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Clean Harbors, Inc. v. Union Pacific Corp.

Superior Court of Delaware

November 15, 2017

CLEAN HARBORS, INC., Plaintiff,
v.
UNION PACIFIC CORPORATION, Defendant.

          Submitted: September 18, 2017

          Richard L. Renck, Esq., Christopher M. Winter, Esq., Mackenzie M. Wrobel, Esq., Duane Morris LLP, Paul L. Feldman, Esq. (Argued), Gary S. Matsko, Esq. (Argued), Christopher J. Marino, Esq., Davis Malm & D'Agostine, P.C. Attorneys for Plaintiff Clean Harbors, Inc.

          Ann L. Al-Bahish, Esq. (Argued), Lauren K. Valastro, Esq., Kelley Drye/Jackson Gilmour & Dobbs, Norton A. Colvin, Jr., Esq., Mitchell C. Chaney, Esq., Colvin, Chaney, Saenz & Rodriguez, LLP, Stephen B. Brauerman, Esq., Sara E. Bussiere, Esq., Bayard, P.A., James W. Semple, Cooch and Taylor, P.A. Attorneys for Defendant Union Pacific Corporation.

          OPINION

          JOHNSTON, J.

         FACTUAL AND PROCEDURAL CONTEXT

         Before the Court are post-trial motions related to a breach of contract case. Plaintiff Clean Harbors, Inc. ("Clean Harbors") sued Union Pacific Corporation ("UPC"), for breaching an environmental indemnity provision in a stock purchase agreement ("SPA"). Clean Harbors sought to recover costs it incurred cleaning contamination from a hazardous waste facility its predecessor purchased from UPC. On a motion for summary judgment, this Court ruled that Clean Harbors was entitled to indemnification under the SPA.[1] The parties went to trial to determine the reasonableness of the extent of cleanup performed by Clean Harbors, whether Clean Harbors complied with the SPA's notice provisions, and the amount of indemnification UPC owed Clean Harbors. At trial, the jury found that both parties breached the contract, but awarded Clean Harbors $9, 180, 445.76 and UPC $0.

         UPC now moves for a new trial based on issues it raises with the jury's verdict, the jury instructions, and the jury verdict form.

         Clean Harbors has filed two motions of its own. It moves for attorneys' fees and costs and for prejudgment interest.

         MOTION FOR NEW TRIAL STANDARD

         To warrant granting a motion for a new trial, "the verdict must be manifestly and palpably against the weight of the evidence or for some reason, or combination of reasons, justice would miscarry if it were allowed to stand."[2] Delaware law gives great deference to jury verdicts.[3] "In the face of any reasonable difference of opinion, courts will yield to the jury's decision."[4] When the court considers a motion for a new trial, "there is a presumption that the jury verdict is correct."[5]

         ANALYSIS

         UPC's Motion for New Trial

         At the conclusion of the trial, the jury completed a verdict form. Question 1 asked: "Did Union Pacific breach the contract?" The jury selected "YES." Question 2 asked: "Did Clean Harbors breach the contract?" The jury selected "YES." Question 3 asked: "ONLY if you answered 'YES' to Question 1: What was the total reasonable cost of the environmental clean-up?" In response, the jury wrote "$9, 180, 445.76." Question 4 asked: "ONLY if you answered 'YES' to Question 2: What amount would fairly and reasonably compensate Union Pacific for Clean Harbors' breach of contract?" In response, the jury wrote "$0."

         The Jury's Verdict on the Total Reasonable Cost of the Environmental Clean-Up is Not Against the Great Weight of the Evidence

         UPC argues that the jury's response to Question 3-that the reasonable cost of cleanup for the Wichita Facility was $9, 180, 445.76-went against the great weight of the evidence presented at trial. It contends that the evidence at trial demonstrated that Clean Harbors accrued most of its claimed damages by pursuing an unnecessarily expensive cleanup process chosen only to meet the indemnity deadline. Clean Harbor counters by noting that its numerous expert and lay witnesses presented evidence in support of its contention that its cleanup efforts were reasonable in scope and cost.

         The Court can only set aside a verdict for being against the great weight of the evidence if "the evidence preponderates so heavily against the jury verdict that a reasonable jury could not have reached the result."[6] No such drastic evidentiary imbalance existed in this case. Instead, the jury heard and considered a classic battle of the experts and the verdict demonstrates that the jury found Clean Harbors' evidence more persuasive. Additionally, the verdict demonstrates that the jury did not completely adopt Clean Harbors' version of events while ignoring UPC's contentions. Consistent with UPC's evidence that certain costs were not reasonable, the jury reduced Clean Harbors' request for relief by $1, 500, 000.[7]

         Considering the evidence heard at trial, the Court finds that the credibility of UPC's witnesses, as opposed to Clean Harbors' witnesses, presents, at most, a "reasonable difference of opinion."[8] Therefore, the Court must "yield to the jury's decision."[9] The Court finds the jury's verdict was not against the great weight of the evidence.

         The Jury Verdict Form Did Not Confuse the Jury

         UPC also argues that the verdict form confused the jury on the issue of damages, because it asked for the "total reasonable cost" of the clean-up without specifying a time period. The SPA indemnified Clean Harbors for expenses, incurred up to 2014, for cleaning up contamination that existed at the time of the SPA in 1994. UPC argues that the jury's verdict may have included costs outside of that indemnification period.[10] However, neither party argued or presented evidence that Clean Harbors' claim for damages included clean-up costs incurred after 2014. Indeed, both parties' opening and closing arguments reminded the jury only to consider damages within the indemnification period.[11]

         UPC names only two instances from the three-week trial in which a witness mentioned the cost of Clean Harbors' clean-up after 2014. In both instances, the attorney elicited the testimony in a way that made clear that those expenses were not within the indemnity period. UPC first points to a Clean Harbors employee's testimony that Clean Harbors spent, "[v]ery generally, about $2 million" on clean-up after 1994.[12] However, UPC fails to note that the witness provided this information in response to the question, "And how much did it spend after 2014 outside of the indemnification[13] Similarly, when a UPC witness stated that there was "4 more million dollars' worth of costs" in 2015, she prefaced that statement with an explanation that she was describing the "Clean Harbor interim remedy" and that "although [Clean Harbor is] recovering costs from Union Pacific in 2014 because that's when the indemnity clock ended, the remedy actually went into 2015 . . . ."[14]The Court finds those two minimal, contextualized references to post-2014 expenses did not confuse the jury.

         The Court also finds that the jury was not confused as to whether it should have included costs arising out of pre-1994 contamination in its verdict. The Court must not consider the "total reasonable cost" language of the verdict form in isolation-"the entire instruction is considered with no statement to be viewed out of context."[15] Jury Instruction 7 provided important context. It stated: "Under the terms of the contract, Union Pacific is only obligated to indemnify Clean Harbors for contamination at the Wichita Facility that arise out of or in connection with acts or omissions occurring prior to December 31, 1994." Given that plainly-stated directive, and Delaware law's presumption "that the jury followed the trial judge's instruction, "[16] the Court holds the verdict form did not cause the jury to incorporate damages outside the indemnity period into its verdict.

         UPC raises an additional argument concerning the verdict form. It claims that Verdict Form Questions 3 and 4 caused prejudice against UPC because the questions were not identical. However, Verdict Form Questions 3 and 4 were different in order to make the jury's task as clear as possible. Determining the amount UPC owed required a calculation as mandated by the SPA, which, as previously discussed, the Court did not want the jury to attempt to compute. Asking for the "total reasonable cost of the environmental cleanup"-in other words, the input for the SPA formula-removed a layer of complexity for the jury. Instruction 9 informed the jury what standard it should apply for reasonableness, and Instruction 8 reminded and explained to the jury Clean Harbors' duty to mitigate damages, making the meaning of Question 4 even clearer.

         UPC requested the following language for what became Question 4: "What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Union Pacific for its damages, if any, that resulted from such breach of contract?" UPC's proposed language is not substantively different from the actual Question 4 on the final Verdict Form.

         The Verdict Form asked the jury to make specific findings of fact. When considered together with all of the instructions, the Verdict Form was neither confusing nor prejudicial to UPC.

         The Jury Instruction 5 is a Correct Statement of the Law and Did Not Cause an Inconsistent Verdict

         UPC argues that it is entitled to a new trial because Jury Instruction 5 misstated the law by not being reasonably informative. Instruction 5 stated, in relevant part: "[T]o establish that Union Pacific breached the contract, Clean Harbors must prove that. . . Clean Harbors substantially performed its obligations under the contract. . . ." UPC asserts that this instruction was insufficient because it should have included an additional instruction on material breach or a definitional instruction for substantial performance.

         "A party is not entitled to a particular jury instruction but does have the unqualified right to have the jury instructed on a correct statement of the substance of the law."[17] "A trial court's charge to the jury will not serve as grounds for reversible error if it is 'reasonably informative and not misleading, judged by common practices and standards of verbal communication.'"[18]

         The language of UPC's proposed instruction for substantial performance shows that the Court's decision to exclude it did not mislead the jury. In relevant part, it reads: "A good-faith attempt to perform a contract, even if the attempted performance does not precisely meet the contractual requirement is considered complete if the substantial purpose of the contract is accomplished. This means that the contract has been completed in every significant respect." Failing to inform the jury that substantial performance exists when the "substantial purpose of the contract is accomplished" is hardly misleading according to the "standards of verbal communication." Nor is it against common practices-the pattern jury instruction for breach of contract does not include substantial performance as an element, much less define it.[19] The Court declined to explicitly state the obvious-that the law defines a phrase in line with its common meaning. This decision does not warrant a new trial.

         The Court also had no reason to independently instruct the jury on the concept of material breach. Case law relied upon by UPC in its proposed instructions noted that material breach and substantial performance are simply the inverse of one another.[20] If a party substantially performs, there is no material breach; if there is a material breach, the breaching party cannot have substantially performed. Instruction 5 already stated Clean Harbors' obligation to substantially perform its contract to prove UPC's breach. Stating the same thing negatively-UPC did not breach if Clean Harbors materially breached the contract-would have been redundant. The Court's decision not to include a redundant instruction did not mislead the jury.

         The Court also did not err in declining to include the requested instructions, because whether there is "sufficient evidence to warrant the requested instruction is a matter within the sound discretion of the trial court."[21] UPC put on evidence in an attempt to prove that Clean Harbors committed several material breaches-or, put another way, failed to substantially perform its contract. Its evidence did not persuade the jury. Though the jury found that Clean Harbors breached its contract, it did not award UPC any damages. This finding is not inconsistent with the trial evidence.

         UPC further contends that Jury Instruction 5 led to inconsistent Verdict Form responses. In both Questions 1 and 2, the jury wrote responded "YES" to whether UPC and Clean Harbors, respectively, breached the contract. Jury Instruction 5 required a party to establish it "substantially performed its obligations under the contract" to prove the other party breached the contract. UPC argues both parties could not have breached, as the jury indicated, and also have substantially performed.

         This position would mean that under no circumstances could more than one party breach a contract. Such a contention is inconsistent with contract law and common sense. UPC essentially argues that a finding of substantial performance precludes a finding of any breach, including one that is non-material. This is contrary to the law. As previously explained, where there is a substantial performance, there can be no material breach. This does not mean, however, that substantial performance precludes a non-material breach. Parties suffering non-material breaches are not excused from performance as they would be had they suffered a material ...


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