Attorney’s Fees in Lieu of Punitive Damages

April 6, 2020 § Leave a comment

Allen Cronier got into a property dispute with two businesses owned by the Rainwater brothers. The dispute spilled into chancery court, and, following a trial, in which the chancellor ruled against him and awarded attorney’s fees, Cronier appealed. The COA affirmed in part, but reversed in Cronier v. ALR Partners L.P., 248 So. 3d 861, 864 (¶1) (Miss. Ct. App. 2017), cert. denied, 247 So. 3d 1264 (Miss. 2018). The court remanded for a determination by the chancellor whether the award of attorney’s fees against Cronier was in lieu of punitive damages.

Here is a recap of the case from Cronier v. ALR Partners, et al., decided by the COA on March 10, 2020:

¶2. Cronier purchased a parcel of land in Jackson County in July 2012. Id. at 865 (¶¶2-3). [Fn omitted] At the time, Cronier believed that the parcel comprised eighty acres, though he did not have the property surveyed before he purchased the property to verify that understanding. Id. Cronier had the property surveyed later. Id. at (¶3). The survey revealed that the parcel he had purchased was only about seventy acres and that there was a boundary issue with the adjoining property owned by the Rainwaterses. Id. at (¶¶3-5). The survey also indicated that the property corners and boundaries were marked with posts, the remains of old fences, and yellow paint blazes on trees. Id. At a post-survey meeting between Cronier and the Rainwaterses, before Cronier abruptly left, Cronier announced that “he had paid for eighty acres and said, ‘by God I’m going to get eighty acres . . . . I know what I’ve got to do.’” Id. at 866 (¶6). Following this meeting, the Rainwaterses went to inspect the property and found that certain old boundary markers were missing. Id. at (¶7). In March 2013, Cronier informed the Rainwaterses that he had conveyed the disputed property to his minor granddaughter. Id. at (¶8). The Rainwaterses visited the property again and discovered that more boundary markers had been removed or defaced. Id. at (¶9). Cronier later built a fence and gate around the perimeter of the property, including the disputed ten-acre parcel. Id. at (¶11).

¶3. This litigation ensued. Id. at (¶¶10-11). The Rainwaterses asserted claims against Cronier for trespassing, compensatory and punitive damages, and attorney’s fees. Id. In March 2016, the chancellor ruled in favor of the Rainwaterses on their claim of adverse possession of the 9.57 acres at issue, and the court entered a final judgment to this effect in April 2016. Id. at 868 (¶19). On December 12, 2017, we affirmed the court’s judgment regarding adverse possession, but we reversed and remanded in part “for clarification of whether punitive damages were awarded in the form of attorney fees.” Id. at 871-72 (¶39) (citing Pursue Energy Corp. v. Abernathy, 77 So. 3d 1094, 1102 (¶26) (Miss. 2011); AquaCulture Tech. Ltd. v. Holly, 677 So. 2d 171, 184 (Miss. 1996)).

¶4. On January 29, 2018, before the mandate issued from this Court, [Fn omitted] the chancery court entered a final judgment on remand, finding that “Cronier acted with actual malice” and ordering Cronier to “pay the Rainwaters[es’] attorney’s fees in the amount of $10,790.00 in lieu of punitive damages.” Cronier filed a motion to set the judgment aside based on the chancery court’s lack of jurisdiction pending the final disposition of his appeal. On February 14, 2018, the chancery court entered an agreed order setting aside its January 29, 2018 final judgment.

¶5. On October 1, 2018, after the appeal was final, the chancery court entered its final judgment. In it, the chancellor adopted and incorporated the findings contained in the January 29, 2018 final judgment. Specifically, the chancellor found that Cronier had “acted with actual malice, and [Cronier] shall pay the Rainwaters[es’] attorney’s fees in the amount of $10,790.00 in lieu of punitive damages.” Relying on Pursue Energy and Holly, the chancellor clarified that attorney’s fees were awarded in lieu of punitive damages “due to [Cronier’s] actions, which included erecting a fence around the property in clear disregard of the Rainwaters[es’] rights and conveying property to his minor granddaughter when he knew there was a serious claim for the subject property.” Cronier now appeals from this judgment.

In his second appeal, Cronier argued that the chancellor erred in awarding attorney’s fees in lieu of punitive damages, and that the evidence was insufficient to support the judge’s findings. Judge Greenlee wrote for the 9-1 court:

¶7. On appeal, Cronier contends that the chancellor erred in awarding attorney’s fees in lieu of punitive damages. Specifically, he contends that the evidence is insufficient to support the chancellor’s finding that he acted with “actual malice,” such that the award of attorney’s fees in lieu of punitive damages was improper.

¶8. “Mississippi follows the general rule that, in the absence of a contractual agreement or statutory authority, attorney’s fees may not be awarded except in cases in which punitive damages are proper.” Tunica County v. Town of Tunica, 227 So. 3d 1007, 1027 (¶49) (Miss. 2017) (citing Grisham v. Hinton, 490 So. 2d 1201, 1205-06 (Miss. 1986)). Generally, punitive damages may only be awarded when a plaintiff proves “by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud.” Miss. Code Ann. § 11-1-65(1)(a) (Rev 2014); see also Wise v. Valley Bank, 861 So. 2d 1029, 1034 (¶15) (Miss. 2003) (“[T]he plaintiff must demonstrate a willful or malicious wrong, or the gross, reckless disregard for the rights of others.”). “[A]n actual award of punitive damages is not a prerequisite for an award of attorney’s fees; rather, attorney’s fees are warranted where ‘the awarding of punitive damages would have been justified,’ even if punitive damages are not awarded.” Tunica County, 227 So. 3d at 1029 (¶54) (quoting Holly, 677 So. 2d at 185). Thus, “attorney fees may be awarded instead of punitive damages.” Cronier, 248 So. 3d at 871 (¶39).

¶9. On remand, the chancellor found that Cronier acted with actual malice based on Cronier’s actions, “which included erecting a fence around the property in clear disregard of the Rainwaters[es’] rights and conveying property to his minor granddaughter when he knew there was a serious claim for the subject property.” Cronier responds that attorney’s fees are not proper and that the “conduct or conditions” required to award punitive damages are not present in this case. After reviewing the record, we find no manifest error in the chancellor’s finding of actual malice.

¶10. The record thus supports the chancellor’s finding that Cronier’s conduct justified an award of punitive damages. After Cronier’s surveyor revealed that the property Cronier purchased was only seventy acres, the parties met to discuss the issue. Cronier declared that he had paid for eighty acres and said, “[B]y God I’m going to get eighty acres . . . . I know what I’ve got to do.” Thereafter, the Rainwaterses discovered that boundary markers had been removed or defaced, and Cronier informed the Rainwaterses that he had conveyed the parcel, including the disputed land, to his minor granddaughter. Cronier also proceeded to erect a fence and gates around the property despite the dispute over title. The chancellor’s findings that Cronier acted with “actual malice” and in “clear disregard of the Rainwaters[es’]rights” are thus supported by substantial evidence, and the chancellor did not err in awarding attorney’s fees in lieu of punitive damages.

Two thoughts:

  • I see requests for attorney’s fees in all kinds of suits that aren’t divorce-related or contempts. Seldom does the proof rise to the level spelled out by Judge Greenlee in ¶8. If you are serious about pursuing that claim for fees, you’ve got to put adequate proof in the record. Paragraph 8 tells you what you need to prove.
  • And the moral of this story is: Although it’s true that self-help is always an option, it can cost you.

 

Attorney’s Fees as Punitive Damages

January 30, 2018 § Leave a comment

May a chancellor award attorney’s fees in lieu of punitive damages?

That question was before the COA in the case of Cronier, et al. v. ALR Partners, et al., handed down December 12, 2017.

In that case, the Rainwaters (ALR Partners) sued for adverse possession of 9.75, naming the Croniers as defendants. Allen Cronier claimed ownership of the property in dispute. As the matter degenerated from discussion to litigation, Cronier erected fences and gates cutting off the Rainwaterses’ access to the contested property. Cronier even conveyed the disputed property to his twelve-year-old granddaughter, retaining a life estate. Following a trial the chancellor found in favor of the Rainwater claim of adverse possession, ordered Cronier to remove all of the fencing and gates from the property, and ordered Cronier to pay the Rainwaterses’ attorney’s fees and court costs. Cronier appealed, raising several issues, among which was that the court erred in awarding attorney’s fees.

The COA reversed and remanded only for the court to state specifically whether the award of attorney’s fees in lieu of punitive damages. Judge Barnes wrote the 9-1 decision, Judge Tindell concurring and dissenting in part:

¶35. The chancellor ordered the Croniers to pay the Rainwaterses’ attorney fees and court costs because the “actions of Allen in erecting a fence around the property were in clear disregard of the Rainwaterses’ rights.” Additionally, the chancellor stated that Allen “knew at the time he built the fence and conveyed the property to his minor granddaughter that there was a serious claim” to the disputed parcel.

¶36. At trial, the Rainwaterses submitted a statement for attorney fees of $9,790.05, not including ten hours spent at trial. The chancellor added ten hours of fees to this figure, but deducted five hours, because she did not find in favor of the Rainwaterses’ adverse possession claim for the southern portion of the property. Therefore, a total of $10,790.05 in attorney fees was awarded to the Rainwaterses.

¶37. Allen argues that attorney fees are not allowed in the absence of contractual provisions, statutory authority, or an award of punitive damages.

¶38. Mississippi follows the American rule for awards of attorney fees. “[A]bsent some statutory authority or contractual provision, attorneys’ fees cannot be awarded unless punitive damages are also proper.” Fulton v. Miss. Farm Bureau Cas. Ins., 105 So. 3d 284, 287-88 (¶16) (Miss. 2012). Punitive damages are only proper when the plaintiff shows by clear and convincing evidence the defendant acted with actual malice. Miss. Code Ann. § 11-1-65 (Rev. 2014). “[T]he plaintiff must demonstrate a willful or malicious wrong, or the gross, reckless disregard for the rights of others.” Wise v. Valley Bank, 861 So. 2d 1029, 1034 (¶15) (Miss. 2003).

¶39. Here, while there is no contractual provision, statutory authority, or specific award of punitive damages, the chancellor awarded attorney fees for the same reason the Rainwaterses requested punitive damages in their amended complaint (for the “Defendants’ reckless disregard of the Plaintiffs’ rights in this case”). The Mississippi Supreme Court has held that attorney fees may be awarded instead of punitive damages. Pursue Energy Corp. v. Abernathy, 77 So. 3d 1094, 1102 (¶26) (Miss. 2011) (citing Aqua-Culture Tech. Ltd. v. Holly, 677 So. 2d 171, 184 (Miss. 1996)). Here, the chancellor did not specify in her order that she was awarding attorney fees in lieu of punitive damages. However, as the trier of fact she
could have found Allen acted with actual malice in removing boundary markers, and constructing gates and a fence. Accordingly, we reverse and remand for clarification of whether punitive damages were awarded in the form of attorney fees.

So, the award of attorney’s fees will stand if on remand the chancellor finds that Cronier’s conduct was with actual malice, justifying punitive damages, and she specifies that the fee award is in lieu of punitive damages.

The language quoted above is a nice summary of the law of attorney-fee awards in Mississippi. You can recite pretty readily, I am sure, some other avenues for fee awards in chancery, among them contempt, divorce, and as a sanction for discovery misconduct.

A Willful, Wanton or Reckless Disregard

May 18, 2015 § 2 Comments

It doesn’t come up very often in chancery court, but from time to time a party will ask a chancellor to impose punitive damages.

Not surprisingly, the latest reported case involved parties contending over an easement. I think most experienced chancery practitioners would nod in agreement that easement and property line disputes can quite often eclipse even bitter divorces for malicious, vicious, destructive behavior.

In the case of Muirhead v. Cogan, decided March 10, 2015, siblings Steve Muirhead and Lula Cogan, along with some other siblings, inherited some land near Vicksburg. A private easement, called “Muirhead Road,” gave both Steve and Lula access to their portions of the property. Steve’s son Ronnie built a home near Steve’s, and after he began using the road also, Steve augmented the hardpan dirt surface with gravel.

The gravel washed out in heavy rains, and Steve wanted Lula to contribute $3,000 to help maintain the easement. Lula, however, was not convinced. She had the road inspected by Pete B. (described in the COA opinion as “a construction worker who owns a construction business”), who opined that it did not need any maintenance.

That’s where things took a detour:

¶6. In 2006, Ronnie built a road that intersected Muirhead Road. After the new road was built, both Steve and Ronnie abandoned the easement and began using the newly built road to access their houses. Ronnie also installed a culvert near the intersection. The culvert directed water away from the newly built road and onto the easement. Also in 2006, after the new road was built, most of the gravel was mysteriously removed from the easement. At some point after the gravel was removed, dirt from the center of the easement was pushed up onto the sides of the easement. After that, a large v-shaped ditch was dug across the easement, preventing vehicular use of the easement.

¶7. In 2007, Lula hired Pete to perform conservation work on her property. To access Lula’s property, Pete and his employees had to use the easement. To make the easement usable, Pete instructed one of his employees, Marcus Clark, to fill the v-shaped ditch with dirt. Marcus complied. However, shortly thereafter, a trench, which was approximately four feet deep and five feet wide, was dug in the center of the easement. As a result, water settled in the center of the easement, causing severe erosion. By 2008, the easement had almost completely eroded.

Lula sued, and one of her claims was for punitive damages. The COA opinion is enlightening about what law the chancellor is required to apply in making a determination whether to assess punitive damages. Judge Irving, for the court:

¶25. Steve argues that the chancery court erred by awarding punitive damages after: (1) applying an improper legal standard and (2) failing to hold an evidentiary hearing on the issue of punitive damages. Second, Steve argues that the chancery court erred by finding that the erroneous award of punitive damages was a proper basis for the award of attorney’s fees. Finally, Steve argues that the chancery court erred by finding James’s testimony credible because James relied on notes prepared by Lula. On the other hand, Lula asserts that a careful reading of the final judgment reveals that the chancery court utilized the clear-and convincing standard in finding that Steve’s actions were malicious.

¶26. In [Jones v. Music, 2 F.Supp.2d 880 (SD Miss. 1988)], which the chancery court relied on in assessing punitive damages, the United States District Court for the Southern District of Mississippi indicated that the standard to be applied during a court’s assessment of punitive damages is a preponderance-of-the-evidence standard. Jones, 2 F. Supp. 2d at 884 (finding that “[p]unitive damages may be awarded only when the trier of fact is persuaded by a preponderance of the evidence that defendant’s actions were wanton, malicious[,] or fraudulent in nature.”) Likewise, in its final judgment, the chancery court found that “[p]unitive damages may be awarded only when the trier of fact is persuaded by a preponderance of the evidence that [the] defendant’s actions were wanton, malicious[,] or fraudulent in nature.” The chancery court further found

that [Steve’s] conduct was malicious, intentional[,] and outrageous. The court finds that removing the gravel that he bought and put on the easement, and cutting a vee down the easement, was spiteful. However, after the easement was made usable following these acts, regardless of who deepened the ditches (which the court believes was an act of [Steve]), digging the trench down the middle of the easement under the guise of saving his fence[] was clearly malicious, intentional[,] and outrageous. [Steve], as a farmer[] who retired from the construction business[,] knew that this action would destroy the easement (and having destroyed the easement, [Steve] now seeks to abandon it). He knew that he could take other, less invasive, remedial actions. He never discussed the fence situation with [Lula] to ascertain the best remedial action; therefore, he was not interested in finding the best solution or in saving the easement. Obviously, he wanted to prevent [Lula] from using the easement regardless of her right to use the easement. Through this aggressive action, which he even admits was wrong, [Steve] showed an intentional[,] wanton disregard for the rights of [Lula], and Lula is entitled to punitive damages in the amount of $10,000.

¶27. We find that the standard enunciated in Jones is in clear conflict with Mississippi statutory law. Mississippi Code Annotated section 11-1-65 (Rev. 2014) provides, in relevant part, as follows:

(1) In any action in which punitive damages are sought:

(a) Punitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud.

****

(c) If, but only if, an award of compensatory damages has been made against a party, the court shall promptly commence an evidentiary hearing to determine whether punitive damages may be considered by the same trier of fact.

****

(f)(i) Before entering judgment for an award of punitive damages the trial court shall ascertain that the award is reasonable in its amount and rationally related to the purpose to punish what occurred giving rise to the award and to deter its repetition by the defendant and others.

(ii) In determining whether the award is excessive, the court shall take into consideration the following factors:

1. Whether there is a reasonable relationship between the punitive[-]damage award and the harm likely to result from the defendant’s conduct as well as the harm that actually occurred;

2. The degree of reprehensibility of the defendant’s conduct, the duration of that conduct, the defendant’s awareness, any concealment, and the existence and frequency of similar past conduct;

3. The financial condition and net worth of the defendant; and

4. In mitigation, the imposition of criminal sanctions on the defendant for its conduct and the existence of other civil awards against the defendant for the same conduct.

¶28. Despite Lula’s argument to the contrary, it is unclear whether the chancery court required Lula to prove by clear and convincing evidence that Steve’s actions were malicious. However, the chancery court’s reliance on Jones suggests that the court applied the lesser standard. Additionally, the record does not reveal that the chancery court conducted an evidentiary hearing on the issue of punitive damages, or that the chancery court ascertained that the punitive-damages award was reasonable in its amount and rationally related to the purpose of deterrence. Furthermore, the chancery court failed to consider the factors enumerated in section 11-1-65(f)(ii). Therefore, we find that the chancery court erred by awarding punitive damages in this case. Consequently, we reverse and remand for an evidentiary hearing wherein the chancery court must determine by clear and convincing evidence whether Steve’s actions were willful, wanton, and malicious. If, on remand, the chancery court finds that punitive damages are warranted, then the chancery court must consider the factors enumerated in section 11-1-65(f)(ii) in determining the amount of punitive damages to be awarded.

The court went on to reverse the award of attorney’s fees in the case because the judge had not enunciated any basis other than punitive damages for the attorney fee award.

When Can a Chancellor Award Punitive Damages?

September 18, 2014 § 4 Comments

Bar-Til entered into a contract as a subcontractor to do some work for Superior Asphalt on Pull-A-Part’s property. Problems arose with some environmental regulations that required some change orders. As the work expanded, so did the bills, and Superior quit paying the invoices.

Bar-Til sued Superior for breach of contract, breach of covenant of fair dealing, and breach of fiduciary duty. Bar-Til included Pull-A-Part on the basis that it had been unjustly enriched by Bar-Til’s uncompensated effort. When the trial was in its third day, Bar-Til moved to amend its complaint to allege bad faith, seeking punitive damages from Superior. The chancellor granted the motion, but clarified that only the issue of whether punitive damages would be an issue was before the court. He said that Bar-Til could “offer the proof of punitive damages when we decide if that’s going to be an issue.”

At the conclusion of trial, the chancellor found for Bar-Til on the breach of contract issue, and added that Bar-Til was even entitled to recover on a quantum meruit basis. The chancellor found that Bar-Til failed to prove that Superior acted in bad faith or breached a fiduciary duty, and so failed to prove entitlement to punitive damages. Since no punitive damages were due, attorney’s fees were denied. The judge also found that Bar-Til had failed to prove any of its claims against Pull-A-Part.

Bar-Til appealed on the chancellor’s denial of punitive damages, charging that the denial was in error, as was the chancellor’s refusal to hold a separate hearing on punitive damages.

In the COA case of Bar-Til, Inc. vs. Superior Asphalt, Inc. and Pull-A-Part, LLC, decided August 26, 2014, Judge Carlton spelled out the parameters for chancery judges considering whether to award punitive damages:

¶14. Our caselaw provides that “[t]he award of punitive damages, along with the amount of such, are within the discretion of the trier of fact.” Hurst v. Sw. Miss. Legal Servs. Corp., 708 So. 2d 1347, 1350 (¶6) (Miss. 1998) (citation omitted). In contract cases, “[p]unitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton[,] or reckless disregard for the safety of others, or committed actual fraud.” Miss. Code. Ann. § 11-1-65(1)(a) (Supp. 2013). In determining the propriety of punitive damages, a chancellor “decides whether, under the totality of the circumstances and viewing the defendant’s conduct in the aggregate, a reasonable, hypothetical trier of fact could find either malice or gross neglect/reckless disregard.” Ciba-Geigy Corp. v. Murphree, 653 So. 2d 857, 863 (Miss. 1994) (citations omitted).

*   *   *

¶19. We now turn to a review of the statutory law and caselaw applicable to punitive damages. In discussing whether an award of punitive damages is proper, Mississippi Code Annotated section 11-1-65(1)(b)-(c) (Supp. 2013) provides:

In any action in which the claimant seeks an award of punitive damages, the trier of fact shall first determine whether compensatory damages are to be awarded and in what amount, before addressing any issues related to punitive damages.

If, but only if, an award of compensatory damages has been made against a party, the court shall promptly commence an evidentiary hearing to determine whether punitive damages may be considered by the same trier of fact.

¶20. The Mississippi Supreme Court has also provided the following guidance:

Mississippi law does not favor punitive damages; they are considered an extraordinary remedy and are allowed with caution and within narrow limits. Punitive damages should be awarded in addition to actual or compensatory damages where the violation of a right or the actual damages sustained, import insult, fraud, or oppression and not merely injuries, but injuries inflicted in the spirit of wanton disregard for the rights of others. In other words, there must be some element of aggression or some coloring of insult, malice[,] or gross negligence, evincing ruthless disregard for the rights of others, so as to take the case out of the ordinary rule.

. . . This Court has held that punitive damages are recoverable in breach of contract cases where the breach results from an intentional wrong and when there has been a showing of malice or gross/reckless disregard for the rights of others. Punitive damages are only appropriate in the most egregious cases so as to discourage similar conduct and should only be awarded in cases where the actions are extreme.

Warren v. Derivaux, 996 So. 2d 729, 738 (¶¶27-28) (Miss. 2008) (internal citations and quotation marks omitted).

¶21. As our precedent reflects, some underlying basis, such as actual malice or fraud, must exist for an award of punitive damages before a chancellor will hold a second hearing on the issue of such damages. See Miss. Code. Ann. § 11-1-65(1) (Supp. 2013). In the present case, the chancellor found no merit to Bar-Til’s claim that Superior’s conduct justified an award of punitive damages. As reflected in his order and final judgment, the chancellor found that Bar-Til failed to provide the requisite evidentiary basis to support an award of punitive damages.

That’s a pretty nifty survey of the law of punitive damages, and it illustrates how exceptional and infrequent such awards are.

The COA swept aside Bar-Til’s claim about the failure to hold a separate hearing based on the chancellor’s conclusion that punitive damages were not warranted.

 

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