Opinion ID: 2812203
Heading Depth: 3
Heading Rank: 1

Heading: Inside Customers

Text: Defendants contend the district court erred by “[s]pecifically” finding defendants converted Stonebridge’s inside customer files.3 Looking primarily to copyright law from other jurisdictions, defendants argue Stonebridge had no possessory interest in copies of the art it created for its customers. We need not venture outside Arkansas tort law to resolve this issue. In Godwin v. Churchman, 810 S.W.2d 34 (Ark. 1991), a solo accountant, Godwin, joined three other accountants to form their own firm. See id. at 35. After the business relationship turned sour and 3 Despite maintaining their innocence as to conversion, at oral argument, counsel for defendants acknowledged Massey’s act was “theft” and Massey “wrongfully took” the files. -6- Godwin rejected the others’ effort to buy him out, the other three accountants resigned. See id. Over a weekend, the three “took furniture, client files in progress, computer diskettes with client information, and financial data including accounts receivable from the office, without giving prior notice.” Id. The Arkansas Supreme Court held Godwin sufficiently alleged a claim of conversion. See id. at 38. The court reasoned Godwin had alleged the other three accountants had “exercised dominion over property in violation of the rights of the owners” where the complaint stated, “the Defendants removed the files, including those originally brought into the practice by Plaintiff Godwin, copied the computer diskettes which were the property of Plaintiffs, took the furniture which was the property of Plaintiffs and took over the Plaintiffs’ accounting practice which he had brought into the group.” Id. Defendants contend the Arkansas Supreme Court might have considered only the taking of files and furniture, not the copying of the computer diskettes, to constitute an allegation of conversion. But the court did not single out the diskette copying as any less a conversion than the physical removal of the files and furniture, and we have no reason to assume otherwise. See Holland v. Walls, 621 S.W.2d 496, 497-98 (Ark. Ct. App. 1981) (finding appellee converted appellant’s tract books when she made microfilm copies of the books, “exercis[ing] dominion over the property in violation of appellant’s right to possession”). Following Godwin and Holland, the district court did not err in concluding defendants converted the copies of insidecustomer files created by Stonebridge.
Stonebridge alleges the district court erred in assessing damages for defendants’ inside-customer files conversion. “[T]he amount of damages in a nonjury case is within the discretion of the trial court and cannot be overturned unless clearly -7- erroneous.” Taylor v. Pre-Fab Transit Co., 616 F.2d 374, 375 (8th Cir. 1980). The district court awarded Stonebridge recovery based on defendants’ unjust enrichment. See, e.g., Holland, 621 S.W.2d at 499 (remanding to the trial court to calculate damages based on unjust enrichment to the conversion tortfeasor). Cutting-Edge took inside-customer contact information from the files Massey copied and arranged for solicitation postcards to be sent to Stonebridge’s inside customers. The parties stipulated these postcard solicitations resulted in at least $27,300 in sales for Cutting-Edge. Stonebridge argues the number should be increased by about $10,000 for ostensible sales by Cutting-Edge to inside customers before the postcard solicitations. The district court did not include Stonebridge’s additional $10,000 because there was “no reliable evidence . . . to support [it].” The district court found Cutting-Edge “earned a 61% net profit of the price of the main knife sold to their end use customers.” The district court awarded damages of 61%, which it calculated as $16,380,4 representing Cutting-Edge’s unjust enrichment. Stonebridge claims the district court clearly erred by not crediting “Exhibit D” to its post-trial brief, which Stonebridge claims supports a higher award. Stonebridge admits it did not introduce Exhibit D at trial, but claims Exhibit D “extracted data from defendants’ trial Exhibit 15.” Considering our deferential standard of review of damages, see Taylor, 616 F.2d at 375, we hold the district court did not clearly err by discounting evidence compiled in a post trial brief exhibit and thereby holding Stonebridge to the lower stipulated figure. Defendants assert Stonebridge is not entitled to damages because it did not present sufficient evidence that it had been profitable. But a lost-profit analysis is 4 The district court clearly erred here, because 61% of $27,300 is $16,653. On remand, the conversion award must be adjusted accordingly. -8- irrelevant here to the district court’s calculation of unjust enrichment damages, which may be calculated solely from defendants’ gain. See, e.g., Hatchell, 211 S.W.3d at 522. The district court did not clearly err in awarding damages based upon defendants’ unjust enrichment.