Opinion ID: 1763518
Heading Depth: 1
Heading Rank: 2

Heading: Industrial's Appeal

Text: Industrial raises a number of issues on appeal. However, the relief it requests is stated in the alternative. It urges this Court to reverse on various grounds the judgment of the trial court and remand the cause for a new trial, or, in the alternative, to reinstate the jury's punitive-damages award. We conclude that the trial court erred in vacating the jury's punitive-damages award, and we resolve this case on that basis. At the outset, we note that the Bank does not challenge the amount of the punitive-damages award. In other words, it contends that no punitive-damages award was authorized by the facts, not that the amount awarded was excessive. Thus, we are not invited to consider the guideposts established in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), or the factors set forth in Green Oil Co. v. Hornsby, 539 So.2d 218 (Ala.1989). We determine only whether the punitive-damages issue was properly submitted to the jury for its decision. We begin our discussion with the following principles in view: Conversion is an intentional tort.... `The intent required is not necessarily a matter of conscious wrongdoing. It is rather an intent to exercise a dominion or control over the goods [of the plaintiff] which is in fact inconsistent with the plaintiff's rights.' Johnson v. Northpointe Apartments, 744 So.2d 899, 904 (Ala.1999) (quoting W. Keeton, Prosser & Keeton on Torts § 15 (5th ed.1984)). Intentional torts ordinarily carry punitive damages, if the jury chooses to award them. Tillis Trucking Co. v. Moses, 748 So.2d 874, 887 n. 12 (Ala.1999). Indeed, [p]unitive damages are recoverable in a conversion case when the evidence shows legal malice, willfulness, insult, or other aggravating circumstances. Schwertfeger v. Moorehouse, 569 So.2d 322, 324 (Ala.1990) (emphasis added). `[P]unitive damages [in an action for conversion] are justified when the evidence discloses the conversion to have been committed in known violation of law and of owner's rights, with circumstances of insult, or contumely, or malice.' Roberson v. Ammons, 477 So.2d 957, 961 (Ala.1985) (quoting Carolina Cas. Ins. Co. v. Tisdale, 46 Ala.App. 50, 57, 237 So.2d 855, 859-60 (1970)). The conversion committed in known violation of the law and of plaintiffs' rights is itself legal insult, contumely, or malice sufficient to justify an award of punitive damages. 477 So.2d at 961 (emphasis added). Consistent with Ala.Code 1975, § 6-11-20(a), a punitive-damages award will not be vacated where the evidence supporting the award is of such quality and weight that a jury of reasonable and fair-minded persons could find by clear and convincing evidence, Ex parte Norwood Hodges Motor Co., 680 So.2d 245, 249 (Ala.1996), that the conversion was associated with malice, willfulness, insult, or other aggravating circumstances. [5] The trial court, in a posttrial order, stated: As to insult or malice, [Industrial] points to evidence that in March 1993, when its officer, Richard Hill, went to Scottsboro to investigate the situation, the Bank's counsel informed him that if he tried to retrieve the property, he would be arrested. This conduct did not occur at the time of the conversion, but more than a year thereafter and subsequent to the Bank's filing this declaratory judgment action to determine the superiority of the claims. This statement cannot be the basis for a punitive damage[s] award. See Treadwell Ford, Inc. v. Wallace, 49 Ala.App. 308, 271 So.2d 505 ([Ala.] Civ.App.1973). (Emphasis added.) Expanding on that theme, the Bank argues: The trial court correctly relied upon [ Treadwell Ford, Inc. v. Wallace, 49 Ala. App. 308, 271 So.2d 505 (Ala.Civ.App. 1973),] in determining that, in order to be actionable, any so-called `rude or insulting' language or conduct directed toward [Industrial] must have occurred at the time of conversion, which was September 1992. Any allegedly rude or insulting conduct directed to [Industrial] at a time other than at the time of conversion simply cannot support an award of punitive damages. The Bank's brief, at 47 (emphasis in original). Thus, relying on Treadwell Ford, Inc. v. Wallace, 49 Ala.App. 308, 271 So.2d 505 (Ala.Civ.App.1973), the Bank argues that nothing that transpires between the plaintiff and the defendant after the date of the alleged conversion is relevant to the plaintiff's conversion claim. Industrial contends that current Alabama law does deem relevant conduct that postdates the conversion. We agree with Industrial. Caselaw is replete with opinions attesting to the relevance of conduct occurring after the conversion. Indeed, where punitive damages are sought, [e]vidence of any fact which legitimately tends to show the motive and spirit of the defendant in doing the act complained of is admissible in an action for conversion. 18 Am.Jur.2d Conversion § 168 (1985) (emphasis added; footnote omitted). In particular, a defendant's ongoing refusal with associated conductto return property upon demand is evidence of legal insult, contumely, or malice. In other words, even where the initial taking by the defendant was not tortious, `the retention of the personalty after demand for its return'  may present a question of fact `on the issue of punitive damages.' Walt Bennett Ford, Inc. v. Keck, 298 Ark. 424, 428, 768 S.W.2d 28, 30 (1989) (quoting Ford Motor Credit Co. v. Herring, 267 Ark. 201, 206-07, 589 S.W.2d 584, 588 (1979)) (emphasis added). The dispute in Keck began when Richard Keck took his Yugo automobile to Walt Bennett Ford, Inc. (Bennett), for repairs. 298 Ark. at 425, 768 S.W.2d at 28. Bennett provided Keck with a substitute automobile to use while his Yugo was being repaired. 298 Ark. at 425-26, 768 S.W.2d at 29. After seven weeks, Keck returned to Bennett to pick up his Yugo. However, when Keck refused to pay $1,200 as the rental amount for the substitute automobile, Bennett refused to release the Yugo. It was undisputed that all repairs to the Yugo were warranty repairs, that Keck owed [Bennett] nothing for the repairs, and that the lease agreement form for the substitute automobile did not grant the dealer a possessory lien on the [Yugo]. 298 Ark. at 426, 768 S.W.2d at 29. In Keck's action against Bennett for conversion, a jury awarded Keck $6,337 in compensatory damages and $25,000 in punitive damages. 298 Ark. at 426, 768 S.W.2d at 29. Bennett appealed, contending that the trial court erred in submitting the issue of punitive damages to the jury. 298 Ark. at 427, 768 S.W.2d at 30. The Arkansas Supreme Court affirmed, explaining: [Bennett's] conduct of retaining the Yugo even through the trial, thirteen months after the demand for surrender, without any claim of mistake or privilege or other legal right to do so, presents a submissible issue on punitive damages. The jury reasonably could have concluded that [Bennett] withheld Keck's property, his means of transportation, with the intent of causing him such inconvenience and damage that he would be coerced into the payment of a questionable debt. [Bennett] continued this course of conduct even after it was sued for conversion, obtained legal counsel and filed a counterclaim for the disputed rental. The evidence is sufficient to support a finding of intent to cause damage. 298 Ark. at 428, 768 S.W.2d at 30 (emphasis added). In Smiley v. Cardin, 655 S.W.2d 114 (Mo.Ct.App.1983), the court affirmed a $10,000 punitive-damages award in favor of a tenant in the tenant's action against her former landlord for conversion of her household appliances. 655 S.W.2d at 115. The tenant made at least two demands for release of her appliances. In response to the first demand, the landlord `just kind of snickered' and said he would [release them] when paid some back rent he claimed she owed. Id. Subsequently, the tenant's lawyer wrote [the landlord] demanding the return of the appliances but obtained no response. [The tenant] then, for the second time, asked for the appliances but received from the [landlord] another `snicker' and assurances the items would be returned when plaintiff paid her debt. 655 S.W.2d at 115-16. On still another occasion, the tenant's lawyer telephoned the landlord to explain that he was legally bound to return to [the tenant] the property he had come by through self-help. 655 S.W.2d at 116. During that conversation, the landlord directed an obscene remark to the lawyer. On appeal, the landlord contended that the trial court erred by awarding [the tenant] $10,000 in punitive damages because [her] evidence ... failed to establish that [the landlord's] acts were characterized by actual malice or that [he had] willfully and wantonly attempted in injure [her]. 655 S.W.2d at 116. The appellate court disagreed. In affirming the punitive-damages award, the court explained: [The landlord's] treatment of [the tenant] after being advised by counsel, both by letter and telephone, that he was withholding [the tenant's] property illegally and [the landlord's] admitted obscene direction to the attorney, demonstrates the spite and ill will which motivated [his] conduct in the matter. 655 S.W.2d at 117. Thus, the basis for punitive damages in both Keck and Smiley was the continued withholding of the converted property without legal justification. Smiley, of course, contained an additional basis, namely, the defendant's use of an obscenity during a conversation with the plaintiff's lawyer after the conversion had occurred. See Ford Motor Credit Co. v. Spicer, 144 Ga.App. 383, 388, 241 S.E.2d 273, 277 (1977) (From the fact that Ford Motor Credit Company continued to withhold plaintiff's automobile after learning of its error in crediting payment ... to the wrong account ..., the jury[, which awarded punitive damages of $38,500,] was authorized to infer that the repossession was malicious from the time it was carried out....); Lack's Stores, Inc. v. Waisath, 479 S.W.2d 406, 408 (Tex.Civ.App.1972) (the defendant's continued refusal to return plaintiff's furniture constituted aggravating circumstances, so as to justify an award of punitive damages in an action for conversion); see also Ford Motor Credit Co. v. Herring, 267 Ark. at 207, 589 S.W.2d at 588 (although the [initial] taking was proper, the retention of the personalty after demand for its return constituted a submissible fact question on the issue of punitive damages); Hinton v. State Farm Mut. Auto. Ins. Co., 741 S.W.2d 696 (Mo.Ct.App.1988). Our own caselaw is in accord. For example, in Brown v. Campbell, 536 So.2d 920 (Ala.1988), this Court affirmed a judgment entered on a jury verdict, awarding $5,000 in compensatory damages and $10,000 in punitive damages to Jerry Campbell in his action against Dwight Brown and Lendon Brown for fraud and for conversion of a stock certificate. Campbell's suit alleged that the Browns had fraudulently induced him to transfer his 250 shares of stock in Brown Tables, Inc., and had converted his certificate (representing 20% of the corporation) during the period from July 10, 1986, to November 5, 1986. 536 So.2d at 921. The stock transfer occurred on June 10, 1986, in response to an allegedly fraudulent request from the Browns. Id. At that time, Campbell was a plant manager for Brown Tables, Inc. The next day, the Browns fired Campbell. 536 So.2d at 921. Approximately 10 days later, Campbell demanded the return of his stock certificate. He was told, however, that the certificate could not be located, but that [the Browns'] attorney might have it. 536 So.2d at 921. Campbell then asked [the Browns'] attorney for the certificate; it was returned to Campbell by the attorney November 5, 1986, some three weeks after he had sued the Browns and Brown Tables, Inc. Id. (emphasis added). On appeal, the Browns argued that Campbell failed to prove damages on both the conversion claim and on the fraud claim. 536 So.2d at 921. This Court rejected both arguments. Regarding the conversion claim, this Court said: There was clearly ample evidence that the Browns refused to surrender Campbell's certificate after he requested it, ... as well as of actual pecuniary loss by Campbell; this evidence supports the award of both compensatory and punitive damages. Id. at 921-22. The basis mentioned in Brown for punitive damages on the conversion claim was the continued withholding of the certificate from Campbell for approximately five months, in the face of repeated requests for its return. In other words, this Court deemed the Browns' continuing refusal to be ample evidence of the sort of aggravating circumstances that will support an award of punitive damages. Id. at 921. The Court of Civil Appeals reached a similar conclusion in Liberty National Life Insurance Co. v. Caddell, 701 So.2d 1132 (Ala.Civ.App.1997). In that case, Liberty National Life Insurance Company (Liberty National) appealed from a judgment entered on a jury verdict awarding Liberty National's insured, Michael Caddell, $50,000 in compensatory damages and $100,000 in punitive damages, on Caddell's claim against Liberty National for conversion of cash. Id. at 1133. The jury concluded that Liberty National had converted premium payments that were due Caddell, as the result of his decision to cash in his life insurance policy and annuity rider. Id. Caddell submitted to Liberty National the completed forms necessary to cash in the policy and annuity in March 1994. At that time, Liberty National was deducting the monthly policy and annuity rider premium by electronic funds transfer or `bank draft' directly from [Caddell's] bank account. Id. In March 1994, Thomas Rotton, Liberty National's agent, received from Caddell the completed forms, and told Caddell that he would have the bank drafts stopped and that the forms completed... were all Caddell needed in order to cash in his policy. Caddell never heard from or saw Rotton again. Id. at 1134. That month Caddell received a $2,158.06 check from Liberty National. Id. However, that check represented only the cash value of the annuity portion of the policy. Id. Liberty National continued to draft from Caddell's account the premiums for the life insurance policy. Caddell's subsequent attempts to stop the automatic drafts and collect the proceeds of his policy are thoroughly chronicled as follows: In March 1994, Caddell received a $ 2,158.06 check from Liberty National representing the cash value of the annuity portion of the policy. Upon receipt of this check, Caddell telephoned the Liberty National office in Eufaula to inquire about the balance of his funds. Caddell stated that he was told he would receive the balance of his funds in a couple of weeks. Caddell's March 8, 1994, bank statement indicates that $ 80.65 was drafted from his account. In April 1994, $ 45.65 was drafted from Caddell's bank account. He called the Liberty National office to ask why Liberty National was still drafting his account. He stated that he was told by a Liberty National representative that Liberty National would `look into it' and that `it would be taken care of.' Caddell's June 7, 1994, bank statement indicates that $ 45.65 was drafted from his account twice during the month of June. Caddell again contacted Liberty National and, again, was told that Liberty National would `look into it.' Caddell's wife attempted to have the bank drafts stopped in March 1994, by completing a `stop payment' form at the bank; however, this attempt failed. It was not until after she had contacted the bank in June 1994, after receiving the bank statement, and asked that the bank drafts be stopped that the drafts on Caddell's account were stopped. Between January and June 1994, all contact with Liberty National had been initiated by Caddell; Liberty National had never contacted Caddell about the problems with the bank drafts. Caddell contacted his attorney in June 1994. That same month, he received a cash surrender request form from Liberty National, which he turned over to his attorney. In September 1994, Caddell received from Liberty National an `automatic loan receipt' indicating that it had deducted $ 84.52 from the cash value of his policy. In November 1994, Caddell received from Liberty National another `automatic loan receipt' indicating that it had deducted $ 592.79 from the cash value of the policy. In November 1995, one year after Caddell had filed his lawsuit, he received the balance of the cash value from his policy. Id. (emphasis added). Before trial, Liberty National returned the premiums, plus interest, that had been deducted from Caddell's bank account after Caddell had requested the cancellation of the insurance policy. Id. at 1135. On appeal, Liberty National contended that the trial court erred in submitting the issue of punitive damages to the jury and that the evidence [did] not support an award of punitive damages. Id. at 1136. The Court of Civil Appeals disagreed, stating: Caddell presented evidence that Liberty National had wrongfully deducted premium payments from his bank account after he was told that he had completed the forms necessary to cash in the policy and annuity rider. The evidence indicated that after each draft on his account Caddell contacted Liberty National and that each time he was told that Liberty National would `look into it' and that `it would be taken care of.' Caddell also presented evidence that Liberty National did not correct its error and that he did not receive a refund of those payments and interest until he had hired an attorney and filed a lawsuit. Id. (emphasis added). Consequently, the court affirmed the judgment awarding punitive damages. Like Brown, Caddell involved no rude or insulting behavior. As in Brown, the basis articulated in Caddell for the punitive damages award was the continued withholding of the converted property without legal justification, causing the inconvenience and expense of a lawsuit. Neither case involved rude or insulting language, either at the time of conversion or afterward. Nevertheless, the retention of converted property in the face of a demand for its return is post-conversion conduct, which is material to the issue of punitive damages. These cases, therefore, as well as those from the other jurisdictions discussed above, refute the Bank's argument that the defendant's post-conversion conduct is irrelevant to the plaintiff's conversion claim. To the extent Treadwell Ford, Inc. v. Wallace, 49 Ala.App. 308, 271 So.2d 505 (1973), and Progressive Finance Co. v. Milner, 45 Ala.App. 684, 236 So.2d 349 (1970), on which Treadwell relied, are inconsistent with this opinion, they are overruled. The rule to be drawn from the cases discussed above compels the conclusion that the trial court erred in vacating the jury's punitive-damages award. In this case, it is undisputed that the Bank converted Industrial's equipment, [6] and there is ample evidence that it did so knowingly and with legal malice. The Bank took possession of Industrial's equipment in September 1992. In fact, the Bank had notice, through Industrial's letter of July 13, 1992, that is, before it acquired possession, that Industrial was claiming equipment that was located on the premises of ADPI. Industrial made a formal demand for the return of that equipment in a letter dated March 17, 1993. That same month, Industrial presented bills of sale and invoices from various companies, many dating from and after November 30, 1989, which showed Industrial as the purchaser of the equipment it claimed. The Bank summarily rejected Industrial's offer of proof of ownership. In fact, the Bank's counsel responded to the offer of proof by threatening Hill with incarceration. Indeed, following the cessation of business by ADPI, the Bank soughtand the trial court grantedpossession only of the equipment described on the asset list the Bank had filed with its UCC financing statement on March 28, 1988. Obviously, the asset list did not contain items that were purchased by Industrial and evidenced by invoices and bills of sale dating from November 30, 1989. Nevertheless, the Bank made clear in its letter to Industrial's counsel on March 2, 1993, that it was claiming a security interest in all the equipment on the premises. Notwithstanding the fact that Hill remained obviously solicitous of his equipment, the Bank continued to withhold the machinery for more than three years after receiving extensive evidence of Industrial's ownership. It was not until June 1996, in connection with the Bank's alleged renewed threat to dispose of the equipment, that Industrial was able to reclaim what remained of its property, following the effects of weather, unauthorized use, and sale. By that time, according to Hill, the equipment was ruined. In short, the Bank converted Industrial's personalty and retained it for almost four years, without an articulated, arguable excuse. [7] Even without rude or insulting language or conduct, taking and withholding personalty in knowing violation of the plaintiff's rights is itself legal insult, contumely, or malice sufficient to justify an award of punitive damages. Roberson v. Ammons, 477 So.2d at 961; see also Brown v. Campbell, supra; Liberty Nat'l Life Ins. Co. v. Caddell, supra. This case, however, does involve such aggravating circumstances. In the letter of March 2, 1993, to Industrial's counsel, counsel for the Bank threatened Hill and Industrial with claims for all consequential damages because of their interference with the Bank's attempts to sell the equipment. Later that month, counsel for the Bank, in a personal encounter with Hill, threatened Hill with criminal prosecution. The post-conversion conduct in this case, namely, the threats and intimidation, coupled with the Bank's retention of the equipment for approximately four years, is relevant to the issue, and clearly supports the imposition, of punitive damages. The trial court erred, therefore, in vacating the jury's punitive-damages award.