Community Bank v. Courtney
| Docket Number: | 2001-CA-01657-SCT Linked Case(s): 2001-CA-01657-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 10-21-2004 Opinion Author: Smith, C.J. Holding: AFFIRMED AS TO LIABILITY; JUDGMENT REMITTED FROM $306,196.88 TO $6,236.88, AND AFFIRMED AS REMITTED, CONDITIONED ON ACCEPTANCE BY ARCHIE WAYNE COURTNEY WITHIN 10 DAYS OF THE FINAL JUDGMENT OF THIS COURT. OTHERWISE, THE JUDGMENT IS VACATED, AND THE CASE IS REMANDED FOR A NEW TRIAL AS TO COMPENSATORY DAMAGES ONLY. REVERSED AND RENDERED AS TO PUNITIVE DAMAGES |
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| Additional Case Information: |
Topic: Conversion - Compensatory damages - Setoff - Punitive damages Judge(s) Concurring: Waller, P.J., and Carlson, J. Non Participating Judge(s): Diaz, Dickinson and Randolph, JJ. Dissenting Author : Easley, J. Dissent Joined By : Graves, J. Concurs in Result Only: Cobb, P.J. Procedural History: Jury Trial Nature of the Case: CIVIL - OTHER |
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| Trial Court: |
Date of Trial Judgment: 05-23-2001 Appealed from: Jones County Circuit Court Judge: Forrest Johnson Disposition: Jury awarded Courtney $345,000 in actual damages and $5,000,000 in punitive damages. Case Number: 92-4-60 |
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| Note: | Motion for rehearing filed by Archie Wayne Courtney is denied. The original opinions of this Court are withdrawn, and these opinions are substituted therefor. Affirmed as to Liability; Judgment Remitted from $306,196.88 to $6,236.88 and Affirmed as Remitted, Conditioned on Acceptance by Archie Wayne Courtney within Ten (10) Days of the Final Judgment of this Court. Otherwise, the Judgment is Vacated and the case is Remanded for a New Trial as to Compensatory Damages Only. Reversed and Rendered as to Punitive Damages. | |
| Party Name: | Attorney Name: | |||
| Appellant: | Community Bank, Ellisville, Mississippi f/k/a Merchants and Manufacturers Bank |
JOHN C. HENEGAN
DONNA BROWN JACOBS
J. STEVENSON RAY
MARY JACQUELINE WATSON EASLEY
AMY D. WHITTEN |
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| Appellee: | Archie Wayne Courtney | THOMAS J. LOWE, JR. LAWRENCE E. ABERNATHY, III JOHN T. KERSH |
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| Topic: | Conversion - Compensatory damages - Setoff - Punitive damages |
| Summary of the Facts: | The motions for rehearing are denied, and these opinions are substituted for the original opinions. Archie Courtney had some loans with the Community Bank of Ellisville for equipment used in his plumbing business. When he defaulted on a consolidated loan payment, the Bank sought an order of possession from the trial court to retrieve and sell the collateral. Courtney alleged that the Bank and Holifield and Sons Wrecker Services erroneously picked up some equipment and converted this collateral. The Supreme Court held that the Bank did not have a valid security interest in the backhoe and remanded the case. Following a trial, the jury awarded Courtney $345,000 in actual damages and $5,000,000 in punitive damages. The court granted the Bank a setoff or recoupment of $38,803.12, which was the amount of the deficiency in the matter. However, the court refused to grant a remittitur on actual damages but remitted the punitive damages award to $1,500,000. Courtney accepted the remittitur, and the Bank appeals. |
| Summary of Opinion Analysis: | Issue 1: Conversion To make out a conversion, there must be proof of a wrongful possession, or the exercise of a dominion in exclusion or defiance of the owner's right, or of an unauthorized and injurious use, or of a wrongful detention after demand. There is no conversion until the title of the lawful owner is made known and resisted or the purchaser exercises dominion over the property by use, sale, or otherwise. Although Courtney argues that the Bank converted nine pieces of equipment, the record shows that Courtney did not own all these items. Based on his own admissions, it is clear that Courtney was not the owner of the Mack truck or the fastback trailer. Since ownership is an essential element of conversion, the court erred in denying the Bank’s j.n.o.v. as to those items. Because the record shows that the Bank collected the Super E backhoe and held it in a manner adverse to Courtney’s rights, the Bank converted the backhoe. Because Courtney paid off the concrete truck before the Bank repossessed it, the Bank did not have a valid security interest in the concrete truck at the time of the repossession and therefore, converted that piece of property. The record also indicates that Courtney owned a set of chains and binder and that the Bank never had a security interest in those items but nevertheless collected them. Therefore, the Bank converted the chains and binder. The Bank also never had a security interest in the transit and the water system repair clamps but nevertheless collected these items. With regard to a “Ditch Witch” in which the Bank did have a security interest, the Bank argues that it obtained a security interest in two implements attached to the Ditch Witch. Because the security agreement that covered the Ditch Witch defined the term “property” as “all property as that is now or later becomes attached to, a part of, or results from the described property,” the security agreement covered the Ditch Witch implements. Issue 2: Compensatory damages The Bank converted five pieces of equipment. At trial, Courtney testified that those five items have a value of $45,040. Pursuant to established jurisprudence at the time of this trial, it was appropriate for Courtney to testify regarding the value of this equipment. In a conversion action, the measure of damages is the value of the property at the time and place of the conversion. Lost profits may be recovered in a conversion action where the loss is a proximate result of the defendant's act, and where the loss can be shown with reasonable certainty. Moreover, those damages may not be unnatural, remote as to cause, nor speculative and conjectural in effect. Courtney’s statement regarding the “rental value” of his equipment fails to meet these standards. With regard to emotional distress damages, the only evidence consists of Courtney’s own testimony about stomach problems he purportedly developed as a result of losing his equipment and business. This evidence is insufficient to support a finding that the Bank's behavior was malicious, intentional, willful, wanton, grossly careless, indifferent or reckless. Nor did this testimony prove any type of demonstrable harm. Given the evidence, the court abused its discretion in refusing to grant a remittitur on compensatory damages and that award should be remitted to $45,040. Issue 3: Setoff The court properly adjusted the award of compensatory damages to include a setoff in the amount of the loan delinquency of $38,803.12. Section 553 of the bankruptcy code provides that the creditor has the right to offset a mutual debt owing by such creditor to the debtor that arose before the commencement of the case under this title against a claim of such creditor against the debtor that arose before the commencement of the case. In order to establish this right, a creditor must prove a debt owed by the creditor against the debtor which arose prior to the commencement of the bankruptcy case; a claim of the creditor against the debtor which arose prior to the commencement of the bankruptcy case; and the debt and claim must be mutual obligations. All three of the prerequisites exist in this case. Courtney’s claim for conversion arose before his filing of bankruptcy and Courtney’s obligation to the bank also arose before the commencement of the bankruptcy proceedings. The debt and claim involved are also mutual in that they arose from the same notes and financing statements and they are owing between the same parties. Community Bank is entitled to setoff the deficiency of $38,803.12, and the amount of compensatory damages will be reduced to $6,236.88. Issue 4: Punitive damages Punitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud. Courtney testified that one of the Bank’s employees intended to put him out of business. However, the employee stated that he did not have any kind of ill will against Courtney, and Courtney failed to provide any corroborating testimony regarding the alleged statements. This is insufficient evidence in this case to support a jury charge on the issue of punitive damages, and that award is reversed and rendered. |
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