E. Prop. Dev. LLC v. Gill
| Decision Date | 06 March 2014 |
| Docket Number | No. 13-10219,D.C. Docket No. 4:11-cv-00062-CDL,13-10219 |
| Parties | EASTERN PROPERTY DEVELOPMENT LLC, a Utah limited liability company, SOUTH EAST ENTERPRISE GROUP LLC, a Georgia limited liability company, Plaintiffs-Appellees, v. LOREN C. GILL, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
Appeal from the United States District Court
for the Middle District of Georgia
Before TJOFLAT and WILSON, Circuit Judges, and BUCKLEW,* District Judge.
Following a jury trial, the jury returned a verdict in favor of Appellees-Plaintiffs Eastern Property Development, LLC ("Eastern Property") and South East Enterprise Group, LLC ("SEE") against Appellant-Defendant Loren Gill ("Gill"), and awarded the plaintiffs $35,335.98 in compensatory damages and $250,000.00 in punitive damages. Gill appeals the punitive damages award, arguing that punitive damages are not warranted under Georgia law and the amount of the award is unconstitutionally excessive under the federal Constitution. Gill also appeals the district court's denial of his right to open and conclude the closing argument under Georgia's plea of justification statute, O.C.G.A. § 51-11-1. After review, and with the benefit of oral argument, we affirm.
We first address whether the district court had subject matter jurisdiction in this case. We find that it did. Although we sua sponte questioned whether the pleadings sufficiently alleged diversity of the parties, we need not reach that issue to find that the district court had subject matter jurisdiction. This is because the plaintiffs' amended complaint alleged federal question jurisdiction due to their federal claim for infringement under section 43 of the Lanham Act, 15 U.S.C. § 1125, which was litigated through trial and arose out of the same nucleus of operative facts as the plaintiffs' state law claims. The district court therefore hadfederal question jurisdiction over the federal law claim under 28 U.S.C. § 1331, and supplemental jurisdiction over the state law claims under 28 U.S.C § 1367.
Gill's brother purchased residential and commercial rental properties, and in 1999, created numerous real estate holding trusts that owned each of the properties. For each real estate holding trust, the executive trustee was Dan Van Gasken1 and the beneficiary was Gill Family Cornerstone Trust ("GFCT"), a trust created by Gill's brother. GFCT's trustee was Kevin Hartshorn.
Gill Companies, LLC, a property management company owned by Gill's brother, initially handled the rental management of the trust properties. However, Gill's brother fled the country in 2009 after being convicted of financial crimes, and in 2010, Van Gasken and Hartshorn formed SEE and Eastern Property, the plaintiffs in this case, to which they transferred the management of the trust properties from Gill Companies.
SEE's executive officers were Van Gasken and Hartshorn. The office manager was Marlene Blossfield (who had also been the manager at Gill Companies). SEE's management duties included collecting rent payments from tenants. Tenants would make their rent checks payable to Eastern Property, SEE's payment entity, and Blossfield would deposit the checks into Eastern Property'sbank account. Hartshorn would then transfer funds from Eastern Property's account to SEE's operating account. Hartshorn would also, in his capacity as GFCT's trustee, transfer funds to GFCT.
On June 8, 2011, Gill entered the plaintiffs' offices in Columbus, Georgia. Gill stated that he was a trustee of the real estate holding trusts, he was taking over the management of Eastern Property and SEE, and any employees who did not follow his instructions would be fired. Gill went on to tell Blossfield that Hartshorn and Van Gasken had been terminated and that she was prohibited from contacting them. To prevent Hartshorn and Van Gasken from entering Eastern Property and SEE's offices, Gill posted security guards at the doors and changed the locks and key codes.
Gill also told Blossfield to get Alabama business licenses in the names of Eastern Property Development and South East Enterprise, LLC. Gill used these Alabama licenses to open a new bank account in the name of Eastern Property Development. After Gill ordered the plaintiffs' employees to stop depositing tenants' rent checks into the plaintiffs' bank account, Gill deposited the rent checks into the new bank account.
On June 15, 2011, the plaintiffs filed suit against Gill in district court. Their amended complaint alleged state law claims for trespass, conversion, interference with contract and prospective business advantage, and a federal Lanham Act claim.The plaintiffs sought injunctive relief, compensatory damages, and punitive damages.
Two days later, Gill fired Blossfield. Soon after, he sent a letter from "South Eastern Enterprise Group, LLC" to the plaintiffs' tenants, instructing them to deliver rent payments to a new mailing address.2
The plaintiffs filed a motion for a preliminary injunction against Gill. After an evidentiary hearing, the district court granted the injunction on June 28, 2011. In its injunction order, the district court required Gill to vacate the plaintiffs' business premises, remove the security guards, reset the locks and key codes, return any checks payable to the plaintiffs that Gill had deposited into his new bank account, and refrain from holding himself out as or acting for the plaintiffs.
On August 24, 2011, and in violation of the injunction, Gill sent a letter to the plaintiffs' tenants, declaring that the plaintiffs had been terminated and were no longer the management company for the trust properties. The letter instructed the tenants to ignore all communications from Blossfield and her staff, to cease delivering rent payments to the plaintiffs' office or mailing address, and to send all rent payments to a different mailing address. The next day, Gill sent a second letter to the tenants, notifying them that the prior letter was sent in error and shouldbe disregarded. Gill's letters created confusion and concern among the tenants, which took the plaintiffs some time to rectify.
On August 15, 2012, the district court held a pretrial conference. There, Gill's counsel raised a question regarding the right to open and conclude closing argument at trial if Gill were to make a plea of justification under Georgia law. When the district court stated that, in federal court, the plaintiffs would still have the right to open and conclude the closing argument, Gill's counsel announced that they would not make the plea.
Just before trial, Gill conceded liability on the state law claims of trespass, conversion, interference with contracts and business advantage, and the case proceeded to trial on the issues of compensatory and punitive damages on the state law tort claims, as well as liability and damages on the federal Lanham Act claim.
After the close of evidence, the district court granted Gill's motion for directed verdict on the Lanham Act claim, and the case went to the jury on compensatory and punitive damages for the state law tort claims. The jury returned a verdict in favor of the plaintiffs, awarding $35,335.98 in compensatory damages and $250,000.00 in punitive damages.
Following trial, Gill moved to reduce the punitive damages award, arguing that it was unconstitutionally excessive. The district court denied the motion, finding that: (1) there was a legitimate state interest in punishing and deterringGill's conduct; (2) the evidence at trial—that Gill "busted into [the] plaintiffs' offices, took over their operations, disrupted their business, and interfered with their employees and tenants"—supported the jury's conclusion that his conduct was sufficiently reprehensible to warrant the amount of punitive damages awarded; and (3) the 7:1 ratio of punitive to compensatory damages was warranted, because the actual damages were mitigated by the district court's preliminary injunction order (notwithstanding Gill's violation of that injunction on one occasion) and understated the egregiousness of Gill's conduct. (Dkt. 139.) Gill appeals, challenging the punitive damages award and the order of closing argument at trial.
We review the propriety of punitive damages de novo. Myers v. Cent. Fla. Invs., Inc., 592 F.3d 1201, 1212 (11th Cir. 2010). We review the constitutionality of punitive damages de novo, but the district court's findings of fact for clear error. Action Marine, Inc. v. Cont'l Carbon Inc., 481 F.3d 1302, 1309 (11th Cir. 2007). We review the district court's determination regarding the right to open and conclude at closing argument for abuse of discretion. See Martin v. Chesebrough-Pond's, Inc., 614 F.2d 498, 501 (5th Cir. 1980) (per curiam) ().3
Gill argues that no punitive damages should have been awarded under Georgia law because there was no evidence that he acted out of aggression or outrage or that his actions rose to the level of criminal or quasi-criminal conduct. Gill also contends the evidence is disputed as to whether he "burst" into the plaintiffs' offices to take over, lied about being a trustee, and had no other purpose but to "burn" down the business.
In Georgia, punitive damages may be awarded in tort actions when "clear and convincing evidence" proves a defendant's "actions showed willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care which would raise the presumption of a conscious indifference to consequences." O.C.G.A. § 51-12-5.1(b). Thus, a punitive damages award is supported if there is clear and convincing evidence that Gill's conduct was "so reckless or so charged with indifference to the consequences" as to show wantonness, Hendon v. DeKalb County, 417 S.E.2d 705, 712 (Ga....
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