Court Opinion

ID: 3184833
Source: CourtListenerOpinion
Date Created: 2016-03-11 16:18:54.293735+00
Date Added: 2024-06-11T14:28:55.630393
License: Public Domain

FIRST DIVISION
                                 PHIPPS, P. J.,
                             BOGGS and MERCIER, JJ.

NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten
                    days of the date of decision to be deemed timely filed.
                                http://www.gaappeals.us/rules

                                                                     March 4, 2016

In the Court of Appeals of Georgia
 A15A1734. BALLISTICS RESEARCH, INC. et al. v. BRI
     FUNDING, LLC.

      PHIPPS, Presiding Judge.

      Ballistics Research, Inc., Ballistics Blocks, LLC, Wayne Orr, and James Orr

(collectively, “defendants”) appeal from the trial court’s order awarding BRI Funding,

LLC, punitive damages in excess of the statutory cap in OCGA § 51-12-5.1 (g).

Because BRI Funding cannot recover excess punitive damages, we vacate the award

and remand for further proceedings.

      This case is before us a second time.1 The pertinent facts, which are fully

outlined in Ballistics Research I, show that beginning in September 2009, several

      1
        See Ballistics Research v. BRI Funding, 330 Ga. App. XXV (2014)
(unpublished opinion, Case No. A14A1074) (“Ballistics Research I”).
investors agreed to loan money to Ballistics Research.2 In exchange, Ballistics

Research granted the investors a security interest in all patents and intellectual

property rights that it owned or might own in the future.3

      Ballistics Research did not timely repay the loans, and on May 10, 2010, the

investors decided to assign their rights under the loan agreements to BRI Funding, an

as-yet-unformed company they planned to create for the purpose of bringing suit.4

Pursuant to the assignment:

      All of the . . . parties assign their rights under the September ‘09
      Agreement effective as of May 18, 2010 to a Georgia limited liability
      company expected to be formed and called BRI Funding, LLC . . . so
      that [BRI Funding] can either accept the voluntary assignment of
      Ballistics’ patents or act as the sole plaintiff in a lawsuit to be filed
      [against] Ballistics and perhaps its members.5

      2
          Ballistics Research I, supra, slip op. at 3, 5.
      3
          Id. at 4-5.
      4
          Id. at 5-6.
      5
          Id. at 6.

                                             2
      At some point after May 10, 2010, the investors incorporated BRI Funding.6

On January 17, 2011, they executed an amended document re-assigning to the newly

formed company their rights to sue Ballistics Research. Approximately one month

later, BRI Funding filed suit against Ballistics Research and Wayne Orr, seeking,

among other things, damages for breach of contract and protection for its assigned

interest in the patents. During discovery, however, BRI Funding learned that

Ballistics Research had transferred its patents to Ballistics Blocks on April 29, 2010.

BRI Funding thus amended the complaint, adding Ballistics Blocks and James Orr

to the litigation and asserting several new claims, including claims for fraudulent

transfer, fraud, and punitive damages.7

      BRI Funding subsequently moved for summary judgment. The trial court

granted the motion and awarded the company compensatory damages and attorney

fees, as well as punitive damages in the amount of $870,407.25. On appeal, we

affirmed the trial court’s judgment as to all claims and damages except punitive

      6
       The parties have not provided us with a record reference reflecting the date
on which BRI Funding was incorporated. The evidence shows, however, that the
incorporation occurred after May 10, 2010. See id. at 6 (May 10, 2010 assignment
agreement refers to BRI Funding as a “Georgia limited liability company expected to
be formed”) (emphasis supplied).
      7
          Id. at 6-7.

                                          3
damages. We explained that “punitive damages are limited [by statute] to a maximum

of $250,000 for any tort action, unless the trier of fact finds that ‘the defendant acted,

or failed to act, with the specific intent to cause harm.’”8 We further noted that to

overcome the statutory cap, a fact finder must make a separate finding as to specific

intent.9 In this case, the trial court determined that the defendants intended to defraud

BRI Funding. But “it did not find that [the defendants] acted with the specific intent

to cause BRI Funding harm.”10 We thus “vacate[d] the punitive damages award and

remand[ed] with direction that the trial court consider whether Ballistics Research

acted, or failed to act, with the specific intent to cause harm such that punitive

damages were warranted beyond the $250,000 cap provided for in OCGA § 51-12-5.1

(f).”11

          8
        Id. at 14-15, quoting OCGA § 51-12-5.1 (f). See also OCGA § 51-12-5.1 (g)
(establishing $250,000 cap on punitive damages).
          9
       Ballistics Research I, supra, slip op. at 15. See McDaniel v. Elliott, 269 Ga.
262, 265 (3) (497 SE2d 786) (1998) (establishing bright-line rule that trier of fact
must make separate finding of specific intent to cause harm to award punitive
damages in excess of $250,000).
          10
               Ballistics Research I, supra, slip op. at 15.
          11
               Id. at 16 (punctuation omitted; emphasis in original).

                                                 4
      The trial court refused to accept new evidence on remand, instead basing its

decision on the record before it. After reviewing the evidence, the court determined

that the defendants acted with specific intent to harm BRI Funding and reinstated the

$870,407.25 punitive damages award. The defendants now appeal a second time,

arguing that they could not have intended to harm BRI Funding because the company

did not exist when the tortious acts occurred.

      We agree. As recounted above, we vacated the original punitive damages

award because the trial court exceeded the statutory cap without finding that the

defendants specifically intended to harm BRI Funding.12 Although the trial court

made the requisite finding on remand, the record does not support that decision. BRI

Funding is an assignee created for the sole purpose of suing the defendants on the

investors’ behalf. The company does not contest its status as an assignee or argue that

its recovery rights arose from something other than assignment. In fact, BRI Funding

admits that “the acts supporting the finding of specific intent occurred before [its]

existence.” Given these circumstances, the defendants could not have specifically

intended to harm BRI Funding.

      12
           Id. at 15-16.

                                          5
       Moreover, “under Georgia law a right to punitive damages cannot be

assigned.”13 Citing this principle, the defendants claim that BRI Funding’s status as

an assignee precludes any punitive damages recovery. But the defendants did not

raise this argument in the first appeal, and although we vacated the initial punitive

damages award, we remanded the case for consideration of one limited issue: whether

a punitive damages award in excess of the $250,000 cap is appropriate here. In

reaching this decision, we tacitly approved the trial court’s award of general punitive

damages (up to the statutory cap) – a decision that we cannot reconsider at this

point.14

       The award of excess punitive damages, however, is squarely before us. And the

defendants are correct that BRI Funding’s sole status as an assignee undermines the

       13
         Canal Indemnity Co. v. Greene, 265 Ga. App. 67, 73 (3) (593 SE2d 41)
(2003). See also Empire Fire & Marine Ins. Co. v. Driskell, 264 Ga. App. 646, 649
(3) (592 SE2d 80) (2003) (Georgia law prohibits assignment of punitive damages
claims).
       14
         See Empire Fire, supra at 648 (1) (appellants cannot relitigate issue resolved
against them on prior appeal); Ovrevik v. Ovrevik, 254 Ga. App. 756, 759-760 (2) (b)
(564 SE2d 8) (2002) (law of the case prevented court from reaching newly raised
argument during second appeal where case was previously remanded for limited
purpose and evidentiary posture had not changed).

                                          6
excess award.15 To find otherwise would ignore the defendants’ lack of tortious

conduct towards BRI Funding. The trial court erred in awarding punitive damages in

excess of $250,000. Accordingly, we vacate the punitive damages award and remand

for further proceedings consistent with this opinion.

      Judgment vacated and case remanded. Boggs and Mercier, JJ., concur.

      15
           See Empire Fire, supra at 649 (3).

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