McGinnis v. Am. Home Mortg. Servicing Inc., Civil Action No. 5:11–CV–284 (CAR)
| Decision Date | 06 March 2017 |
| Docket Number | Civil Action No. 5:11–CV–284 (CAR) |
| Citation | 240 F.Supp.3d 1337 |
| Parties | Jane MCGINNIS, Plaintiff, v. AMERICAN HOME MORTGAGE SERVICING INC., Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
Charles Austin Gower, Miranda J. Brash, Columbus, GA, Naveen Ramachandrappa, Atlanta, GA, for Plaintiff.
Russell J. Rogers, Two Allliance Ctr., Daniel S. Reinhardt, Michael E. Johnson, Alexandria J. Reyes, Benjamin W. Cheesbro, Mark J. Windham, Atlanta, GA, John C. Lynch, Virginia Beach, VA, for Defendant.
ORDER ON MOTION FOR NEW TRIAL
This case is presently before the Court on remand from the Eleventh Circuit Court of Appeals for consideration of Defendant Homeward Residential's motion for new trial on the issue of punitive damages. Upon due consideration of the Eleventh Circuit's mandate, the evidence, the parties' arguments, and the relevant law, the Court finds that the jury's punitive award in this case is neither unconstitutional, unconscionable, nor excessive in light of the evidence presented at trial.
Plaintiff Jane McGinnis ("McGinnis") filed the present action for wrongful foreclosure, conversion, interference with property, and intentional infliction of emotional distress against Defendant Homeward Residential, Inc. ("Homeward"), the servicer of the mortgages on several properties for which Plaintiff was a landlord. At the end of a bifurcated trial, the jury found against Homeward on all claims and awarded McGinnis $3,506,000.00 in damages ($6,000.00 for her economic injury, $500,000.00 for her emotional distress, and $3,000,000.00 in punitive damages).
After the trial, Homeward renewed its motion for judgment as a matter of law under Rule 50 of the Federal Rule of Civil Procedure ("Renewed JMOL"), and also moved, in the alternative, for a new trial and/or remittitur of damages under Rule 59. Homeward's Renewed JMOL was granted only on the issue of punitive damages.1 The motions were otherwise denied.
The parties, thereafter, cross-appealed, and the Eleventh Circuit Court of Appeals affirmed this Court's ruling in its entirety. That opinion was vacated a short time later (following a decision by one the judges to recuse herself), and the appeal was referred to a second panel.2 After review, the second panel affirmed all but one of the Court's rulings, concluding that Homeward was procedurally barred from challenging the punitive damages award in its Renewed JMOL.3 The Court's ruling on this issue under Rule 50 was accordingly reversed. The case was then remanded to this Court for consideration of the same arguments under Rule 59, which had been timely raised by Homeward but not yet ruled upon by the Court.
Homeward's motion for new trial on the issue of punitive damages is thus now again before the Court.4 On remand, the parties were allowed to each file a supplemental brief for consideration. Homeward filed a post-appeal motion, and McGinnis filed a response thereto.5 Homeward then moved to file a reply brief.6 That motion is GRANTED over McGinnis's objection,7 as her response included new arguments to which Homeward may respond. The reply has thus been considered.8
Homeward's "Post–Appeal Motion to Reduce Punitive Damages Award, or Alternatively for New Trial or Remittitur"9 is now ripe for consideration.
I. Standard of Review under Rule 59
Rule 59 of the Federal Rules of Civil Procedure allows the district court to order a new trial on evidentiary grounds if the trial judge, in his discretion, determines that the jury's verdict is against the "great weight" of the evidence presented at trial.10 Thus, because the weight of the evidence is considered, the district judge may grant a new trial even if there was sufficient evidence to prevent a directed verdict under Rule 50.11
When considering a motion for new trial, however, the district judge may not substitute his own credibility choices and inferences for those made by the jury.12 The jury's verdict may be set aside on evidentiary grounds only if "the verdict is against the great—not merely the greater—weight of the evidence."13 The jury's award of damages must likewise stand undisturbed unless the amount is shown to be clearly outside "the universe of possible awards which are supported by the evidence."14
With these standards in mind, the Court now turns to the arguments raised in Homeward's Motion for New Trial: (1) that the jury's punitive award is unconstitutionally excessive; (2) that the jury's punitive award is grossly excessive under Georgia law; and (3) that the jury's verdict on punitive damages is against the great weight of the evidence presented at trial.
The first issue before the Court is whether the jury's punitive award is so excessive that it violates due process. A punitive damages award may run afoul of the Due Process Clause "when it can fairly be categorized as grossly excessive" in relation to "a [s]tate's legitimate interests in punishing unlawful conduct and deterring its repetition."15 The relevant question in this case is thus whether the jury's award is grossly excessive in relation to Georgia's strong interest in preventing a mortgage servicer from unfairly exercising its power of sale.16
When deciding whether an amount of punitive damages offends due process, three factors must be considered: the degree of reprehensibility of the defendant's conduct; "the disparity between the actual or potential harm suffered by the plaintiff and the punitive ... award"; and "the difference between the punitive damages awarded and civil penalties authorized or imposed in comparable cases."17
The degree of reprehensibility of a party's conduct is the "dominant consideration" in determining whether a punitive award is excessive.18 Evaluating the reprehensibility of a defendant's conduct is meant to ensure that the "damages imposed on a defendant ... reflect the enormity of his offense."19 The "gravity of the defendant's conduct" must therefore be balanced with the "harshness of the award of punitive damages"20 —i.e., a higher degree of reprehensibility weighs in favor of a larger award of punitive damages. With respect to this inquiry, courts have been instructed to consider a number of sub-factors, such as whether the harm caused was physical or economic; whether the defendant's conduct showed an indifference to the health and safety of others; whether the target of the conduct was financially vulnerable; whether the conduct involved repeated actions or a single incident; and whether the evidence showed malice, trickery, or deceit.21 Thus, for example, repeated "conduct which causes emotional as well as economic harm [may be viewed as] more reprehensible than that which causes only economic harm."22
After considering the facts of this case in light of the relevant factors, the Court finds a high degree of reprehensibility in Homeward's conduct. During the trial of this case, there was ample evidence presented to show that Homeward was aware of both McGinnis's financial vulnerability and her good-faith attempts to notify Homeward of its error in calculating the amount owed.23 Homeward nonetheless bullied and harassed McGinnis to pay greater amounts and flatly maintained that she was required to pay "any amount" it demanded, regardless of whether it was reasonable or in error.24 When McGinnis refused to pay the disputed amounts, Homeward proceeded with foreclosure in a short amount of time; and as a result of Homeward's repeated refusals to concede its error, McGinnis suffered not only an economic injury but also physical and emotional harm.25 Homeward's actions in this context were reprehensible and warrant a substantial penalty beyond the award of compensatory damages.
"The Court must next consider the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award."26 In this inquiry, the mathematical ratio of punitive to compensatory damages is instructive.27 A single-digit ratio (less than 10–to–1) will most likely comport with due process.28 There is, however, no firm rule or "bright-line ratio which a punitive damages award cannot exceed."29 The core question is whether the amount of punitive damages is "reasonable and proportionate to" the amount of compensatory damages recovered.30 The reasonableness of the award thus depends "on the facts and circumstances of the defendant's conduct and the [actual and potential] harm" that was likely to result.31
In this case, the ratio of punitive to compensatory damages is 5.9–to–1.32 This is a single digit ratio and not presumptively suspect.33 Homeward, nonetheless, contends that, even at a single-digit ratio, the punitive award offends due process because of McGinnis's substantial recovery for emotional distress.
In support of its motion, Homeward relies on frequently-cited caselaw suggesting that, if an award of compensatory damages is substantial, it is possible that "a lesser ratio, perhaps only equal to compensatory damages, can reach the outermost limit of the due process guarantee."34 Prior cases have also suggested that a punitive damages award "more than four times the amount of compensatory damages might [in some cases] be close to the line of constitutional impropriety."35 These suggestions, however, are no more than suggestions—intended to be instructive; they neither demarcate an uppermost limit for a punitive award nor mandate the use of any particular calculation for determining whether a punitive damages award is outside the acceptable range.36 Federal courts have "consistently rejected the notion that the constitutional line is marked by a simple mathematical formula."37
Thus, "particularly egregious conduct ... may justify bumping the acceptable ratio to a higher level."38 The Eleventh Circuit has, many times, upheld ratios greater than...
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...offered reflect that Homeward almost certainly knew its conduct was causing McGinnis emotional harm. McGinnis v. Am. Home Mort. Servicing, Inc. , 240 F.Supp.3d 1337, 1352 (M.D. Ga. 2017).Third, Homeward knew that McGinnis was financially vulnerable. The seven properties at issue in the fore......