Gillespie v. Seymour, 68691

• Decision Date: 28 May 1993
• Docket Number: No. 68691,68691
• Citation: 853 P.2d 692,253 Kan. 169
• Parties: Warren Brown GILLESPIE and Polly Gillespie Townsend, Plaintiffs/Appellees, v. Dorothea Wofford SEYMOUR, as Co-Trustee of the Brown-Gillespie Trust Estate; Dorothea Wofford Seymour, individually; Paul A. Seymour, Jr.*; Paul Seymour, III; Ruth Bassett; Robert W. Burdge; Grant Thornton, an accounting partnership; Arrowhead Petroleum, Inc., a Kansas corporation; and Big Springs Drilling, Inc., a Kansas corporation, Defendants/ *Appellant, and Dorothea Wofford SEYMOUR, as Co-Trustee of the Brown-Gillespie Trust Estate; and Dorothea Wofford Seymour, Individually, Defendants and Third-Party Plaintiffs, v. James Paul GILLESPIE, Executor of the Estate of Pauline Brown Gillespie, Deceased, Third-Party Defendant.
• Court: Kansas Supreme Court

Page 692

853 P.2d 692

253 Kan. 169

Warren Brown GILLESPIE and Polly Gillespie Townsend, Plaintiffs/Appellees, v. Dorothea Wofford SEYMOUR, as Co-Trustee of the

Brown-Gillespie Trust Estate; Dorothea Wofford Seymour,

individually; Paul A. Seymour,

Jr.*; Paul Seymour,

III; Ruth Bassett; Robert W. Burdge; Grant Thornton, an

accounting partnership; Arrowhead Petroleum, Inc., a Kansas

corporation; and Big Springs Drilling, Inc., a Kansas

corporation, Defendants/

*Appellant,

and

Dorothea Wofford SEYMOUR, as Co-Trustee of the

Brown-Gillespie Trust Estate; and Dorothea

Wofford Seymour, Individually, Defendants and Third-Party Plaintiffs, v. James Paul GILLESPIE, Executor of the Estate of Pauline

Brown Gillespie, Deceased, Third-Party Defendant.

No. 68691.

Supreme Court of Kansas.

May 28, 1993.

Syllabus by the Court

When determining the amount of punitive damages to be awarded under K.S.A.1992 Supp. 60-3701, it is incumbent on the trial court to make sufficient findings of fact to afford meaningful appellate review thereof.

Terry L. Mann of Martin, Pringle, Oliver, Wallace & Swartz, Wichita, argued the cause, and Robert Martin, of the same firm, was with him on the briefs for appellant.

Jerry D. Bogle of Young, Bogle, McCausland, Wells & Clark, P.A., Wichita, argued the cause, and Glenn D. Young, Jr., of the same firm, was with him on the brief for appellees.

McFARLAND, Judge:

This is an appeal from an award of punitive damages entered in an action by the beneficiaries of a trust for recovery of damages for oil and gas investments made by the Trust.

The factual background is complex and is set forth in Gillespie v. Seymour, 250 Kan. 123, 823 P.2d 782 (1991), hereinafter referred to as Gillespie I. Originally, punitive damage awards were entered as follows:

                 For the period prior to July 1, 1987
                Dorothea Seymour                    $2,000,000
                Paul A. Seymour, Jr.                $2,000,000
                Paul A. Seymour, III                $   25,000
                 For the period after July 1, 1987
                Dorothea and Seymour, Jr., jointly  $   89,250
                

In Gillespie I, we held the entry of punitive damage awards against Dorothea and Paul Seymour, III, were improper and reversed the same. As to the punitive damage awards against Paul Seymour, Jr., we stated:

"Seymour's conduct relative to the Trust's investments in Arrowhead has been discussed extensively elsewhere in this opinion and little would be gained by its repetition herein. It is sufficient to say that his egregious conduct as found by the trial court is legally adequate to support a punitive damage award.

"This brings up to examination the amount of the punitive damage awards entered against Seymour.

"K.S.A.1990 Supp. 60-3701 provides, in pertinent part:

'(e) Except as provided by subsection (f), no award of exemplary or punitive damages pursuant to this section shall exceed the lesser of:

(1) The annual gross income earned by the defendant, as determined by the court based upon the defendant's highest gross annual income earned for any one of the five years immediately before the act for which such damages are awarded; or

(2) $5 million.

'(f) In lieu of the limitation provided by subsection (e), if the court finds that the profitability of the defendant's misconduct exceeds or is expected to exceed the limitation of subsection (e), the limitation on the amount of exemplary or punitive damages which the court may award shall be an amount equal to 1 1/2 times the amount of profit which the defendant gained or is expected to gain as a result of the defendant's misconduct.

'(g) The provisions of this section shall not apply to any action governed by another statute establishing or limiting the amount of exemplary or punitive damages, or prescribing procedures for the award of such damages, in such action.

'(h) As used in this section the terms defined in K.S.A. 60-3401 and amendments thereto shall have the meaning provided by that statute.

'(i) The provisions of this section shall apply only [to] an action based upon a cause of action accruing on or after July 1, 1987 and before July 1, 1988.'

"The trial court found the plaintiffs' cause of action herein accrued in August 1987. Without stating any legal basis therefor, the trial court circumvented the operation of the statute by entering two separate punitive damage awards based on the effective date of the statute (July 1, 1987). The award for punitive damages based on conduct occurring prior to July 1, 1987, was made without application of the statute, and the post-July 1 award was presumably in compliance with the statute, although we cannot see from the record the basis for the $89,250 calculation.

"We hold that the determination of the punitive damage award against Seymour was erroneous. Only one award of punitive damages may be entered, and it must be made in accordance with the mandates of K.S.A.1990 Supp. 60-3701. The awards of punitive damages entered against Seymour must be reversed and the case remanded for entry of a punitive damage award determined pursuant to K.S.A.1990 Supp. 60-3701." 250 Kan. at 145-46, 823 P.2d 782.

On remand, no additional evidence was submitted on the issue of punitive damages. Oral arguments were heard and briefs filed. The district court's decision thereon is set forth in its memorandum opinion as follows:

"MEMORANDUM OPINION

"I have been directed by the Supreme Court to make a single punitive damage award. This ruling applies to Paul Seymour, Jr. I previously made awards for punitive acts before July 1, 1987 and for punitive act[s] after July 1, 1987. (July 1, 1987 is the effective date of K.S.A. 60-3701.)

"The previous award of punitive [damages] was for $89,250 subsequent to July 1, 1987 and for $2,000,000 prior to July 1, 1987.

"The Court finds that the profitability of defendant's misconduct exceeds the limitation of K.S.A. 60-3701(e). The profitability existed for many years more than the number of years set out in Section (e). The acts began in 1974 and continued until 1987. Plaintiffs suggest that the limitation of section (f) is $6,439,039.

"My previous award as to Paul Seymour, Jr., was $2,089,250. Other awards of punitive damages were made but were reversed on appeal.

"I will not change the amount of the award because of the reversals.

"Punitive damages are awarded to plaintiff against Paul Seymour, Jr., in the amount of $2,089,250.00.

"Judgment is entered for plaintiffs against defendant, Paul Seymour, Jr., for punitive damages in the amount of $2,089,250.00."

The parties agree that an appropriate award under K.S.A.1992 Supp. 60-3701(e)(1) would be $865,861 (Seymour's highest gross annual income in the statutory five-year period). The district court stated that the profitability of defendant's misconduct exceeded the limitation of K.S.A.1992 Supp. 60-3701(e)(1) and that the award should be entered under K.S.A.1992 Supp. 60-3701(f). The award was fixed at $2,089,250--the exact amount of the aggregate punitive damage award entered against Seymour, Jr., in Gillespie I. There is no indication as to how this figure was reached under subsection (f) of the statute. We have only the enigmatic statement, "I will not change the amount of the award because of the reversals."

What the district court characterized as plaintiffs' suggestion that the maximum award under subsection (f) is $6,439,039 is apparently based upon one and one-half times the compensatory damages entered in Gillespie I. On appeal, plaintiffs argue the award is supportable on the basis of the $2.6 million invested in Arrowhead Petroleum, Inc., by the Trust which, when multiplied one and one-half times, comes to $3.9 million. There is no punitive damage award against Arrowhead, of which Seymour owns 51 percent. Seymour contends there is no evidence admitted from which his "profit" could fairly be...