Opinion
No. SA-03-CV-932
March 8, 2004
ORDER AFFIRMING FINAL JUDGMENT OF THE UNITED STATES BANKRUPTCY COURT
Before the Court is Appellant Stone's Appeal from the Final Judgment of the United States Bankruptcy Court granting Appellee exemplary damages (Docket no. 9), filed October 23, 2003, Appellee's Response, and Appellant's Reply. For the following reasons, the Court AFFIRMS the decision of the Bankruptcy Court.
Appellant raises a number of other issues but as explained, infra, only the issue of exemplary damages is properly before the Court.
Factual background is taken from the District Court's Order (Judge Prado) on the first appeal, prior to remand. See In re Franklin Wright, SA-00-CA-166 (Docket no. 22) ("2000 Prado Order").
Franklin Wright practiced law in San Antonio until November 6, 1998, when his law license was suspended because of a federal criminal conviction for tax evasion. He was indicted in April 1997 and convicted on December 19, 1997. Wright had a personal injury practice. As part of that practice, he brought in Appellant Robert Stone to assist with cases. Wright would generally sign contracts with clients. Wright would informally refer cases to Stone for Stone to complete the litigation work. The agreement between the two lawyers was not in writing, but generally involved Wright and Stone splitting the fees. Wright was responsible for all overhead costs.
Shortly after Wright's conviction, Stone took client files from the office and set up a new office. He did not tell anyone that he was planning to take the files, and, in fact, took them on Christmas Eve when no staff was in the office. The files were all cases on which Stone had been working. Stone then visited several of the clients. During these visits, at which Stone arrived with new contracts, Stone would inform the clients of Wright's conviction. All the clients Stone visited fired Wright and hired Stone.
Wright filed a Chapter 11 bankruptcy petition on July 9, 1998. The case became a Chapter 7 bankruptcy case and Johnny W. Thomas was appointed trustee.
The Trustee is the real party in interest in this adversary proceeding.
After a bench trial, Judge Clark issued his Findings of Fact and Conclusions of Law ("FFCL") on June 10, 1999, determining that Stone was liable for tortious interference with contract and for conversion. The tortious interference finding was based on the clients who fired Wright and hired Stone after being visited by Stone. The conversion finding was based on clients who had never fired Wright. The final judgment awarded $86,065.97 in damages for conversion, $50,000 in exemplary damages for conversion, and $2,990,900 in actual damages for tortious interference with contract. No exemplary damages for tortious interference were awarded. The amount of damages was based on Judge Clark's conclusions that the fee-splitting agreements between Wright and Stone were unenforceable, and that, therefore, Wright's damages would be the entire amount of the fees.
On appeal to the district court, Judge Prado reversed the Bankruptcy Court as to all conversion claims except the claim relating to the Un Yong Kwon contingency fees. The District Court's Order ("Prado Order") affirmed the finding of liability and actual damage for tortious interference. The Prado Order affirmed the Bankruptcy Court's denial of prejudgment interest. The Prado Order further ruled that the Bankruptcy Court applied the wrong standard for exemplary damages as to the conversion claim and as to the tortious interference claim. The case was remanded to the Bankruptcy Court on the issue of exemplary damages for both conversion and tortious interference. The Prado Order did not address the effect of the remand on postjudgment interest. The Prado Order was appealed to the circuit court, which dismissed the appeal for lack of jurisdiction, holding that the district court's ruling was not a final appealable order.
The actual damages awarded for the Kwon contingency fee was $12,000.
The District Court ruled that the Bankruptcy Court should have used the standard set out in Chapter 41 of the Texas Civil Practice Remedies Code. See TEX.CIV.PRAC. REM. CODE ANN., § 41.002(a) (Vernon 1997). Section 41.003(a) of the Code explains that "exemplary damages may be awarded only if the claimant proves by clear and convincing evidence that the harm with respect to which the claimant seeks recovery of exemplary damages results from: . . . (2) malice." Id.
On remand, the Bankruptcy Court held that the evidence at trial showed by clear and convincing evidence, that Stone's conduct, both with respect to the conversion claim and the tortious interference claim, was malicious within the meaning of Section 41.001(7) of the Texas Civil Practice and Remedies Code (the "Code").
In the first decision, the Bankruptcy Court used a preponderance of the evidence standard
Malice is defined by the Code as:
(A) a specific intent by the defendant to cause substantial injury to the claimant; or
(B) an act or omission:
(i) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others, and
(ii) of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others."
TEX.CIV.PRAC. REM. CODE ANN., § 41.001(7) (Vernon 1997)
For the conversion claim, the Court found malice under § 41.001(7)(A) based on three reasons. The Bankruptcy Court found that Stone acted with specific intent to injure Wright because Stone knew that Wright, not Stone, was singularly entitled to the fees; that Stone's conversion of the contingency fee deprived Wright of the $12,000 fee, thereby causing financial injury to Wright; and that conversion of $12,000, is "substantial." Thus, the Bankruptcy Court found by clear and convincing evidence that Stone acted with malice within the definition provided for by § 41.001(7)(A).
In re Franklin Wright, Bankr. Case. no. 98-53314-C, Adv. Proc. No. 98-5119, filed June 6, 2001, at 4. ("2001 Clark Memorandum Order").
The Bankruptcy Court found malice under § 41.001(7)(B) for the tortious interference claim. Judge Clark found that, viewed objectively from the standpoint of Stone, Stone's acts involved an extreme degree of risk as to Wright, especially when the risk is considered in light of the probability and magnitude of the potential harm to Wright (approximately $3,000,000 in contingency fees). Judge Clark also found that Stone intended this action. Judge Clark found that Stone had an actual, subjective awareness of the risk involved, but nevertheless proceeded with conscious indifference to the rights, safety, or welfare of Wright. Judge Clark found that Stone knew, as would any lawyer in his position, that the result of his conduct would be that Wright would be cut out of $3 million in contingency fees. Judge Clark found that such knowledge did not deter Stone who culled out the most profitable files, taking them out of the office after hours, drove to meet clients, with pre-prepared forms ready to present to the clients, certain that once the forms were completed, he and not Wright would be able to recover the client's fee. Stone incited Wright's clients to fire Wright, and knew that he was the only party who stood to gain, not Wright or Wright's clients. Judge Clark held that given the extensive and credible evidence that Stone acted consciously and indifferently to Wright's rights, malice was established by clear and convincing evidence.
See § 41.001(7)(A)(i).
See § 41.001(7)(A)(ii).
After establishing that exemplary damages were proper for both claims, Judge Clark conducted the analysis provided for by the Code for determining the amount of exemplary damages. The Code specifies six factors a court must use to determine the amount of exemplary damages: (1) the nature of the wrong; (2) the character of the conduct involved; (3) the degree of culpability of the wrongdoer; (4) the situation and sensibilities of the parties concerned; (5) the extent to which such conduct offends a public sense of justice and propriety; and (6) the net worth of the defendant. The Court held that the evidence adduced at trial satisfied five of the six elements for determining the amount of exemplary damages when malice is found. The Bankruptcy Court held a hearing to consider further evidence on the sixth element, the net worth of the defendant, because no evidence of net worth had been presented at trial. At the conclusion of the hearing, Judge Clark found that Stone's net worth on the relevant date was $391,386.00.
TEX.CIV.PRACT. REM. CODE ANN., § 41.011 (West 1997).
The Bankruptcy Judge denied Stone's motion to submit mitigation evidence because, after considering the intended scope and purpose of the evidence intended to be offered, the Bankruptcy Judge found the evidence was not relevant to the issues before the court on remand and was highly prejudicial. The Bankruptcy Judge held that Stone already presented evidence of mitigation at the trial on the merits, and that Stone was seeking to retry matters that were not remanded by the District Court. The Bankruptcy Court held that the purpose of mitigating evidence is to demonstrate whether the intended purpose of a punitive damage award has already been satisfied by the defendant's own voluntary actions to set things right. The evidence Stone sought to introduce concerned what other persons had to say about Wright, and thus was not relevant to Stone's conduct.
See Owens Corning Fiberglass Corp. v. Malone, 972 S.W.2d 35, 38 (Tex. 1998).
As to the factors for determining the amount of punitive damages, the Bankruptcy Court found that for the conversion claim, the nature of the wrong is civil theft; the character of the conduct is quasi-criminal; and the degree of culpability is high because a lawyer is presumed to know that conversion of another's property is wrong as a matter of law. As for the fourth element, the bankruptcy court described the situation and sensibilities of the parties as follows: Wright's office was in chaos, his employees left to wonder what their futures would be; his clients were, for the most part, not sophisticated consumers of legal services, and so were unaware of the rights and entitlements of the lawyers who were handling their matters. Stone was in a position to take advantage of the confusion, and did so. The Bankruptcy Judge also found the fifth element, that Stone's conduct offends a public sense of justice or propriety because lawyers who know the law are expected to abide by it. They are most at risk with they use their knowledge of the law to the disadvantage of others. When a lawyer takes advantage of the trust placed in him by other lawyers, especially other lawyers with whom he is closely associated, that sense of public justice and propriety is especially offended.
In re Franklin Wright, Bankr. Case. no. 98-53314-C, Adv. Proc. No. 98-5119, filed May 19, 2003, at 6 ("2003 Clark Judgment").
Id.
The Bankruptcy Court found that these five factors taken together support an exemplary damage award. The court, noting that the Supreme Court held that an award in excess of four times the amount of actual damages "might be close to the line of constitutional impropriety," the Court tripled the actual damages and entered an exemplary damages award in the amount of $36,000 as to the Trustee's conversion claim.
See State Farm Mutual Automobile Insurance Co. v. Campbell, 123 S.Ct. 1513, 1514 (2003) [internal citations omitted].
As for the sixth factor, that of defendant's net worth, the Bankruptcy Judge's review of Texas law determined that Texas does not have any rule for a percentage of net worth that is acceptable for exemplary damages save for statutory limits that is not exceeded in this case. Compared to the exemplary damages awarded in other Texas cases, an award of $36,000 against Stone whose net worth is almost $400,000, is not excessive.
See TEX.CIV.PRACT. REM. CODE ANN., § 41.008 (West 1997).
"See Parker v. Parker, 897 S.W.2d 918, 930-31 (Tex.App. 1995) (punitive damages of 21% of defendant's net worth awarded); Ellis County State Bank v. Keever, 913 S.W.2d 605, 610 (Tex.App. 1995) (allowed punitive damages of $1 million against a net worth of $770,000).
As for the tortious interference claim, the Bankruptcy Court found that the nature of the wrong is a tort with primarily economic injury; and the character of Stone's conduct was selfish and without regard to the right's of others. As for the third factor, the degree of culpability, Stone argued that he had no culpability because he was merely looking out for his client's best interests and was constrained by the Rules of Professional Conduct to let his client's know of their alternatives. The Bankruptcy Court had already rejected this argument at the trial on the merits, and this finding was affirmed on appeal by Judge Prado. Thus, the Bankruptcy Judge found Stone to be culpable. The Bankruptcy Judge also stated the sensibilities of the parties involved, and found that tortious interference with another lawyer's relationships offends a public sense of justice and propriety.
2003 Clark Judgment, at 10.
2003 Clark Judgment, at 11.
The Bankruptcy Judge then held that the analysis of the five elements confirms that an exemplary damage award sufficient to punish the wrongdoing and deter conduct of this sort is appropriate. While exemplary damages of two of three times the actual damages are not unusual, because the underlying damage award is primarily economic in nature, section 41.008(b) of the Code sets a limit of in exemplary damages. Subtracting the $36,000 awarded for the conversion claim, the Bankruptcy Judge awarded exemplary damages of $164,000 for the tortious interference claim, for a total of $200,000. The Bankruptcy Court found this award was appropriate in light of Stone's net worth. Since Stone has done nothing to mitigate the damage to Wright's estate, the court found that an award of $200,000 was sufficient for Stone to "feel the sting," but not high enough to consume his net worth, and does not render Stone "even remotely destitute."
2003 Clark Judgment, at 13.
II. Discussion
A. Jurisdiction
This Court has jurisdiction over this case pursuant to 28 U.S.C. § 158(a) and Federal Rule of Bankruptcy Procedure 8001.
B. Standard of Review
The standard of review for a bankruptcy appeal by a district court is the same as when a Court of Appeals reviews a district court proceeding. Accordingly, the Court reviews a bankruptcy court's conclusions of law de novo, findings of fact for clear error, and mixed questions of law and fact de novo. Rulings regarding the admission or exclusion of evidence are reviewed for abuse of discretion.
See In re Nat'l Gypsum Co., 208 F.3d 498, 504 (5th Cir. 2000).
Gen. Elec. Co., v. Joiner, 522 U.S. 136, 138-39 (1997); Reddin v. Robinson Prop. Group, 239 F.3d 756, 759 (5th Cir. 2001).
C. Analysis
Because this case reaches us on appeal for the second time, we must consider the implications of the prior district court opinion in this case and the well-settled "law of the case" doctrine. Under the law of the case doctrine, an issue of law or fact decided on appeal may not be reexamined either by the lower court on remand, in this case the Bankruptcy Court, or by the appellate court, in this case the District Court, on a subsequent appeal. Thus, on remand, the Bankruptcy Court was only liberty to address the issue remanded by Judge Prado, exemplary damages. Accordingly, the Bankruptcy Court properly declined to retry liability or actual damages.
See United States v. Becerra, 155 F.3d 740, 752 (5th Cir. 1998) [internal citations and quotations omitted].
Id.
Becerra, 155 F.3d at 753 [internal citations and quotations omitted] ("A corollary of the law of case doctrine, known as the mandate rule, provides that a lower court on remand must implement both the letter and the spirit of the appellate court's mandate, and may not disregard the explicit directives of that court. The mandate rule simply embodies the proposition that a district court is not free to deviate from the appellate court's mandate.").
This Court likewise cannot address any issue other than exemplary damages unless one of the three exceptions to the law of the case doctrine applies. A prior decision of the appellate court can be re-examined if: (i) the evidence on a subsequent trial was substantially different, (ii) controlling authority has since made a contrary decision of the law applicable to such issues, or (iii) the decision was clearly erroneous and would work a manifest injustice.
Unlike res judicata, the law of the case doctrine applies only to issues that were actually decided, rather than all questions in the case that might have been decided, but were not. Alpha/Omega Ins. Services, Inc. v. Prudential Ins. Co. of America, 272 F.3d 276, 279 (5th Cir. 2001); Clifford v. Gibbs, 298 F.3d 328, 331 (5th Cir. 2002). But, even if issues have not been expressly addressed in Judge Prado's Order, if those matters were fully briefed to and necessary predicates to the Judge Prado's ability to address the issue or issues specifically discussed, those issues are deemed to have been decided tacitly or implicitly, and their disposition is law of the case. Alpha/Omega, 272 F.3d at 279. But if the issues were not briefed, the law of the case doctrine does not bar this Court from addressing them now.
Becerra, 155 F.3d at 753.
The first exception does not apply in this case because in determining punitive damages the Bankruptcy Court reviewed the evidence from the 1999 trial. The only new evidence gathered on remand was the net worth of Stone. All factual determinations from the trial on the merits were not disturbed on appeal or on remand.
2003 Clark Judgment, at 5.
Id.
Id. 2000 Prado Judgment.
Stone argues that the second exception applies in this case because he alleges that Wal-Mart Stores, Inc. v. Sturges, changed the law of tortious interference with contract. Stone argues that based on Struges, at least one Texas court has found that tortious interference with contract requires "an intentional or willful act that would be actionable under a recognized tort." The trustee replies that Sturges only articulated the standards for liability for tortious interference with prospective business relations.
57S.W.3d 711(Tex. 2001).
Gulf Coast Radiology Assocs. v. Malek, 2003 WL 1988624 at *2 (Tex.App 2003).
Sturges, 52 S.W.3d at 726 ("We therefore hold that to recover for tortious interference with a prospective business relation a plaintiff must prove that the defendant's conduct was independently tortious or wrongful." Id.).
Having reviewed the cases, the Court finds that the trustee has the better argument on this point. Sturges was clearly addressing tortious interference with prospective business relations, not tortious interference with contract. In fact, the Surges court noted the two have been judged by different standards. And, subsequent to Sturges, the Texas Supreme Court again articulated the elements of tortious interference with contract in Butnaru v. Ford Motor Co., The Butnaru court did not include an independent tort element, and did not state that the standard for tortious interference with contract was changed by the opinion in Sturges. Thus, there has been no contrary decision of law by controlling authority since Judge Prado's Order.
Sturges, 52 S W.3d at 716-721, 725.
84 S.W.3d 198, 207 (Tex. 2002).
Butnaru, 52 S.W.3d at 725.
The third exception also does not apply in this case. Contrary to Stone's one sentence assertion, a review of the record shows that the liability rulings against Stone are not clearly erroneous or manifestly unjust.
Stone also argues that the law of the case doctrine does not apply because a different standard of review applied. A different standard of review applied only to the remanded exemplary damages issue, not to liability or actual damages. Thus, the law of the case doctrine applies to all issues that were not remanded — all issues other than exemplary damages.
With this principle in mind, the Court will now go through all claims raised by Stone and the trustee. Stone's first claim is that he did not act with malice as defined by the Section 41.001(7)(B) of the Code. In support of this claim, Stone disputes the factual basis for the liability finding, rearguing the facts found in support of liability and defenses rejected by Judge Prado, such as privilege or justification. Such an argument is barred by the law of the case doctrine.
See Stone's Brief, at 17-25, Sections V.A.I.a. V.A.I.b, V.A.I.c, V.A.I.d.
Supra. at 12-13.
In support of this claim, Stone also argues that Section 41.001(7)(B) applies only to gross negligence, not to intentional torts. However, Stone has cited no authority that excludes intentional torts from the scope of Section 41.001(7)(B)'s definition of malice. The 1995 version of Chapter 41 states: "[t]his chapter applies to any action in which a claimant seeks exemplary damages relating to a cause of action." Furthermore, many courts have applied the Section 41.001(7)(B) definition of malice to intentional torts. Finally, if Stone's argument were correct, it would mean punitive damages would apply to negligent torts but not intentional torts, a result which is neither just nor reasonable,
See Stone's Brief, at 25, Section V.A.2.
TEX.CIV.PRAC. REM. CODE § 41.002(a).
See, e.g., Roth v. Mims, 298 B.R. 272, 297-298 (N.D. Tex. 2003); Mims v. Kennedy Capital Mgmt., Inc., 239 B.R. 93, 116 (Bankr. N.D. Tex. 1999); Eberle v. Adams, 73 S.W.3d 322, 338-39 (Tex.App.-Houston [1st Dist. 2001]).
See TEX.GOV. CODE § 311.021(3).
Stone also disputes the Bankruptcy Court's determination of the objective prong of malice, specifically the determination of the degree of risk Stone's conduct involved considering the possibility of harm to others. In order to show malice under this prong, the Defendant's conduct must involve an extreme degree of risk. "Extreme risk is a function of both the magnitude and the probability of the anticipated injury to the plaintiff. The extreme risk requirement is not satisfied by a remote possibility of injury or even a high probability of minor harm, but rather the likelihood of serious injury to the plaintiff. Despite Stone's continuing disagreement with liability, the facts are that Stone's action, which was not necessary to protect the clients, whose cases were being handled by Stone anyway, was knowingly done to ensure that Stone, not Wright, got the legal fee. Furthermore, contrary to Stone's assertion otherwise, the loss of almost $3,000,000 in legal fees is a serious injury, equivalent to financial ruin, particularly considering what Wright was facing at the time Stone committed these acts, prison and disbarment, facts of which Stone was aware.
Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 22 (Tex. 1994).
Id.
1999 Clark Judgment, at 21-22.
Id.
Id.
Stone also disputes the subjective prong of malice. The subjective prong is defined as an act or omission of which the actor has subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others. Stone again argues facts found by the Bankruptcy Court at the trial on the merits and upheld on appeal. Such an argument is barred by the law of the case doctrine. As previously stated, Judge Clark found that Stone knew, as would any reasonable lawyer in his position, that the result of his conduct would be that Wright would be cut out of $3 million in contingency fees. Judge Clark found that such knowledge did not deter Stone who culled out the most profitable files, taking them out of the office after hours, drove to meet clients, with pre-prepared forms ready to present to the clients, certain that once the forms were completed, he and not Wright would be able to recover the client's fee. Stone incited Wright's clients to fire Wright, and knew that he was the only party who stood to gain, not Wright or Wright's clients. This Court finds that given the extensive and credible evidence that Stone acted consciously and indifferently to Wright's rights regarding the tortious interference claim, malice as defined by Section 41.001(7)(B) of the Code was established by clear and convincing evidence.
TEX.Civ.PRAC. REM. CODE ANN., § 41.001(7).
Stone's second claim is that he did not act with malice as defined by the Section 41.001(7)(A) of the Code which defines malice as a specific intent by the defendant to cause substantial injury to the claimant. The bankruptcy court found specific intent based on three reasons. First, that Stone "knowingly, intentionally, deliberately and designedly" converted a contingency fee to which only Wright was entitled. Second, that it was Stone's knowledge of Wright's singular entitlement to the contingency fee that led Stone to get his own contracts with those clients whose cases were worth the most money. And, third, that Stone is (and was at the time) an experienced personal injury lawyer, and may be presumed to have known that the rules which govern the collection of contingency fees placed him in a precarious legal position.
TEX.CIV.PRAC. REM. CODE ANN., § 41.001(7)(A) (Vernon 1997).
2001 Clark Judgment at 4.
The argument Stone makes in opposition to these findings is to reargue the question of liability as to the conversion claim. That argument is barred by the law of the case doctrine. However, exemplary damages cannot be awarded unless Stone intended to inflict substantial injury. Stone first argues there was no substantial injury because once he learned the fee was disputed, he kept the fee in trust. However, Stone did not deposit the fees in the trust until after the 1999 Clark Judgment was entered. In addition, whether Stone put the money in trust once this action was initiated against him does not speak to the fact that it was wrongfully taken from Wright in the first place.
TEX.CIV.PRAC. REM. CODE ANN., § 41.001(7)(A) (Vernon 1997).
Trustee's Response, at 30.
Stone also argues that conversion of $12,000 is not substantial. Neither party points to any Texas case which provides a minimum amount of money that must be wrongfully taken before the injury is substantial. However, Texas courts have upheld findings of malice, and awards of exemplary damages, based on actual damages around $12,000. Furthermore, regardless of whether $12,000 now seems like a small amount considering the size of the tortious interference damages awarded in this case, the Court finds by clear and convincing evidence that Stone acted with specific intent to cause substantial injury to Wright, and thus a finding of malice was appropriate for the conversion claim.
See Dillard Dept. Stores, Inc. v. Silva, 106 S.W.3d 789 (Tex.App. 2003) (the appeals court upheld a jury's award of actual damages of $13,124.01, and upon a finding of malice, an award of exemplary damages of $50,000); See also Durban v. Guajardo, 79 S.W.3d 198 (Tex.App. 2002) (appeals court upholds jury award of actual damages of $7,000 based on assault, and upon finding of malice, exemplary damages of $25,000). Steinhagen v. Ehl, 2003 WL 23189467 (Tex.App. 2004) (in a jury trial involving a claim of conversion, the jury awarded actual damages of $35,431 and upon a finding of malice, awarded exemplary damages of $50,000).
Stone's third claim is that the exemplary damages are unconstitutionally excessive. Stone argues that the Bankruptcy Court misapplied the Section 41.011(a) factors. The Code specifies six factors a court must use to determine the amount of exemplary damages: (1) the nature of the wrong; (2) the character of the conduct involved; (3) the degree of culpability of the wrongdoer; (4) the situation and sensibilities of the parties concerned; (5) the extent to which such conduct offends a public sense of justice and propriety; and (6) the net worth of the defendant. Stone argues that the alleged wrong was purely economic. Texas law provides for exemplary damages for economic harm but caps those damages at $200,000. The Bankruptcy Court appropriately awarded damages accordingly.
TEX.CIV.PRACT. REM. CODE ANN., § 41.011.
TEX.CIV.PRACT. REM. CODE ANN., § 41.008.
Stone's argument for the second through fifth factors is a rehash of his factual arguments which attack liability. Such an argument is barred by the law of the case doctrine. Stone's argument on the sixth factor is that the typical ratio between exemplary damages and net worth is 1% while the ratio awarded in this case exceeds 50%. Stone cites a Seventh Circuit case which stated that the typical ration of punitive damage awards is around 1%. However, no such rule applies in Texas. In the Texas case cited by Stone, Missouri Pac. R.R. Co. v. Lemon, a jury awarded $11,000,000 in damages, which was approximately 1% of the Defendant's net worth. However, Lemon points to no rule or law that exemplary damages should be 1% of a defendant's net worth. In this case, the Bankruptcy Court considered the constitutional limits of an exemplary award, the practice in Texas, and statutory restraints in determining the exemplary damages award, and determined the award accordingly. The Court notes the exemplary damage award was significantly less than the actual damages in this case. Thus the exemplary damages awarded are not unconstitutionally excessive.
Aetna Cas. Sur. Co. v. Joseph, 769 S.W.2d 603, 607 (Tex.App. 1989) (no set rule or ration for exemplary damages).
Missouri Pac. R.R. Co. v. Lemon, 861 S.W.2d 501, 522 (Tex.App. 1993).
See supra, at 5.
Stone also argues that the bankruptcy court erred by refusing to admit or consider mitigating evidence. The bankruptcy court excluded the mitigating evidence Stone sought to introduce because it did not concern Stone's behavior but Wright's behavior. Stone continues to argue Wright's behavior in his argument before this Court. This argument challenges liability and is barred by the law of the case doctrine.
Stone then argues that the exemplary damages violate Stone's due process rights because they are grossly excessive. As stated above, the damages are consistent with the Supreme Court's ruling on constitutionality, and within the statutory limits. The damages are not constitutionally excessive. In addition, in support of this argument, Stone again argues the underlying liability and actual damages, argument which are barred by the law of the case doctrine.
State Farm Mutual Automobile Insurance Co. v. Campbell, 123 S Ct. 1513, 1514 (2003) (punitive damages four times actual damages can be constitutionally excessive). In the instant case, the exemplary damages for conversion were three times the actual damages. And the exemplary damages for tortious interference were approximately 18 times less than the actual damages. The damages do not reach the constitutional line.
Stone's fourth claim is that the trustee waived any exemplary damages claim by inviting error. This argument is barred by the law of the case doctrine. Judge Prado addresses this issue and declined to hold that the Bankruptcy Court's error was invited.
Stone's final claim is that the tortious interference cause of action is unconstitutional. Tortious interference has long been recognized as an acceptable cause of action and is constitutional.
See Sturges, 52 S.W.3d at 716, 721.
The Court will now address the trustee's cross issues. The trustee's first claim is that the bankruptcy court erred in not awarding prejudgment interest. This claim was addressed by Judge Prado on the first appeal. Thus, it is barred by the law of the case doctrine.
The trustee's second claim is that the bankruptcy court erred by not merging the 2003 judgment with the 1999 judgment such that postjudgment interest should accrue from the date of the 1999 judgment. This argument is being raised for the first time on appeal, and thus will be reviewed for plain error. A court can only grant relief under the plain error doctrine if the error "affect substantial rights," and "seriously affects the fairness, integrity or public reputation of judicial proceedings." Because the Court finds that a failure to award postjudgment interest on exemplary damages from the date of the 1999 judgment, as opposed to the date of the 2003 judgment, does not "seriously affect the fairness, integrity or public reputation of the proceedings," the Court will not grant relief under the plain error doctrine.
United States v. Olano, 507 U.S. 725, 732 (1993)
Olano, 507 U.S. at 732.
The trustee's third claim is that the District Court erred by not recalling its mandate and awarding postjudgment interest to the trustee. This argument is barred by the law of the case doctrine.
The trustee's final claim is that the Bankruptcy Court erred in failing to award costs to the trustee. The decision of the bankruptcy court to not award costs was made in the 1999 judgment and affirmed on appeal by Judge Prado; thus the decision is barred from review by this Court by the law of the case doctrine.
1999 Prado Order, at 13.
III. Conclusion
For the foregoing reasons, the Court AFFIRMS the Final Judgment and Findings of Fact and Conclusions of Law of the Bankruptcy Court.