Opinion ID: 2546274
Heading Depth: 1
Heading Rank: 2

Heading: mr. franklin's appeal

Text: Mr. Franklin argues that the Overbeys failed to make a submissible case against him and that the reduced amount of punitive damages awarded was excessive.
A motion for judgment notwithstanding the verdict will be denied if the plaintiff made a submissible case. Klotz v. St. Anthony's Med. Ctr., 311 S.W.3d 752, 769 (Mo. banc 2010). A case is submissible if each and every fact essential to liability is predicated on legal and substantial evidence. Id. The Court takes the evidence in the light most favorable to the verdict, giving the prevailing party all reasonable inferences from the verdict and disregarding the unfavorable evidence. Hodges v. City of St. Louis, 217 S.W.3d 278, 280 (Mo. banc 2007). This Court will reverse the jury's verdict for insufficient evidence only where there is a complete absence of probative facts to support the jury's conclusion. Klotz, 311 S.W.3d at 769. The Overbeys did not seek to hold Mr. Franklin liable for violating the MMPA under respondeat superior or by piercing the corporate veil but rather for his personal involvement in the fraud. To hold him liable under the MMPA, they needed to prove his employment of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce .... § 407.020. A corporate officer may be held liable if it is shown by evidence of probative force that he had actual or constructive knowledge of the actionable wrong and participated therein. Wolfersberger v. Miller, 327 Mo. 1150, 39 S.W.2d 758, 764-65 (1931). Direct evidence of fraud rarely exists, [b]ut fraud, like any other fact, may be established by circumstantial evidence. Bank of New Cambria v. Briggs, 361 Mo. 723, 236 S.W.2d 289, 291 (1951). This may include indirect evidence of knowledge of or involvement in the conduct, as well as evidence of similar transactions in the course of a continuous, systematic course of dealing. Blakeley v. Bradley, 281 S.W.2d 835, 839 (Mo.1955); see also Chesus v. Watts, 967 S.W.2d 97, 113 (Mo.App.1998). Mr. Franklin did not admit involvement in the fraud, but the Overbeys presented substantial circumstantial evidence supporting his involvement in the fraudulent conduct. First, they showed that National placed television commercials advertising the payment-for-life program, quoted earlier. They showed that he was the sole owner of National and of Chad Franklin Suzuki. They showed that Chad Franklin Suzuki made commercials offering a similar program and that Mr. Franklin personally appeared in at least one of these commercials. They played these commercials as well as commercials for Nationalfor the jury. The jurors could see the similarity of the programs, they could see Mr. Franklin's personal involvement in the Suzuki program and they could see his relationship with both programs offered by his two wholly owned dealerships. Moreover, the Overbeys presented evidence that Mr. Franklin was involved in National's sales process by showing that when they complained about the failure to honor the payment-for-life program, the salesperson called Mr. Franklin personally about how to proceed. While, as Mr. Franklin notes, he then and now denied any knowledge of the fraudulent promises made to the Overbeys, the jury was free to find this denial incredible in light of the use of his name in National's commercials advertising the payment-for-life program and in light of the other evidence noted above. Further, the jury's finding that Mr. Franklin had personal knowledge of the fraudulent promises made to the Overbeys was supported by the testimony of four other persons who claimed they similarly were defrauded by National, as well as evidence that the Missouri attorney general received at least 35 complaints of analogous conduct in regard to the payment-for-life membership plan and similar payment plans and is seeking a civil injunction. This was not isolated conduct of a single errant salesperson. The Overbeys made a submissible case against Mr. Franklin, and the trial court properly overruled his motion for judgment notwithstanding the verdict.
This Court reviews constitutional challenges de novo. Hodges, 217 S.W.3d at 279. A statute is presumed to be valid and will not be declared unconstitutional unless it clearly contravenes some constitutional provision. Franklin Cnty. ex rel. Parks v. Franklin Cnty. Comm'n, 269 S.W.3d 26, 29 (Mo. banc 2008). The challenger has the burden of proving the [statute] clearly and undoubtedly violates the constitutional limitations. Id. Here, Mr. Franklin contends that the entry of a $500,000 judgment for punitive damages violated his due process rights because this award is grossly excessive in light of the nature of his conduct, even though reduced from the $1 million jury verdict. The 14th Amendment to the United States Constitution prevents a state from depriving any person of life, liberty, or property, without due process of law. Article I, section 10 of the Missouri Constitution is essentially identical, stating that no person shall be deprived of life, liberty or property without due process of law. Mo. Const. art. I, § 10. In State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 417, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), the Supreme Court held that due process prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor because [t]o the extent an award is grossly excessive, it furthers no legitimate purpose and constitutes an arbitrary deprivation of property. Id. In applying these principles to determine whether the award of punitive damages was excessive based on State Farm's improper refusal to settle or later pay a claim, the Supreme Court said it would consider: (1) the degree of reprehensibility of the defendant's conduct; (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. Id. at 418, 123 S.Ct. 1513. Pursuant to these principles, it said, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. Id. at 425, 123 S.Ct. 1513. In the case before it, in particular, the Supreme Court found that the Utah Supreme Court had erred in approving a punitive damage award of $145 million, based on an actual damage award of $2.6 million, as the punitive damages had been based not on State Farm's conduct regarding the individual plaintiff but rather on its unrelated conduct toward its customers across the nation. Id. at 419-23, 123 S.Ct. 1513. Due process does not permit courts, in the calculation of punitive damages, to adjudicate the merits of other parties' hypothetical claims against a defendant under the guise of the reprehensibility analysis. Id. at 423, 123 S.Ct. 1513. But due process does permit considering the wrongfulness of the conduct and whether it is part of a pattern and practice of misconduct. Accordingly, State Farm also held that far greater ratios may comport with due process where `a particularly egregious act has resulted in only a small amount of economic damages.' Id. at 423, 123 S.Ct. 1513, quoting BMW of North America, Inc. v. Gore, 517 U.S. 559, 582, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). Ultimately, State Farm concluded, [t]he precise award in any case ... must be based upon the facts and circumstances of the defendant's conduct and the harm to the plaintiff. Id. at 425, 123 S.Ct. 1513, quoting Gore, 517 U.S. at 582, 116 S.Ct. 1589. In considering those circumstances, the most important factor is the degree of reprehensibility of the misconduct, including: the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an insolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident. Id. at 419, 123 S.Ct. 1513 (emphasis added). In State Farm, the Supreme Court found that the defendant's conduct was not very reprehensible, for it caused limited economic harm, did not threaten health or safety, there was scant evidence of repeated misconduct, and unrelated conduct as to other insureds could not be considered. Id. at 419-23, 123 S.Ct. 1513. By contrast, here, consideration of these factors supports the large ratio between actual and punitive damages. The actual damage award of $4,500 was small, in contrast to the large actual damage award in State Farm of $2.6 million, so that a single-digit ratio would be insufficient to punish and deter the defendant properly. Id. This reasoning is supported by the language of section 510.265 itself, in which the legislature provided that the ratio of punitive damages should not be more than five times actual damages in cases with damages of more than $100,000, but if the amount of actual damages was less than $100,000, then it authorized an award of up to $500,000 regardless of the size of the actual damage verdict. § 510.265. While this statutory framework of course cannot permit a punitive damage award larger than due process would allow, it is an additional indication that, in the case of small awards, due process does not prevent large ratios if necessary, given particular facts, to impose punishment and deter future misconduct. Here, while the harm caused was economic rather than a threat to health or safety, the target was financially vulnerable, the misconduct was part of a plan or scheme through which at least 35 people have alleged they were injured, and the harm was the result of intentional malice, trickery or deceit. Unlike in State Farm, Mr. Franklin did not appear or testify at the trial or otherwise express remorse, nor did he make his victims whole, but instead he continued to deny his fault through his counsel, who appeared for him at trial. A jury would be within its discretion in determining that, in these circumstances, in which a particularly egregious act has resulted in only a small amount of economic damages, the usual single-digit ratio may not be an appropriate measure of the limits of due process. Id. at 419, 123 S.Ct. 1513. Other cases from Missouri and elsewhere have approved ratios of the size awarded here when the actual damage award was small and the conduct was egregious. See, e.g., Smith v. New Plaza Pontiac Co., 677 S.W.2d 941 (Mo.App.1984) ($400 in actual and $30,000 in punitive damages, a 75-to-1 ratio, for making misrepresentations about the condition of a used car); TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 113 S.Ct. 2711, 125 L.Ed.2d 366 (1993) ($19,000 in actual damages and $10 million in punitive damages, a 526-to-1 ratio, for slander of title); Kemp v. Am. Tel. & Tel. Co., 393 F.3d 1354 (11th Cir.2004) ($115 in compensatory damages and $250,000 in punitive damages, a 2,172-to-1 ratio, for fraudulent billing practices); Parrott v. Carr Chevrolet, Inc., 331 Or. 537, 17 P.3d 473 (2001) ($11,496 in compensatory damages and $1 million in punitive damages, an 86-to-1 ratio, for misrepresentations related to the sale of a vehicle). Here, as in these cases, this Court holds that, on these facts, the amount of punitive damages was reasonable and proportionate to the harm inflicted by Mr. Franklin and did not violate due process.