Abrahamson et al v. Jones et al

Filing 77

ORDER GRANTING PLAINTIFFS' MOTION FOR PUNITIVE DAMAGES (Doc. 53 ). Signed by Judge Timothy S. Black on 1/13/2017. (mr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
RICHARD ABRAHAMSON, et al.

Case No. 1:16-cv-712

Plaintiffs,

Judge Timothy S. Black

vs.
BRIAN D. JONES, et al.
Defendant.
ORDER GRANTING PLAINTIFFS’
MOTION FOR PUNITIVE DAMAGES (Doc. 53)
This case is before the Court regarding Plaintiffs’ motion for punitive damages
filed December 8, 2016. (Doc. 53). Defendants did not file a response.
I.

INTRODUCTION

Plaintiffs originally filed this case on June 29, 2016. (Doc. 1). Plaintiffs alleged
in the Complaint that Defendants had engaged them in a fraudulent business enterprise
where Plaintiffs paid Defendants large upfront cash payments in return for promised
regular payments that were not fully realized. (Id. at 2–9). Furthermore, Plaintiffs
alleged that Defendants went to extreme lengths to disguise their fraud, including forging
bank documents to convince Plaintiffs that Defendants possessed the necessary funds to
fulfil their obligations. (Id. at 6–9). Following the Court’s issuance of a Temporary
Restraining Order (Doc. 9), and after several months where Defendants failed to
participate in the litigation, the Court awarded a Default Judgment in favor of Plaintiffs
for $335,000 in compensatory damages. (Doc. 19).

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On December 8, 2016, Plaintiffs filed the present motion for punitive damages,
seeking attorneys’ fees as well as additional punitive damages. (Doc. 53).
II.

STANDARD OF REVIEW

When a federal court is sitting in diversity, it generally applies the substantive law
of the forum state where the case is being tried. This includes the law governing an
entitlement to damages, including punitive damages. Accordingly, federal courts sitting
in diversity apply the law of the forum state to determine whether punitive damages are
recoverable and, if so, what legal standard applies to determine if punitive damages are
appropriate in a given case. See, e.g., Lawson v. Dutch Heritage Farms, Inc., 502 F.
Supp. 2d 698 (N.D. Ohio 2007) (applying Ohio law to determine whether punitive
damages can be recovered); Cooley v. Lincoln Elec. Co., 776 F. Supp. 2d 511 (N.D. Ohio
2011) (applying the substantive law of the state where the cause of action arose to
determine whether punitive damages can be recovered). Therefore, Ohio law governs
whether the Plaintiff can recover punitive damages in this case.
The standard for recovering punitive damages under Ohio law is governed by
statute. Under the Ohio Revised Code, punitive damages are appropriate when (1) the
actions of the defendant demonstrate malice or aggravated/egregious fraud and (2) the
trier of fact has determined that a compensatory damage award is also appropriate.
Barnes v. Univ. Hosps. of Cleveland, 2008-Ohio-3344, 893 N.E.2d 142 (citing O.R.C.
§ 2315.21(c)). Fraud is “aggravated” if it is accompanied by the existence of malice or ill
will. Fraud is “egregious” if the fraudulent wrongdoing is particularly gross. See
Charles R. Combs Trucking, Inc. v. Int’l Harvester Co., 466 N.E.2d 883, 888 (Ohio
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1984)). Punitive damages may be awarded against the defendant as a punishment to
discourage others from committing similar wrongful acts. See id.
III.

ANALYSIS

The first factor required for the Court to award punitive damages is that the actions
of the defendants must demonstrate malice or aggravated/egregious fraud. That factor
has been established in this case. Defendants entered into a fraudulent business
arrangement with Plaintiffs where Defendants promised to pay Plaintiffs a discrete sum
on a regular basis. Defendants not only failed to make the promised payments, they also
attempted to buy time to continue their scheme by executing fraudulent “promissory
notes” and “deposit slips” to falsely assure Plaintiffs that their promised payments were
forthcoming. (Doc. 1, at 6–9). These actions demonstrate clear fraudulent intent; an
award of punitive damages is therefore appropriate.
The second factor required for the Court to award punitive damages is that the trier
of fact must have determined that a compensatory damage award was also appropriate.
That has happened in this case. The Court entered a Default Judgment in favor of
Plaintiffs on October 12, 2016, awarding them $335,000 plus interest. All Defendants
are jointly and severally liable for that award.
Plaintiffs’ motion for punitive damages “defer[s] to the Court to exercise its
reasonable discretion of the proper amount of punitive damages that should be awarded.”
Plaintiffs assert through their motion that they have paid $41,142 in attorneys’ fees to this
point in the litigation. The Court sees fit to order Defendants to reimburse those fees as
the time incurred and the applicable hourly rates are reasonable. Additional punitive
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damages are also warranted based on Defendants’ outrageous behavior. After reviewing
other judgments against these Defendants in related cases, see, e.g., Assen v. Jones et al.,
S.D. Ohio Case No. 2:15-cv-2892, ECF Doc. No. 45 (S.D. Ohio Jan. 4, 2017), the Court
determines that $90,000 in additional punitive damages is sufficient to punish Defendants
and deter others from engaging in similar behavior. 1
IV.

CONCLUSION

Accordingly, for the reasons outlined above:
1) Plaintiffs’ motion for punitive damages (Doc. 53) is GRANTED;
2) Plaintiffs are awarded $41,142 in attorneys’ fees and $90,000 in additional
punitive damages for a total of $131,142 in punitive damages. Defendants are
jointly and severally liable for this award.
3) The Clerk shall enter a judgment in accordance with this Order.
IT IS SO ORDERED.
1/13/17
Date: ______________

_______________________
Timothy S. Black
United States District Judge

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In Assen, the court awarded a judgment in favor of the plaintiff and against Defendant Jones for
compensatory damages of $326,375. Assen, S.D. Ohio Case No. 2:15-cv-2892, ECF Doc. No.
45, at 9 (S.D. Ohio Jan. 4, 2017). The court then levied punitive damages of $87,755 against
Jones: this represented the value of actual damages suffered from the most recent instance of
fraud in Defendant’s scheme in that case. Id. The Court finds that the punitive damages award
in Assen was appropriately balanced. Plaintiff’s compensatory damages in this case are nearly
identical to the compensatory damages awarded to the plaintiff in Assen—$335,000 vs.
$326,375. Accordingly, the Court finds it appropriate that the punitive damages levied here be
similarly proportional to those levied in Assen—in this case, $90,000 vs. Assen’s $87,755.
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