Opinion
Case No. 00-4015-RDR.
March 5, 2001.
ORDER
This is a diversity action brought by plaintiffs Rodney Joe Fillmore and David A. Deardorff against Farell McAtee d/b/a Trinity Gas Investors alleging fraud. Plaintiffs contend that they were defrauded when they purchased stock in Trinity Gas Investors. They allege that the defendant made certain misrepresentations that induced them to purchase stock. They assert that they paid $25,350.00 for 50,700 shares on July 18, 1997, and $26,200.00 for 52,400 shares on August 27, 1997. They seek compensatory damages of $51,550.00 plus prejudgment interest from the date of the stock purchases and punitive damages of $154,650.00.
On January 30, 2001, the court granted plaintiffs' motion for default judgment and scheduled a hearing to determine the amount of damages to be awarded to them. Prior to the hearing, the court held a telephone conference with plaintiffs. At that time, plaintiffs argued that a hearing was not necessary. They asserted that they had additional information that would allow the court to reach a decision on the amount of damages without a hearing. The court agreed to allow the plaintiffs to provide the court with some additional information and then determine if a hearing was necessary. Since that telephone conference, plaintiffs have submitted additional documents to the court. Based upon the receipt of that information, the court now concludes that a hearing on damages is not necessary. The court shall proceed to determine the amount of damages to be awarded to plaintiffs.
"Once the court determines that a judgment by default should be entered, it will determine the amount and character of the recovery that should be awarded." 10 Wright, Miller Kane, Federal Practice and Procedure: Civil 3d § 2688, p. 63 (1998). The amount requested by plaintiffs for compensatory damages is a liquidated sum. Accordingly, the court shall award the amount of compensatory damages sought by plaintiffs. See Hunt v. Inter-Globe Energy, Inc., 770 F.2d 145, 148 (10th Cir. 1985) (hearing to determine compensatory damages not necessary where amount claimed is a liquidated sum or one capable of mathematical calculation).
The court shall also award prejudgment interest to plaintiffs. See Macsenti v. Becker, 237 F.3d 1223, 1245 (10th Cir. 2001) (prejudgment interest in diversity case is a matter of state law). Under Kansas law, prejudgment interest is allowable on liquidated claims. K.S.A. 16-201; Hamilton v. State Farm Fire and Casualty Co., 263 Kan. 875, 953 P.2d 1027, 1033 (1998). The court shall allow prejudgment interest from the date of the commencement of this action.
Finally, the court shall consider plaintiffs' request for punitive damages. In a diversity case, whether punitive damages are warranted is a matter of state law. The Post Office v. Portec, Inc., 913 F.2d 802, 809 (10th Cir. 1990), vacated on other grounds, 499 U.S. 915, (1991). Punitive damages may be awarded in cases of fraud or willful misrepresentation. Tetuan v. A.H. Robins Co., 241 Kan. 441, 738 P.2d 1210, 1239 (1987). In determining the amount of punitive damages to be awarded, the court may consider the following: (1) the likelihood at the time of the alleged misconduct that serious harm would arise from the defendant's misconduct; (2) the degree of the defendant's awareness of that likelihood; (3) the profitability of the defendant's misconduct; (4) the duration of the misconduct and any intentional concealment of it; (5) the attitude and conduct of the defendant upon discovery of the misconduct; (6) the financial condition of the defendant; and (7) the total deterrent effect of other damages and punishment imposed upon the defendant as a result of the misconduct, including, but not limited to, compensatory, exemplary and punitive damage award to persons in situations similar to those of the claimant and the severity of the criminal penalties to which the defendant has been or may be subjected. K.S.A. 60-3701(b).
The defendant failed to respond to certain requests for admissions submitted by the plaintiffs. In those requests, plaintiffs asked the defendant to admit that an award of punitive damages of $150,000.00 was appropriate. Given the defendant's failure to respond, the court finds that an award of $150,000.00 is appropriate. The court shall award that amount.
IT IS THEREFORE ORDERED that plaintiffs are entitled to a judgment against the defendant in the amount of $51,550.00 in compensatory damages, plus prejudgment interest from the commencement of the action pursuant to K.S.A. 16-201, and $150,000.00 in punitive damages.
IT IS SO ORDERED.