Rain Bird Corp. v. National Pump Co. , 144 F. App'x 373 ( 2005 )


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  •                                                          United States Court of Appeals
    Fifth Circuit
    F I L E D
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT                  June 14, 2005
    Charles R. Fulbruge III
    Clerk
    No. 04-60735
    RAIN BIRD CORP
    Plaintiff - Appellee
    v.
    NATIONAL PUMP COMPANY LLC; ET AL
    Defendants
    ROBERT MILTON
    Defendant - Appellant
    --------------------
    Appeal from the United States District Court
    for the Northern District of Mississippi
    2:02-CV-18-M-D
    --------------------
    Before GARWOOD, GARZA, and BENAVIDES, Circuit Judges.
    PER CURIAM:*
    In this tort action, Defendant-Appellant Robert Milton
    (“Milton”) appeals the district court’s entry of final judgment
    in favor of Plaintiff-Appellee Rain Bird Corp. (“Rain Bird”) and
    its assessment of actual and punitive damages against him.
    *
    Pursuant to 5TH CIR. R. 47.5, the Court has determined
    that this opinion should not be published and is not precedent
    except under the limited circumstances set forth in 5TH CIR. R.
    47.5.4.
    1
    Having reviewed the record and considered the briefs and
    arguments on appeal, we affirm the judgment of the district court
    and uphold the award of actual and punitive damages.
    Milton raises three issues on appeal.   First, Milton
    contends that the district court’s findings of fact are clearly
    erroneous inasmuch as they disregard certain evidence presented
    by Milton at trial.   Following a bench trial, we review the
    district court’s findings of fact for clear error.     See Energy
    Mgmt. Corp. v. City of Shreveport, 
    397 F.3d 297
    , 302 (5th Cir.
    2005).   In light of the record viewed in its entirety, and given
    that the district court’s findings were based largely on
    determinations regarding witness credibility, see Schlesinger v.
    Herzog, 
    2 F.3d 135
    , 139 (5th Cir. 1993), we conclude that the
    district court’s account of the facts did not disregard evidence
    and was not clearly erroneous.
    Second, Milton asserts that the district court erred in
    finding in favor of Rain Bird, and against Milton, as to Rain
    Bird’s causes of action.    Specifically, Milton complains that it
    was error for the district court not to accept his version of the
    facts and that, had the district court done so, judgment in his
    favor would be warranted.   In essence, Milton’s argument under
    this assignment of error amounts to nothing more than a complaint
    that the district court erred in declining to adopt facts more to
    Milton’s liking.   As discussed supra, in light of the record
    2
    viewed in its entirety, and given that the district court’s
    findings were based largely on determinations regarding witness
    credibility, the district court’s account of the facts was not
    clearly erroneous.
    Finally, Milton contends that the district court erred in
    its assessment of damages against Milton in four respects.    In
    reviewing damages assessments, “[a]bsent an error of law, [we]
    will sustain the amount of damages awarded by the fact finder,
    unless the amount is clearly erroneous or so gross or inadequate
    as to be contrary to right reason.”   Vogler v. Blackmore, 
    352 F.3d 150
    , 154 (5th Cir. 2003) (citations omitted).
    With respect to damages, Milton first contends that the
    district court ignored cost of investment in determining Rain
    Bird’s lost future profits.   We find this argument to be without
    merit.   The earnings projections relied on by the district court
    to assess Rain Bird’s lost future profits specifically account
    for cost of investment, calculated on an annualized basis as a
    yearly depreciation deduction.   Therefore, we conclude that the
    district court did not err in calculating Rain Bird’s lost future
    profits.
    Milton next contends that the district court erred in
    considering the projected earnings pro-forma introduced as
    Exhibit P-110 as evidence of Rain Bird’s lost future profits.      On
    appeal, Milton argues that because the challenged pro-forma was
    3
    not prepared for the specific purpose of demonstrating Rain
    Bird’s lost future profits, the district court’s reliance on that
    pro-forma was clearly erroneous.       Because Milton did not object
    at trial to either the introduction or reliability of the
    challenged pro-forma, we need not determine whether the district
    court’s reliance on that pro-forma was clearly erroneous.       See
    Colonial Refrigerated Transp., Inc. v. Mitchell, 
    403 F.2d 541
    ,
    552 (5th Cir. 1968) (citations omitted).
    Third, Milton contends that the district court erred in
    awarding Rain Bird damages in the amount of the severance package
    Milton awarded himself from the coffers of Golf Course Irrigation
    Services, Inc. (“GCIS”).   We find Milton’s argument to be without
    merit.   In awarding himself a severance package that was not part
    of his proper compensation, Milton breached his fiduciary duty to
    Rain Bird, as the pledgee of GCIS stock, by unjustly enriching
    himself by the amount of the severance package.       See Gibson v.
    Manuel, 
    534 So. 2d 199
    , 202 (Miss. 1988); Knox Glass Bottle Co.
    v. Underwood, 
    89 So. 2d 799
    , 814-15 (Miss. 1956).       Accordingly,
    Milton is liable to Rain Bird for the amount of the severance
    package, irrespective of any harm to GCIS or any diminution in
    value of the GCIS stock pledged to Rain Bird.       See Knox, 89 So.
    2d at 815.   Therefore, the district court’s assessment of damages
    against Milton in the amount of his GCIS severance package was
    not clearly erroneous.
    4
    Lastly, Milton contends that the district court’s assessment
    of $500,000 in punitive damages against him runs afoul of the
    constitutional prohibition against grossly excessive or arbitrary
    punitive damages awards.1   Because Milton challenges the
    constitutionality of the size of the district court’s punitive
    damages award, we review Milton’s challenge de novo.   See Watson
    v. Johnson Mobile Homes, 
    284 F.3d 568
    , 572 (5th Cir. 2002).
    In BMW of North America, Inc. v. Gore, 
    517 U.S. 559
     (1996),
    the United States Supreme Court articulated three guideposts that
    courts should consider in determining whether an award of
    punitive damages is constitutionally excessive.   The three
    guideposts are:   (1) the degree of the defendant’s
    reprehensibility; (2) the disparity between the harm or potential
    harm suffered by the victim and the punitive damages award; and
    (3) the sanctions authorized for comparable misconduct.     See
    Gore, 
    517 U.S. at 575-85
    ; see also State Farm Mut. Auto. Ins. Co.
    v. Campbell, 
    538 U.S. 408
    , 418 (2003) (reiterating the importance
    of the Gore guideposts).
    Regarding the first Gore guidepost, the harm Milton
    inflicted on Rain Bird was purely economic in nature and Milton’s
    conduct evinced no indifference to, or reckless disregard for,
    1
    We note that Milton raises only a constitutional
    challenge to the size of the district court’s punitive damages
    award. Because Milton does not raise an excessiveness challenge
    under Mississippi state law, we decline to address that issue.
    5
    the health and safety of others.       See Gore, 
    517 U.S. at 576
    .
    However, “[t]o be sure, infliction of economic injury, especially
    when done intentionally through affirmative acts of misconduct,
    or when the target is financially vulnerable, can warrant a
    substantial penalty.”   
    Id.
        In the instant case, Milton’s conduct
    included:   (1) knowingly providing defendant National Pump
    Company (“NPC”) with Rain Bird’s confidential information,
    enabling NPC to essentially steal Rain Bird’s prospective
    customers; (2) improperly transferring to NPC GCIS’s secured
    assets, in knowing violation of the Loan and Security Agreement
    with Rain Bird; and (3) continuing to transfer GCIS’s secured
    assets to NPC in violation of a preliminary injunction entered by
    the district court, resulting in the district court holding
    Milton in contempt of court.    Accordingly, we conclude that the
    combination of economic injury to Rain Bird and Milton’s multiple
    affirmative acts of misconduct supports a punitive damages award.
    Regarding the second Gore guidepost, the $500,000 in
    punitive damages assessed against Milton is substantially less
    than the $2,869,167 in actual damages caused by Milton’s conduct,
    resulting in a punitive damages-to-actual damages ratio of 0.17.
    This fractional ratio does not even come close to approaching the
    ratio contemplated as questionable by the Supreme Court.       See
    Campbell, 
    538 U.S. at 410
    .    Accordingly, we conclude that the
    second Gore guidepost supports upholding the amount of punitive
    6
    damages assessed against Milton.
    Regarding the final Gore guidepost, the comparable sanctions
    under Mississippi state law for the disposal of property that is
    secured by a lien are up to one year’s imprisonment, a fine not
    exceeding the value of the property disposed of, in this case
    $90,000, or both.    See 
    Miss. Code Ann. § 97-17-75
     (1972).   This
    provision imposes relatively severe penalties on wrongdoers,
    indicating the seriousness with which the state views the
    wrongful action.    Accordingly, we conclude that the relevant
    civil and criminal penalties under Mississippi state law provided
    Milton with constitutionally adequate notice of the severity of
    the penalty that the state may impose.    See Gore, 
    517 U.S. at 584
    .    Therefore, we uphold the district court’s punitive damages
    award against Milton.
    For the foregoing reasons, we affirm the judgment of the
    district court with respect to Milton and uphold the actual and
    punitive damages awards against Milton.
    7