United States District Court, E.D. Michigan, Southern Division
David Hunt, Carol Santangelo, Plaintiffs: Michael C. Curhan,
Bloomfield Hills, MI.
Donnelly Hadden, Donnelly W. Hadden, P.C., Defendants: M.
Ellen Dennis, Saline, MI.
OPINION ON CROSS MOTIONS FOR SUMMARY JUDGMENT
David M. Lawson, United States District Judge.
case began as a legal malpractice case, but eventually was
pared down by the plaintiffs to claims of conversion, breach
of fiduciary duty, and fraud, based on the plaintiffs'
former attorney charging legal fees in excess of the
parties' retainer agreement. After discovery closed, the
parties each filed motions for summary judgment. The Court
denied the defendants' motion and granted the
plaintiffs' motion in part, finding that the defendants
were liable for statutory conversion and fixing the amount
converted. The Court held that a jury must decide whether the
plaintiffs are entitled to treble damages under
Michigan's conversion statute. Subsequently, the parties
each filed motions for reconsideration, in part focusing on
the amount of damages. It became apparent that there was a
material fact dispute over that amount, and the Court vacated
that part of its prior opinion, leaving the amount of damages
for jury determination, along with the treble damage issue.
status conference held thereafter, the parties raised
additional issues, not addressed in their summary judgment
briefs, pertaining to attorney fees, the requisite proofs for
treble damages, and whether expert testimony could be
offered. The Court ordered the parties to submit supplemental
briefs addressing the following issues: (1) What are the
relevant factors for the jury to consider in determining
whether the plaintiffs are entitled to treble damages under
Michigan Compiled Laws § 600.2919a? (2) Who decides
whether and how much to award in attorney fees under section
600.2919a: the jury at trial, or the Court upon motion after
trial under Federal Rule of Civil Procedure 54(d)? (3) Should
the Court permit expert testimony on whether the plaintiffs
should be awarded treble damages? The parties have submitted
their supplemental briefs.
the Court filed its opinion and order, the Michigan Supreme
Court issued its opinion in Aroma Wines & Equip., Inc. v.
Columbian Distribution Servs., Inc., 497 Mich. 337, 871
N.W.2d 136 (2015). The court determined that, to be liable
for statutory conversion, a plaintiff must show " that
the defendant employed the converted property for some
purpose personal to the defendant's interests, even if
that purpose is not the object's ordinarily intended
purpose." Aroma, 497 Mich. 337, slip op. at 4.
The court, however, declined to review whether an award of
treble damages is a matter of discretion for the jury.
Id. at 7 n.10. As this Court stated in its previous
opinion, the Michigan intermediate appellate court decisions
commit that determination to the jury.
defendants maintain that treble damages are akin to punitive
damages, although they cite no Michigan authority in support
of that argument. Nonetheless, they contend that the
requisite showing therefore must be sufficient to justify a
punitive damage award. The plaintiffs point out that treble
damages are not always identified as punitive damages, and
sometimes a different standard of proof is appropriate.
plaintiffs cite Johnson v. Jensen, 433 N.W.2d 472
(Minn. Ct.App.), rev'd in part on other grounds,
446 N.W.2d 664 (Minn. 1989), for the proposition that "
[t]he standard o[f] proof required for the imposition of
punitive damages is not the same as the standard o[f] proof
required for the imposition of treble damages."
Id. at 476. That is certainly the case in some
states. For instance, the Minnesota Supreme Court recognized
that " there are differences between a statutory award
of multiple damages, which represents a fixed amount and does
not necessarily reflect a judgment concerning the culpability
of the [defendant]'s conduct, and an award of punitive
damages at common law, which is assessed by the jury and thus
reflects the community's condemnation of a
defendant's conduct when it is viewed as wanton,
malicious, or outrageous." Wojciak v. N. Package
Corp., 310 N.W.2d 675, 680 (Minn. 1981).
in Cieslewicz v. Mut. Serv. Cas. Ins. Co., 84 Wis.2d
91, 267 N.W.2d 595 (Wisc. 1978), the Wisconsin Supreme Court
identified three differences between common law punitive
damages and statutory multiple damages under Wisconsin law.
First, the court noted that punitive damages are
awarded only if the plaintiff establishes a specific state of
mind, but found that state of mind is irrelevant to an award
of treble damages under Wisconsin law. Id. at 600.
Second, the court said that common law punitive
damages are assessed in the discretion of the jury, but
" [m]ultiple damages, on the other hand, are assessed
whenever the statutory requirements are met, and the
plaintiff is entitled to multiple damages on that showing
alone." Ibid. Third, the court noted that the
wealth of the defendant must be considered when calculating
punitive damages, but wealth has nothing to do with the
assessment of statutory multiple damages. Id. at
national jurisprudence recognizes a difference between
punitive damages denominated as such, and multiple damages,
acknowledging that multiple damages are not always punitive.
" When the award of multiple damages is intended to
serve penal purposes, it is a substitute for punitive
damages, and the same or similar proof requirements usually
must be satisfied." Dist. Cablevision Ltd.
P'ship v. Bassin, 828 A.2d 714, 726 (D.C. 2003).
" On the other hand, multiple damages provisions may be
enacted to serve remedial rather than punitive purposes, such
as ensuring full compensation or encouraging private
enforcement of the law." Ibid. Similarly, in a
series of cases, the Supreme Court has " placed
different statutory treble-damages provisions on different
points along the spectrum between compensatory and strictly
punitive awards." PacifiCare Health Sys., Inc. v.
Book, 538 U.S. 401, 405, 123 S.Ct. 1531, 155 L.Ed.2d 578
(2003) (collecting cases). As the Supreme Court has noted,
" the tipping point between payback and punishment
defies general formulation, being dependent on the workings
of a particular statute and the course of particular
litigation." Cook Cnty., Ill. v. United States ex
rel. Chandler, 538 U.S. 119, 130, 123 S.Ct. 1239, 155
L.Ed.2d 247 (2003). Indeed, at least one court of appeals has
instructed that " treble damages statutes defy easy
categorization as compensatory or punitive in nature."
Alea London Ltd. v. Am. Home Services., Inc., 638
F.3d 768, 777 (11th Cir. 2011). Instead, " [w]hether
treble damages under a given statute are considered
compensatory or punitive is an intensely fact-based inquiry
that may vary statute-to-statute." Ibid.
articulated distinctions between punitive damages and
are sensible and well-reasoned. However, they do not appear
to have taken root in Michigan jurisprudence. The nature and
amount of damages to which a plaintiff is entitled is a
matter of substantive law. See Blasky v.
Wheatley Trucking, Inc., 482 F.2d 497, 498 (6th Cir.
1973). Because this is a diversity action, the Court must
follow Michigan substantive law, as prescribed by the
state's highest court. Erie R.R. v. Tompkins,
304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). And because
the Michigan Supreme Court has not addressed whether the
requirements to impose punitive and statutory multiple
damages are the same, the Court " must predict how it
would resolve the issue from 'all relevant
data.'" Kingsley Associates, Inc. v. Moll
PlastiCrafters, Inc., 65 F.3d 498, 507 (6th Cir. 1995)
(citing Bailey v. V & O Press Co., Inc.,
770 F.2d 601, 604 (6th Cir. 1985)). " Relevant data
include decisions of the state appellate courts, and those
decisions should not be disregarded unless we are presented
with persuasive data that the Michigan Supreme Court would
decide otherwise." Ibid. (citing FL
Aerospace v. Aetna Casualty and Surety Co., 897 F.2d
214, 218-19 (6th Cir. 1990)).
Michigan court to consider the issue has found that treble
damages under Michigan Compiled Laws § 600.2919a is
punitive in the traditional sense, that is, to punish the
defendant for wrongdoing. See e.g.,Peisner v.
Detroit Free Press Inc., 421 Mich. 125, 143 n.4, 364
N.W.2d 600, 609 (1984) (describing treble damages as an
example of " true 'punitive' (i.e.,
punishment-type) damages" ); Shepard v. Gates,
50 Mich. 495, 498, 15 N.W. 878, 880 (1901) (" [T]reble
damages are ...