Section 50 Conversion

• Library: Damages 2012

In JCB, Inc. v. Union Planters Bank, NA, 539 F.3d 862 (8^th Cir. 2008), the Eighth Circuit addressed the propriety of punitive damage awards in a case brought by a creditor with a superior security interest in inventory against a bank for trespass and conversion when the bank seized and sold certain collateral. Id. at 867–68. The jury awarded the plaintiff $1,446,500 in compensatory damages and $1,150,000 in punitive damages for conversion. Id. at 867. The defendant bank asserted various arguments on appeal, the first of which was that it was acting on a good-faith belief that it was permitted by law to seize the property. Id. at 873. While noting that, under Missouri law a party is not liable for punitive damages based on acts in good faith or in honest belief, “[s]imply presenting such evidence of good faith to the jury does not immunize a defendant from punitive damages, however, because the jury may believe or disbelieve such evidence like any other.” Id. Because there was contrary evidence to support the finding of punitive damages, the Eighth Circuit refused to reverse the award on this ground. Id.

Next, the defendant bank challenged the award as constitutionally excessive. Citing State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), the Eighth Circuit held that the ratio of punitives to actual damages on the conversion claim was a 1:1 ratio and did...