United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 07-2968

___________

JCB, Inc., * 

*

 Plaintiff - Appellee, *

*

v. *

* Appeal from the United States 

Union Planters Bank, NA, * District Court for the Eastern

* District of Missouri.

 Defendant - Appellant, *

*

Machinery, Inc., *

*

 Defendant. *

___________

 Submitted: April 14, 2008

Filed: August 26, 2008 (Corrected August 27, 2008)

___________

Before MURPHY, COLLOTON, and SHEPHERD, Circuit Judges.

___________

MURPHY, Circuit Judge.

JCB, Inc. brought this action against Union Planters Bank, N.A. (Bank) seeking

a declaratory judgment and damages for trespass and conversion for unilateral

removal and sale of equipment which had been purchased by their debtor, Machinery,

Inc. and was subject to their competing security interests. The district court referred

some of the issues in dispute to the bankruptcy court which determined that JCB had

the senior security interest in the equipment and granted it partial summary judgment.
1

The key clause reads: "[Machinery] hereby grants, sells, assigns, conveys and

confirms to JCB a security interest in inventory consisting of new and used

equipment, machines, products, attachments and parts manufactured or sold by JCB

or carrying the JCB name or identification mark now or hereafter acquired by

[Machinery] from JCB and with respect to which the purchase price, finance charges

or any other related sums shall not have been paid in full in cash" and "in all proceeds

. . . related to the foregoing."

-2-

Issues of damages were tried to a jury in the district court, resulting in a verdict in

favor of JCB. The jury awarded JCB $1,446,500 in compensatory damages and

$1,150,000 in punitive damages for conversion, as well as $1 compensatory and

$1,087,500 punitive damages for trespass. After denying the Bank's post trial

motions, the district court entered judgment for JCB in the amount of the jury verdict.

The Bank appeals. We affirm in part and reverse in part.

 

I.

Both JCB and the Bank were creditors of Machinery, Inc. (Machinery). JCB

manufactures and distributes heavy equipment, such as backhoe loaders and

excavators, as well as parts. Machinery was an authorized dealer of JCB products in

St. Louis, Missouri. Under their 1996 dealership agreement and inventory security

agreement, Machinery received JCB equipment, machines, and parts on credit as part

of a floorplan financing arrangement. In return, Machinery granted JCB a purchase

money security interest in the equipment, including any which Machinery might

acquire after the agreements were signed.1

 As a result of a line of credit extended to

Machinery in 2000 the Bank obtained a security interest in Machinery's inventory and

accounts and certain other items. While the Bank made no new loans to Machinery

after 2001 and the principal and interest on its loan had been fully paid off by July

2003, Machinery still had contingent obligations to it related to another lawsuit.
2

The bankruptcy case finally closed in June 2006 after it was fully administered.

-3-

Machinery ran into financial trouble and filed a voluntary Chapter 11

bankruptcy petition in 2001. The bankruptcy court confirmed Machinery's plan for

reorganization later that year.2

 While Machinery was in bankruptcy, JCB continued

to sell it inventory under the original floorplan financing arrangement and previous

security agreement; no separate security agreement was executed after the Chapter 11

proceedings were initiated. In 2003 Machinery encountered further financial

difficulties and could not make scheduled payments to JCB for inventory it purchased

on credit, but JCB continued to provide it current model equipment and parts so that

Machinery could service its customers. In March 2003 representatives of Machinery

and JCB decided to move the remaining JCB equipment to a lot which JCB leased

adjacent to Machinery's premises. Other rental equipment subject to JCB's security

agreement was placed on this lot as it was returned. JCB's lot was fenced with gates

which were supposed to be locked at all times, but a Machinery representative had a

key to one of the gates and limited authority to enter the lot to show machines to

prospective customers and to return rented equipment.

Machinery eventually decided to close down its business, and on April 29, 2003

a meeting of its major secured creditors was held on its premises to announce that it

would be ceasing operations. The Bank, JCB, and Machinery were all represented at

the meeting. At the time of the meeting, the huge yellow equipment which had been

moved onto JCB's adjacent lot was visible through the fencing, but neither the Bank

nor Machinery raised any objection to its separation. The Bank later explained that

only after the meeting had it learned that JCB had financed equipment purchase by

Machinery subsequent to the confirmation of its reorganization plan. 

The Bank decided to repossess equipment Machinery had obtained from JCB

and it hired ATEC, Inc. for the job. ATEC had been serving as the liquidating agent

for Machinery, and on May 9, 2003, ATEC entered JCB's lot without notice or
-4-

advance authorization and removed 23 machines from it. All of this equipment had

been purchased by Machinery from JCB on credit after confirmation of its Chapter 11

plan. 

The Bank chose to sell the 23 pieces of equipment ATEC had seized along with

other Machinery collateral at a public liquidation auction. It notified JCB and other

creditors of its plan on June 12, 2003. JCB responded on July 2 with a written

proposal to sell the equipment in which it claimed a security interest through its

dealership system. Its proposal was not accepted by the Bank. On July 15 two days

before the auction, JCB sent a letter demanding that the Bank remove its equipment

from the auction and return it. This letter also stated that JCB asserted a first priority

purchase money security interest in the machines and disputed the Bank's claim to

them. ATEC nevertheless proceeded with the auction on behalf of the Bank as

originally scheduled, and around $839,000 was obtained for the equipment. Although

there were varying estimates, there was testimony at trial that the equipment had a fair

market value of about $1.1 million. The Bank eventually placed the proceeds from the

equipment in a noninterest bearing account mingled with proceeds from other

collateral; it subsequently withdrew some of the money to cover Machinery's

obligations to the Bank, including attorney fees for a separate action. 

JCB filed this action against the Bank and Machinery in September 2003,

seeking a declaratory judgment that it had a security interest in the equipment which

was senior to the interests of the Bank and Machinery, and also asserting claims in

trespass and conversion. The Bank counterclaimed on four counts, requesting a

declaratory judgment that it held the senior security interest in the collateral. The

district court referred the matter to the bankruptcy court for determination under

Machinery's reorganization plan of the relative priorities of its creditors' secured

interests. The Bank moved unsuccessfully for summary judgment, and JCB moved

for partial summary judgment on its own claims and on the Bank's counterclaims. The

bankruptcy court determined that both the Bank and JCB had perfected security
-5-

interests in the collateral, but that JCB's lien was senior because Machinery's

reorganization plan preserved JCB's prepetition purchase money security interest in

the equipment Machinery acquired after confirmation of the plan. 

The district court held a jury trial on the issue of damages. The jury was

instructed on both trespass and conversion, and the verdict form had separate sections

for each tort with separate lines for compensatory and punitive damages. For the

Bank's conversion of JCB's equipment, the jury awarded JCB $1,446,500 in

compensatory damages based on its fair market value (which included $346,500 in

interest) and $1,150,000 in punitive damages. The district court directed the jury to

award $1 in compensatory damages on JCB's trespass claim since the fair market

value of the land had not been diminished by the trespass; the parties agreed that that

amount was appropriate. The jury awarded JCB $1,087,500 in punitive damages for

the Bank's trespass. The Bank filed post trial motions for judgment as a matter of law,

a new trial, and remittitur of the damages. The district court denied the motions and

ordered that judgment be entered for JCB in the amounts awarded by the jury; the

judgment lists the amounts awarded for trespass and conversion separately.

The Bank appeals from the judgment, arguing that it had the senior security

interest in the collateral as a matter of law and that it could therefore not have been

liable for trespass and conversion. The Bank further contends that JCB was not

entitled to punitive damages and that the amount awarded was excessive and

unreasonable. It also challenges the interest award. JCB urges us to affirm in all

respects. 

II.

The Bank argues that the bankruptcy court erred as a matter of law in granting

JCB's motion for partial summary judgment. It attacks the determination that JCB had

the senior interest in the collateral and argues that it was not liable for conversion and
3

Section 3.4.14.b provides: "Except for the change in interest rate, monthly

payments, 'release prices' and reamortization proposed to occur following an

authorized collateral sale and application of proceeds as provided in the Plan, all terms

and conditions of the prepetition documents executed by the Debtor shall remain in

full force and effect." (Emphasis supplied). "Debtor" was defined in the plan to mean

Machinery, Inc., the Debtor and Debtor in Possession.

4

Conversion is the "unauthorized assumption of the right of ownership over the

personal property of another to the exclusion of the owner's rights." Carter v. White,

241 S.W.3d 357, 362 (Mo. Ct. App. 2007) (per curiam) (quotation omitted). Trespass

is the "unauthorized entry by a person upon the land of another, regardless of the

degree of force used, even if no damage is done, or the injury is slight." Ogg v.

Mediacom, L.L.C., 142 S.W.3d 801, 807 (Mo. Ct. App. 2004) (quotation omitted).

-6-

trespass. JCB disagrees, arguing that the bankruptcy court correctly determined that

it had the senior security interest in the equipment under the reorganization plan and

that the Bank was liable for conversion and trespass. 

While we normally review a bankruptcy court's legal conclusions de novo, Neal

v. Kansas City Star (In re Neal), 461 F.3d 1048, 1052 (8th Cir. 2006), its

interpretation of the confirmed plan is entitled to deference as an interpretation of its

own order and "should be reviewed under the abuse of discretion standard." Gen.

Elec. Capital Corp. v. Dial Bus. Forms, Inc. (In re Dial Bus. Forms, Inc.), 341 F.3d

738, 744 (8th Cir. 2003). Acting on a reference from the district court, the bankruptcy

court concluded here that Machinery's reorganization plan gave JCB the senior

security interest in post confirmation assets purchased under the JCB financing and

security agreements, including the 23 pieces of equipment on the fenced lot. The

court reasoned that § 3.4.14.b of the reorganization plan preserved JCB's prepetition

lien on the collateral and that no other provision of the plan eliminated that interest.3

The district court agreed with the bankruptcy court and determined that JCB had the

senior lien in the collateral and that the Bank had trespassed on JCB's lot and

converted its equipment.4

 
-7-

We review de novo the district court's denial of the Bank's motion for judgment

as a matter of law, drawing "all reasonable inferences in favor of the nonmoving party

without making credibility assessments or weighing the evidence." Arabian Agric.

Servs. Co. v. Chief Indus., Inc., 309 F.3d 479, 482 (8th Cir. 2002) (quotation omitted).

Judgment as a matter of law is appropriate if "the responding party has been fully

heard on an issue and a reasonable jury would not have a legally sufficient basis to

find for that party on that issue." Dominic v. DeVilbiss Air Power Co., 493 F.3d 968,

974 (8th Cir. 2007); see Fed. R. Civ. P. 50(a)(1). 

Once confirmed, a Chapter 11 plan acts as both a contract which binds the

parties and as an order of the bankruptcy court. In re Dial Bus. Forms, 341 F.3d at

744. Confirmation of the reorganization plan replaces prior obligations, id. at 742 n.3,

and a lien not preserved by the plan may be extinguished. See FDIC v. Union Entities

(In re Be-Mac Transp. Co., Inc.), 83 F.3d 1020, 1025-26 (8th Cir. 1996); Airadigm

Commc'ns, Inc. v. FCC (In re Airadigm Commc'ns, Inc.), 519 F.3d 640, 648 (7th Cir.

2008) ("[D]efault rule" is that "if a secured creditor participates in the debtor's

bankruptcy and the ultimate plan does not preserve the creditor's interest, the interest

is gone."); see also 11 U.S.C. § 1141(c). A plan can, however, "'expressly preserve

preexisting liens.'" In re Dial Bus. Forms, 341 F.3d at 743, quoting In re Penrod, 50

F.3d 459, 462 (7th Cir. 1995). A security interest preserved by the plan will continue

after confirmation. See 11 U.S.C. § 1141(c). 

The Bank argues that JCB did not have a secured interest in the equipment

because Machinery's Chapter 11 plan did not specify that JCB had an interest in the

collateral of the reorganized debtor and JCB did not enter into any new security

agreements with Machinery after confirmation of the plan. The Bank suggests that
5

Section 552(a) provides that subject to certain exceptions "property acquired

by the estate or by the debtor after the commencement of the case is not subject to any

lien resulting from any security agreement entered into by the debtor before the

commencement of the case." 

6

Subject to exceptions not material here, section 1141(c) states "except as

otherwise provided in the plan or in the order confirming the plan, after confirmation

of a plan, the property dealt with by the plan is free and clear of all claims and

interests of creditors, equity security holders, and of general partners in the debtor."

(Emphasis supplied).

-8-

under 11 U.S.C. §§ 552(a)5

 and 1141(c)6 collateral acquired after plan confirmation

is free of any liens except as explicitly provided for in the plan. JCB responds that §

1141(c) specifically provides that a reorganization plan can preserve security interests

even though they would otherwise be eliminated by confirmation and that this was

done here. It also asserts that § 552(a) does not apply after a plan has been confirmed

and that it does not override the terms of a confirmed plan. See Kucera v. Bank of

Brainard, 123 B.R. 852, 854 (Bankr. D. Neb. 1990) ("§ 552 simply suspends operation

of an after acquired property clause during the pendency of the bankruptcy case"); In

re Blackwelder Furn. Co., 31 B.R. 878, 881-82 (Bankr. W.D. N.C. 1983). 

Machinery's reorganization plan expressly provided in § 3.4.14.b that "all terms

and conditions of the pre-petition documents executed by the Debtor shall remain in

full force and effect." Under this section of the plan, the subsequently acquired

property clause in JCB's financing and security agreements survived confirmation.

JCB therefore had a security interest in the collateral under the agreements. See In re

Blackwelder Furn., 31 B.R. at 881-82; cf. In re Dial Bus. Forms, 341 F.3d at 743 (plan

preserved creditors' security interests and defined their relative post bankruptcy

priority). Moreover, JCB had a perfected purchase money security interest in the

equipment, and § 3.7 of Machinery's reorganization plan provided that the Bank's first

priority secured position would be junior to any "properly perfected purchase money

security interests in Debtor's [Machinery's] equipment and inventory."
-9-

The Bank claims that it was the only secured creditor with an interest in the post

confirmation collateral under Machinery's Chapter 11 plan, pointing to § 3.7 and

other sections of the plan. Section 3.7 addresses the property of the reorganized

debtor and states in part: "[o]ther than [the Bank], with respect to all assets, and other

than any secured creditor, with respect only to specific items and accounts receivable

stemming from the sale but not the lease or rental of any collateral on which it holds

a properly perfected security interest, no party shall hold any security interest in any

property of the reorganized debtor." The Bank interprets this section to mean that

other secured creditors only received security interests in collateral existing at the time

the plan was put in place. This reading is not supported by the text in § 3.7, however,

which plainly protects some perfected security interests of "any secured creditor" in

"specific items" and some "accounts receivable." The Bank also contends that §§ 2.11

and 3.4 of the plan limit JCB's interests to prepetition collateral. While those sections

establish JCB's secured claim against Machinery's estate, they simply do not address

its interest in the reorganized debtor.

We conclude that JCB had the senior security interest in the collateral under the

terms of Machinery's reorganization plan. Cf. In re Dow Corning Corp., 456 F.3d

668, 676 (6th Cir. 2006) (confirmed plan to be interpreted using contract principles

and unambiguous plan terms are to be enforced as written); accord In re Dial Bus.

Forms, Inc., 283 B.R. 537, 541 (8th Cir. BAP 2002). The Bank's objections to the

findings that it was liable for trespass and conversion rest on its premise that it had the

senior or sole security interest in the collateral. Because we reject that theory, the

Bank cannot prevail on its arguments that it was permitted by virtue of its own

security interest to enter onto JCB's lot, remove the collateral, and possess the

equipment under Missouri law. Accordingly, the district court did not err by denying

the Bank's motion for judgment as a matter of law.
-10-

III.

Although the Bank does not challenge the $1,100,000 in compensatory damages

for conversion or the $1 nominal damages for trespass, it raises multiple objections

to the punitive damages awarded to JCB: $1,087,500 for trespass and $1,150,000 for

conversion. JCB answers that it presented sufficient evidence to support the

submission and award of punitive damages, and that the amounts of the punitive

damages awards do not violate the Bank's due process rights.

A.

The Bank's objects to the district court's submission of the issue of punitive

damages to the jury, and we review this decision for abuse of discretion. See Diesel

Machinery, Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 837 (8th Cir. 2005). Punitive

damages are available for the torts of trespass and conversion under Missouri law, see

Wright v. Edison, 619 S.W.2d 797, 803 (Mo. Ct. App. 1981); Dayton Constr., Inc. v.

Meinhardt, 882 S.W.2d 206, 209 (Mo. Ct. App. 1994), but must be shown by clear

and convincing evidence. See, e.g., Perkins v. Dean Machinery Co., 132 S.W.3d 295,

299 (Mo. Ct. App. 2004), citing Rodriguez v. Suzuki Motor Corp., 936 S.W.2d 104,

111 (Mo. banc 1996). A submissible case for punitive damages is made if the

"evidence and the inferences drawn therefrom are 'sufficient to permit a reasonable

juror to conclude that the plaintiff established with convincing clarity – that is, that it

was highly probable – that the defendant's conduct was outrageous because of evil

motive or reckless indifference'" to the rights of others. Perkins, 132 S.W.3d at 299

(citation omitted); see also Blue v. Harrah's North Kansas City, LLC, 170 S.W.3d 466,

477 (Mo. Ct. App. 2005). 

Under Missouri law, if a "trespass is intentional and done without cause or

excuse, it is willful and warrants a submission of punitive damages," even if the

defendant acted under a mistaken belief of law or fact. Wright, 619 S.W.2d at 803.
-11-

The Bank had ATEC enter JCB's fenced lot without permission. Neither the Bank nor

ATEC contacted JCB for authorization to enter the lot or to notify it of the entry, even

though ATEC was aware that JCB was renting the lot and a representative of the Bank

stated in his deposition that he "presume[d]" the machines had been moved there "by

or for the benefit of JCB." The lot was protected by a fence with locking gates and

was obviously not open to the public. The Bank's officer in charge of this matter

testified at trial that he knew of the option of trying to obtain a replevin order from a

court before a repossession but chose not to seek such an order in this case. As the

trespass was willful, the issue of punitive damages could be submitted to the jury

irrespective of the Bank's mistaken belief that it had a superior interest allowing it to

enter the fenced lot to repossess the machines, id., and was not an abuse of discretion.

Trial evidence also supported the submission of punitive damages to the jury

on JCB's conversion claim. The Bank received JCB's demand letter and suggestions

for alternative ways of selling the equipment prior to the public auction arranged by

the Bank. JCB's communications put the Bank on notice that JCB claimed rights in

the collateral, yet it chose to proceed with the sale anyway. There was evidence that

the Bank's officer in charge of this matter knew there were other means to take

possession of the machines which would have protected JCB's rights but chose not to

use them. Testimony indicated that the Bank's decision to proceed with the liquidation

auction resulted in the sale of the equipment for less than full value. After the auction,

the Bank knew that JCB disputed its right to the proceeds of the collateral. Yet it did

not place the funds under joint control or in an escrow account. Because this evidence

indicated with sufficiently high probability that the Bank seized and sold the machines

with reckless disregard for JCB's rights in them, the district court did not abuse its

discretion in submitting the issue of punitive damages for conversion. 

The Bank next asserts that it was entitled to judgment as a matter of law on

punitive damages because JCB did not meet its burden to show by clear and
-12-

convincing proof that it had a culpable state of mind. Reviewing de novo, see

Dominic, 493 F.3d at 974, we disagree. Although a punitive damages award may be

reversed on appeal under Missouri law if there is no evidence of evil motive or

reckless indifference, see Walker v. Gateway Nat'l Bank, 799 S.W.2d 614, 617 (Mo.

Ct. App. 1990), we will not lightly overturn a jury verdict unless there is a complete

absence of probative facts and no proof beyond speculation to support that verdict.

See Wedow v. Kansas City, 442 F.3d 661, 669 (8th Cir. 2006). A reasonable jury

could have credited JCB's evidence that the Bank acted with reckless indifference to

its rights in the land and in the collateral, and an evil motive may be inferred from

such evidence. See Walker, 799 S.W.2d at 617, citing Burnett v. Griffith, 769 S.W.2d

780, 789 (Mo. banc 1989). The district court therefore did not err in denying the

Bank's motion for judgment as a matter of law.

The Bank further claims that the punitive damages should be vacated based on

its good faith belief that its actions complied with the law. It is true that when a

defendant "acts in good faith and honestly believes that his act is lawful," he is not

liable for punitive damages under Missouri law. Hostler v. Green Park Dev. Co., 986

S.W.2d 500, 507 (Mo. Ct. App. 1999). The Bank presented evidence at trial about its

efforts to investigate JCB's security interest prior to seizing the machines and the

conclusion it drew that JCB did not have a security interest in the post confirmation

collateral. The Bank's counsel reviewed these matters in its closing argument and

urged the jury not to award punitive damages to JCB. Simply presenting such

evidence of good faith to the jury does not immunize a defendant from punitive

damages, however, because the jury may believe or disbelieve such evidence like any

other. See Young v. Mercantile Trust Co. Nat'l Ass'n, 598 S.W.2d 482, 483 (Mo. Ct.

App. 1980); see also Ryther v. KARE 11, 108 F.3d 832, 845 (8th Cir. 1997) (en banc).

The jury's decision to assign punitive damages to JCB for both trespass and

conversion was supported by evidence that the Bank committed the torts with the

requisite state of mind. It is the jury's role to evaluate that evidence and decide what

inferences should be drawn from it, see Brown v. Sandals Resorts Int'l, 284 F.3d 949,
-13-

954 (8th Cir. 2002), and we see no reason to vacate the jury's verdict based on the

Bank's renewed assertions of its good faith.

B.

 The Bank next contends that the punitive damage awards are so high as to

violate its due process rights; JCB denies this assertion. On its conversion claim the

jury awarded JCB $1,100,000 compensatory damages, $346,500 in compensatory

interest, and $1,150,000 in punitive damages. For trespass, JCB and the Bank agreed

that $1 was the appropriate amount for actual damages, and the district court

instructed the jury to assess that amount and itself entered $1 on the verdict form. For

punitive damages on the trespass claim the jury additionally awarded $1,087,500. 

The district court submitted separate punitive damages instructions for trespass

and conversion, and the jury accordingly considered them individually. The verdict

form was divided into different sections for each tort. There were separate blanks for

punitive damages for each tort, which the jury filled in with separate amounts of

punitive damages for trespass and conversion. When it came to reviewing the

constitutionality of the punitive damages awards after trial, however, the district court

decided to consider the punitive damages awards together, reasoning that the acts of

trespass and conversion were a "single course of wrongful conduct" for the purpose

of the trespass was to seize the machines. It added together the compensatory

damages for trespass and conversion, which were about $1.45 million, and compared

that sum to the combined amount of punitive damages, approximately $2.24 million,

thus concluding that the punitive damages were well within constitutional limits. The

district court observed that the resulting ratio between compensatory and punitive

damages was below some approved by our court in prior cases. JCB defends this

approach, but the Bank argues the awards should be addressed separately. 

 
-14-

Trespass and conversion protect distinct legal rights, and here the torts were

based on separate actions by the Bank. An action in trespass traditionally protects the

proprietary interest of the owner or possessor of land, see Motchan v. STL

Cablevision, Inc., 796 S.W.2d 896, 898 (Mo. Ct. App. 1990), and the Bank's trespass

was based on ATEC's entry onto JCB's fenced lot. In contrast, conversion violates an

owner's right of possession in personal property. See Carter v. White, 241 S.W.3d

357, 362 (Mo. Ct. App. 2007). The Bank's conversion involved its taking possession

of the equipment and retaining it even after JCB demanded its return. Both torts are

punishable by punitive damages under Missouri law, see Wright, 619 S.W.2d at 803;

Dayton Constr., 882 S.W.2d at 209, and the district court and jury treated the two torts

as distinct during the trial on damages. Because "exacting appellate review ensures

that an award of punitive damages is based upon an application of law, rather than .

. . caprice," State Farm, 538 U.S. at 418 (quotation omitted), the way in which the

issue was presented to the jury is relevant to our review. Here, punitive damages were

awarded separately at trial, for different acts causing distinct legal harms.

To be sure, a single punitive damages instruction for separate counts of trespass

and conversion "'may be adequate'" under Missouri law when the acts underlying each

tort were "'identical.'" McKamely v. Hession, 704 S.W.2d 702, 703 (Mo. Ct. App.

1986), quoting Weldon v. Town Prop., Inc., 633 S.W.2d 196, 199 (Mo. Ct. App.

1982). If "the trespass count relate[s] to an unauthorized entry" onto property,

however, and "the conversion count refer[s] to the repossession of personal property

found" where the trespass occurred, the "courses of conduct [a]re separate and

distinct, requiring separate punitive damage instructions to be submitted."

McKamely, 704 S.W.2d at 702 (describing Weldon). The Bank's acts of trespass

involved an unauthorized entry onto JCB's lot, and its conversion was based on its

repossession of equipment located on that lot. Although related, the wrongful acts

leading to the Bank's trespass and conversion were not identical. Missouri courts have

required separate punitive damages instructions for each tort under very similar

circumstances. See Weldon, 633 S.W.2d at 199. The district court's separate
7

Since this action was filed Missouri has passed a statute limiting punitive

damages to $500,000 or five times the net amount of the judgment against the

defendant, whichever amount is greater. Mo. Rev. Stat. § 510.265. 

8

The parties have framed the discussion of punitive damages in federal due

process terms. Although the Bank mentioned Letz v. Turbomeca Engine Corp., 975

S.W.2d 155, 178 (Mo. Ct. App. 1997), it did not analyze any of its factors and we do

not understand the Bank to raise a state law challenge to the punitive damages award.

See Meyers v. Starke, 420 F.3d 738, 743 (8th Cir. 2005) ("To be reviewable, an issue

must be presented in the brief with some specificity."). Nor did the district court

opinion discuss whether the award was excessive under state law. See Bearden v.

Lemon, 475 F.3d 926, 929-30 (8th Cir. 2007) (court of appeals does not ordinarily

consider issues not ruled on by district court). 

-15-

treatment of the torts at trial was consistent with Missouri law, and we conclude that

it is similarly appropriate to consider the individual punitive damage awards

separately on the Bank's challenge on appeal.

We review de novo the district court's ruling on the constitutionality of the

punitive damage awards. Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532

U.S. 424, 436 (2001). Although states have broad discretion to impose punitive

damages for the legitimate state purposes of punishment and deterrence, those awards

are subject to both procedural and substantive limitations under the due process clause

of the fourteenth amendment.7

 See State Farm Mut. Auto Ins. Co. v. Campbell, 538

U.S. 408, 416 (2003); see also BMW of North America, Inc. v. Gore, 517 U.S. 559,

568 (1996). Our review of the constitutionality of punitive damage awards is guided

by a three factor test set by the Supreme Court: "(1) the degree of reprehensibility of

the defendant's misconduct; (2) the disparity between the actual or potential harm

suffered by the plaintiff and the punitive damages award; and (3) the difference

between the punitive damages awarded by the jury and the civil penalties authorized

or imposed in comparable cases." State Farm, 538 U.S. at 418, citing Gore, 517 U.S.

at 575.8
9

After this case was argued, the Supreme Court determined that a 1:1 ratio of

compensatory to punitive damages was appropriate in a maritime case, but it did not

mandate this ratio as a matter of constitutional law. See Exxon Shipping Co. v. Baker,

128 S. Ct. 2605, 2626 (2008) ("Today's enquiry differs from due process review

because the case arises under federal maritime jurisdiction, and we are reviewing a

jury award for conformity with maritime law, rather than the outer limit allowed by

due process."). 

-16-

In converting JCB's property the Bank acted with "callous disregard" of JCB's

rights, and the reprehensibility of its conduct was comparable to the conduct which

supported punitive damages in prior business cases. Diesel Machinery, 418 F.3d at

840; see also Asa-Brandt, Inc. v. ADM Investor Servs., Inc., 344 F.3d 738,746-47 (8th

Cir. 2003). The Bank's tortious conduct involved in the conversion was not

"accidental or inadvertent." Eden Elec., Ltd. v. Amana Co., 370 F.3d 824, 828 (8th

Cir. 2004). Rather, the Bank deliberately decided to seize JCB's equipment, although

it had never made loans against that specific collateral and although Machinery at the

time had a zero balance on the principal and interest on its loan from the Bank. JCB

demanded that the equipment be returned, but the Bank retained it nonetheless. When

the Bank sold the equipment it knew that JCB asserted a priority security interest in

it and had offered another method of sale, but the Bank nevertheless proceeded with

the auction, obtaining less than full value for the equipment. Although JCB had

demanded the proceeds from the auction, the Bank retained the funds for itself,

placing them in a noninterest bearing account with the proceeds from other collateral.

The ratio between the damage awards for conversion is approximately 1:1

($1,100,000 compensatory and $1,150,000 punitive damages). See State Farm, 538

U.S. at 425 (suggesting that punitive damages equal to compensatory damages are

within constitutional limits "[w]hen compensatory damages are substantial").9

 As

neither party refers to comparable civil penalties for conversion, we do not consider

that factor. See Asa-Brandt, 344 F.3d at 747 n.16. We conclude that the jury award

of punitive damages for the Bank's conversion does not exceed due process limits. 
-17-

The $1,087,500 in punitive damages assessed by the jury for the Bank's trespass

is more troublesome. Although the Bank emphasizes the disparity between the $1

compensatory and punitive damages for its trespass, the nominal amount of the

compensatory damages for that tort does not on its own preclude a punitive damages

award of this size. Punitive damages may withstand constitutional scrutiny when only

nominal or a small amount of compensatory damages have been assigned, even

though the ratio between the two will necessarily be large. See Saunders v. Branch

Banking & Tr. Co. of Va., 526 F.3d 142, 154 (4th Cir. 2008) (collecting cases). The

Supreme Court has "consistently rejected the notion that the constitutional line is

marked by a simple mathematical formula." Gore, 517 U.S. at 582; State Farm, 538

U.S. at 424-25. As noted by the Court, a higher ratio "may comport with due process

where a particularly egregious act has resulted in only a small amount of economic

damages." State Farm, 538 U.S. at 425 (internal quotation omitted); see also Exxon

Shipping Co. v. Baker, 128 S. Ct. 2605, 2622 (2008) ("'Thus an award of nominal

damages . . . is enough to support a further award of punitive damages, when a tort,

. . . is committed for an outrageous purpose, but no significant harm has resulted.'")

(quoting 4 Restatement § 908, Comment c, p. 465). Our court as well as the Missouri

courts have affirmed punitive damages supported by only nominal compensatory

damages. See Asa-Brandt, 344 F.3d at 743 & 747 (affirming $1.25 million on a

breach of fiduciary duty claim with nominal damages); Labrier v. Anheuser Ford, Inc.,

621 S.W.2d 51, 58 (Mo. banc 1981) (collecting cases). 

The issue here of course is whether in this case the punitive damages award for

the Bank's trespass is constitutionally excessive. See Saunders, 526 F.3d at 154. The

Bank directed ATEC to enter JCB's fenced lot without permission or notification, and

the trespass was done for the purpose of seizing and selling JCB's collateral. The

Bank's trespass was sufficiently reprehensible to warrant a substantial penalty. See

Diesel Machinery, 418 F.3d at 839-40; Asa-Brandt, 344 F.3d at 746-47; cf. Gore, 517

U.S. at 575 (reprehensibility is "perhaps the most important indicium of the
-18-

reasonableness of a punitive damages award"). The state has a legitimate interest in

punishing and deterring such trespasses, as well as the risk of violent confrontation

which may arise from them. Missouri authorizes criminal fines of $2000 for trespass,

or double a corporation's gain from the offense, as well as a term of imprisonment of

up to six months. See Mo. Rev. Stat. §§ 569.140, 560.021.1, 558.011(6). The highest

punitive damage award we found in a comparable Missouri case was $400,000 –

based on actual damages of $25,000 for conversion and $5,000 for trespass – against

a repair company which repossessed a bulldozer from a couple after they defaulted on

payments for repairs on the machine. Perkins v. Dean Machinery Co., 211 S.W.3d

148, 148 (Mo. Ct. App. 2007) (affirming punitive award); Perkins, 132 S.W.3d at 298-

99 (underlying facts and actual damages). Although that award covered both trespass

and conversion, it was significantly lower than the punitive damages JCB received for

trespass alone. And while the Bank's trespass was necessary for it to effect its

conversion, a separate award punished that tort and compensated JCB for its loss on

the sale. Under all the circumstances we conclude that the $1,087,500 awarded in

punitive damages for the Bank's trespass was beyond what due process will permit.

 

When faced with an award which exceeds due process limits, it is appropriate

to remit it to an amount which is "sufficiently punitive, but that does not violate

notions of fundamental fairness." Conseco Finan. Serv. Corp. v. North American

Mortgage Co., 381 F.3d 811, 825 (8th Cir. 2004). Neither the Bank nor JCB has

suggested an alternate amount of punitive damages in the event that the award were

found to be beyond constitutional bounds. JCB has not cited any comparable trespass

cases with such a high ratio between the punitive damages and compensatory awards,

but the Bank cited Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154, 156 (Wis.

1997), a trespass case in which punitive damages of $100,000 withstood constitutional

scrutiny although the underlying compensatory award was nominal. The Bank's

citation of this case implies that it would have had notice that its conduct could lead

to penalties of up to $100,000. See Gore, 517 U.S. at 574 ("Elementary notions of

fairness . . . dictate that a person receive fair notice not only of the conduct that will
-19-

subject him to punishment, but also of the severity of the penalty that a State may

impose."). We conclude that in this case a reduction of the jury's punitive damages

award for trespass to one tenth the original amount would recognize the

reprehensibility of the Bank's trespass but not offend the constitutional concerns

which have been articulated by the Supreme Court. An award of $108,750 in punitive

damages would punish the Bank's trespass and deter such conduct in the future, while

not violating the Bank's due process rights. This amount is also consistent with a

comparable case cited by the Bank. We conclude that the amount of punitive damages

for the Bank's trespass should be remitted to $108,750.

IV.

The Bank objects to the interest awarded to JCB on the conversion claim,

challenging the district court's jury instructions and evidentiary rulings which JCB

defends. We normally review a district court's jury instructions for abuse of

discretion, limiting our consideration to whether the instructions fairly and accurately

present the evidence and law to the jury given the issues in the case. Eden Elec., 370

F.3d at 827. If the challenge has not been preserved for review by objection below,

however, we apply a plain error standard, reversing only when the error would result

in a miscarriage of justice if left uncorrected. See Kight v. Auto Zone, Inc., 494 F.3d

727, 735 (8th Cir. 2007). 

The Bank argues that the district court erred in instructing the jury that a 9% per

annum rate – the rate from Mo. Rev. Stat. § 408.020 – would apply from the time of

conversion if it chose to award additional compensatory damages in the nature of

interest. The Bank advocates for a lower rate from another statutory section: the

federal funds rate plus 3% from § 408.040. The Missouri Court of Appeals has

concluded, however, that the 9% rate in § 408.020 applies to conversion. See

Stromberg v. Moore, 170 S.W.3d 26, 32-33 (Mo. Ct. App. 2005); see also

Independence Flying Serv., Inc. v. Ailshire, 409 S.W.2d 628, 631-32 (Mo. 1966). The
-20-

Bank also contends that the district court should have instructed the jury that it could

"consider the good faith of [the Bank] in determining the date from which interest

began to run," but interest is normally awarded from the date of conversion under §

408.020. See Stromberg, 170 S.W.3d at 32. Moreover, the Bank did not object to

either the 9% interest rate or the removal from the instruction of any reference to good

faith when the jury was charged and it did not preserve the issue for review. See

Kight, 494 F.3d at 735. The district court did not plainly err in its jury instructions

relating to interest.

The Bank contends that the district court should not have admitted testimony

that JCB could have earned a 12% to 20% rate of return on an investment. Although

it now characterizes that evidence as speculative and prejudicial, it did not object to

its introduction at trial and thus we review for plain error. See Spencer v. Young, 495

F.3d 945, 949 (8th Cir. 2007). The district court did not plainly err by admitting this

evidence, and in any event, the testimony had no effect on the amount of interest

imposed because the district judge told the jury what rate to apply. See Batiste-Davis

v. Lincare, Inc., 526 F.3d 377, 381 (8th Cir. 2008) (improper admission of evidence

was harmless where it did not have a substantial effect on the jury's verdict). 

V.

Accordingly, we affirm the judgment of district court in all respects except for

the punitive damage award for trespass which must be remitted to $108,750 on due

process grounds. We therefore reverse that award and remand the case to the district

court for entry of an amended judgment consistent with this opinion.

COLLOTON, Circuit Judge, concurring in part and dissenting in part.

I concur in all but Part III.B of the opinion of the court. As to that section, I do

not agree that the jury’s award of punitive damages under Missouri law violates the
-21-

substantive due process rights of Union Planters Bank, N.A. I would therefore affirm

the judgment of the district court.

In considering whether the punitive damages were excessive, the district court

concluded that the Bank’s unlawful trespass and conversion were “inextricably

intertwined,” because the Bank trespassed on the property of JCB, Inc., for the sole

purpose of taking possession of JCB’s equipment. The district court thus considered

the two torts together when comparing the punitive damages (i.e., $1,150,000 for

conversion and $1,087,500 for trespass) with the compensatory damages (i.e.,

$1,450,000 for conversion and $1 in nominal damages for trespass). The court then

concluded that “the jury’s punitive damages award of less than twice the actual

damages was both reasonable and proportionate, considering the egregious nature of

[the Bank’s] conduct.”

As the case comes to us, the Bank does not challenge the district court’s

application of Missouri law, ante, at 15 n.8, so we presume that Missouri authorizes

a punitive damages award of this amount under these circumstances. “In our federal

system, States necessarily have considerable flexibility in determining the level of

punitive damages that they will allow in different classes of cases and in any particular

case.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). The Bank raises no

claim that the procedures applied in this case were unfair, and a judgment that is a

product of fair procedures “is entitled to a strong presumption of validity.” TXO Prod.

Corp. v. Alliance Res. Corp., 509 U.S. 443, 457 (1993) (plurality opinion); Gore, 517

U.S. at 586-87 (Breyer, J., concurring).

In conducting its substantive due process analysis, the majority decides to

examine separately the punitive damages awards for conversion and trespass, and thus

emphasizes a comparison between the punitive damages award of $1,087,500 for

trespass and a nominal damage award of $1. The majority never really explains,

however, why this divide-and-conquer approach is dictated by federal constitutional
-22-

law. It reasons instead that separate consideration of the two damages awards for

constitutional purposes is “appropriate,” because the use of separate verdict forms at

trial was “consistent with” Missouri law. Ante, at 14. But the Bank (and the majority)

cannot have it both ways. If there is no challenge to the damages award under

Missouri law, then the substantive due process challenge raised by the Bank

presupposes that Missouri accepts the district court’s conclusion that the torts of

conversion and trespass in this case were “inextricably intertwined,” and that the

damages awards should be analyzed as such. 

The relevant authority from Missouri, moreover, permits a jury to consider

punitive damages together for trespass and conversion in certain circumstances. See

McKamely v. Hession, 704 S.W.2d 701, 702 (Mo. Ct. App. 1986). This precedent

establishes that Missouri necessarily is content to consider punitive damages awards

for separate torts in the aggregate when evaluating excessiveness, for it would be

impossible to separate them once a jury returns a single award in accord with

McKamely. That Missouri law sometimes requires separate punitive damages

instructions on each tort to ensure that the defendant acted with the requisite mental

state when committing each tort, see Weldon v. Town Prop., Inc., 633 S.W.2d 196,

199 (Mo. Ct. App. 1982), says nothing about whether Missouri would aggregate the

damages awarded for inextricably intertwined torts when considering excessiveness,

once the necessary culpability is established. The absence of a challenge in this case

to the punitive damages under Missouri law, which incorporates the federal

constitutional standards into its state-law excessiveness inquiry, see Letz v. Turbomeca

Engine Corp., 975 S.W.2d 155, 178 (Mo. Ct. App. 1997), fortifies the conclusion that

Missouri treats the torts in a manner that is most likely to make the State’s action

constitutional. If Missouri law indeed required separate consideration of the two torts

when evaluating the potential excessiveness of a damages award, then Missouri law

(incorporating the federal standards) would require a remittitur for the same reasons

set forth in the majority’s analysis, and there would be no reason to declare Missouri

law unconstitutional.
-23-

As a matter of federal constitutional law, I cannot say that Missouri’s decision

to permit an award of punitive damages that is less than double the actual damages

caused by the intertwined torts is state action that “furthers no legitimate purpose and

constitutes an arbitrary deprivation of property.” State Farm Mut. Auto. Ins. Co. v.

Campbell, 538 U.S. 408, 417 (2003). Both torts were necessary steps in the Bank’s

course of conduct to harm JCB, and it is reasonable for a State to consider them

together in assessing whether a punitive damages award is excessive. Although

“[t]respass and conversion protect distinct legal rights,” ante, at 13, the majority itself

recognizes that “the trespass was done for the purpose of seizing and selling JCB’s

collateral;” indeed, it was done solely for that purpose. Accordingly, I agree that

“[t]he Bank’s trespass was sufficiently reprehensible to warrant a substantial penalty.”

Ante, at 17. Once it is recognized that a State may consider the purpose of the trespass

in determining punitive damages, I do not think constitutional law dictates that the

State may give partial weight to the resulting conversion (thus justifying punitive

damages of $100,000 for trespass, despite only $1 in actual damages for the trespass

standing alone), but may not fully consider the conversion in determining punitive

damages for the trespass that enabled the conversion.

Accepting that the State reasonably may consider the Bank’s course of conduct

as a whole in assessing punitive damages, the relevant guideposts show that the

punitive damages award is constitutional. See generally Gore, 517 U.S. at 575-85.

For the reasons stated in the majority’s analysis of reprehensibility, ante, at 15-16, the

Bank’s conduct, viewed in the light most favorable to the verdict, supports an award

of this magnitude under our precedents. Diesel Machinery, Inc. v. B.R. Lee Indus.,

Inc., 418 F.3d 820, 839-40 (8th Cir. 2005); Asa-Brandt, Inc. v. ADM Investor Serv.

Inc., 344 F.3d 738, 746-47 (8th Cir. 2003). The ratio of punitive damages as a whole

to compensatory damages for the interrelated torts is less than 2:1, and thus well

within the ratios approved by the Supreme Court and our court. Pacific Mut. Life Ins.

Co. v. Haslip, 499 U.S. 1, 23-24 (1991) (approving 4:1 ratio); State Farm, 538 U.S.

at 425 (noting that the Court in Gore “referenced a long legislative history, dating
-24-

back over 700 years and going forward to today, providing for sanctions of double,

treble, or quadruple damages to deter and punish,” and that these ratios are

“instructive.”); Eden Elec., Ltd. v. Amana Co., 370 F.3d 824, 829 (8th Cir. 2004)

(approving 4.5:1 ratio); Diesel Machinery, 418 F.3d at 820 (approving 4:1 ratio). 

The damages awards in this case are large, and the record would support

inferences that cast the Bank’s actions in a more sympathetic light. But viewing the

evidence in the light most favorable to the verdict, and giving Missouri the flexibility

it is due in our federal system to further its legitimate interests in punishing unlawful

conduct, I would affirm the judgment of the district court upholding the jury’s

verdicts.

______________________________