Edwards v. Armstrong World Industries, Inc.

• Decision Date: 20 September 1990
• Docket Number: No. 89-1570,89-1570
• Citation: 911 F.2d 1151
• Parties: , Prod.Liab.Rep.(CCH)P 12,596 Bennie EDWARDS, et al., Plaintiffs-Appellees, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants. The Celotex Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1151

911 F.2d 1151

59 USLW 2260, Prod.Liab.Rep.(CCH)P 12,596

Bennie EDWARDS, et al., Plaintiffs-Appellees, v. ARMSTRONG WORLD INDUSTRIES, INC., et al., Defendants.

The Celotex Corporation, Defendant-Appellant.

No. 89-1570.

United States Court of Appeals, Fifth Circuit.

Sept. 20, 1990.

Donald J. Verplancken, Elizabeth M. Thompson, Butler & Binion, Houston, Tex., for defendant-appellant.

David M. Glaspy, Walnut Creek, Cal., Joseph F. Bruegger, Brent M. Rosenthal, Baron & Budd, Dallas, Tex., Monroe Kirby, Tyler, Tex., A.B. Conant, Ruth Ann Norton, Shank, Irwin, Conant, Lipshy & Casterline, Dallas, Tex., David M. Stagner, Sherman, Tex., Gary D. Elliston, Dehay & Blanchard, Dallas, Tex., Joe Riddles, Dallas, Tex., Frank Bean, Samuel E. Stubbs, Fulbright & Jaworski, Richard L. Josephson, Baker & Botts, Ronald E. Cook, Bruce Kemp, Mayor, Day & Caldwell, Stephen S. Andrews, Woodard, Hall & Primm, Houston, Tex., Don Kent, Cowles & Thompson, Tyler, Tex., Lyn Stevens, Weller, Willis & Green, Beaumont, Tex., for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before POLITZ, JOLLY, and JONES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Celotex Corporation appeals the punitive damage award in favor of plaintiffs, Bennie and Joann Edwards, for asbestosis related to Bennie Edwards's exposure to asbestos-containing products. Celotex principally contends that the district court erred in assessing punitive damages against Celotex for the acts of its predecessor, Philip Carey; the punitive damages are excessive; and the award of punitive damages violates Celotex's federal and state constitutional rights. We affirm the judgment of the district court.

I. Facts

While working for sixteen years as an insulator, Bennie Edwards was exposed to asbestos-containing insulation products manufactured by several companies, including Philip Carey Corporation, a predecessor of Celotex. He contracted asbestosis. Plaintiffs' claims necessarily assumed, and the court held, that Celotex is liable as the successor-in-interest to Philip Carey. The jury awarded the plaintiffs a total of $491,000 in actual damages. Because Celotex was found 7.18% responsible for the damages, a judgment of $35,525.80 in compensatory damages resulted. Additionally, the jury awarded the plaintiffs punitive damages of $245,500 against Celotex. Celotex argued in both a Rule 59 motion and in a Motion for Entry of Judgment that the district court should award only compensatory damages against Celotex or order a remittitur as to the amount of punitive damages. Upon the denial of these motions, Celotex timely appealed.

II. Punitive Liability of a Successor Corporation

Celotex adroitly contends that Texas law would not impose liability for punitive damages upon it as a corporate successor to Philip Carey. ¹ In part, Celotex suggests, this result follows from state corporate law principles, but also and more importantly because penalizing Celotex for the sins of Philip Carey would disserve the state's twin goals of punishment and deterrence. In two recent cases we have rejected these arguments, finding that they both depended upon evidence of Celotex's corporate history that was not in the record. Aguirre v. Armstrong World Industries, Inc., 901 F.2d 1256, 1258 (5th Cir.1990); King v. Armstrong World Industries, Inc., 906 F.2d 1022, 1029 (5th Cir.1990). We reject them again here for the same reason. Celotex made no effort to seek a ruling in the trial court that would favorably characterize--under Texas or other applicable law--its acquisition of Philip Carey by means of a stock purchase of Carey's owner corporation followed immediately by an "agreement of merger." ² Perhaps painfully aware that its efforts to avoid liability for punitive damages based on its purchase of Philip Carey have been largely unsuccessful, ³ Celotex chose to tantalize the trial court rather than to fulfill by truly joining issue, with the necessary proof, on the legal significance of its status as a successor corporation.

III. Excessiveness of Punitive Damages

Celotex alternatively seeks a remittitur of the punitive damages of $245,500 which under Texas law should be reasonably proportioned to the amount of actual damages. Alamo National Bank v. Kraus, 616 S.W.2d 908, 910 (Tex.1981). Punitive damages here total nearly seven times the actual damages apportioned against Celotex.

Notwithstanding requiring reasonable proportionality, however, Kraus held that there can be no set rule or ratio between the amount of actual and exemplary damages which will be considered reasonable, and that each case must be analyzed according to several factors:

(1) the nature of the wrong, (2) the character of the conduct involved, (3) the degree of culpability of the wrongdoer, (4) the situation and sensibilities of the parties concerned, and (5) the extent to which such conduct offends a public sense of justice and propriety. Id.

Contrary to the Edwards's position, Texas does not require that "reasonable proportionality" be evaluated according to the total amount of actual damages rather than the proportionate share allocated against Celotex. In John Deere Co. v. May, 773 S.W.2d 369, 377-78 (Tex.App.--Waco 1989, writ denied), the court determined the reasonableness of a punitive damage award by measuring it against a defendant's share of actual damages. The court concluded that a $550,000 punitive damage award was not excessive compared to the co-defendant's 15% liability for actual damages of $1,050,000 ($157,500).

Although we review the proportionality of the punitive damage award against Celotex in comparison with its allocated share of actual damages, however, we do not find it so excessive as to suggest that passion rather than reason motivated the jury. Wright v. Gifford Hill & Co., Inc., 725 S.W.2d 712, 714 (Tex.1987) (quoting Tynberg v. Cohen, 76 Tex. 409, 416, 13 S.W. 315, 316 (1890)). The conduct of Philip Carey in marketing its asbestos products, as reported at trial, could support an award of gross negligence. Celotex contests neither the jury finding nor the other Kraus factors bearing on the size of the punitive damage award. Moreover, the award in this case is not grossly disproportionate to other punitive damage awards under Texas law. ⁴ See, e.g., King, supra (punitive damages--$1,550,000; actual damages about $1 million); Aguirre, supra (punitive damages $201,000; actual damages $658,000); Victoria Bank & Trust Co. v. Brady, 779 S.W.2d 893, 912 (Tex.App.--Corpus Christi 1989), writ granted, --- Tex.S.Ct.J. ---- (1990) ($2.2 million punitive damages; actual damages $495,000); Donnel v. Lara, 703 S.W.2d 257, 261-62 (Tex.App.--San Antonio 1985, writ ref'd n.r.e.) ($4,500 punitive damage award not excessive where jury awarded two dollars ($2.00) as actual damages for harassing phone calls); Russell v. Truitt, 554 S.W.2d 948, 956 (Tex.Civ.App.--Fort Worth 1977, writ ref'd n.r.e.) ($55,000 punitive damage award not excessive as compared to $8,000 in actual damages).

IV. Constitutional Limitations

Celotex finally repeats its arguments that multiple punitive damage awards for a single...