briefs on these motions, Hughes even argues that it did not have sufficient time before trial to test the undersized bearings in its helicopters that caused this aircraft to fall out of the sky. One would hope that the jury's award of punitive damages would serve its purpose at some point. The feeling producing this jury verdict was an anger appropriate to Hughes' corporate callousness. As Hughes' shoddy practices were amply proven in the courtroom, I will not disturb the jury's finding.
C. Admission Of Service And Operation Reports
Hughes argues that it was error for the Court to admit some thirty-six Service and Operation Reports (SORs) into evidence. These SORs were reports to Hughes of mechanical problems encountered by operators of Hughes helicopters. The defendant contends that the SORs were prejudicial because the incidents reported in them were not sufficiently similar to the incident in this case. Hughes also maintains that the SORs contain double hearsay.
A review of the circumstances leading to the admission of the SORs reveals that Hughes has waived its right to complain. Hughes originally moved in limine to exclude the SORs. I refused to rule abstractly in limine. Instead, I ruled that before the SORs would be admitted, the plaintiff would have to lay a responsible foundation for each SOR, showing that there was sufficient similarity between Bemer's accident and the incident reported to Hughes in the SOR. N.T. April 12, 1985, at 3-5.
When the plaintiff's expert, Lester Kerfoot, testified, however, plaintiff's counsel did not offer the SORs. Kerfoot testified that in his opinion there was an unreasonably dangerous defect in the Model 269C helicopter. When asked on direct examination to explain, Mr. Kerfoot stated that he had "been through" the SORs. N.T. April 12, 1985, at 96. Defense counsel never objected that the SORs were not the type of information reasonably relied upon by experts in the field. Fed. R. Evid. 703. Defendant's motion in limine did not address this point; it merely concerned the admissibility of the reports. Under Rule 703, if the information upon which the expert relies is "of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence." Fed. R. Evid. 703. Thus, the motion in limine was not an objection to Kerfoot's use of the SORs in forming his opinion.
Ironically, it was not plaintiff's counsel who opened the door to the admission of the SORs. Rather, defense counsel, on cross-examination, took Kerfoot, plaintiff's expert, through each and every Service and Operation Report to try to show the jury that the reported incidents were dissimilar to the incident that led to the trial and that Hughes was not responsible for any of the problems associated with Bemer's helicopter. Defense counsel made a strategic decision to explore the substance of the SORs. Once the defendant examined the witness on each SOR, he opened the door for the plaintiff to pursue the SORs on redirect with Mr. Kerfoot and with other witnesses.
See Burgess v. Premier Corp., 727 F.2d 826, 834 (9th Cir. 1984); 1 J. Weinstein and M. Berger, Weinstein's Evidence, § 103, at 12-15 (1982) (attorney can waive his client's right to raise an error on appeal by deliberately eliciting inadmissible evidence).
Moreover, I find that the SORs were business records of incidents sufficiently similar to the incident here to justify their admission into evidence. Further, the differences between the SORs and this incident were fully developed on cross examination and fairly presented to the jury, so there was no unfair prejudice from their use at trial. They were admissible as a reasonable basis for the experts' opinions and to show defendant's knowledge of problems with this helicopter model.
D. Motion to Strike the Testimony of Manuel Raefsky
Defendant Hughes' final contention is that the Court erred in refusing to strike the expert testimony of Mauel Raefsky, a metallurgical engineer who testified that the defect in Bemer's helicopter was Hughes' use of the wrong bearing. Hughes objects to Raefsky's testimony on the grounds of unfair prejudice and surprise. Hughes notes that in plaintiff's answers to interrogatories, plaintiff stated that Raefsky would testify that "the lower pulley bearings failed due to lack of lubrication which is caused by the system lacking an adequate means for retaining lubrication, inadequate lubrication instructions, inadequate warnings as to aircraft washings and inadequate warnings as to preflight inspection of the bearings." Defendant claims prejudice and unfair surprise because it was not prepared for the substance of Raefsky's testimony, namely, that the bearings themselves were defective.
In Meyers v. Pennypack Woods Home Ownership Association, 559 F.2d 894 (3d Cir. 1977), the Court of Appeals held that the district court abused its discretion by excluding the testimony of two witnesses not listed in a pretrial memorandum. The Court considered the following factors in making its determination:
"(1) the prejudice or surprise in fact of the party against whom the excluded witnesses would have testified, (2) the ability of that party to cure the prejudice, (3) the extent to which waiver of the rule against calling unlisted witnesses would disrupt the orderly and efficient trial of the case or of other cases in the court, and (4) bad faith or willfulness in failing to comply with the court's order."
559 F.2d at 904-05.
Under Rule 26(e)(1)(B) of the Federal Rules of Civil Procedure, plaintiff did have a duty to supplement his answers to expert witness interrogatories; however, under the Meyers analysis, it was not error to refuse to strike Raefsky's testimony. The court stated in Meyers that the exclusion of critical evidence is an "'extreme' sanction, . . . not normally to be imposed absent a showing of willful deception or 'flagrant disregard' of a court order by the proponent of the evidence." 559 F.2d at 905 (citation omitted). I find that there is no real evidence of willful deception or flagrant disregard of an order by the plaintiff.
I also find that the unfair surprise and prejudice to the defendant was minimal. Defendant's own expert, Stuart Matheson, addressed the issue of the quality of the bearing in his expert report. During Matheson's deposition, plaintiff's counsel repeatedly questioned the witness about whether or not the problem with the lower pulley bearing was really with the bearing itself and not with its lubrication. From these questions posed to Hughes' expert, Hughes had notice that Bemer questioned the integrity of the bearing. Defendant's counsel was not unprepared for Raefsky's opinion. He cross-examined Raefsky effectively and at length, and two of defendant's own witnesses gave extensive testimony that the bearing was not defective.
Counsel for Hughes contributed to its alleged unpreparedness by never deposing Raefsky before trial, even though he was listed as an expert witness. For all the voluminous pretrial motions and discovery, this useful discovery was omitted. Nor did counsel request a continuance to allow him to prepare his cross-examination of Raefsky. He requested that court adjourn early to allow for more preparation time, and the Court granted that request. N.T. April 15, 1985, at 212-13. In light of the minimal prejudice, lack of bad faith, and the steps defense counsel failed to take to cure whatever prejudice defendant did suffer, I will not strike Manuel Raefsky's testimony.
V. Pre-Judgment Interest
Plaintiff has requested pre-judgment interest on its award of damages for rescission.
Under California law, the statute provides:
"(a) Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day . . . ." Cal. Civ. Code § 3287(a).
Plaintiff is entitled to prejudgment interest as a matter of right if, as a matter of law, damages are "certain, or capable of being made certain by calculation." Levy-Zentner Co. v. Southern Pacific Transportation Co., 74 Cal. App.3d 762, 798, 142 Cal. Rptr. 1, 24 (Cal Ct. App. 1977).
As one California court has noted, the statutory test of whether damages are certain or capable of being made certain by calculation "is not an easy one to apply." Marine Terminals Corp. v. Paceco, Inc., 145 Cal. App.3d 991, 996, 193 Cal. Rptr. 687, 689 (Cal. Ct. App. 1983). However the court in Marine Terminals derived a number of principles from the case law to clarify the test. Pre-judgment interest is not allowable "where the amount of damages is unliquidated and depends upon the jury's resolution of conflicting evidence." Cal. App.3d at 996, 193 Cal. Rptr. at 689 (citations omitted). But "the defendants' denial of liability in itself does not make the damages uncertain." 145 Cal. App.3d at 996, 193 Cal. Rptr. at 689 (citations omitted) (emphasis in original). Rather, a court will deem damages capable of being made certain by calculation "if the amount due can be determined by reference to a fixed standard: e.g., a payment schedule . . . [,] a readily ascertainable market value . . . [,] or data supplied by plaintiff to defendant . . ." 145 Cal. App.3d at 196-97, 193 Cal. Rptr. at 689-90 (citations omitted). Applying these principles to the facts of this case, I find that plaintiff is entitled to pre-judgment interest since plaintiffs' damages were capable of being made certain by calculation.
First, plaintiffs' damages were liquidated. At trial, plaintiff presented documentary evidence to show that it was entitled to $70,547.23 in compensatory damages. The jury awarded plaintiff damages in exactly this amount.
Although Hughes denied both liability and the amount of damages it owed, plaintiff is entitled to pre-judgment interest "where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable but where their dispute centers on the issue of liability giving rise to damages." Leff v. Gunter, 33 Cal.3d 508, 519, 658 P.2d 740, 788, 189 Cal. Rptr. 377, 385 (Cal. 1983).
In the present action, Hughes disputed the amount of plaintiff's claim by alleging that it was entitled to set-off the income that plaintiff earned by its use of the helicopter. However, California case law holds that a plaintiff is entitled to pre-judgment interest even if the plaintiff's certain and liquidated claim under a contract is reduced by a defendant's unliquidated set-off or counterclaim. Hansen v. Covell, 218 Cal. 622, 629-31, 24 P.2d 772, 775-76 (Cal. 1933); E. L. White, Inc. v. City of Huntington Beach, 138 Cal. App.3d 366, 378, 187 Cal. Rptr. 879, 887 (Cal. Ct. App. 1982); Bentz Plumbing & Heating v. Favaloro, 128 Cal. App.3d 145, 152, 180 Cal. Rptr. 223, 228 (Cal. App. Ct. 1982); Leaf v. Phil Rauch, Inc., 47 Cal. App.3d 371, 375-76, 120 Cal. Rptr. 749, 753 (Cal. App. Ct. 1975).
The present case is one in which damages are capable of being made certain by calculation by reference to a fixed standard. Leaf v. Phil Rauch, Inc., 47 Cal. App.3d 371, 120 Cal. Rptr. 749 (Cal. App. Ct. 1975). In Leaf, the buyers of a new automobile sued the dealer and the manufacturer and sought to rescind a conditional sales contract for the automobile. The plaintiffs won at trial but appealed, in part, because the trial judge failed to award them pre-judgment interest on their award of compensatory and consequential damages. Regarding the award of pre-judgment interest in cases of rescission, the court noted:
"In an action based upon rescission of a contract, the plaintiff's right to repayment of moneys paid under the contract is fixed by the rescission, and interest on the moneys paid thus is recoverable from the date of rescission."