Molenaar v. United Cattle Co.

• Decision Date: 30 July 1996
• Docket Number: No. C2-96-32,C2-96-32
• Citation: 553 N.W.2d 424
• Parties: Orville MOLENAAR, Appellant, v. UNITED CATTLE COMPANY, Defendant and Third-Party Plaintiff, Respondent, v. Michael J. FRANK, Third-Party Defendant.
• Court: Minnesota Court of Appeals

Page 424

553 N.W.2d 424

Orville MOLENAAR, Appellant, v. UNITED CATTLE COMPANY, Defendant and Third-Party Plaintiff, Respondent, v. Michael J. FRANK, Third-Party Defendant.

No. C2-96-32.

Court of Appeals of Minnesota.

July 30, 1996.

Syllabus by the Court

A litigant may recover punitive damages for conversion of property if the conversion is Jerry W. Snider, Charles F. Webber, Faegre & Benson Professional Limited Liability Partnership, Minneapolis, for Defendant and Third-Party Plaintiff, Appellant.

in deliberate disregard of the rights or safety of others.

Patrick McLaughlin, Todd C. Pearson, Dorsey & Whitney LLP, Minneapolis, for Respondent.

Considered and decided by LANSING, P.J., and PETERSON and HARTEN, JJ.

OPINION

LANSING, Judge.

On appeal from the denial of posttrial motions in a livestock conversion action, we revisit the issue of punitive damages for property injury and review the jury determinations on liability and compensatory damages. We reverse and remand the entry of JNOV on punitive damages and affirm the district court's denial of JNOV on liability and its denial of JNOV, a new trial, or remittitur on compensatory damages.

FACTS

A jury found United Cattle Company liable for converting Orville Molenaar's sixty-five heifers. The verdict awarded both compensatory and punitive damages. Molenaar had purchased the heifers in Montana in 1994 and transported them to Minnesota for feeding, care, and breeding at Michael Frank's farm. Frank and Molenaar had similar arrangements in previous years. Molenaar's cattle were identified by the blue ear tags they wore at the farm.

Frank also kept, cared for, and bred cattle for United Cattle Company. White and yellow ear tags identified United's cattle. United and Frank's relationship deteriorated and United brought a replevin action against Frank, alleging breach of contract and conversion of its cattle. The district court granted United a replevin order on October 11, 1994, authorizing United to take immediate possession of its cattle including 306 heifers. The next day Dana Hansen, vice president of United, arrived at Frank's farm to take possession of the cattle. Frank explained to Hansen that sixty-five of the heifers on the farm belonged to Molenaar, but Hansen took all of the cattle, including Molenaar's heifers.

Frank told Molenaar on October 16 that United had taken Molenaar's heifers. The next day Molenaar contacted United's attorney to find the cattle. The attorney refused to tell him where the cattle were kept. Molenaar sent the attorney a photograph of his heifers and a copy of his original purchase invoice. Molenaar, still attempting to locate the cattle, then contacted Hansen. Hansen also refused to tell Molenaar where the cattle had been taken. Neither the attorney nor Hansen asked for any documentation of ownership. United sold Molenaar's heifers on November 18, 1994, and they cannot be traced.

Molenaar sued United for conversion, alleging that its actions caused severe financial injury, and moved to amend his complaint to add a claim for punitive damages. The district court permitted the amendment, and the jury awarded $400,000 in punitive damages in addition to $59,375 in compensatory damages for conversion.

United moved for JNOV on liability, compensatory damages, and punitive damages. The district court granted JNOV on punitive damages, holding that these damages could only be recovered for personal injury. The district court denied the remainder of United's motions. Molenaar appeals the JNOV vacating punitive damages, and United cross-appeals the denial of JNOV on liability and compensatory damages.

ISSUES

I. Are punitive damages recoverable for deliberate conversion of property?

II. Did the district court err by refusing to order JNOV, a new trial, or remittitur on the compensatory damages?

ANALYSIS

Judgment notwithstanding the verdict is proper when a jury verdict has no reasonable support in fact or is contrary to the law. Diesen v. Hessburg, 455 N.W.2d 446, 452 (Minn.1990), cert. denied, 498 U.S. 1119, 111 S.Ct. 1071, 1072, 112 L.Ed.2d 1177 (1991). Whether to grant a JNOV presents an issue of law, but the analysis admits every inference reasonably to be drawn from the evidence, and an order denying JNOV should stand unless the evidence is practically conclusive against the verdict. Seidl v. Trollhaugen, Inc., 305 Minn. 506, 507, 232 N.W.2d 236, 239 (1975). The district court has discretion in determining whether to grant a new trial, and will be reversed only for a clear abuse of discretion. 200 Levee Drive Ass'n v. Scott County, 532 N.W.2d 574, 578 (Minn.1995).

I

Punitive damages have been permitted in conversion actions since the formation of the state. Huebsch v. Larson, 291 Minn. 361, 364, 191 N.W.2d 433, 435 (1971); Matteson v. Munroe, 80 Minn. 340, 342-43, 83 N.W. 153, 154 (1900); Lynd v. Picket, 7 Minn. 184, 7 Gil. 128, 144-45 (1862); Minnesota Valley Country Club v. Gill, 356 N.W.2d 356, 363 (Minn.App.1984). Permitting punitive damages in these actions demonstrates the state's strong policy against malicious, willful, or reckless disregard of another's property rights. Huebsch, 291 Minn. at 364, 191 N.W.2d at 435.

Punitive damages "further a State's legitimate interests in punishing unlawful conduct and deterring its repetition." BMW of N. Am. v. Gore, --- U.S. ----, ----, 116 S.Ct. 1589, 1595, 134 L.Ed.2d 809 (1996). A substantial body of this state's jurisprudence on intentional torts has recognized punitive damages as a proper remedy for intentional violations of the rights of others. See Huebsch, 291 Minn. at 364, 191 N.W.2d at 435 (permitting punitive damages for conversion); Jensen v. Peterson, 264 N.W.2d 139, 145 (Minn.1978) (permitting punitive damages for fraud); Bucko v. First Minn. Sav. Bank, 471 N.W.2d 95, 98 (Minn.1991) (permitting punitive damages for polygraph testing); Advanced Training Sys. v. Caswell Equip. Co., 352 N.W.2d 1, 10 (Minn.1984) (permitting punitive damages for libel); Cobb v. Midwest Recovery Bureau, 295 N.W.2d 232, 237-38 (Minn.1980) (recognizing punitive damages for some wrongful repossessions).

In addition to punitive damages as a remedy evolved through caselaw, the Minnesota legislature has specifically permitted punitive damages for misconduct that injures the rights of others. ¹ Some states, including Minnesota, have limited legislatively created punitive damages in amount. ² State legislatures have imposed other reforms, such as avoiding a windfall by requiring the punitive damages to be paid to the state rather than a litigant. ³

In 1980 the supreme court extended the scope of punitive damages in Minnesota to include strict products-liability cases. Gryc v. Dayton-Hudson Corp., 297 N.W.2d 727, 741 (Minn.), cert. denied, 449 U.S. 921, 101 S.Ct. 320, 66 L.Ed.2d 149 (1980). This extension shifted the focus from a defendant's conduct to the severity of a plaintiff's injuries and removed the requirement of clear and convincing evidence of willful indifference to the rights or safety of others. In 1982 the court limited this expansion by prohibiting punitive damages in strict products-liability cases absent personal injury. Eisert v. Greenberg Roofing & Sheet Metal, 314 N.W.2d 226, 229 (Minn.1982) (noting the "extraordinary measure of deterrence" of punitive damages in strict liability cases).

The court subsequently applied this limitation to all products-liability claims whether or not the cause of action was based on strict liability. Independent Sch. Dist. No. 622 v. Keene Corp., 511 N.W.2d 728, 732 (Minn.1994) (denying punitive damages for asbestos cleanup). The court looked beyond the formal pleadings and restricted punitive damages stemming from products liability to circumstances involving personal injury. Id.

This approach to punitive damages in products-liability claims mirrors the supreme court's analysis of punitive damages for breach of contract. Traditionally, punitive damages were not available for breach of contract. Minnesota-Iowa T.V. Co. v. Watonwan T.V. Improvement Ass'n, 294 N.W.2d 297, 309 (Minn.1980). But when an independent tort accompanies a breach of contract, a plaintiff may seek punitive damages. Id. The supreme court looks beyond the formal pleadings and limits punitive damages to those cases involving a willful independent tort, not merely willful breach of contract. Barr/Nelson, Inc. v. Tonto's, Inc., 336 N.W.2d 46, 52 (Minn.1983). The focus falls on the underlying tort, rather than the nature of damages or the specific legal pleadings. See Cherne Indus. v. Grounds & Assocs., 278 N.W.2d 81, 95-96 (Minn.1979) (assessing evidence of tortious interference with contract).

In Soucek v. Banham, 524 N.W.2d 478, 480 (Minn.App.1994), review denied (Minn. Jan. 25, 1995), a divided panel of this court broadly interpreted Keene to prohibit punitive damages in any case not involving personal injury. But since the issuance of Soucek, the supreme court has decided and affirmed an age discrimination case that allowed punitive damages even though the complaint did not allege personal injury. Phelps v. Commonwealth Land Title Ins., 537 N.W.2d 271, 277 (Minn.1995).

We read the supreme court's affirmance in Phelps as consistent with the substantial body of Minnesota law permitting punitive damages for deliberate or willful indifference to the rights or safety of others and as limiting the language in Keene to products-liability actions. Thus, Keene stands for the proposition that "[a]bsent personal injury, a party injured by a product may not recover punitive damages." Keene, 511 N.W.2d at 728 (emphasis added).

Limiting Keene to product-related injury also reestablishes consistency between case law and statutory law. The statute governing punitive damages, enacted in 1978, provides that "[p]unitive damages shall be allowed in civil actions only upon clear and convincing evidence that the acts of the defendant show deliberate disregard for the rights or...