Bayles, B. v. Hamrock, R. ( 2023 )

J-A08022-23
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
BRAD D. BAYLES, AN INDIVIDUAL, : IN THE SUPERIOR COURT OF
FOR HIMSELF, AND ON BEHALF OF : PENNSYLVANIA
JEFFERSON OF MONTICELLO, INC, A :
PENNSYLVANIA CORPORATION :
:
:
v. :
:
: No. 463 WDA 2022
ROBERT G. HAMROCK, AN :
INDIVIDUAL AND JEFFERSON OF :
MONTICELLO, INC., A :
PENNSYLVANIA CORPORATION :
:
Appellants :
Appeal from the Order Entered April 4, 2022
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD-18-2757
BRAD BAYLES, AN INDIVIDUAL FOR : IN THE SUPERIOR COURT OF
HIMSELF, AND ON BEHALF OF : PENNSYLVANIA
JEFFERSON OF MONTICELLO, INC. A :
PENNSYLVANIA CORPORATION :
:
Appellants :
:
:
v. : No. 573 WDA 2022
:
:
ROBERT HAMROCK, AN INDIVIDUAL :
AND JEFFERSON OF MONTICELLO, :
INC. A PENNSYLVANIA :
CORPORATION :
Appeal from the Order Entered April 4, 2022
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD-18-2757
J-A08022-23
BEFORE: STABILE, J., SULLIVAN, J., and PELLEGRINI, J.*
MEMORANDUM BY SULLIVAN, J.: FILED: October 18, 2023
Robert Hamrock (“Hamrock”) and Jefferson of Monticello, Inc. (“JOM”)
appeal, and Brad Bayles (“Bayles”) and JOM cross-appeal, from the judgment
entered in this shareholder derivative action. We affirm.
The relevant factual and procedural history of this case can be
summarized as follows. Since the 1980s, Bayles and Hamrock have been
business partners and co-owners of two residential real estate development
companies: JOM and B&B Rainbow. They acquired JOM pursuant to a 50/50
ownership split to buy and sell real estate for investment purposes. The assets
of JOM included approximately sixty acres of vacant real property in Jefferson
Hills. At the time they acquired JOM, all JOM stock certificates were blank and
thereafter remained in Hamrock’s exclusive possession in his role as the
president and CEO of JOM.
In 2003, Bayles discovered that Hamrock had secretly purchased a
property that they had previously agreed to jointly purchase for JOM. Bayles
commenced a lawsuit against Hamrock alleging that Hamrock had usurped a
corporate opportunity belonging to JOM and committed fraudulent
misrepresentation and civil conspiracy by purchasing the property in his wife’s
name before conveying the property to himself. Bayles also alleged that
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* Retired Senior Judge assigned to the Superior Court.
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Hamrock breached his fiduciary duty to JOM by reimbursing himself for
corporate expenses without consulting Bayles or sharing corporate
information. Bayles requested the appointment of a custodian and a receiver
for JOM. After Bayles failed to pursue the complaint (purportedly because he
and Hamrock were in negotiations for a lucrative real estate transaction), the
lawsuit was eventually terminated by local court rules.
In early 2011, Hamrock received inquiries regarding the potential lease
of the oil, gas, and mineral rights (“OGM rights”) on the vacant land owned
by JOM. In June 2011, Hamrock recorded a deed, purportedly executed by
both he and Bayles in 1992, conveying to Hamrock the OGM rights to the
vacant land owned by JOM for one dollar (“the 1992 deed”). Hamrock initially
leased the OGM rights to MDS Energy (“MDS”); however, he received no
revenue from MDS. Accordingly, in 2014, Hamrock leased the OGM rights to
EQT Production Company (“EQT”) and received a $208,200 signing bonus.
In 2017, Bayles’s attorney discovered the 1992 deed. In February 2018,
Bayles/JOM brought a derivative shareholder action against Hamrock/JOM for
breach of fiduciary duty, theft, and fraudulent conveyance of the OGM rights.
Bayles also requested a constructive trust over JOM, appointment of a
receiver, an accounting, and damages for unjust enrichment. Hamrock
countersued Bayles/JOM for breach of fiduciary duty and unjust enrichment.
A few months later, in July 2018, Hamrock sold the OGM rights on the
vacant land owned by JOM to Divot Energy Consultants, LLC, and Cavallo
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Mineral Partners, LLC, for $336,547. In 2017 and 2019, Hamrock sold three
properties owned by JOM without disclosing the sales to Bayles.
During the ensuing litigation, Hamrock claimed that, as he continued to
put more of his personal funds into JOM, he and Bayles agreed to convey to
Hamrock the OGM rights on the vacant land owned by JOM, and pursuant to
this agreement, they executed the 1992 deed. Hamrock asserted that,
although the 1992 deed was delivered to him, he did not immediately record
it, but instead placed it in a drawer where it remained for nineteen years.
Hamrock claimed that he and Bayles also agreed to change the ownership
percentage of JOM from 50/50 to 60/40 in favor of Hamrock. With respect to
the three JOM properties, Hamrock maintained that no taxes had been paid
on the three properties, and that he paid $36,699.92 of his personal funds to
unencumber the properties so that they could be sold by JOM. Finally,
Hamrock claimed that Bayles had disappeared for fifteen years, and was not
involved in the operation of JOM from 2003 until 2018.
Bayles disputed these claims and asserted that: he did not disappear,
and he and Hamrock were in communication; there was no agreement to
convey the OGM rights or change the ownership percentage to a 60/40 split;
and the 1992 deed was forged by Hamrock. Bayles retained Khody Detwiler,
an expert in the field of forensic document examination, who opined that the
1992 deed was forged. Bayles filed a motion for sanctions for fabrication of
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evidence and forgery of discovered documents, which was deferred to the trial
judge.
Hamrock filed a motion for partial judgment on the pleadings, seeking
the dismissal of Bayles’s claims regarding the 1992 deed (i.e., breach of
fiduciary duty and unjust enrichment) on the basis that they were barred by
the applicable four-year statute of limitations which, according to Hamrock,
began to run in June 2011, when he filed the 1992 deed. Bayles opposed the
motion on the basis that the discovery rule tolled the statute of limitations
until he discovered the fraudulent deed and the lease and sale of the OGM
rights. The trial court denied the motion. Hamrock then filed a motion in
limine seeking to exclude evidence pertaining to events occurring prior to
2015 on the same basis. The trial court denied the motion in limine on the
basis that the question of whether the discovery rule operated to toll the
statute of limitations was a factual determination to be made by a jury.
The matter proceeded to a jury trial in September 2021. Bayles’ expert,
Mr. Detwiler, opined that the 1992 deed and the 1991 corporate resolutions
for B&B Rainbow were both forged, and that Bayles’s signature (and those of
three witnesses) on those documents had been copied and pasted from other
legitimate documents. See N.T., 9/17-22/21, at 150-168. In light of the
forgery opinion testimony provided by Mr. Detwiler, Hamrock claimed that any
forgery was committed by the title company which prepared the deed. Gail
Critchfield, the accountant for JOM, B&B Rainbow, and Hamrock personally,
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testified that Hamrock told her that the $208,200 he received from EQT in
2014 was for the lease of OGM rights on real estate Hamrock owned
personally, rather than from OGM rights on the vacant land owned by JOM.
Ms. Critchfield also testified that she prepared corporate tax returns indicating
a 50/50 ownership split for JOM until 2007, when Hamrock handed her a
handwritten note in which he directed her to indicate a 60/40 split. Hamrock
presented undated and unwitnessed JOM stock certificates on which he had
written his name as evidence of the 60/40 ownership split.
At the conclusion of trial, the jury determined that: (1) the discovery
rule tolled the statute of limitations on Bayles’s claims for breach of fiduciary
duty and unjust enrichment; (2) Bayles did not own 50 percent of JOM stock;
(3) Hamrock breached his fiduciary duty, causing damages to Bayles/JOM; (4)
Hamrock’s breach was outrageous; (5) no punitive damages were to be
assessed against Hamrock; (6) Hamrock was liable for unjust enrichment; (7)
Bayles breached his fiduciary duty, causing damages to Hamrock/JOM; and
(8) Bayles was not liable for unjust enrichment. See Jury Verdict, 9/23/21,
at 1-3. The parties agreed that the jury did not need to determine
compensatory damages, as the trial court could mold the verdict by using the
jury’s factual findings and the agreed-upon amounts received by Hamrock for
the lease and subsequent sale of the OGM rights, as well as the amounts paid
by Hamrock for delinquent property taxes on the three JOM properties he sold.
The parties filed post-verdict motions. Bayles renewed his motion for
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sanctions, which the trial court denied. Hamrock sought a directed verdict
and judgment notwithstanding the verdict (“JNOV”), which the trial court
denied. Both parties filed motions to mold the verdict. The trial court
appointed Ms. Critchfield as custodian of JOM and ordered Bayles to submit a
petition for attorneys’ fees.
Ultimately, the trial court entered a judgment directing that: (1)
Hamrock pay $237,830 in compensatory damages (representing 40 percent
of the amounts received by Hamrock for the lease and sale of the OGM rights)
and pre-judgment interest on that amount to the custodian of JOM, to be paid
over to Bayles; (2) Hamrock pay $84,406 to the custodian of JOM, to be paid
over to Bayles for his attorneys’ fees and costs; and (3) that Bayles pay
Hamrock $14,661 in compensatory damages (representing 40 percent of the
delinquent property taxes paid by Hamrock) to the custodian of JOM, to be
paid over to Hamrock. Hamrock filed a timely notice of appeal, and Bayles
cross-appealed. Hamrock, Bayles, and the trial court complied with Pa.R.A.P.
1925.
On appeal, Hamrock raises the following issues for our review:
A. Whether the trial judge erred by denying [Hamrock’s] motion
for partial judgment on the pleadings and motion in limine,
thereby allowing claims, evidence, and testimony to be
presented to the jury that should have been excluded due to
the statute of limitations?
B. Whether the jury erred in its decision that the discovery rule
tolled the applicable statutes of limitations for claims of breach
of fiduciary duty and unjust enrichment brought by [Bayles]?
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C. Whether the trial judge erred in his decision to apply pre-
judgment interest to [Bayles’s] award?
D. Whether the trial judge erred in his interpretation of 15
Pa.C.S.A. § 1784(b)?
E. Whether the trial judge erred in his sua sponte determination
that Hamrock acted illegally, oppressively, and fraudulently
pursuant to 15 Pa.C.S.A. § 1767?
Hamrock’s Brief at 5 (unnecessary capitalization omitted).
In his cross-appeal, Bayles raises the following issues for our review:
A. Whether the trial court erred in awarding $ 14,661.97 in favor
of [JOM] and against . . . Bayles for property taxes paid at real
estate closings for the sale of corporate real estate where
Hamrock conducted those closings without any notice to
Bayles[?]
B. Whether the trial court erred in failing to set aside that portion
of the jury verdict that failed to award punitive damages in
favor of Bayles and against Hamrock where the jury found that
Hamrock’s conduct was outrageous and the overwhelming
evidence showed that Hamrock forged documents, stole
corporate assets and defrauded third parties?
C. Whether the trial court erred in relying upon the jury slip in
awarding Bayles only 40% of the compensatory damages
where the jury slip was ambiguous and where the jury
instructions failed to instruct which party had the burden of
persuasion or proof with regard to ownership of the
corporation?
Bayles’ Brief at 5 (unnecessary capitalization omitted).
Initially, we will address Hamrock’s issues. In his first issue, Hamrock
challenges the trial court’s pretrial rulings denying his motion for partial
judgment on the pleadings and motion in limine. In reviewing the trial court’s
grant or denial of a motion for judgment on the pleadings, our scope of review
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is plenary. See Vetter v. Fun Footwear Co., 668 A.2d 529, 531 (Pa. Super.
1995) (en banc). Our standard of review for such rulings is as follows:
Our review of a trial court’s decision to grant . . . judgment
on the pleadings is limited to determining whether the trial court
committed an error of law or whether there were facts presented
which warranted a jury trial. In so reviewing, we look only to the
pleadings and any documents properly attached thereto.
Judgment on the pleadings is proper only where the pleadings
evidence that there are no material facts in dispute such that a
trial by jury would be unnecessary.
Pennsylvania Financial Responsibility Assigned Claims Plan v. English,
664 A.2d 84, 86 (Pa. 1995). A motion for judgment on the pleadings will be
granted where, on the facts averred, the law says with certainty that no
recovery is possible. See Am. Appliance v. E.W. Real Estate Mgmt., 769
A.2d 444, 446 (Pa. 2001).
Our standard of review of a ruling on a motion in limine is well-settled:
A motion in limine is used before trial to obtain a ruling on
the admissibility of evidence. It gives the trial judge the
opportunity to weigh potentially prejudicial and harmful evidence
before the trial occurs, thus preventing the evidence from ever
reaching the jury. A trial court’s decision to grant or deny a
motion in limine is subject to an evidentiary abuse of discretion
standard of review.
Questions concerning the admissibility of evidence lie within
the sound discretion of the trial court, and we will not reverse the
court’s decision absent a clear abuse of discretion. An abuse of
discretion may not be found merely because an appellate court
might have reached a different conclusion, but requires a manifest
unreasonableness, or partiality, prejudice, bias, or ill-will, or such
lack of support so as to be clearly erroneous.
In addition, to constitute reversible error, an evidentiary
ruling must not only be erroneous, but also harmful or prejudicial
to the complaining party.
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Parr v. Ford Motor Co., 109 A.3d 682, 690-91 (Pa. Super. 2014) (citations
omitted).
Both of Hamrock’s motions were based on a claim that the relevant
statute of limitations had expired. “Statutes of limitations are rules of law that
set time limits for bringing legal claims.” Didomizio v. Jefferson
Pulmonary Assocs. & Asthma Allergy & Pulmonary Assocs., P.C., 280
A.3d 1039, 1046 (Pa. Super. 2022). The general rule is that a cause of action
accrues, and thus the applicable limitations period begins to run, when an
injury is inflicted. See Wilson v. El-Daief, 964 A.2d 354, 361 (Pa. 2009);
see also Pocono International Raceway, Inc. v. Pocono Produce, Inc.,
468 A.2d 468, 471 (Pa. 1983) (holding that the statute of limitations begins
to run as soon as the right to institute and maintain a suit arises). Once a
cause of action has accrued and the prescribed statutory period has run, an
injured party is barred from bringing his cause of action. See Fine v.
Checcio, 870 A.2d 850, 857 (Pa. 2005).
However, in certain cases involving latent injury, and/or instances in
which the causal connection between an injury and another’s conduct is not
apparent, the discovery rule may operate to toll the statute of limitations until
the plaintiff discovers, or reasonably should discover, that he has been injured
and that his injury has been caused by another party’s conduct. See id. at
859. As this Court has explained:
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The discovery rule is a judicially created device which tolls
the running of the applicable statute of limitations until that point
when the plaintiff knows or reasonably should know: (1) that he
has been injured, and (2) that his injury has been caused by
another party’s conduct. The limitations period begins to run
when the injured party possesses sufficient critical facts to put him
on notice that a wrong has been committed and that he need
investigate to determine whether he is entitled to redress.
Melley v. Pioneer Bank, N.A., 834 A.2d 1191, 1201 (Pa. Super. 2003)
(internal quotation marks and citation omitted).
Although Pennsylvania favors the strict application of a statute of
limitations, see Communications Network Int’l, 187 A.3d 951, 961 (Pa.
Super. 2018), the discovery rule jurisprudence applies a reasonable-diligence
requirement as opposed to an all-vigilance one. See Nicolau v. Martin, 195
A.3d 880, 895 (Pa. 2018). Moreover, because the reasonable diligence
determination is fact intensive, the determination of when a plaintiff should
reasonably be aware of their injury is generally an issue of fact to be
determined by the jury. See id. at 886, 893; see also Fine, 870 A.2d at 859
(holding that “the question as to when a party’s injury and its cause were
discovered or discoverable is for the jury”).
Relevantly, the statute of limitations for an action upon a contract
implied in law must be commenced within four years. See 42 Pa.C.S.A. §
5525(a)(4).1
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1 As both Bayles and Hamrock based their respective claims on their status as
shareholders, the trial court determined that their claims derive from
(Footnote Continued Next Page)
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Hamrock contends that Bayles did not exercise due diligence to discover
the alleged harm caused by the filing of the 1992 deed in 2011. According to
Hamrock, Bayles should have been on notice of potential harm by Hamrock
since 2003, when Bayles sued Hamrock for theft of corporate assets and
accused him of cheating, stealing, and lying to Bayles. Hamrock maintains
that “[t]he fact that Bayles filed a suit against Hamrock alleging theft and
breach of fiduciary duty is enough for Bayles to have put himself on notice of
potential future harm.” Hamrock’s Brief at 23. Hamrock additionally argues
that “as the part-owner of a real estate investment company, Bayles could
either easily regularly review the company assets, or hire counsel to do the
same.” Id. Hamrock asserts that Bayles’s failure to check on the company
assets for fifteen years after filing the 2003 lawsuit, and seven years after the
2011 filing of the 1992 deed, shows that he did not act in a reasonably diligent
manner, and therefore the discovery rule should not apply to toll the statute
of limitations.
Hamrock further contends that, assuming he breached his fiduciary duty
and was unjustly enriched, the initial action which led to those claims was the
recording of the 1992 deed rather than his subsequent dealings with the oil
and gas companies. Hamrock insists that “the leases and sales were a
secondary form of injury, but the primary injury that led to Bayles’s claims
____________________________________________
contractual agreements implied in law pertaining to their ownership rights in
JOM. See Trial Court Opinion, 7/5/22, at 5. Neither party disputes this ruling.
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was the 2011 recording of the 1992 [d]eed, which stripped the OGM rights
away from [JOM], thus depriving Bayles of his ownership rights and potential
for future income.” Id. at 24-25. On this basis, Hamrock contends that the
trial court erred by denying his motion for partial judgment of the pleadings
and his motion in limine, thereby allowing the admission into evidence of
claims, exhibits, and testimony that should have been excluded due to the
expiration of the four-year statute of limitations in 2015.
The trial court considered Hamrock’s first issue and concluded that it
lacked merit. The court reasoned:
. . . [A]ll of . . . Hamrock’s statute of limitations arguments
assume commencement of the limitations periods in 2011[,] when
he recorded the deed that conveyed [to] him[self] all of [JOM’s
OGM rights]. This assumption is improper. The statute of
limitations does not begin to run until the right to institute and
maintain a lawsuit arises. However, the damages element of . . .
Bayles’[s] breach of fiduciary duty claim and the appreciation of
benefits element of his unjust enrichment claim did not arise until
. . . Hamrock received payments for the natural gas in 2014 and
2018. [The] four[-]year statute of limitations . . . began to run
on March 26, 2014[,] when . . . Hamrock received $208,200 from
EQT . . . and therefore had not expired when . . . Bayles[] filed
the lawsuit [i]n February . . . 2018. Hence, [the trial court’s]
ruling against . . . Hamrock on the statute of limitations was
correct.
Even if the statutes of limitations commence[d] to run in
2011 with the recording of the deed conveying the [OGM rights],
the discovery rule tolls them and they d[id] not begin to run until
. . . Bayles discover[ed] or reasonably should [have] discover[ed]
that he ha[d] been injured and that his injury was caused by . . .
Hamrock’s conduct. See Fine . . . 870 A.2d . . . at 859 . . .. This
is a factual determination ordinarily made by a jury. Id. [a]t 858.
. . ..
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. . . Hamrock argue[d] the discovery rule does not apply as
a matter of law because he produced the deed to the [OGM rights]
during discovery in the 2003 lawsuit, before the deed was
recorded. . . . Hamrock did testify that he responded to . . .
Bayles’ discovery in the 2003 lawsuit by sending, among other
things, the [OGM] deed to his attorney. However, . . . Bayles
testified that . . . Hamrock never responded to the discovery
request in the 2003 lawsuit. Hence, whether the deed was
produced in the 2003 lawsuit was a disputed factual issue
requiring an assessment of the parties’ credibility, and [the trial
court] was correct to allow the jury to determine if . . . Bayles
knew or reasonably should have known of the deed from the 2003
lawsuit.
. . . Hamrock also argue[d] the 2003 lawsuit alleges nearly
the same claims as this 2018 lawsuit. This supposedly put . . .
Bayles on inquiry notice of the potential for future harm, which
again, according to . . . Hamrock, would make the discovery rule
inapplicable as a matter of law. This argument is meritless. First,
the 2003 lawsuit and this 2018 lawsuit do not allege nearly the
same claims. The 2003 lawsuit alleges Mr. and Mrs. Hamrock
usurped a corporate opportunity to acquire realty[,] while this
2018 lawsuit alleges . . . Hamrock forged a deed and used the
forged deed to obtain over $500,000 that belonged to [JOM]. As
a matter of law, was . . . Bayles not reasonably diligent because
he did not anticipate . . . Hamrock’s misconduct would continue
after he was caught and also would transform into forgery?
Reasonable minds could find . . . Bayles exercised reasonable
diligence even though he did not anticipate . . . Hamrock’s forgery.
The concept of a plaintiff being on inquiry notice described in Rice
v. Diocese of Altoona-Johnstown[,] 255 A.3d 237 (Pa. 2021).
. . involves a secondary cause of a known injury. No secondary
cause is alleged by . . . Bayles[,] and his injury was not known
since it involved the unobservable lease and sale of natural gas
that is hidden below the surface of the land. See Lewey v. H.C.
Frick Coke Co., . . . 31 A.261[, 263-64] ([Pa.] 1895) ([holding
that] plaintiff could not know that a trespasser had
subterraneously extracted coal from his land). In any event, the
injury alleged in the 2003 lawsuit is different from the injury in
the 2018 lawsuit. Therefore, the 2003 lawsuit did not put . . .
Bayles on inquiry notice of the conduct of . . . Hamrock set forth
in the 2018 lawsuit.
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. . . Hamrock also argue[d] . . . Bayles did not exercise
reasonable diligence because he abandoned his 2003 lawsuit and
afterwards disappeared for nearly fifteen years. According to . . .
Hamrock, this is another reason the discovery rule does not apply
as a matter of law. But, . . . Bayles explained that litigating the
2003 lawsuit with . . . Hamrock could have jeopardized a pending
purchase of their property that would generate over a million
dollars. Bayles further explained that he planned to wait until the
sale closed, have the proceeds held in escrow and then fight it out
relative to the 2003 lawsuit. The decision on whether this was a
lack of reasonable diligence or a sensible course of action is a
question of fact for the jury. Similarly, . . . Bayles denied that he
disappeared for nearly fifteen years and testified to regular
communications with . . . Hamrock (including their fight for
approval for a sale of property to UPMC that was contingent on
approval of zoning for a hospital). Hence, whether . . . Bayles
disappeared for nearly fifteen years also is a question of fact for
the jury. Therefore, it would be incorrect to deem the discovery
rule inapplicable as a matter of law.
Trial Court Opinion, 7/5/22, at 4-7 (quotations marks and some citations
omitted).
We discern no error or abuse of discretion by the trial court in denying
Hamrock’s motion for partial judgment on the pleadings and his motion in
limine. As explained above, a motion for judgment on the pleadings will not
be granted unless, on the facts averred, the law says with certainty that no
recovery is possible. See Am. Appliance, 769 A.2d at 446. Here, Bayles
averred that Hamrock breached his fiduciary duty by failing to disclose his
secret and fraudulent conveyance of the OGM rights to himself, and further
failing to disclose his subsequent lease of the OGM rights to EQT. See
Complaint, ¶¶ 18, 45. Because Bayles asserted that Hamrock’s misdeeds
were both “secret” and “undisclosed,” the claims asserted in Bayles’s
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complaint were subject to the potential application of the discovery rule. Id.;
see also Fine, 870 A.2d at 859 (explaining that the discovery rule may apply
in cases involving latent injury, and/or instances in which the causal
connection between an injury and another’s conduct is not apparent). Thus,
given the potential application of the discovery rule to toll the statute of
limitations, it could not be said with certainty that no recovery was possible.
See Am. Appliance, 769 A.2d at 446. Accordingly, the trial court properly
denied Hamrock’s motion for partial judgment on the pleadings.
With respect to the denial of Hamrock’s motion in limine, the
determination of when Bayles discovered or reasonably should have
discovered his injury was an issue of fact to be determined by the jury. See
Fine, 870 A.2d at 857; see also Nicolau, 195 A.3d at 893 (explaining that
the determination of when a plaintiff should reasonably be aware of their
injury is generally an issue of fact to be determined by the jury). Thus, the
trial court correctly determined that the jury should be permitted to consider
all evidence pertinent to the question of whether the discovery rule tolled the
statute of limitations. Accordingly, we discern no error or abuse of discretion
by the trial court in denying Hamrock’s motion in limine regarding the statute
of limitations. For these reasons, Hamrock’s first issue merits no relief.
In his second issue, Hamrock contends that the jury erred in its decision
that the discovery rule tolled the applicable statutes of limitations for Bayles’s
claims for breach of fiduciary duty and unjust enrichment. Although
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Hamrock’s second issue is inartfully presented as a claim of jury error, we
discern that he intended to challenge the trial court’s denial of his motion for
JNOV. Our standard of review of a denial of a motion for JNOV is well-settled:
Appellate review of a denial of JNOV is quite narrow. We
may reverse only in the event the trial court abused its discretion
or committed an error of law that controlled the outcome of the
case. Abuse of discretion occurs if the trial court renders a
judgment that is manifestly unreasonable, arbitrary or capricious;
that fails to apply the law; or that is motivated by partiality,
prejudice, bias[,] or ill-will.
When reviewing an appeal from the denial of a request for
[JNOV], the appellate court must view the evidence in the light
most favorable to the verdict[-]winner and give him or her the
benefit of every reasonable inference arising therefrom while
rejecting all unfavorable testimony and inferences. . . . Thus, the
grant of [JNOV] should only be entered in a clear case and any
doubts must be resolved in favor of the verdict[-]winner.
Furthermore, [i]t is only when either the movant is entitled to
judgment as a matter of law or the evidence was such that no two
reasonable minds could disagree that the outcome should have
been rendered in favor of the movant that an appellate court may
vacate a jury’s finding.
Phillips v. Lock, 86 A.3d 906, 919 (Pa. Super. 2014) (citation omitted).
Hamrock claims that there are two different applications of the discovery
rule: one which is more liberal and plaintiff-friendly; and another which is
stricter and less plaintiff-friendly. Hamrock maintains that Pennsylvania has
adopted the latter approach, and requires only notice inquiry to commence
the running of the statute of limitations where the injury could be found with
the exercise of reasonable diligence. According to Hamrock, “it must be
determined whether Bayles could have paid attention to the corporate assets;
had sufficient knowledge, or access to those with sufficient knowledge, to
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check on the corporate assets; the intelligence to know how to be reasonably
diligent; and sound judgment to protect his own interests.” Hamrock’s Brief
at 27-28. Hamrock asserts that, if Bayles was involved in the operation of
JOM from 2003 until 2018, as he claimed at trial, then he should have been
regularly checking on JOM’s assets and would have discovered the 1992 deed
in 2011. Hamrock points to his own testimony that Bayles stopped taking part
in JOM’s operations and failed to regularly check on JOM’s assets to ensure
that Hamrock, whom Bayles had already accused of theft, wasn’t stealing
company assets. Hamrock asserts that Bayles hired several attorneys
between 2010 and 2017, any of whom could have checked the recorder of
deeds website and discovered the 1992 deed. According to Hamrock, Bayles
did not exhibit sound judgment by accusing his business partner of theft, and
then disappearing for fifteen years while leaving his property in the hands of
an alleged thief.2
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2 Hamrock additionally argues that the jury misunderstood the trial court’s
jury instructions regarding the discovery rule because the court failed to clarify
the definition of the term “to toll.” Hamrock’s Brief at 31-34. However,
Hamrock failed to preserve this issue for our review, as he did not raise any
objection to the court’s jury instructions at trial. Indeed, as the trial court
pointed out, “Hamrock’s requested point for charge on the statutes of
limitations was, in fact, verbally given to the jury.” See Trial Court Opinion,
7/5/22, at 9. Instead, Hamrock challenged the verdict sheet submitted to the
jury. See Post-Verdict Motion, 1/15/22, at ¶¶ 24-27; see also Amended
Post-Verdict Motion, 3/21/22, at ¶¶ 24-27. Consequently, as Hamrock did not
raise a challenge to the jury instructions at trial, the issue is waived. See
Pa.R.A.P. 302(a) (providing that issues not raised in the trial court are waived
and may not be raised for the first time on appeal).
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As explained above, when reviewing the denial of a motion for JNOV,
we must view the evidence in the light most favorable to the verdict-winner,
giving him the benefit of every reasonable inference arising therefrom while
rejecting all unfavorable testimony and inferences. See Phillips, 86 A.3d at
919. Here, as the trial court explained above, Bayles testified that the 1992
deed was not produced in discovery during the 2003 lawsuit, denied that he
disappeared for nearly fifteen years, and testified to regular communications
with Hamrock. See Trial Court Opinion, 7/5/22, at 4-7. Bayles further
testified that he did not authorize the conveyance of the OGM rights to
Hamrock, his signature on the deed conveying the OGM rights was forged,
and he did not become aware of the 1992 deed until 2017, when his attorney
stumbled across the deed. See N.T., 9/17-22/21, at 236-37, 242. Viewing
these facts in the light most favorable to Bayles, we cannot conclude that the
evidence was such that no two reasonable minds could disagree that the
discovery rule did not apply. See Phillips, 86 A.3d at 919. As such, we
discern no abuse of discretion by the trial court in denying Hamrock’s motion
for JNOV.
In his third issue, Hamrock contends that the trial court erred by
awarding prejudgment interest on the damage award to Bayles. We review a
challenge to an award of prejudgment interest for abuse of discretion. See
Linde v. Linde, 220 A.3d 1119, 1150 (Pa. Super. 2019). Prejudgment
interest may be awarded when a defendant holds money or property which
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belongs to the plaintiff. See id.; see also Kaiser v. Old Republic
Insurance Co., 741 A.2d 748, 755 (Pa. Super. 1999). While a plaintiff in a
contract action for failure to pay a liquidated sum has right to prejudgment
interest over which the court has no discretion, see TruServ Corp. v.
Morgan’s Tool & Supply Co., Inc., 39 A.3d 253, 264 (Pa. 2012), the
decision whether to award prejudgment interest in other actions for wrongfully
withheld funds and the amount of such an award are matters of equity subject
to the trial court’s discretion. See Sack v. Feinman, 413 A.2d 1059, 1065-
66 (Pa. 1980); see also Linde, 220 A.3d at 1150.
Hamrock maintains that he was not a trustee for Bayles or for JOM, and
he did not invest any company assets for his own benefit. Hamrock asserts
that he sold his own assets and, therefore, damages should only be assessed
from the money he earned on the sale. Hamrock points out that, because the
jury awarded no punitive damages against him, the imposition of prejudgment
interest should be viewed as punitive damages. Finally, Hamrock argues that
prejudgment interest should be suspended from the beginning of the COVID-
19 judicial emergency until the first day of the trial, as the shutdown was not
the fault of either party, and he should not be punished for the unforeseeable
delay.
The trial court considered Hamrock’s third issue and determined that it
lacked merit. The court reasoned:
. . . Since 2014 and 2018 until the verdict in 2021, . . .
Hamrock wrongfully deprived . . . Bayles of his portion of the
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$544,747 from the natural gas lease and sale. It is indisputable
that the earlier in time money is received the greater its value will
be to the recipient. . . . Bayles will not be made whole unless he
is awarded pre-verdict interest to compensate him for this “time
value of money.” Hence, interest on the funds from the time they
were wrongfully withheld is necessary to make . . . Bayles whole
again. . . . Since the jury found . . . Hamrock was unjustly
enriched and pre-verdict interest is needed to make [Bayles]
whole, [the] award of pre-verdict interest to [Bayles/JOM] is
correct.
. . . Hamrock also argues that [the trial court] erroneously
awarded pre-verdict interest between March 24, 2020[,] and the
date of the verdict[,] since all trials were suspended then due to
the COVID-19 pandemic. The Superior Court of Pennsylvania
recently addressed a similar argument in Getting v. Mark Sales
& Leasing, Inc., [274 A.3d 1251 (Pa. Super.] 2022). While the
pre-verdict interest in that case was authorized under
Pennsylvania Rule of Civil Procedure 238 (“Damages for Delay in
Actions for Bodily Injury, Death or Property Damage”), Rule 238
also is premised on the concept of making a plaintiff whole. Id.The Superior Court’s observation that COVID-19 and the judicial
emergency do not diminish the right to be made whole or allow
tortfeasors to reap unjust windfalls . . . is therefore also applicable
to . . . Hamrock’s wrongful deprivation of funds from [Bayles/JOM]
in this case. Thus, [the] award of interest between March 24,
2020[,] and the date of the verdict was not an error.
Trial Court Opinion, 7/5/22, at 9-10.
We discern no abuse of discretion by the trial court in awarding pre-
judgment interest on the damage award to Bayles/JOM. Contrary to
Hamrock’s assertion otherwise, the jury determined that the OGM rights in
question were the property of JOM, not Hamrock, and that Hamrock
fraudulently deprived Bayles/JOM of the OGM rights by forging a deed. That
the jury did not award punitive damages for such misconduct does not negate
the fact that Hamrock wrongfully deprived Bayles/JOM of a corporate asset,
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as well as monies derived from the lease and subsequent sale of that corporate
asset. Accordingly, as Hamrock wrongfully held money that belonged to
Bayles/JOM, the trial court did not abuse its discretion in awarding
prejudgment interest. See Linde, 220 A.3d at 1150; see also Kaiser, 741
A.2d at 755.
Further, Hamrock was not entitled to any diminution in prejudgment
interest because of the temporary shutdown of Pennsylvania courts due to the
COVID-19 pandemic. As this Court explained in Getting:
COVID-19 and the judicial emergency it created did not
diminish the rights of plaintiffs to be made whole. . . .
Moreover, the interest on the damages was the plaintiffs’
money by right, by virtue of the jury’s verdict . . .. We do not
read the [In re: General Statewide Judicial Emergency,]
March 18, 2020 Order of the Supreme Court as permitting
tortfeasors to reap unjust windfalls from a five month delay that
was clearly beyond the control of their victims. Here, closure of
the Court of Common Pleas . . . did not alter the indisputable fact
that the [defendant] retained and had unfettered use of the
[plaintiffs’] money throughout the judicial emergency. As such,
the [defendant] must compensate the [plaintiffs] for using their
money during the judicial emergency to the fullest extent of
Pa.R.C.P. 238.
Getting, 274 A.3d at 1262 (quotation marks omitted).
Although Getting concerned an award of delay damages pursuant to
Rule 238, we conclude that the same logic applies to a discretionary award of
prejudgment interest. The closure of the court of common pleas in Allegheny
County did not alter the fact that Hamrock retained and had the unfettered
use of the wrongfully obtained profits for the lease and sale of JOM’s OGM
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rights throughout the judicial emergency. As such, he must compensate
JOM/Bayles for using their money during the judicial emergency. For these
reasons, Hamrock’s third issue warrants no relief.
In his fourth issue, Hamrock contends that the trial court erred in its
interpretation of 15 Pa.C.S.A. § 1784(b) when awarding attorneys’ fees and
other expenses to Bayles/JOM. Our standard of review of an award of
attorneys’ fees is well settled: “we will not disturb a trial court’s
determinations absent an abuse of discretion. A trial court has abused its
discretion if it failed to follow proper legal procedures or misapplied the law.”
Kessock v. Conestoga Title Ins. Co., 194 A.3d 1046, 1059 (Pa. Super.
2018) (citation omitted).
Section 1784(b) provides:
If a derivative action is successful in whole or in part, the
court may award the plaintiff reasonable expenses, including
reasonable attorney fees and costs, from the recovery of the
business corporation, but in no event shall the attorney fees
awarded exceed a reasonable proportion of the value of the relief,
including nonpecuniary relief, obtained by the plaintiff for the
corporation.
15 Pa.C.S.A. § 1784(b).
Hamrock maintains that section 1784(b) “means that the plaintiff’s costs
must reduce the corporation’s recovery, not be added to it.” Hamrock’s Brief
at 40. According to Hamrock, the trial court improperly twisted the wording
of the statute to award additional costs and fees to Bayles/JOM. Hamrock
asserts that, as the 60 percent owner of JOM, he would have been eligible to
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receive 60 percent of the profits had JOM retained the OGM rights and then
leased and sold them. Hamrock asserts that the maximum compensatory
judgment that can be awarded in this matter is the remaining shareholder
portion (i.e., 40 percent) of the funds that Hamrock earned by leasing and
selling the OGM rights.
The trial court considered Hamrock’s fourth issue and determined that
it lacked merit. The court reasoned:
[The trial court’s] orders entered a verdict in favor of
[Bayles/JOM] and against . . . Hamrock for compensatory
damages and interest in the total amount of $594,576.56, with
forty percent of the total, or $237,830.62 due to [JOM’s] custodian
from . . . Hamrock immediately. [The] January 4, 2022 order also
specified that an amount in addition to the $237,830.62 would be
due from . . . Hamrock in the future after calculation of expenses
under [section] 1784(b). [The] March 2, 2022 order awarded . .
. Bayles/JOM] $84,406.62 under [section] 1784(b) ($76,607.33
for attorney fees and the balance for expert witness fees, lodging
and travel), with it to immediately be paid to [JOM’s] custodian by
. . . Hamrock.
. . . [Section] 1784(b)] allows a shareholder who has
been successful in a derivative lawsuit to be reimbursed for
litigation expenses. These expenses are paid to the successful
shareholder out of the funds recovered by the corporation. Since
the amount of the expenses is not added on to the corporation’s
recovery, there cannot possibly be any merit to . . . Hamrock’s
argument that the $84,406.62 award of expenses is punitive.
[] Hamrock next makes the argument that [] Bayles
should collect the $84,406.62 from the damages obtained by
[JOM] from [] Hamrock. Clearly[, ] Hamrock is confused as [the
trial court] ordered exactly what [he] seems to argue [it] did not
order. [JOM’s] total recovery is $594,576.56. [] Hamrock was
never ordered to pay in excess of that amount. [] Hamrock
instead was ordered to pay the corporation $237,830.62 for []
Bayles’[s] forty percent ownership plus $84,406.62 for his
litigation expenses for a total of $322,237.24. The difference
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between [JOM’s] $594,576.56 total recovery and the $322,237.24
[] Hamrock must pay [JOM] may be retained by [] Hamrock as
the sixty percent shareholder.
Trial Court Opinion, 7/5/22, at 11-12 (unnecessary capitalization omitted).
We discern no abuse of discretion by the trial court in awarding
attorneys’ fees and costs to Bayles/JOM pursuant to section 1784(b). The
plain language of the statute permits the trial court to award reasonable
expenses to a successful plaintiff in a shareholder derivative action from the
total damages recovered by the business corporation. In the instant
shareholder derivative action, Bayles/JOM were successful in their claims
against Hamrock. Thus, the trial court did not abuse its discretion in awarding
such fees to Bayles from the total damages recovered by JOM. Accordingly,
no relief is due.
In his fifth issue, Hamrock contends that the trial court abused its
discretion by appointing a custodian for JOM. The decision to appoint a
custodian or receiver is within the sound discretion of the trial court. See
Abrams v. Uchitel, 806 A.2d 1, 8 (Pa. Super. 2002). The trial court may
appoint a receiver to prevent waste, dissipation of assets, fraud, or
mismanagement. See Hankin v. Hankin, 493 A.2d 675, 677 (Pa. 1985).
“Where substantial evidence supports findings that indicate that a receiver is
necessary to preserve the property and the rights of all the parties concerned
. . . the [trial court’s] exercise of discretion must be affirmed.” Id. at 678.
Section 1767 provides, in pertinent part, as follows:
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(a) General rule. — Except as provided in subsection (b), upon
application of any shareholder, the court may appoint one or more
persons to be custodians of and for any business corporation when
it is made to appear that:
****
(2) in the case of a closely held corporation, the directors or those
in control of the corporation have acted illegally, oppressively or
fraudulently toward one or more holders or owners of 5% or more
of the outstanding shares of any class of the corporation in their
capacities as shareholders, directors, officers or employees[.]
15 Pa.C.S.A. § 1767(a)(2).
Hamrock asserts that the trial court erred by determining sua sponte
that he acted illegally, oppressively, and fraudulently so as to justify the
appointment of a custodian pursuant to 15 Pa.C.S.A. § 1767. Hamrock argues
that, although Bayles requested the appointment of a custodian in his
complaint, he did not seek a factual determination that Hamrock acted
illegally, oppressively, or fraudulently. Hamrock points out that allegations of
fraud must be pleaded with particularity pursuant to Pa.R.C.P. 1019(b), and
that Bayles’s complaint did not assert a claim for fraud. Hamrock maintains
that, had the complaint asserted a claim for fraud, he would have had the
opportunity to object to such a claim and seek to have it dismissed from the
pleading. Hamrock contends that the trial court’s sua sponte determination—
when molding the verdict—that he acted illegally, oppressively, and
fraudulently, deprived him of the opportunity to defend himself against such
a factual finding. On this basis, Hamrock claims that the trial court’s findings
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of illegal, oppressive, and fraudulent conduct should be stricken from the trial
court’s order.
The trial court considered Hamrock’s fifth issue and determined that it
lacked merit. The court reasoned:
[] Hamrock first argues that [the trial court’s]
determination that his actions were illegal, oppressive[,] and
fraudulent was made sua sponte. However, the provisions in the
Business Corporation Law require this determination before a
custodian can be appointed and [] Bayles first requested the court
appoint a custodian in the complaint . . ., again on the record just
before the trial began[,] . . . and finally in [Bayles’s] response to
[Hamrock’s] motion to mold verdict . . .. Hence, the
determination that [] Hamrock acted illegally, oppressively and
fraudulently was not initiated by [the trial court], but instead was
at the request of [] Bayles.
[] Hamrock also argues the jury never made a
determination that he forged any document or engaged in any
fraudulent activity. While it is true the jury was not specifically
asked if [] Hamrock forged the [OGM] rights deed, there was
overwhelming circumstantial evidence that he was the forger and
his testimony concerning the signatures on the deed was
inconsistent (see [N.]T[.], [9/17-22/21, at] 391-[]93, 418-[]19
and 464-[]71) and incredible. [The trial court] was the one to
decide that [] Hamrock acted illegally, oppressively[,] and
fraudulently because [he] had no right to a jury trial on the issue
of appointing a custodian. See Fazio v. Guardian Life Ins. Co.
of America, . . . 62 A.3d 396 ([Pa. Super.] 2013. . .. In any
event, [] Hamrock waived any claim he could have to a jury trial
on the issue because he did not raise it until he filed a motion for
post-trial relief. Therefore, [the trial court’s] determination that
[] Hamrock acted illegally, oppressively and fraudulently was
correct.
Trial Court Opinion, 7/5/22, at 12-13 (footnote and some citations omitted).
We discern no abuse of discretion by the trial court in determining that
Hamrock acted illegally, oppressively, and fraudulently such that the
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appointment of a custodian was appropriate pursuant to section 1767(a)(2).
Hamrock cites no authority for the proposition that a jury must decide whether
a director has acted illegally, oppressively, or fraudulently before the trial
court may appoint a custodian pursuant to section 1767(a)(2). See Pa.R.A.P.
2119(a) (providing that issues raised on appeal shall be supported “by such
discussion and citation of authorities as are deemed pertinent”). Moreover, a
cursory review of the statutory language reflects that no factual finding by a
jury is required before the trial court may appoint a custodian. Indeed, the
statute provides that “the court may appoint one or more persons to be
custodians of and for any business corporation when it is made to appear
that: . . . the directors . . . of the corporation have acted illegally, oppressively
or fraudulently toward one or more holders or owners . . ..” 15 Pa.C.S.A. §
1767(a)(2) (emphasis added). The language, “when it is made to appear
that,” provides the trial court with the authority to appoint a custodian when
it appears to the court that the evidence reflects that a director has acted
illegally, oppressively, or fraudulently. The statute does not involve a jury in
this assessment.
Here, the trial court concluded that the evidence of record met this
threshold, noting:
The circumstantial evidence includes [] Hamrock
admitting he had the deed in his possession from the date he
alleges he first signed it until he recorded it nineteen years later.
See [N.]T[., 9/17-22/21, at] 389. [] Hamrock was also in
possession of the source documents that were cut and pasted into
the deed. [] Hamrock admitted the signatures on the deed are
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identical to the signatures on the source documents. See [id.,
at] 391-[]93. [] Hamrock also had an obvious motive to forge the
deed as he was able to use it to obtain $545,000. This is
highlighted by the recording of the deed occurring shortly after he
received solicitations from MDS [] and entered into an agreement
with MDS []. See [id. at] 389-[]90.
Trial Court Opinion, 7/5/22, at 13 n.1.
We discern no abuse of discretion by the trial court in reaching its
determination that, based on the evidence presented at trial, it appeared that
Hamrock acted illegally, oppressively, and fraudulently toward Bayles.
Accordingly, Hamrock’s final issue merits no relief.
We next address Bayles’s issues. In his first issue, Bayles contends that
the trial court erred in entering its verdict that he owed Hamrock/JOM
$14,661.97 in damages related to the three JOM properties sold by Hamrock
in 2017 and 2019. Generally, our review of damage awards is narrow:
In reviewing the award of damages, the appellate courts
should give deference to the decisions of the trier of fact who is
usually in a superior position to appraise and weigh the evidence.
If the verdict bears a reasonable resemblance to the damages
proven, we will not upset it merely because we might have
awarded different damages.
McManamon v. Washko, 906 A.2d 1259, 1285 (Pa. Super. 2006) (citations
omitted).
Bayles acknowledges that the damage award of $14,661.97 represents
40 percent of the $36,654.92 that Hamrock paid in delinquent real estate
taxes to facilitate the sale of the three JOM properties. However, Bayles
argues that Hamrock never disclosed those sales to Bayles, and Bayles’s
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signature was absent from the deeds because he was not involved in those
transactions. Bayles claims that he cannot be liable for breach of fiduciary
duty in relation to those transactions because his ignorance prevented him
from causing damages for the closing costs related to those transactions (i.e.,
payment of unpaid property taxes).
The trial court considered Bayles’s first issue and determined that it
lacked merit. The court reasoned:
. . . Bayles contends there was no basis for concluding
that he caused $14,661.97 in damages to [JOM]. [] Bayles is
mistaken since there was more than sufficient evidence for the
jury’s verdict that [] Bayles breached “his fiduciary duty causing
damages to . . . [JOM].” Jury Verdict, Question 7. [] Hamrock
alleged [] Bayles breached his fiduciary duty to [JOM] because he
did not provide funding needed to pay delinquent property taxes
when three parcels sold in 2017 and 2019. Since [] Bayles
acknowledged the “practice” of [JOM] was not to pay property
taxes on pieces of property until they were sold ([see N.]T[.,
9/17-22/21, at] 259 and 362), this practice was one basis for the
jury finding [Bayles’s] lack of any contribution towards the
delinquent taxes upon the sale of the three parcels was a breach
of fiduciary duty that caused damage to [JOM].
[] Bayles also argues he cannot be liable for breach of
fiduciary duty and cannot have caused damages to [JOM] because
[] Hamrock did not involve [] Bayles in the transactions. However,
the jury may have attributed [] Bayles’[s] non[-]involvement in
the transactions to him breaching his fiduciary duty by not keeping
in close enough contact with [] Hamrock. See [id. at] 541. It
would be inappropriate for [] Bayles to accept the benefit of his
part ownership of [JOM] to receive a portion of the natural gas
revenues but then avoid any responsibility for part of [JOM’s]
expenses. Accordingly, there was a basis for concluding that []
Bayles breached his fiduciary duty causing $14,661.97 in
damages to [JOM].
Trial Court Opinion, 7/5/22, at 14-15 (some citations omitted).
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We discern no error or abuse of discern by the trial court in determining
that Bayles owed Hamrock/JOM 40 percent of the amounts paid by Hamrock
for delinquent taxes on the three JOM properties he sold in 2017 and 2019.
The jury specifically found that Bayles breached his fiduciary duty to Hamrock
and/or JOM. See Jury Verdict, 9/23/21, at 2. Given his 40 percent ownership
interest in JOM, Bayles was responsible for 40 percent of JOM’s debts. Thus,
we discern no error or abuse of discern by the trial court in concluding that
Bayles owed Hamrock/JOM $14,661.97 in damages for delinquent taxes owed
on JOM’s properties. Accordingly, Bayles’s first issue merits no relief.
In his second issue, Bayles contends that the trial court erred in failing
to set aside the jury’s verdict insofar as it assessed no punitive damages
against Hamrock. Our standard of review in assessing an award of punitive
damages is well-settled.
Punitive damages will lie only in cases of outrageous
behavior, where defendant’s egregious conduct shows either an
evil motive or reckless indifference to the rights of others.
Punitive damages are appropriate when an individual’s actions are
of such an outrageous nature as to demonstrate intentional,
willful, wanton, or reckless conduct.
Pestco, Inc. v. Associated Prods., Inc., 880 A.2d 700, 709 (Pa. Super.
2005) (citation omitted). The determination of whether a person’s actions
rise to the level of outrageous conduct is within the sound discretion of the
fact-finder and will not be disturbed by an appellate court so long as that
discretion has not been abused. See J.J. Deluca Co. v. Toll Naval Assocs.,
56 A.3d 402, 415-16 (Pa. Super. 2021). In assessing punitive damages, the
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trier of fact can properly consider the character of the defendant’s act, the
nature and extent of the harm to the plaintiff that the defendant caused or
intended to cause, and the wealth of the defendant. See Vance v. 46 & 2,
Inc., 920 A.2d 202, 206 (Pa. Super. 2007) (quoting RESTATEMENT (SECOND)
OF TORTS § 908(2) (1979)). However, the wealth of the defendant is a proper
consideration in the jury’s determination of the amount of punitive damages
to award, not in the jury’s determination of whether or not to impose punitive
damages in the first place. Id. Further, “[i]t should be presumed a plaintiff
has been made whole for his injuries by compensatory damages, so punitive
damages should only be awarded if the defendant’s culpability, after having
paid compensatory damages, is so reprehensible as to warrant the imposition
of further sanctions to achieve punishment or deterrence.” State Farm Mut.
Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419, (2003) (citation omitted).
Bayles asserts that the jury found that Hamrock’s actions were
outrageous. On this basis, Bayles surmises that “Hamrock’s behavior reflected
an evil motive or reckless indifference to the rights of others, specifically, . . .
Bayles.” Bayles’s Brief at 32. According to Bayles, “[e]vidence of such
conduct can be found in the forgery of the 1992 oil and gas deed, the recording
of the forged deed with the Recorder of Deeds, the use of the deed to lease
the rights to EQT[,] and the use of the deed to sell the rights to Divot and
Cavallo.” Id. Bayles claims that Hamrock’s repeated forgeries and deception
in this case warranted an award of punitive damages to punish and deter
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future detrimental and illegal conduct. Bayles argues that the jury’s failure to
award punitive damages is so contrary to the evidence as to shock one’s sense
of justice.
The trial court considered Bayles’s second issue and determined that it
lacked merit. The court reasoned:
This argument is premised on the jury being required to
award some amount of punitive damages since it found []
Hamrock’s conduct outrageous. [] Bayles cannot cite any legal
authority that mandates an award of some amount of punitive
damages when there is a finding of outrageous conduct. Indeed,
in accordance with Pennsylvania Standard Suggested Jury
Instruction (Civil) 8.00, [the trial court] instead instructed the jury
it may award punitive damages if it finds outrageous conduct. The
jury could have decided the award of compensatory damages
would sufficiently punish [] Hamrock. The jury also could have
been unable to determine what amount would punish him due to
the lack of evidence of his wealth. . . . Therefore, [the trial
court’s] decision not to set aside the award of $0 for punitive
damages is correct.
Trial Court Opinion, 7/5/22, at 15.
We discern no abuse of discretion by the trial court in failing to set aside
the jury’s verdict that no punitive damages should be assessed against
Hamrock. As explained above, this Court must presume that Bayles has been
made whole for his injuries by compensatory damages. See Campbell, 538
U.S. at 419. The determination of whether Hamrock’s conduct warranted an
award of punitive damages fell within the sound discretion of the jury, and
this Court may not disturb that decision absent an abuse of that discretion.
See J.J. Deluca Co., 56 A.3d at 415-16. Based on the record before us, we
cannot conclude that the jury abused its discretion in assessing no punitive
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damages against Hamrock. Therefore, Bayles’s claim that the trial court
should have set aside the jury’s determination warrants no relief.
In his final issue, Bayles contends that the trial court erred in relying on
the verdict slip in awarding him only 40 percent of the compensatory damages
awarded to JOM. Our standard of review of a trial court’s award of damages
is narrow:
In reviewing the award of damages, the appellate courts
should give deference to the decisions of the trier of fact who is
usually in a superior position to appraise and weigh the evidence.
If the verdict bears a reasonable resemblance to the damages
proven, we will not upset it merely because we might have
awarded different damages.
Witherspoon v. McDowell-Wright, 241 A.3d 1182, 1187 (Pa. Super. 2020)
(citation omitted).
Bayles argues that the verdict slip was ambiguous, incomplete, and
should have been regarded by the trial court as merely advisory. Bayles points
out that the trial court determined that Hamrock was a serial forger, and
Hamrock’s only evidence of his purported 60 percent ownership percentage
was the undated and unwitnessed stock certificates, which were under his
exclusive control and in his personal possession, and on which he wrote his
own name on the reverse of the certificates. Bayles asserts that JOM’s tax
records reflect that there was a 50/50 ownership split for seventeen years.3
____________________________________________
3 Bayles additionally argues that the determination of the ownership of JOM,
as well as the dissolution and partition of the corporation, were equitable
(Footnote Continued Next Page)
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The trial court considered Bayles’s final issue and determined that it
lacked merit. The court reasoned:
Question 2 in the verdict form simply asks does [] Bayles
own 50% of the shares of [JOM’s] stock. Since [] Bayles took the
position he owned 50% and [] Hamrock took the position [] Bayles
owned 40% of the stock, the jury’s [“]no[”] answer was its finding
that [Bayles] owned 40%. [See Jury Verdict, 9/23/21, at 1.]
There is no ambiguity. In any event, after the jury verdict was
read in open court[,] Bayles’[s] counsel agreed with the jury’s
40% stock ownership verdict. See [N.]T[., 9/17-22/21, at] 578-
[]79. Therefore, [the trial court] was correct in utilizing 40% in
calculating Bayles’[s] compensatory damages.
Trial Court Opinion, 7/5/22, at 15-16.
We discern no abuse of discretion by the trial court in relying on the
jury’s factual finding that Bayles did not own 50 percent of JOM. The jury was
tasked with appraising and weighing the evidence and testimony to determine
whether, as Bayles claimed, he and Hamrock each owned 50 percent of JOM,
or whether, as Hamrock claimed, he owned 60 percent of JOM and Bayles
owned 40 percent of JOM. By indicating on the verdict slip that Bayles did not
own 50 percent of JOM, the jury implicitly expressed its factual finding that
the parties agreed to change the ownership of JOM to a 60/40 split in
Hamrock’s favor. As an appellate court, we must defer to the jury’s finding in
this regard, as the finder of fact is usually in a superior position to appraise
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matters for the trial court—and not the jury—to decide. However, this issue
was not raised in Bayle’s concise statement. See Pa.R.A.P. 1925(b)(4)(vii)
(providing that issues not included in the concise statement are waived).
Thus, as Bayles failed to preserve the issue for our review, we may not address
it.
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J-A08022-23
and weigh the evidence. See Witherspoon, 241 A.3d at 1187. Moreover,
as the portion of damages awarded to Bayles (i.e., 40 percent) bears a
reasonable resemblance to the compensatory damages sustained by JOM as
proven at trial, we will not upset the verdict merely because we might have
awarded different damages. Id. Accordingly, Bayles’s final issue merits no
relief.
Judgment affirmed.
DATE: 10/18/2023
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