Court Opinion

ID: 9518229
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:47:39.962179+00
Date Added: 2024-06-11T12:27:52.549196
License: Public Domain

JUSTICE BUCKLEY dissents: What we review here is an impeccable trial record. Prior to the verdict, defendant never raised any legal question regarding plaintiffs’ request for compensatory and punitive damages, and to this day, defendant raises no questions surrounding the conduct of the trial, the admission of evidence, the law under which the case was tried, or the jury instructions. The majority finds that plaintiffs’ evidence of damages was speculative. However, I believe the size of the award is the motive behind the majority’s opinion, and I do not believe the sheer size of a jury award is a proper basis for such a finding. When one considers defendant’s egregious conduct proved by plaintiffs, the risks plaintiffs took in their endeavor, and the size of defendant, the award is put into perspective. There is no question defendant’s fraud caused plaintiffs some amount of compensatory damage, and I believe plaintiffs proved this amount of damage to a sufficient degree of certainty. Further, I do not believe the remittitur of the circuit court had any basis in law. I would affirm the jury verdict of $4 million in compensatory damages and $50 million in punitive damages for the following reasons. The evidence put forth by plaintiffs proved their damages with reasonable certainty. Plaintiffs made $4 million in spite of defendant’s fraud. Because of the financial chaos created by defendant’s misrepresentation, plaintiffs spent $1.6 million less on marketing than their business plan had contemplated and was agreed upon by their lender. It is irrational to suppose that plaintiffs would have spent the missing $1.6 million unproductively. It is more logical to accept as true their testimony, undisputed at trial, that they would have spent the $1.6 million on lifts or something even more productive. Both the jury and the trial judge accepted this as true, and it is not this court’s place to reject that finding. The majority mistakenly relies exclusively on Roth’s direct testimony, which gives the impression that Moran ignored the events that occurred after plaintiffs discovered defendant’s fraud. However, these criticisms of Moran’s statement miss the mark. These undisputed events, supposedly ignored by Moran, had already been taken into account in the underlying SK financial statements on which Moran’s statement was based. Borsch took Moran’s incremental sales and profits, compared them to Snap-On, made a large deduction for liquidity (30%), and arrived at two incremental values: $6.4 million, which the jury rejected, and $4 million based on sales, which the jury accepted. Defendant’s attack was primarily directed at this testimony. Defendant’s criticism of Borsch’s valuations parrots the testimony of Mr. Cerone, defendant’s financial analyst. Cerone testified that Snap-On is a publicly traded industry leader and SK is not. However, Borsch allowed for this difference by discounting his valuation by 30%. The bottom line is that neither the jury, nor the trial judge, who were in the best position to weigh Cerone’s testimony against Borsch’s, chose to deny compensatory damages based on Cerone’s testimony. Yet, now the majority reweighs Cerone’s testimony and finds it to outweigh Borsch’s. The weight to be assigned expert testimony is for the jury, who actually heard it, not appellate judges who have only had it described to them by counsel for the verdict loser. Treadwell v. Downey, 209 Ill. App. 3d 999, 1003, 568 N.E.2d 998, 1001 (1991). Aside from the fact that plaintiffs did prove their amount of damages sufficiently, what I find even more disturbing about the majority opinion is that it summarily dismisses the fact that defendant failed to object to the introduction of the expert testimony or to the jury instructions on damages. The majority states that because plaintiffs "failed to raise this argument in their initial brief’ they waived the issue on appeal. However, plaintiffs did raise the expert testimony argument on page 17 of its brief and made the jury instruction argument regarding punitive damages on page 28. While it is true plaintiffs did not make the jury instruction argument regarding compensatory damages until its cross-reply brief, I fail to see how this would preclude this court from considering the jury instruction and the fact that defendant never objected to it. In fact, I believe it is the first thing this court should have considered once defendant made its damage argument. Since the majority did not, I consider it now. "(15) If you decide for the plaintiffs on the question of liability, you must then fix the amount of money which will reasonably and fairly compensate them for any damages proved by the evidence to have resulted from the alleged misstatements of the defendant. Evidence on the following types of damages has been presented: Profits Plaintiffs lost when SK was sold to Falcons. Whether any damages have been proved by evidence is for you to determine. (16) Damages for fraud may include lost profits. Such damage is the amount of reasonable certain net profits the plaintiffs did not earn as a result of defendant’s wrongful conduct. Absolute certainty as to the amount of lost profits is not required, but speculative profits cannot be awarded. Lost profits must be proved with reasonable certainty.” (Emphasis added.) The rule applicable to this case was correctly stated in the agreed jury instruction and the trial judge’s decision. Absolute certainty as to the amount of lost profits is not required. Plaintiffs’ lost profits were not speculative, they were real. All the law requires, in cases of this character, is that the evidence shall, with a fair degree of probability, tend to establish a basis for the assessment of damages. Barnett v. Caldwell Furniture Co., 277 Ill. 286, 289, 115 N.E. 389, 390 (1917). It should also be remembered that the $4 million compensatory award was not based on lost operating profits; the jury rejected that basis for damages. The basis for the jury’s compensatory award was lost sales. Those lost sales produced compensatory damages in the reduced value of the company and, thus, a lower profit when they sold the company than would have been the case in the absence of defendant’s fraud. Furthermore, I believe there are procedural reasons why the jury’s and the trial judge’s $4 million compensatory award should stand on appeal. It was not until the verdict that defendant raised the legal arguments presented in this appeal. Until then, defendant had tacitly conceded that plaintiffs’ damage evidence, if believed by the jury, would be legally sufficient. This concession is established by the following procedural events as shown by the record. Although defendant made three motions in limine, none made reference to plaintiffs’ evidence of compensatory damages, and defendant did not object to plaintiffs’ damage experts when they were called at trial. Nor did defendant raise the matter of compensatory damages when it moved for a directed verdict at the close of plaintiffs’ case in chief. On the contrary, defendant’s motion for a directed verdict at that point only argued that plaintiffs had waived their right to consequential damages by proceeding to arbitration. At the close of all the evidence, defendant again moved for a directed verdict and again there was no argument against compensatory damages. I see defendant’s appeal to this court as nothing more than an attempt to retry the case, which is what the majority has done. It is not our role to brandish exhibits and reconsider properly given jury instructions that were agreed to by the parties. I remind the majority of the standards of review to which we are held. A verdict is against the manifest weight of the evidence only where the opposite conclusion is clearly evident, plain and undisputable, or where the findings are unreasonable, arbitrary and not based on any evidence. Maple v. Gustafson, 151 Ill. 2d 445, 454, 603 N.E.2d 508, 512-13 (1992); Anderson v. Beers, 74 Ill. App. 3d 619, 623, 393 N.E.2d 552, 555 (1979). The trial court denied defendant’s new trial request and that ruling cannot be disturbed absent a clear abuse of discretion. Maple, 151 Ill. 2d 445, 603 N.E.2d 508; Reideelberer v. Highland Body Shop, Inc., 83 Ill. 2d 545, 548, 416 N.E.2d 268, 270 (1981). The majority has failed to show the abuse of discretion here. Furthermore, even if the compensatory damage amount was speculative, there is no basis for overturning the punitive award, because it is clear plaintiffs suffered some amount of compensatory damage as a result of defendant’s fraud. Defendant’s fraud actually caused two types of harm to plaintiffs. An immediate injury in the form of an overpayment, which the arbitrator valued at $1.3 million upon which the federal district court entered judgment, and a consequential injury, which the jury valued at $4 million 11 years later. Only injury is required to support an award of punitive damages. The case of Kemner v. Monsanto Co., 217 Ill. App. 3d 188, 576 N.E.2d 1146 (1991), cited by the majority, does not support the proposition that the punitive damage award must be reversed. There, the appellate court disallowed punitive damages only because it was "not a case where there was an intentional tort alleged nor a case where damages could not be easily compensated.” 217 Ill. App. 3d at 200. In the case at bar, there was an intentional tort and it is defendant who contends that plaintiffs’ damages could not easily be computed. Accordingly, Kemner stands for the proposition that compensatory damages are not an essential predicate to punitive damages in intentional tort cases like this one. I can only guess to what effect defendant’s argument regarding punitive damages had on the majority opinion. Although the majority never reaches this issue, I cannot leave this case without stating my belief that the trial court’s remittitur had no basis in law. The Illinois Supreme Court has never reduced a jury verdict for punitive damages. The supreme court has either upheld or rejected such awards in their entirety. But it has never done what the trial court did here. Defendant does cite two cases in which Illinois appellate courts have reduced jury verdicts: Stambaugh v. International Harvester Co., 106 Ill. App. 3d 1, 435 N.E.2d 729 (1982), and Brown v. Farkas, 158 Ill. App. 3d 772, 511 N.E.2d 1143 (1987). Both are appellate verdicts giving no reason whatever for the "judicial” action taken. The Illinois law is quite plain: Juries’ punitive awards are to be reviewed only for "passion, partiality or corruption.” Deal v. Byford, 127 Ill. 2d 192, 204, 537 N.E.2d 267, 272 (1989). Defendant has never contested that the instant verdict was the product of "passion, partiality or corruption.” Those words do not appear in defendant’s post-trial filings and they have not been used in this appeal. Moreover, Illinois law is equally clear that the measurement of punitive damages "is peculiarly within the province of the jury.” Collins v. Interroyal Corp., 126 Ill. App. 3d 244, 257, 466 N.E.2d 1191, 1200 (1984). The trial court reviewed the jury’s punitive award under the "Proctor factors.” However, no Illinois authority for the application of these factors exists. The 1994 Proctor decision was subsequently withdrawn by the court, and thus, has no precedential value. The real Illinois law under which the jury verdict must be reviewed is stated in the jury instruction, which defendant proposed, and plaintiffs agreed to. "In assessing punitive damages, you the jury, can properly consider the following factors: 1) the nature and enormity of the wrong; and 2) the financial status of the defendant.” Applying this law to this case, we see at once that the $50 million verdict was appropriate. Furthermore, this award is consistent with the substantive due process standard, with regard to punitive awards, recently set by the United States Supreme Court in BMW of North America, Inc., Petitioner v. Ira Gore, Jr., 517 U.S. 559, 134 L. Ed. 2d 809, 116 S. Ct. 1589 (1996). In BMW, the Supreme Court considered three guideposts in determining whether the award was "grossly excessive.” These were: the degree of reprehensibility of the defendant’s conduct, the ratio of the punitive award to the actual harm inflicted, and the civil and criminal penalties that could be imposed for comparable misconduct. BMW, 517 U.S. at 574-75, 134 L. Ed. 2d at 826-27, 116 S. Ct. at 1598-99. In that case, the Supreme Court found a punitive award of $2 million grossly excessive where BMW had repaired redelivery damage to plaintiff’s car without disclosing such repairs, and the conduct resulted in actual damages of only $4,000. BMW, 517 U.S. at 574-75, 134 L. Ed. 2d at 826, 116 S. Ct. at 1598. The case before us is clearly distinguishable in that defendant’s conduct was much more reprehensible than BMW’s, and the civil and criminal penalties for such conduct are potentially great. Here the punitive award is only 12 times the compensatory award, as opposed to the punitive award in BMW, which was 500 times the actual damages. For all of these reasons, I would affirm the jury verdict award of $4 million in compensatory damages and $50 million in punitive damages and reverse the trial court’s remittitur.