdict, then judgment as a matter of law is appropriate." Hinz, 538 F.3d at 984.

B. Lost Profits Discussion

HCC argues that there was no legally sufficient evidentiary basis for the jury to find Hot Stuff was entitled to $200, 000 in lost profits. HCC is not arguing that Hot Stuff cannot recover lost profits under the insurance contract; rather, HCC argues ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.