Dunne v. Res. Converting, LLC
| Decision Date | 17 March 2021 |
| Docket Number | No. 19-3170, No. 19-3271,No. 19-2982,19-2982 |
| Citation | 991 F.3d 931 |
| Parties | Tom DUNNE, Jr., Plaintiff - Appellant v. RESOURCE CONVERTING, LLC; Tim Danley; Rick Kersey; Sebright Products, Inc.; Gary Brinkmann; NewWay Global Energy; David Wolf; Jerry Flickinger ; JWR, Inc., Defendants - Appellees Resource Converting, LLC, Plaintiff - Appellee v. Tom Dunne, Jr., Defendant - Appellant Resource Converting, LLC, Plaintiff - Appellant v. Tom Dunne, Jr., Defendant - Appellee |
| Court | U.S. Court of Appeals — Eighth Circuit |
Barry L. Haith, Jonathan R. Waldron, Jaclyn Niccole Warr, Stinson LLP, Saint Louis, MO, Gary D. Goudelock, Jr., Matthew D. Jacobson, Stephen W. Tyler, Whitfield & Eddy, Des Moines, IA, for Tom Dunne, Jr.
Peter J. Dunne, Robert T. Plunkert, Pitzer & Snodgrass, Saint Louis, MO, for Defendants - Appellees Resource Converting, LLC, Tim Danley, and Rick Kersey.
Gene J. Brockland, Jr., Brian M. Wacker, Attorney, Smith & Amundsen, Saint Louis, MO, Thomas Frederick Koernke, Koernke & Crampton, Grand Rapids, MI, for Defendants - Appellees Sebright Products, Inc. and Gary Brinkmann.
Ann E. Buckley, Martin John Buckley, Buckley & Buckley, Saint Louis, MO, for Defendant - Appellee NewWay Global Energy.
Steven Howard Schwartz, Elizabeth S. Silker, Teresa Michelle Young, Brown & James, Saint Louis, MO, Travis James West, West & Dunn, Waunakee, WI, for Defendants - Appellees David Wolf, Jerry Flickinger, and JWR, Inc.
Robert T. Plunkert, Pitzer & Snodgrass, Saint Louis, MO, for Resource Converting, LLC.
Before SMITH, Chief Judge, KELLY and ERICKSON, Circuit Judges.
Tom Dunne, Jr. purchased licenses for Resource Converting, LLC's ("RCI") non-thermal, pulverizing, and drying system technology ("PAD System"). Dunne alleges the capabilities of the PAD System were misrepresented to him. Two lawsuits ensued in federal district court, one in Iowa and one in Missouri. In this consolidated appeal, we affirm the Iowa judgment and reverse and remand the Missouri judgment for further proceedings consistent with this opinion.
RCI; Tim Danley; Rick Kersey; Sebright Products, Inc.; Gary Brinkmann; NewWay Global Energy; David Wolf; Jerry Flickinger; and JWR, Inc. (collectively, "the RCI defendants") targeted Dunne to purchase licenses granting Dunne the exclusive right to sell the PAD System in the St. Louis, Missouri, area. The stated purpose of the PAD System was to convert municipal waste into "biomass and ultimately renewable fuels." On August 21, 2015, Dunne entered into five license agreements with RCI for the PAD System, agreeing to pay a total of $1,000,000. Dunne made an initial payment of $400,000 but refused to make the final payment when he was never able to see an operational PAD System.
Approximately ten months after entering into the license agreements, Dunne sent the RCI defendants a letter that sought a refund of the $400,000 and threatened to sue in federal court in Missouri if the refund was not promptly issued. Ten days later, RCI commenced an action against Dunne in the Polk County Iowa District Court, alleging breach of the license agreements and seeking payment of the remaining $600,000. Dunne then simultaneously removed the Iowa state action to the United States District Court for the Southern District of Iowa ("Iowa action") and sued the RCI defendants in the United States District Court for the Eastern District of Missouri ("Missouri action"). Both sides made unsuccessful motions to transfer and consolidate the cases, so the two cases proceeded on parallel paths.
The Iowa action went to trial in May 2018. Dunne defended against the RCI contract claim on a theory of fraudulent misrepresentation and counterclaimed for the return of his initial payment. After an eight-day trial, the jury returned a verdict, finding both that Dunne breached the license agreements and that RCI fraudulently misrepresented the PAD System. The jury awarded no compensatory damages to RCI or Dunne but awarded Dunne $200,000 in punitive damages. Post-trial motions were brought by both parties, and the district court1 entered an order that upheld the jury's verdict; dismissed Dunne's counterclaims for equitable relief; and awarded Dunne attorney's fees and costs. Both parties appeal the judgment in the Iowa action.
After the Iowa trial, the Missouri district court dismissed Dunne's claims for fraudulent misrepresentation, fraudulent inducement, negligent misrepresentation, unjust enrichment, and civil conspiracy under Fed. R. Civ. P. 12(b)(6) and awarded the RCI defendants costs. Dunne appeals the judgment in the Missouri action.
Dunne asserts the district court erred in three ways: (1) when it failed to increase the compensatory damages award; (2) when it dismissed his equitable counterclaims; and (3) when it failed to award his full claim for attorney's fees and costs. RCI also asserts three district court errors: (1) when it failed to strike the punitive damages award; (2) when it failed to enter a judgment as a matter of law in favor of RCI on the fraudulent misrepresentation counterclaim; and (3) when it concluded Dunne was a prevailing party and awarded fees and costs. Having carefully reviewed the record and each issue raised by the parties, we find neither error nor an abuse of discretion.
Dunne contends the amount of compensatory damages was uncontested and, therefore, the district court erred when it denied his motion under Fed. R. Civ. P. 59 for $400,000 in compensatory damages. We review "the denial of an additur for abuse of discretion, bearing in mind that if the amount of damages was disputed, a grant of additur violates the losing party's Seventh Amendment right to a jury trial." Am. Bank of St. Paul v. TD Bank, N.A., 713 F.3d 455, 468 (8th Cir. 2013) (citations omitted).
While it is undisputed that Dunne made an initial $400,000 payment for the licenses, the parties contested the existence of any damages. Dunne claimed he suffered a loss of $400,000 as a result of RCI's misrepresentation and RCI countered that Dunne received some value from the licenses. The question of damages was properly left to the jury, and the record makes plain that the jury carefully deliberated on this issue.
The jury was asked to decide what amount would reimburse Dunne and put him in as good a position as if the misrepresentations were not made. The court instructed the jury that it "may" consider the $400,000 payment when considering compensatory damages. When, during deliberations, the jury sent the court a question expressly asking whether it could award no compensatory damages, the court responded: Dunne did not object to the court's response.
It is apparent that when resolving the question of compensatory damages, the jury arrived at the conclusion that no award was proper. Under these circumstances, a grant of additur would violate the losing party's Seventh Amendment right to a jury trial. The district court did not abuse its discretion in denying Dunne's request for additur . See Trinity Prods., Inc. v. Burgess Steel, L.L.C., 486 F.3d 325, 335 (8th Cir. 2007) ().
Without an award of compensatory damages, RCI contends that the jury's award of punitive damages must be stricken and that if punitive damages are available, the award is unconstitutionally excessive. Interpretations of state law and the constitutionality of a punitive damages award are reviewed by us de novo . See Cooper Indus., Inc. v. Leatherman Tool Gr., Inc., 532 U.S. 424, 436, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001) ; Bockelman v. MCI Worldcom, Inc., 403 F.3d 528, 531 (8th Cir. 2005). Under Iowa law, "an award of punitive damages does not depend on an award of compensatory damages, but rather depends on a showing of actual damages." Podraza v. City of Carter Lake, 524 N.W.2d 198, 203 (Iowa 1994) ; see also Pringle Tax Serv., Inc. v. Knoblauch, 282 N.W.2d 151, 154 (Iowa 1979) (). As noted by RCI, more recently, the Iowa Supreme Court made a statement in a footnote indicating a punitive damages award may only be recoverable if the plaintiff proves compensatory damages. Spreitzer v. Hawkeye State Bank, 779 N.W.2d 726, 746 n.10 (Iowa 2009). Contrary to RCI's interpretation, we do not read this statement as a declaration of a new rule of Iowa law. The opinion, citing Pringle, instead supports that actual damages need only be established in order for punitive damages to be recoverable. Establishment of damages is a different concept than an award of damages, and upholding the jury's verdict on punitive damages in this case would not run afoul of Iowa law.
A close reading of the jury instructions and verdict demonstrate that the jury found Dunne suffered actual damages, even though it did not award compensatory damages. In particular, the jury found fraudulent misrepresentation, which required a finding that RCI's false representations were "a cause of [Dunne's] damage[s]." Further, the jury was instructed that it could only award punitive damages if it found that RCI "caused actual damage to [Dunne]." We presume the jury followed the instructions. See Borchardt v. State Farm Fire & Cas. Co., 931 F.3d 781, 786 (8th Cir. 2019). Because the jury necessarily found that Dunne suffered actual damages when it found fraudulent misrepresentation, punitive damages were recoverable under Iowa law. See Pringle, 282 N.W.2d at 154 ().
For the same reasons, we also reject RCI's argument that it is...
To continue reading
Request your trial
-
Hansei Wei v. Xiaodong Xu
... ... provision, even in diversity actions. See, e.g. , ... Dunne ... provision, even in diversity actions. See, e.g. , ... Dunne v. Resource Converting ... ...
-
Weems Indus. v. Teknor Apex Co.
...a showing of actual damages. Podraza v. City of Carter Lake, 524 N.W.2d 198, 203 (Iowa 1994); see also Dunne v. Resource Converting, LLC, 991 F.3d 931, 938 (8th Cir. 2021) (“Under Iowa law, ‘an award of punitive damages does not depend on an award of compensatory damages, but rather depends......
-
LiiON, LLC v. Vertiv Grp. Corp.
... ... claims.” Vogt , 963 F.3d at 774; see also ... Dunne v. Res. Converting, LLC , 991 F.3d 931, 943 (8th ... Cir. 2021); see also, e.g. , Mea Fin ... ...
-
Garrard v. Rust-Oleum Corp.
...a commercial buyer of goods from seeking to recover in tort for economic losses that are contractual in nature." Dunne v. Res. Converting LLC , 991 F.3d 931, 943 (8th Cir. 2021) (internal quotation marks omitted). As a threshold matter, the parties dispute whether Missouri or Illinois law a......