Summary: The court addressed various post trial motions brought by both parties. Plaintiff's request for oral argument was denied because of the court's extensive familiarity with plaintiff's arguments. The court considered plaintiff's challenge to its damage calculation and held that there was no basis for changing its original damage award. The court also denied defendant's motion to alter or amend judgment on the basis that the court again found that its damage calculation was proper and rejected the calculations made by a fact witness at trial. Finally, both parties motion for costs was denied; the court found that neither party was the prevailing party in that each was successful in some but not all of their respective claims.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHEASTERN DIVISION

MEMORANDUM AND ORDER

Following entry of judgment on the court's findings of fact and conclusions of law, both plaintiff and defendants filed post-trial motions to alter or amend judgment as well as motions for an award of costs.

1. Plaintiff's Motion for Post-Trial Relief and Oral Argument

Plaintiff filed its motion for post-trial relief under Rules 52(b) and 59(e), challenging most of the court's rulings following trial. Because of the complexity of the issues raised, plaintiff requests oral argument. The court finds no need for oral argument because the court is already familiar with plaintiff's arguments. Defense counsel has aptly referred to plaintiff's motion as "deja vu all over again," in the purported words of Yogi Berra. This is not a case in which the court issued summary, impromptu rulings. The court carefully considered all the evidence in the two-week trial record, as well as the parties' extensive trial briefs and post-trial briefs, and issued a forty-page opinion. Plaintiff's post-trial motion does not contain any revelations that convince the court it should reverse course on any of its findings. Essentially it takes issue with the court's decision because the court did not accept plaintiff's liability and damages theories wholesale. The motion largely reasserts the positions plaintiff took at trial, and the court declines the invitation to address them once again. Nevertheless, certain issues do merit brief mention.

The court did not employ a "deeming" accounting method in calculating damages. The court simply rejected plaintiff's assertion that the implied covenant of reasonable development required Coteau to develop the coal reserves subject to plaintiff's royalty interest ahead of the Dakota Star reserves for the LOS and UPA markets, when Basin Electric brought the LOS and UPA markets to Coteau as a consequence of Coteau's purchase of Dakota Star. Therefore, the court limited plaintiff's recovery of damages for displaced royalties to the market that existed prior to the addition of LOS and UPA. That does not amount to a "deeming" method of accounting for the royalties; nor does it have anything to do with the 1982 Purchase Agreement under which the deeming method has been held improper.

The court did previously consider plaintiff's argument that the North Dakota Supreme Court would reject a "time value" of money approach to compensating for royalties and adopt an approach requiring payment of the full royalty amount as damages. This is not a case of abandonment of the mine; instead it is a case of delay, in which some of plaintiff's reserves will await the development of reserves brought into the mine by defendant Coteau's purchase of Dakota Star from defendant Basin. Awarding interest for the period of delay is more appropriate than awarding royalties up front in this situation.

Plaintiff's argument that the court erred in reducing the discount rate used by its damages expert witness fails to recognize the court's duty to independently find the facts in the case. While it is true that defendants elected not to offer a theory of damages at trial, the court was not thereby bound to accept as conclusive all the damages evidence presented by plaintiff. The court applied a discount rate that seemed appropriate under the circumstances.

Plaintiff had a responsibility to present evidence on delay rentals that was not dependent upon the court accepting in toto its damages theory on all other issues. Since the court rejected some of plaintiff's damages approach, it had insufficient information to calculate the amount of underpayment of delay rentals consistent with the court's underlying findings. Consequently, the court ruled that plaintiff had failed in its burden of proof on this damages issue. This was plaintiff's error, not the court's. The court will not revisit the issue at this time.

The court further rejects plaintiff's contention that the court's damage findings are deficient if its economist is unable to precisely replicate the court's calculations. This was a complex case, requiring the court to sift through many difficult and complicated exhibits. The court attempted to explain its approach to damages in its original opinion. The court has reproduced spreadsheets reflecting its calculations, which it now attaches to this order. The court has done so not to provide the parties with an opportunity to minutely dissect the court's findings, but simply to reflect that the calculations are consistent with the methodology the court identified in its opinion. Plaintiff's expert's calculations were of limited assistance to the court because plaintiff made inappropriate assumptions underlying those calculations. Had the parties wanted this case decided by an expert in mine planning, they could have elected another forum. They chose to present the case to a generalist judge in the federal court system and received a generalist's best attempt to fairly and properly resolve the issues between the parties on the evidence presented.

Because of rounding, the final figures in the attached spreadsheets are slightly different from the court's damage award, but come within a few thousand dollars of the original figures. Therefore, the court finds no basis for changing its original damages award.

All other issues presented by plaintiff have been fully addressed in the court's original opinion. Plaintiff's post-trial motion is denied in its entirety.

2. Defendants' Motion to Alter or Amend Judgment

Defendants' motion is limited to a contention that the court made mistakes in its calculation of damages for breach of the implied covenant of development and mining.

In support of their motion defendants have submitted an affidavit and spreadsheet prepared by Karl Lemmerman, a mining engineer employed by Basin Electric who testified as a fact witness at trial. Plaintiff has moved to strike Mr. Lemmerman's affidavit because he was not identified by defendants as an expert witness and because defendants elected at trial to produce no evidence of damages and should not be allowed to do so at this point. The court does not view Mr. Lemmerman as an expert witness, at least not an expert witness subject to the same advance disclosure requirements as those who testified at trial. Nor does the fact that defendants employed a trial strategy of presenting no evidence on the issue of damages prevent them from attempting to demonstrate alleged mistakes in the court's damage calculations. The court has reviewed and considered Mr. Lemmerman's affidavit and attachments. Plaintiff's motion to strike is denied.

Having reviewed Mr. Lemmerman's calculations, and having recalculated damages itself, the court finds that its original damages calculation was proper and rejects the calculations made by Mr. Lemmerman. The court notes a few areas in which it disagrees with Mr. Lemmerman.

Defendants contend the court improperly treated certain tonnage mined in 1993 and 1994 as Dakota Star coal rather than coal from window leases in Mine Areas 1 through 4. Mr. Lemmerman's spreadsheets combine the Renner's Cove tonnage and Mine Area 1 through 4 window lease tonnage into one figure. He indicates that the window lease tons are shown on Exhibit 253. There was no Renner's Cove production yet in 1993 and 1994, and Exhibit 253, which breaks down WCDC and window lease tonnage from Mine Areas 1 through 4, does not start until 1995.

Mr. Lemmerman also appears to allocate the AVS proportionate share of tonnage delivered as a share of only the AVS-gas plant tonnage. The proper AVS proportion is its share of entire mine production. Limiting the AVS share to only the AVS-gas plant market allocates too high a share to AVS and improperly inflates the tons exempt from the WCDC royalty under the 1982 Purchase Agreement. Although the court has held that plaintiff is not entitled to damages on coal delivered to the LOS and UPA markets, those markets must be considered in determining the AVS proportion of coal deliveries for purposes of applying the pro rata accounting method to determine the royalty exemption under the 1982 Purchase Agreement.

Finally, Mr. Lemmerman contends the court included delay caused by production from the Renner's Cove reserves in its damage calculations, contrary to the court's findings on the scope of damages. In reviewing its damage calculations, the court finds that it did not include any damages based on delay in mining WCDC royalty-bearing reserves resulting from mining Renner's Cove. The court's damages calculation will stand as originally determined.

3. Motions for Costs

Both plaintiff and defendants have filed motions for taxation of costs in their favor, claiming to be the prevailing party in this action. An award of costs is within the court's discretion. Fed. R. Civ. P. 54(d)(1) ("costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs"); 28 U.S.C. § 1920 ("A judge or clerk of any court of the United States may tax as costs . . ."). In this case the court declines to award costs to either side. Plaintiff prevailed on its claim of breach of implied duty of reasonable development, but not to the extent that it had claimed, and it lost its intentional interference with contract claims. Defendants prevailed on the intentional interference claims, but did not achieve a dismissal of the breach of implied duty of reasonable development claim. Therefore, the court finds neither side prevailed to an extent that justifies an award of costs and disbursements in the case. Both motions are denied.

IT IS ORDERED:

1. Plaintiff's motion for post-trial relief is denied.
2. Plaintiff's motion for oral argument is denied.
3. Plaintiff's motion to strike the affidavit of Karl Lemmerman is denied.
4. Defendants' motion to alter or amend judgment is denied.
5. Plaintiff's and defendants' motions for taxation of costs are denied.

Dated: January ____, 2000.

Karen K. Klein
United States Magistrate Judge