Al-Sabah v. Agbodjogbe et al
Filing
285
MEMORANDUM OPINION. Signed by Judge Stephanie A. Gallagher on 3/19/2020. (kw2s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
ALIA SALEM AL-SABAH,
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Plaintiff,
v.
JEAN AGBODJOGBE, et al.,
Defendants.
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Civil Case No. SAG-17-730
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MEMORANDUM OPINION
On November 22, 2017, Plaintiff Alia Salem Al-Sabah (“Al-Sabah”) filed a nine-count
Amended Complaint against Defendants Jean Agbodjogbe (“Agbodjogbe”), N&A Kitchen, LLC
(“N&A Kitchen”), N&A Kitchen II, LLC (“N&A Kitchen II”), 5722 York Road, LLC (“5722
York Road”), and 9 Jewels, LLC (“9 Jewels”). ECF 76. A nine-day jury trial commenced on
January 21, 2020. See ECF 236-240, 242-45, 249. The jury entered a verdict in favor of AlSabah against each Defendant on each count submitted, and awarded her $7,641,800 in
compensatory damages, and an additional $1,000,000 in punitive damages. ECF 256; see also
ECF 259 (Order of Judgment). On February 10, 2020, the parties submitted post-trial motions.
The final motion remaining for adjudication is Defendants’ Motion for Remittitur (“the
Motion”). ECF 265. Al-Sabah opposed, ECF 269, and Defendants replied, ECF 277. For the
reasons that follow, Defendants’ Motion will be granted, though the Court will reduce, but not
eliminate, the punitive damages award.
I.
FACTUAL BACKGROUND
The instant lawsuit dates back to Al-Sabah’s initial filing of the Complaint on March 17,
2017, ECF 1, which she amended with Defendants’ consent on November 22, 2017, ECF 75, 76.
The Amended Complaint sought money damages from Agbodjogbe and his co-conspirators, the
corporate Defendants, under eight claims for relief: Fraudulent Misrepresentation (Count I);
Fraudulent Concealment (Count II); Conversion (Count III); Civil Conspiracy (Count IV);
Detrimental Reliance (Count V); Unjust Enrichment (Count VI); Breach of Contract (Count
VII); and Breach of Agency Duties (Count VIII). Id. ¶¶ 1, 46-89. As relevant here, Al-Sabah
requested both compensatory and punitive damages in each Count, save for her Breach of
Contract claim. Id. Finally, Count IX of the Amended Complaint sought various forms of
declaratory relief against all Defendants. Id. ¶ 93. Al-Sabah tried five of these claims to the
jury: Fraudulent Misrepresentation, Fraudulent Concealment, Breach of Agency Duties, Unjust
Enrichment, and Civil Conspiracy. Prior to trial, Al-Sabah abandoned her Detrimental Reliance
claim, and all of her claims against Defendant ASA Foundation, Inc. ECF 232 at 16. During
trial, Al-Sabah also abandoned her Conversion claim, as well as all remaining claims against
Defendant Nandi Scott. ECF 241; ECF 248.
The jury trial in this case began on January 21, 2020, and concluded on January 31, 2020.
ECF 236-40, 242-45, 249.
Over the span of those nine days, the jurors heard extensive
testimony from just two party-witnesses: Alia Salem Al-Sabah, and Jean Agbodjogbe. A brief
summary of the trial testimony, relevant to the issue of punitive damages, follows.
The parties stipulated that between September, 2014, and April 16, 2016, Al-Sabah wired
over $7.8 million to Defendants. See ECF 232 at 17-18 (Stipulations of Fact). These transfers
were received by either 9 Jewels or N&A Kitchen, id., and were used by Defendants to purchase
various residential and commercial real estate properties, id. at 18-19.
The evidence
demonstrated, however, that those properties are all heavily encumbered, with several having
entered foreclosure proceedings.
Agbodjogbe testified that Nailah’s Kitchen continues to
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operate at the 5722 York Road property, and that the restaurant currently generates “tens of
thousands” of dollars in net revenue. Outside of this, neither party presented any evidence
establishing any of the corporate Defendants’ net worth.
As to Agbodjogbe, the jury heard evidence that he maintains a personal bank account
with the Municipal Employees Credit Union of Baltimore, Inc. (“MECU”), Pl.’s Trial Ex. 505,
507-09, that was not disclosed to Al-Sabah during pre-trial discovery, Pl.’s Trial Ex. 9 at 15-16.
Agbodjogbe did acknowledge that in May, 2017, he transferred $100,000 to Touba Bollo, a
Senegalese company that he created and owns. See Pl.’s Trial Ex. 512. He also introduced two
HUD-1 Settlement Statements showing the amounts of money disbursed to him pursuant to
mortgages N&A Kitchen took out on two of the commercial properties, see Defs.’ Trial Ex. 19495.1
Agbodjogbe, however, did not present any financial statements or other documents
indicating his current net worth. Instead, he repeatedly testified that “every penny” that AlSabah sent to him “went into the business,” for costs such as paying contractors, architects, and
restaurant supply vendors. However, the only limited evidence of such expenses was that
introduced by Al-Sabah (such as an online order from the “Webstaurant Store” for equipment
exceeding $200,000). Agbodjogbe did not introduce any documentary evidence to support his
contention that he had expended all of the monies received from Al-Sabah on renovating the
commercial properties.
Prior to the Court’s conference with the parties regarding the jury instructions on January
30, 2020, the Court raised concerns with counsel for both parties on the record, indicating that it
was not sure whether it could submit the issue of punitive damages to the jury based on the
factual record developed at trial. After hearing arguments from both parties, the Court ruled that
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In fact, of their initial 336 proposed exhibits, the two HUD-1 Settlement Statements were the
only documentary evidence that Defendants introduced in their case-in-chief. See ECF 251.
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the issue of punitive damages could go to the jury. Relying on Darcars Motors of Silver Spring,
Inc. v. Borzym, 379 Md. 245 (2004), the Court reasoned that Al-Sabah had no duty to put
forward evidence regarding the Defendants’ ability to pay punitive damages. The Court further
found that there had been some evidence of Defendants’ finances adduced at trial. Though the
evidence was “probably not to the extent that one optimally would have in a punitive damages
situation,” the Court found that the evidence was sufficient to allow the jury to consider whether
punitive damages were appropriate. The Court thereafter gave the jury the following instruction
on punitive damages:
If you find for the plaintiff and award damages to compensate for the injuries or
losses suffered, you may go on to consider whether to make an award for punitive
damages. To award punitive damages, you must find by clear and convincing
evidence the defendant acted with malice. Malice is conduct motivated by evil
motive, intent to injure, ill will, or fraud. The purpose of punitive damages is not
to compensate the plaintiff, but to punish the defendant and to deter others from
this type of conduct in the future. An award for punitive damages should be:
(1) In an amount that will deter the defendant and others from similar
conduct.
(2) Proportionate to the wrongfulness of the defendant's conduct and the
defendant's ability to pay.
(3) Not designed to financially destroy a defendant.
An award of punitive damages in this case requires that the defendant acted with
malice. While an award for compensatory damages may be based upon a finding
that the defendant made a representation with reckless indifference to its truth,
this is not sufficient to warrant the award of punitive damages. Negligence,
however gross, is not enough to award punitive damages. A defendant’s
knowledge of the falsity of a representation, coupled with an expectation that a
plaintiff would rely upon a representation, is the state of mind that justifies an
award of punitive damages.
For punitive damages to be recoverable as a result of the breach of a fiduciary
duty owed by the defendant to the plaintiff, the wrongful conduct must be
characterized by evil motive, intent to injure, ill will, or fraud.
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After just hours of deliberation following nine days of testimony, the jury found
Agbodjogbe liable on each claim for relief, and further found that each corporate Defendant had
conspired with Agbodjogbe to perpetrate the fraud on Al-Sabah. ECF 256. The jury awarded
Al-Sabah $7,641,800 in compensatory damages, and an additional $1,000,000 in punitive
damages, jointly and severally against each Defendant. Id.; ECF 259 (Order of Judgment).
II.
LEGAL STANDARDS
Litigants may lodge two kinds of challenges to a jury’s punitive damages award: a
constitutional challenge, or a Rules-based challenge. In the first type of challenge, litigants may
argue that the punitive damages award is “grossly excessive,” in violation of the Due Process
Clause of the Fourteenth Amendment to the United States Constitution. See, e.g., BMW of N.
Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). In making that assessment the Court must consider:
(1) the reprehensibility of the defendant’s conduct; (2) the “disparity” between the harm, or
potential harm, that the plaintiff suffers, and the punitive damages award; and (3) the difference
between the punitive damages award at issue, and those issued in other “comparable cases.” Id. at
574-75; see also State Farm Mut. Ins. Co. v. Campbell, 538 U.S. 408, 418 (2003).
In lieu of a constitutional challenge, litigants may pursue the second type of relief: a
motion under Federal Rule of Civil Procedure 59(a) for a new trial nisi remittitur. See Atlas Food
Sys. & Servs., Inc. v. Crane Nat’l Vendors, Inc., 99 F.3d 587, 593 (4th Cir. 1996); see also id. at
595 (“[T]he Seventh Amendment imposes no barrier to the trial judge’s participation in
determining the amount of a punitive damages award through the review mechanism provided by
remittitur and Rule 59(a).”). “Remittitur is a process, dating back to 1822, by which the trial
court orders a new trial unless the plaintiff accepts a reduction in an excessive jury award.” Id.
(citation omitted). As has long been recognized in this Circuit, litigants may not receive a
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judgment as a matter of law, under Federal Rule of Civil Procedure 50, on the issue of punitive
damages, if a jury renders the award. Def. Indus., Inc. v. Nw. Mut. Life Ins. Co., 938 F.2d 502,
507 (4th Cir. 1991) (en banc). While the Court is to respect the parties’ Seventh Amendment
right to a jury trial, “a remittitur may be assessed in an amount that will bring the verdict on
damages to the maximum amount which the jury could have awarded under the evidence
introduced at trial.” Korotki v. Goughan, 597 F. Supp. 1365, 1386 (D. Md. 1984) (quoting Call
Carl, Inc. v. BP Oil Corp., 403 F. Supp. 568, 578 (D. Md. 1975)). If the plaintiff accepts the
remittitur, no new trial is needed. Id. But the plaintiff need not accept a remittitur; she may
instead choose to proceed to a new trial. Id.; see also CHARLES A. WRIGHT,
ET AL.,
FEDERAL
PRACTICE & PROCEDURE § 2815 (3d ed. 2010). The Court does not have discretion in deciding
whether to offer the plaintiff a new trial, because the Seventh Amendment “guarantees the right to
a jury determination of the amount of punitive damages.” Def. Indus., Inc., 938 F.2d at 507.
In a diversity action, such as this case, “the propriety of an award of punitive damages for
the conduct in question, and the factors the jury may consider in determining their amount, are
questions of state law.” Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257,
278 (1989). Thus, this Court must look to “whether the jury’s verdict is within the confines set by
state law, and [then] determine, by reference to federal standards developed under Rule 59,
whether a new trial or remittitur should be ordered.” Id. at 278-79; accord Atlas Food, 99 F.3d at
593-94.
Under Rule 59, “the district court must ‘set aside the verdict and grant a new trial[] if . . .
(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is
false, or (3) will result in a miscarriage of justice, even though there may be substantial evidence
which would prevent the direction of a verdict.’” Knussman v. Maryland, 272 F.3d 625, 639
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(4th Cir. 2001) (quoting Atlas Food, 99 F.3d at 594). These first two prongs are “purely factual
questions,” requiring “a comparison of the factual record and the verdict to determine their
compatibility.” Atlas Food, 99 F.3d at 594. In this analysis, the Court’s review of the jury’s
factual determinations is limited to “whether the jury’s verdict is against the weight of the
evidence or based on evidence which is false.” Id. The Court may, in doing so, “weigh the
evidence and consider the credibility of witnesses.” Cline v. Wal-Mart Stores, 144 F.3d 294, 301
(4th Cir. 1998). Ultimately, the decision of whether to grant a new trial nisi remittitur rests
within the Court’s discretion. Browning-Ferris, 492 U.S. at 279; accord Cline, 144 F.3d at 301.
III.
ANALYSIS
As previously stated, the jury awarded Al-Sabah $1 million in punitive damages.
Defendants make no constitutional challenge to the award. Instead, they challenge the punitive
damages award under Rule 59, arguing that the award “was excessive and divorced from any
consideration of the Defendants[’] ability to pay.” ECF 265 at 2-3; ECF 277 at 2-5. Defendants
provide no proposed remittitur amount.
A.
The Proper Rule 59 Framework for Review
Before addressing the merits of Defendants’ Motion, the Court must elucidate the proper
procedural framework for addressing Defendants’ arguments. Defendants contend that the Court
should determine whether the jury’s apparent view of Defendants’ ability to pay punitive
damages was against the clear weight of the evidence. See, e.g., ECF 265 at 3 (“[N]o evidence
was provided to the jury upon which a finding or basis for punitive damages could have been
predicated . . . .”). However, framing the Court’s review as such would be contrary to binding
Fourth Circuit precedent.
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In Atlas Foods, the Fourth Circuit discussed the trial court’s unique, but difficult, role in
reviewing a jury’s punitive damages award. See 99 F.3d at 594-95. Part of the difficulty, the
court noted, lies in the fact that a punitive damages award is both quasi-factual, and quasipolicymaking, in nature. Id. at 594. Some of the jury’s considerations in determining the precise
amount of punitive damages – “e.g., the defendant’s ability to pay” – are “well suited to the
jury’s role of finding facts.” Id. However, other considerations – such as the proper amount
needed to further the law’s goal of general deterrence – “are not factual questions and, therefore,
are more appropriately decided by the trial judge.” Id. Thus, according to the Fourth Circuit, the
review of a punitive damages award cannot be solely considered as a factual review, because
“the jury’s determination of the amount of such an award is almost entirely ungrounded in the
factual record.” Id. Trial courts must look also to factors outside of the factual record, such as
the need for the deterrence, and whether the award rendered comports with those rendered in
factually comparable cases, to determine if a jury’s punitive damages award is appropriate under
the circumstances of the particular case. Id. at 594-95.
Given these unique considerations, the Fourth Circuit held that, upon a Rule 59 motion
for remittitur of punitive damages, the trial court must determine whether the award results in a
miscarriage of justice. Id. at 595. To do so, the trial court must compare its independent
judgment of the appropriate amount, with the jury’s ultimate award, and “determine whether the
jury’s award is so excessive as to work an injustice.” Id. Given the trial court’s “participatory
decisionmaking role” in reviewing punitive damages awards, the court gives “less deferen[ce]”
than it typically would in reviewing the jury’s factual findings. Id. at 595 (second emphasis
added); see also, e.g., Butler v. Windsor, 143 F. Supp. 3d 332, 336 (D. Md. 2015).
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B.
Application of the Bowden Factors to the Instant Punitive Damages Award
In undertaking this review, the Court is mindful that Maryland law governs its
independent judgment of the proper punitive damages amount. See Browning-Ferris, 492 U.S.
at 278; Atlas Foods, 99 F.3d at 593-94; see also Snyder v. Phelps, 533 F. Supp. 2d 567, 593-96
(D. Md. 2008) (applying Maryland’s nine-factor test to determine whether a jury’s punitive
damages award was excessive), rev’d on other grounds, 580 F.3d 206 (4th Cir. 2009), aff’d, 562
U.S. 443 (2011). In Bowden v. Caldor, Inc., the Maryland Court of Appeals set forth nine
different factors for trial courts to consider in reviewing a jury’s punitive damages award: (1) the
gravity of the defendant’s wrongdoing; (2) the defendant’s ability to pay; (3) the deterrence value
of the award “under all of the circumstances of the case”; (4) how the award compares to the
maximum criminal or civil fine for similar conduct; (5) the amount of the award, in comparison
to awards in factually comparable cases; (6) any prior punitive damages awards against the same
defendant for the same course of conduct; (7) if the award is based on separate torts, whether the
separate torts arose from a single episode of events; (8) the plaintiff’s reasonable expenses and
costs that “are not covered by the award of compensatory damages”; and (9) whether the award
“bears a reasonable relationship to the compensatory damages awarded.” 350 Md. 4, 27-41
(1998) (citations omitted).
Importantly, however, not every factor will be relevant to every case, nor are these nine
factors “intended to be exclusive or all-encompassing.” Id. at 41. Maryland courts utilize these
“principles” or “guideposts” to “determin[e] if a punitive damages award is excessive and, if it is
held to be excessive, the extent of the reduction.” Id. at 25-26; see also Khalifa v. Shannon, 404
Md. 107, 142 (2008) (noting that the Bowden factors “are not criteria that must be established
but, rather, [are] guideposts to assist a court in reviewing an award” for excessiveness). Here, all
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but factors four (the maximum civil and/or criminal fines for similar conduct)2 and six (prior
punitive damages awards against the same defendant) are relevant. Since Defendants address
none of the factors relevant to this case, other than their ability to pay, the Court will briefly
discuss each of the other factors before addressing the one that is contested.
1.
The Uncontested Bowden Factors
First, under Maryland law, engaging in “heinous” or “egregiously bad” conduct “is a
prerequisite for any award of punitive damages.” Bowden, 350 Md. at 28. Thus, any award of
punitive damages must properly calculate the degree of heinousness with which the defendant
acts, and ensure that the punitive damages award is proportionate to the gravity of that wrong.
Id. (quoting Ellerin v. Fairfax Sav., F.S.B., 337 Md. 216, 242 (1995)). Defendants, rightfully, do
not contest that the jury’s punitive damages award is proportionate to the degree of their
wrongdoing.
The Court notes, as the Maryland appellate courts have in other cases, that
Defendants’ conduct “was not life threatening or the type of conduct which would likely lead to
permanent physical injuries.” Id. at 42; see also, e.g., Zachair, Ltd. v. Driggs, 135 Md. App.
403, 419 (2000) (“[I]n those cases in which high awards of punitive damages have been allowed
to stand, the harm has involved death or, at least, substantial health or environmental damage.”);
Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs., Inc., 88 Md. App. 672, 720-21
(1991).
But, the jury’s verdict evidences their conclusion that Defendants maintained a
consistent pattern of fraudulent activity for nearly two consecutive years, resulting in a loss of
2
The Court notes that section 7-113 of the Maryland Code Annotated, Criminal Law, which
criminalizes the fraudulent misappropriation of money that a fiduciary holds for another, is
directly on point with the facts of this case. However, section 7-113(b) only provides for a
period of incarceration, and requires no imposition of a monetary fine. See Harvey-Jones v.
Coronel, 239 Md. App. 145, 161 (2018) (dismissing as irrelevant the fourth Bowden factor in a
defamation case involving a counterfeited criminal charging document “[b]ecause the legislature
elected not to impose a monetary fine” for the crime of counterfeiting). Accordingly, this factor
is of little relevance to the Court’s instant analysis. .
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over $7.6 million by Al-Sabah. As discussed in this Court’s March 9, 2020 Opinion, that
conclusion is in accordance with the clear weight of the evidence presented at trial. See ECF
282. Given the enormity of that sum, the degree of heinousness involved in this scheme is
severe.
The third Bowden factor contemplates the need for punitive damages to promote both
general and specific deterrence. See 350 Md. at 29-30; Owens-Croning v. Garrett, 343 Md. 500,
537-38 (1996) (“The purpose of punitive damages is not only to punish the defendant for
egregiously bad conduct toward the plaintiff, but also to deter the defendant and others
contemplating similar behavior.”). The need for deterrence is at its greatest where the defendant
repeatedly engages in the same type of misconduct, commits his tort over a long period of time,
affirmatively acts to conceal his wrongdoing, and fails to take corrective action. Bowden, 350
Md. at 29. Every circumstance that the Bowden court contemplated is present in this case,
making the need for a “significant award” compelling
Next, the Court must compare the instant punitive damages award with those in other
factually comparable cases. While an analysis of awards in other cases is not intended “to put a
strict, judicially-created cap on the size of a punitive award,” Snyder, 533 F. Supp. 2d at 593, the
Court observes that punitive damages awards exceeding one million dollars are atypical in
Maryland state courts, see, e.g., id. at 32-33 (collecting cases, and observing that outside of a
$700,000 punitive damages award, the Court of Appeals had not upheld a punitive damages
award greater than $107,875); Alexander & Alexander, Inc., 88 Md. App. at 710-11 (collecting
cases, and observing that, outside of two cases issuing a $7.5 million and $910,000 punitive
damages verdict, respectively, “[m]ost of the punitive damages awards to date have been well
under $100,000). However, as recently noted by the Court of Special Appeals in Harvey-Jones,
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many of the awards discussed in Bowden that fail to exceed $100,000, when adjusted for
inflation, approach and exceed $200,000. See 239 Md. App. at 162-63.
In any event, it is noteworthy that the Maryland Court of Appeals recently upheld
punitive damages verdicts of $900,000, and $1,100,000, against two defendants who tortiously
interfered with a plaintiff-father’s child custody and visitation rights. Khalifa, 404 Md. at 14249. Other fraud cases from this Court provide further guidance. See, e.g., Capital Fin., LLC v.
Rosenberg, 364 F. Supp. 3d 529, 551 (D. Md. 2019) (awarding $200,000, after a bench trial, in
breach of contract and fraudulent misrepresentation case resulting in compensatory damages of
over $500,000); Kent Constr. Co. v. Global Force Auction Grp., LLC, No. TJS-12-2839, 2015
WL 5315565, at *8-9 (D. Md. Sept. 10, 2015) (awarding $50,000 in punitive damages on a
summary judgment motion in a fraud and conversion case); In re Rood, 459 B.R. 581, 609-10
(Bankr. D. Md. 2011) (awarding only nominal punitive damages against defendants whose fraud
caused $500,000 in damages, because the likelihood of any defendant making compensatory
damages payments was so small that fixing a large punitive damages was “a useless act”). At the
same time, almost no cases have presented quite the level of fraudulent conduct at issue here,
making it difficult to rely upon a like situation. The proverbial foot that fits the glass slipper that
is this case, does not appear to exist.
The final three uncontested factors can be addressed summarily. The seventh factor is
designed to ensure that juries do not award multiple “pyramided” punitive damages awards for a
single episode of events that constitute multiple torts.
Bowden 350 Md. at 35 (quoting
Montgomery Ward & Co. v. Cliser, 267 Md. 406, 425 (1972)). That is not the case here,
however; the jury’s verdict contemplated one single punitive damages amount for the entirety of
Defendants’ conduct. The eighth factor counsels in favor of a larger punitive damages award, as
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Al-Sabah certainly has incurred, and will continue to incur, more litigation expenses in collecting
on her monetary judgment. See id. at 36-37. Finally, the ninth factor (the ratio between the
compensatory and punitive damages awards) speaks to the reasonableness of the jury’s award, as
the punitive damages award is only approximately thirteen percent of the compensatory damages
award (a ratio of 1:7.6). See id. at 38-41; see also State Farm Mut. Auto. Ins. Co. v. Campbell,
538 U.S. 408, 425 (2003) (observing, in the context of a constitutional challenge to punitive
damages awards, that “few awards exceeding a single-digit ratio between punitive and
compensatory damages . . . will satisfy due process”).
2.
Factor Two: Defendants’ Ability to Pay
As previously alluded to, Defendants focus all of their attention on factor two. According
to Defendants, the only evidence adduced at trial showed that “Defendants had exhausted not
only all the funds that they received from the Plaintiff but also all alternative funding sources no
matter how dubious.” ECF 277 at 2. Thus, “in the absence of any such evidence of financial
ability [to pay,] the punitive damage[s] award was excessive” and would only work to “subject
the Defendants to financial ruin,” thereby entitling them to a remittitur of the award. Id. at 2-3.
Al-Sabah points to, inter alia, Agbodjogbe’s testimony about the continuing stream of “tens of
thousands of dollars” in net income from Nailah’s Kitchen each month, as evidence of
Defendants’ ability to pay. ECF 269 at 5. Defendants counter, however, that the restaurant was
not “fruitful to the degree [that] wo[uld] support a million dollar punitive damage award.” ECF
277 at 3.
Defendants are correct that punitive damages awards “should not be disproportionate to .
. . the defendant’s ability to pay.” Bowden, 350 Md. at 28 (alteration in original) (quoting Ellerin
v. Fairfax Sav., F.S.B., 337 Md. 216, 242 (1995)). This is because once “a punitive damages
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award consumes a defendant’s total wealth, it has ceased to serve the societal goal of
punishment.” Fraidin v. Weitzman, 93 Md. App. 168, 212 (1992). Accordingly, a defendant’s
ability to pay is “a limiting factor which must be considered by the . . . trial court upon its review
of the jury’s award.” Bowden, 350 Md. at 28 (quoting Fraidin, 93 Md. App. at 212-13).
In a later case, however, the Court of Appeals reiterated that the Bowden factors “are not
criteria that must be established but, rather, [are] guideposts to assist a court in reviewing an
award.” Darcars Motors, 379 Md. at 275. In fact, the Darcars Motors court explicitly held that
plaintiffs in Maryland have no affirmative burden to prove a defendant’s ability to pay punitive
damages. Darcars Motors, 379 Md. at 275; see also id. at 276-77 (collecting cases from other
jurisdictions that hold similarly). The court further explained the rationale behind this rule:
Compelling a plaintiff seeking punitive damages to present evidence of a
defendant's financial condition could, on the one hand, require a plaintiff with
limited financial resources to wage a complicated discovery campaign against a
monetarily sated defendant. On the other hand, it would license the plaintiff to
conduct extensive pre-trial discovery of the defendant's finances to support a
measure of damages that may never be awarded. Not only could the latter result
in a severe invasion of the defendant's privacy, but it could also unnecessarily cost
the defendant a great deal of time and money to compile all of its financial
information.
Moreover, placing a burden on plaintiff to introduce evidence of a defendant's
financial condition will enhance the risk that a jury will place undue emphasis on
the defendant's wealth. If that should occur, the jury may become more prone to
use information of a wealthy defendant's finances to justify an award of punitive
damages disproportionately higher than the gravity of the defendant's
wrongdoing.
Id. at 275-76.
This Court, and Maryland’s appellate courts, have considered punitive damages awards
in cases with minimal evidence regarding a defendant’s ability to pay. In Khalifa v. Shannon,
the plaintiff, Michael Shannon (“Shannon”), filed suit against his ex-wife, Nermeen Khalifa
Shannon and her mother, Afaf Nassar Khalifa (“the Khalifas”), and others, alleging that they
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tortiously interfered with his custody and visitation rights to the minor child he had with
Nermeen. 404 Md. at 111-12. The jury awarded Shannon $500,000 in compensatory damages,
as well as a total of $2 million in punitive damages: $900,000 against Afaf Nassar Khalifa, and
$1.1 million against Nermeen Khalifa Shannon. Id. at 113. On appeal, the Maryland Court of
Appeals rejected the Khalifas’ argument that the jury lacked insufficient evidence to justify the
awards of punitive damages against them. Id. at 144-45. The court explained that at trial,
Shannon provided “uncontroverted testimony” that the Khalifas had multiple residences across
the world (one of which, Shannon claimed, was valued at $3 million), as well as a number of
cars at each residence. Id. at 144. Though there was no evidence that the Khalifas actually had
title to those residences, the court reasoned that Maryland law did not require Shannon to prove
that the Khalifas owned those residences, or that the Khalifas could pay the awards altogether.
Id. at 145. This accords with the Court of Appeals’s earlier decision in Darcars Motors, in
which the court upheld a $25,000 punitive damages award against a car dealership, despite the
dealership’s failure to offer evidence as to its ability to pay during the punitive damages phase of
trial. See 379 Md. at 278.
The Maryland Court of Special Appeals has followed this directive in a number of cases,
upholding punitive damages verdicts despite minimal, or a total lack of, evidence regarding the
defendant’s ability to pay. See Harvey-Jones v. Coronel, 239 Md. App. 145, 158-60 (2018)
(affirming a $200,000 punitive damages verdict, despite defendant’s failure to offer evidence of
her ability to pay, because her failure to object to the plaintiff’s requests for admissions permitted
the court to infer that the defendant’s net worth was over $1 million, and because there was
evidence that during litigation, the defendant transferred a property worth $200,000); Merritt v.
Craig, 130 Md. App. 350, 372 (2000) (upholding a $150,000 punitive damages verdict against a
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defendant-school teacher, because the evidence showed that she owned a home and a partnership
interest in property in a resort area, though there was no evidence as to the value of that interest).
The only exception to this line of cases is Fraidin, in which the Court of Special Appeals vacated
a punitive damages award because the evidence demonstrated that it was crafted to mirror the
maximum approximation of the defendant’s net worth. See 93 Md. App. at 211-12. Such an
award, the court held, “ceased to serve the societal goal of punishment.” Id. at 212.
This Court has also previously addressed the issue on occasion. In Adams v. Morris, a
jury awarded two plaintiffs $75,000 each in punitive damages against the defendant employer,
T.L. Morris Seafood, Inc. (“TLM”), and its sole owner and operator, Morris. 706 F. Supp. 2d
632, 634, 636 (D. Md. 2010). Upon a Rule 59 motion, the Court rejected the defendants’
argument that the awards were disproportionate to their ability to pay. Id. at 639. The only
evidence offered was Morris’s 2008 tax returns, which showed his business income was $20,600.
Id. Because the defendants “offered no evidence as to the value of the business, Morris’s other
assets, or his ability to borrow,” the Court refused to alter the jury’s punitive damages award. Id.
Conversely, however, in litigation spawning out of a debtor’s bankruptcy proceedings, the
United States Bankruptcy Court for the District of Maryland awarded only nominal punitive
damages against the individual defendants (which included the debtor), despite their fraudulent
conduct calling for a much higher award, because the court would have been “surprised” if any
one of them made “any meaningful payment of compensatory damages.” In re Rood, 459 B.R.
at 609. The Bankruptcy Court found that fixing any sort of large punitive damages award would
have been “a useless act.” Id. at 609-10.
Most often, the issue of a defendant’s ability to pay punitive damages is presented in this
Court upon a plaintiff’s motion for default judgment. Even still, this Court has not hesitated to
16
issue even large sums of punitive damages upon such a limited record. See, e.g., Legacy Inv. &
Mgmt., LLC v. Susquehanna Bank, No. WDQ-12-2877, 2014 WL 5325757, at *10 (D. Md. Oct.
17, 2014) (awarding $300,000 in punitive damages, despite an absence of evidence from the
plaintiff regarding the defendant’s ability to pay); HBCU Pro Football, LLC v. New Vision
Sports Props., LLC, No. WDQ-10-467, 2011 WL 2038512, at *8 (D. Md. May 24, 2011)
(awarding $1 million in punitive damages, despite plaintiff offering no evidence as to the
defendant’s ability to pay).
To be sure, here, the jury did not wholly lack evidence regarding Defendants’ financial
status. Yet this case does not fall neatly in line with those previously decided by this Court, or
by Maryland’s appellate courts. Many of the cases previously decided involved much more
substantial, though technically unverified, evidence of the defendant’s ability to pay than what
Al-Sabah presented here. See Khalifa, 404 Md. at 144-45 (testimony regarding various luxury
residences in different countries); Darcars Motors, 379 Md. at 278 (involving a defendant-car
dealership); Merritt, 130 Md. App. at 372 (a teacher who owned a home and some partnership
interest in resort property).
Indeed, to some extent, the Court shares the same concerns as the Bankruptcy Court in In
re Rood that Defendants here may not make “any meaningful payment of compensatory
damages,” 459 B.R. at 609, because there is a potential that the holders of the mortgages on the
other commercial properties at issue may prevail on their claims of title to those properties.
Currently before this Court is a separate lawsuit initiated by Al-Sabah against those very
mortgage holders, and one of the central issues in that case is whether Al-Sabah, or those
mortgage holders, have a superior claim of title. See generally Complaint, Al-Sabah v. World
17
Bus. Lenders LLC, No. SAG-18-2958 (D. Md. Sept. 25, 2018), ECF 1 (“the Lender Lawsuit”).3
At the same time, the Court cannot excuse Defendants from their burden to prove that they
cannot pay a punitive damages award, even if the evidence Al-Sabah herself introduced
generates some skepticism. See Adams, 706 F. Supp. 2d at 639; see also, e.g., Darcars Motors,
379 Md. at 275 (“Our cases have never required clear and convincing evidence of a defendant’s
financial condition to support an award of punitive damages. . . .”). Indeed, the Court readily
recognizes that the jury was unaware of the pending Lender Lawsuit when considering its
punitive damages award, and the Court does not intimate one way or the other that such evidence
would have been admissible.
The fact remains, however, that Defendants could have had a bifurcated trial in this case
to litigate the issue of punitive damages more fully. Federal Rule of Civil Procedure 42(b)
provides that the Court “may order” the separate trial “of one or more separate issues,” which
includes the issue of punitive damages. But Defendants here never sought bifurcation of the
issue of punitive damages. Particularly apt, on this point, are the observations of the Second
Circuit in Smith v. Lightning Bolt Products, Inc., 861 F.2d 363 (2d Cir. 1988), which the
Maryland Court of Appeals positively cited in Darcars Motors, 379 Md. at 276. In Smith, the
Second Circuit addressed defendant Solerwitz’s challenge to a $500,000 punitive damages award
against him, arguing that there was insufficient evidence regarding his ability to pay. 861 F.2d at
373-74. The court rejected the challenge, explaining:
The incompleteness of the record as to Solerwitz's net worth is not a basis for
reducing the punitive damages award against him, for it is the defendant's burden
to show that his financial circumstances warrant a limitation of the award. . . .
3
Any discussion of the Lender Lawsuit herein shall not be construed as the Court looking
favorably, or unfavorably, upon the merits of any party’s claim in that case.
18
Th[e] procedure [for bifurcating trial on punitive damages] was not followed in
the present case, and the fault for that lies with the defendants. The trial court
was not required to order this bifurcation sua sponte. Yet defendants did not
move for a bifurcated submission of issues to the jury. The single set of special
verdict questions submitted to the jury included questions as to the amount of
punitive damages the jury believed appropriate; yet defendants did not protest that
the inclusion of these questions was premature. Nor did they request any other
procedure that would have preserved their ability to present timely evidence with
respect to their financial condition.
We conclude that Solerwitz . . . has failed to carry his burden of showing that the
award of $500,000 in punitive damages against him is disproportionate to his
wealth.
Id. (internal citations omitted) (emphasis added).
3. The Governing Maryland Law Requires a Remittitur in this Case
Returning to the punitive damages award at issue here, the jury’s clear intent was to
impose the highest award permissible under Maryland law. There is no miscarriage of justice in
the jury’s punitive damages award in this regard. Given that each relevant (and uncontested)
Bowden factor counsels in favor of a severe punitive damages award, the Court agrees that one is
warranted, especially given the egregiousness of Defendants’ conduct, and the need for general
deterrence.
Nonetheless, having considered the entire record, and the relevant case law, the Court
concludes that a remittitur of the punitive damages award in this case is required. Despite the
justifiable need for a severe punitive damages award, the Court finds that the jury’s punitive
damages award was intended to match or exceed the maximum valuation of Defendants’
remaining net worth, given the number of known encumbrances on the commercial properties.
See Fraidin, 93 Md. App. at 211-12. Maryland appellate courts – courts whose rulings are
binding on this Court – have expressly disallowed calculating punitive damages awards in this
manner. See id. Therefore, cases such as Adams, 706 F. Supp. 2d at 639, Khalifa, 404 Md. at
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144-45, Harvey-Jones, 239 Md. App. at 158-60, and Legacy Investment, 2014 WL 5325757, at
*10, are inapposite, because there was no indication in any of those cases that the jury, or court,
utilized a legally impermissible methodology in determining the amount of punitive damages.
Because upholding a punitive damages award that is premised upon a legally impermissible
methodology would result in a “miscarriage of justice,” Knussman, 272 F.3d at 639, the question
becomes the proper remittitur amount.
As discussed at the outset, the evidence showed that all but one of the Defendants’
commercial properties are mortgaged, the exception being the 400 North Howard Street
property, which is in such a dilapidated state that no company would accept it as collateral for a
mortgage. Further, Agbodjogbe has a previously-undisclosed bank account with MECU, but the
funds held therein are unknown. Agbodjogbe also acknowledged on the stand that he sent
$100,000 to a Senegalese company he created, and that some unspecified portion of those funds
still remain.
Nailah’s Kitchen continues to operate today, and according to Agbodjogbe,
generates “tens of thousands” of dollars in monthly gross revenue. Defendants presented no
evidence regarding the value of Nailah’s Kitchen, but its value certainly is relevant to
Defendants’ net worth. Nor did Agbodjogbe, or any other Defendant, present evidence to verify
Agbodjogbe’s repeated assertions that “every penny” Al-Sabah sent him “went into the
business,” leaving millions of dollars that Al-Sabah sent unaccounted for by a paper trail.
However, the evidence at trial did establish that a significant percentage of the funds sent by AlSabah were spent to purchase the properties themselves, making it highly unlikely that
Agbodjogbe has millions of dollars stashed away at his disposal.
Giving as much deference as possible to the jury’s approximation of Defendants’ wealth
based on these facts, an aspect of the punitive damages award process that is more appropriately
20
within the jury’s purview, see Atlas Foods, 99 F.3d at 594, the Court finds that an award of
$250,000 is appropriately tailored to the circumstances presented in this case. This figure serves
three purposes: it is designed to further the jury’s intent in awarding punitive damages; it
accounts for a valuation of Defendants’ net worth that is not against the clear weight of the
evidence; and it is an amount that is not designed to financially ruin Defendants. This figure is
also largely in accordance with those awarded in the many of the cases discussed above, which
awarded similar (or more severe) punitive damages, despite weak evidence of a defendant’s
ability to pay. See Legacy Inv., 2014 WL 5325757, at *10; HBCU Pro Football, 2011 WL
2038512, at *8; Khalifa, 404 Md. at 144-45; Harvey-Jones, 239 Md. App. at 158-60; Merritt;
130 Md. App. at 372. The Court is mindful that this amounts to a seventy-five percent reduction
in the jury’s punitive damages award. The Court does not take this result lightly. Were the
evidence sufficient to show that Defendants could pay $1 million in punitive damages without
going bankrupt, the Court would not hesitate to uphold the jury’s verdict.
The evidence, however, suggests otherwise. Defendants already must pay over $7.6
million in compensatory damages, and Al-Sabah “concedes that the Defendants have squandered
millions of dollars that they stole.” ECF 269 at 2. In fact, it may ultimately be the case that
Defendants cannot make even meaningful payments on the compensatory damages award. But
Defendants availed themselves of none of the available opportunities to demonstrate that they
cannot pay. Instead, Defendants relied exclusively on the testimony of Agbodjogbe. Based on
the jury’s findings, it is clear that they did not find his testimony credible. That strategic choice,
and the consequences flowing therefrom, rest with Defendants. The long line of cases discussed
above from Maryland’s appellate courts, and from courts in this District, make clear that
Defendants should not be rewarded a total remittitur, based upon their failure to present
21
sufficient evidence on their ability to pay punitive damages. However, the Court cannot, on the
current record, permit a punitive damages award that appears to have utilized a calculus
impermissible under Maryland law.
IV.
CONCLUSION
For the reasons set forth above, Defendants’ Motion for Remittitur, ECF 265, is
GRANTED, and the punitive damages award will be reduced to $250,000. Al-Sabah will have
until April 18, 2020, to advise whether she will accept the new award, or ask for a new jury trial
on the issue of punitive damages. A separate implementing Order is filed herewith.
Dated: March 19, 2020
/s/
Stephanie A. Gallagher
United States District Judge
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