Making the Cap Fit
March 6, 2017 § Leave a comment
Chancery courts can award punitive damages. It doesn’t happen every day, and it doesn’t happen often, but it does happen. When they do award punitive damages, chancery courts are as bound as other courts by MCA 11-1-65(1)(a), which imposes a cap of 2% of the defendant’s net worth for defendants with net worth of $50 million or less.
The case of Moore v. McDonald, handed down February 7, 2017, the appellants argued that the trial court erred in assessing punitive damages in excess of their claimed net worth. We’ve already posted about this case here, here, and here, because there’s a lot to talk about in it. It’s the property-line dispute in which the Moores had violated a previously affirmed judgment setting the parties’ boundary line. The Moores appealed, and Judge Wilson’s opinion will fill you in on the applicable facts:
¶8. The Moores do not dispute that their conduct was malicious such that an award of punitive damages was appropriate. Miss. Code Ann. § 11-1-65(1)(a). Their only objection is that the punitive award exceeds two percent of their net worth in violation of Mississippi Code Annotated section 11-1-65(3). See id. § 11-1-65(3)(a)(vi) (“[N]o award of punitive damages shall exceed . . . [t]wo percent (2%) of the defendant’s net worth for a defendant with a net worth of Fifty Million Dollars ($50,000,000.00) or less.”). On appeal, they argue that the chancellor was required to accept at face value their own representations of their net worth and cap punitive damages at $1,268. However, in the court below, the Moores failed to raise the issue of the statutory cap on punitive damages. The Moores also failed to introduce any reliable evidence of their net worth. Accordingly, they were not entitled to the benefit of the statutory cap on punitive damages.
¶9. On March 20, 2015, at the conclusion of the hearing on the McDonalds’ contempt petition, the chancellor found that an award of $10,000 in punitive damages would be appropriate. After that hearing, the Moores, who had been proceeding pro se, decided to hire a lawyer. At a hearing on May 8, 2015, the Moores’ recently retained counsel argued that the burden was on the McDonalds to prove the Moores’ net worth before the court could award any amount of punitive damages. Indeed, counsel asserted that “[t]he case law is clear” on this point. At the Moores’ request, the chancellor then continued the case to July 7, 2015, for a hearing on attorneys’ fees and the Moores’ net worth for purposes of assessing punitive damages.
¶10. At the July 7 hearing, counsel for the Moores acknowledged that his argument at the prior hearing was mistaken and that proof of net worth is not necessary to support an award of punitive damages. Counsel then argued that either side could offer such evidence, which the court should then consider in assessing punitive damages. However, in all of the proceedings in the chancery court, the Moores never—at any hearing or in any pleading—mentioned the statutory cap on punitive damages or argued that punitive damages must be capped at two percent of their net worth or any other number. “It is a long-established rule in this state that a question not raised in the trial court will not be considered on appeal.” Adams v. Bd. of Sup’rs of Union Cty., 177 Miss. 403, 170 So. 684, 685 (1936). “Moreover, it is not sufficient to simply mention or discuss an issue at a hearing. The rule is that a ‘trial judge cannot be put in error on a matter which was never presented to him for decision.’” City of Hattiesburg v. Precision Constr. LLC, 192 So. 3d 1089, 1093 (¶18) (Miss. Ct. App. 2016) (quoting Methodist Hosps. of Memphis v. Guardianship of Marsh, 518 So. 2d 1227, 1228 (Miss. 1988)). Accordingly, the Moores waived any argument that the chancellor should have applied the statutory cap.
¶11. Procedural bar notwithstanding, the Moores also failed to present evidence sufficient to require the chancellor to apply the cap. The only evidence that the Moores introduced of their net worth was a Uniform Chancery Court Rule 8.05 financial statement that they apparently signed on the morning of the hearing. The Moores’ 8.05 statement estimated the value of their home and land as $85,000 with a $22,000 mortgage balance; claimed household goods, furniture, and clothing worth $400; disclosed checking accounts with a combined balance of $325 or less; and listed two vehicles—one worth $5,600 or less with a $5,600 loan, and the other worth $1,500 with an $1,800 loan. The Moores gave a total value of their assets of $0, although the assets listed totaled $63,425.
The court went on to describe: Carolyn Moore’s evasive answers to questions about $17,000 cash on hand and her admission that their 8.05 was inaccurate; the evasive testimony of her husband about false and misleading bankruptcy filings; their failure to offer tax returns or a copy of a loan application they had submitted to a local blank shortly before trial; and the Moores’ smirking and mocking demeanor at trial. The COA concluded:
¶15. The chancellor did not err by reaffirming her $10,000 punitive award. “[P]roof of net worth is not required to award punitive damages. . . . [F]or a defendant to mitigate potential punitive damages, it is his responsibility to present proof of his net worth and financial condition.” Woodkrest Custom Homes Inc. v. Cooper, 108 So. 3d 460, 469 (¶¶41-42) (Miss. Ct. App. 2013) (citing C&C Trucking Co. v. Smith, 612 So. 2d 1092, 1102, 1105 (Miss. 1992)); accord Coleman & Coleman Enters., 106 So. 3d at 320 (¶33). Furthermore, the “evidence must be sufficient to enable the trial court to determine the defendant’s current net worth, according to generally accepted accounting principles.” In re Miss. Medicaid Pharm. Average Wholesale Price Litig. (“AWP Litig.”), 190 So. 3d 829, 846 (¶40) (Miss. 2015) (opinion of Chandler, J., joined by Kitchens and King, JJ., affirming). The Moores failed to meet their burden. They presented only one self-serving and admittedly inaccurate document of their own creation. Clearly, they did not present “evidence . . . sufficient to enable the [chancellor] to determine [their] current net worth, according to generally accepted accounting principles.” Id.
Not much more needs to be said. If you want to preserve a point for appeal, it must have been presented to the chancellor in trial or pre-trial in a form suitable for the judge to rule on it, or you have waived it. And the burden is on you to prove net worth so as to apply the punitive damages cap.