Miller's Bottled Gas, Inc. v. Borg-Warner Corp.

817 F. Supp. 643, 1993 U.S. Dist. LEXIS 5268, 1993 WL 120985
CourtDistrict Court, W.D. Kentucky
DecidedApril 12, 1993
DocketCiv. A. No. C85-0029-BG(H)
StatusPublished
Cited by5 cases

This text of 817 F. Supp. 643 (Miller's Bottled Gas, Inc. v. Borg-Warner Corp.) is published on Counsel Stack Legal Research, covering District Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Miller's Bottled Gas, Inc. v. Borg-Warner Corp., 817 F. Supp. 643, 1993 U.S. Dist. LEXIS 5268, 1993 WL 120985 (W.D. Ky. 1993).

Opinion

MEMORANDUM OPINION

HEYBURN, District Judge.

Having secured a verdict for fraud and compensatory damages, Plaintiff, Miller’s Bottled Gas, Inc., moves for a new trial on the issue of punitive damages pursuant to Rule 60(b)(6). The procedural posture of this action is lengthy: Judge Boyce F. Martin, Jr. presided over the first jury trial and directed a verdict on the liability issue; the Sixth Circuit reversed and remanded for a new trial; a jury returned a verdict for Plaintiff at the second trial but the undersigned directed a verdict on the issue of punitive damages; thereafter, this Court denied cross-motions for a new trial; and the judgment is now on appeal.

I.

In its response to Plaintiffs contention of error on the issue of punitive damages, the Court evaluated the propriety of its own directed verdict in this case by applying the same standard set forth by the Sixth Circuit in its review of the first round of directed verdicts in this case:

The only question to be determined by the court on a motion for directed verdict is whether the plaintiff has sustained the burden of proof by “more than a scintilla of evidence,” that is, has the plaintiff submitted “evidence of probative value having fitness to induce conviction in the minds of reasonable men?” In so ruling, “[t]he court must draw all fair and rational inferences from the evidence in favor of the party opposing the motion, and a verdict should not be directed unless the evidence is insufficient to sustain the verdict. The evidence of such party’s witnesses must be accepted as true.”

Miller’s Bottled Gas v. Borg-Warner Corp., 955 F.2d 1043, 1050 (6th Cir.1992) (citation omitted).

This Court exercised jurisdiction in this case on the basis of diversity of citizenship, and, therefore, applied the Kentucky law of punitive damages. Kentucky courts have followed the Restatement (Second) of Torts, which states, “Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.” Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382 (Ky.1985) (citing the Restatement (Second) of Torts § 908(2) (1979)). Plaintiff contended that once a plaintiff has sustained its burden of production on the issue of fraud, an instruction on punitive damages is necessarily warranted under the common law of punitive damages. In other words, Plaintiff contended that fraud, in and of itself, , warrants an instruction on punitive damages.

In support of its position, Plaintiff cited an “all-fours decision”, Dancey Co., Inc. v. Borg-Warner Corp., 799 F.2d 717 (11th Cir.1986), in which another aeucarb distributor, Dancey Co., Inc., like Plaintiff in this case, asserted similar claims against Borg-Warner. In Dancey, the court overruled the trial court’s directed verdict on the liability issue and on the issue of punitive damages. Id. In a short-handed fashion, the Eleventh Circuit explained that its reversal of the directed verdict on the punitive damages issue was based on the same reasons elucidated in its ruling on the liability issue. Id. at 720-21. [645]*645This Court found Dancey unpersuasive because it involved the application of Florida law and because it did not discuss the issue at any length.1

Of significant consequence to this Court’s ruling was Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382 (Ky.1985), a case which both parties cite in support of their adverse positions. In Horton, the Kentucky Supreme Court posited the rule of punitive damages in reliance on its own decisional law as well as scholarly authority, namely, the Restatement (Second) of Torts and Prosser and Keeton on the Law of Torts. The Kentucky Supreme Court not only emphasized the distinguishing element for punitive damages as having the “character of outrage”, the court also indicated the separate and distinct quality of the punitive damages issue. Id. at 388-89. The high court stated that “punitive damages are not justified just because the injury was intentional.” Id. at 389. Rather, punitive damages require a distinguishing factor from a civil wrong being “whether there [are] sufficient ‘circumstances of aggravation or outrage’ ”. Id. at 388-89. The court illustrated this concept noting, first, that as with assault, punitive damages are not allowable if there is sufficient provocation and, second, that as with false arrest, punitive damages are not allowable absent a showing that the acts were either willful or malicious or performed in gross disregard for the rights of the person wronged. Id. at 389. It stands to reason that a punitive damages instruction heightens a plaintiffs burden of production.

Plaintiffs made much about the Court’s assessment of the strength of its case, wherein the Court characterized it as “on the lower-end of the fraud scale”. This statement was merely intended to illustrate the concept that punitive damages are appropriate only where there is a showing of a higher level of culpability than the tort theory, itself, intends to redress. Subsequent research has borne out the correctness of this view, if not the appropriateness of the illustration.

II.

Plaintiff petitions this Court again on the even of a pre-argument conference before the Sixth Circuit on the basis of a recently published Kentucky Supreme Court decision, Hanson v. American National Bank & Trust Co., 844 S.W.2d 408 (Ky.1992). Plaintiff argues that Kentucky law mandates the submission of instructions on punitive damages in fraud actions. Plaintiff has maintained this position throughout the litigation and, yet undaunted, returns to this Court asserting recent authority for its position.

Hanson states in pertinent part:

The Bank argues that Hanson established no basis for the award of punitive damages. In light of what has been said earlier in the opinion, we cannot accept such an argument. We have found that there is sufficient evidence and therefore reasonable grounds for submitting to the jury the issue of fraud and misrepresentation. Once the jury had found that the Bank intentionally misrepresented and deceived Hanson, an instruction on punitive damages should have been given and the jury afforded the opportunity to assess such sums as it considered appropriate.

Id. at 415. Indeed, the Kentucky trial court had instructed the jury about punitive damages and the jury awarded more than five million dollars. The Kentucky appellate court, however, reversed and remanded for remittitur of excessive punitive damages or a new trial on punitive damages. Although the defendant argued to the supreme court that a punitive damages instruction was unwarranted, the extent of the high court’s rejection of this argument is captioned above.

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Bluebook (online)
817 F. Supp. 643, 1993 U.S. Dist. LEXIS 5268, 1993 WL 120985, Counsel Stack Legal Research, https://law.counselstack.com/opinion/millers-bottled-gas-inc-v-borg-warner-corp-kywd-1993.