Mo-Jack Distributor, LLC v. Tamarak Snacks, LLC
476 S.W.3d 900
Ky. Ct. App.2015Background
- Clark appeals after a jury found Cohen fraud and forgery and awarded $65,000 in compensatory and $95,000 in punitive damages.
- The only damages evidence was Cohen's legal defense expenses; trial barred testimony of hours billed, but evidence of attorney fees was admitted.
- The trial court instructed the jury that Cohen could be compensated up to $100,000 for damages caused by Clark’s forgery, based on defense costs.
- Kentucky follows the American Rule; attorney fees are generally not compensable damages absent a contract or statute, and are not ordinarily jury-triable.
- The court ultimately reverses the compensatory damages award and remands for nominal damages and a new trial on punitive damages; the oral contract claim instruction was not preserved for review.
- On remand, the court may consider attorney fees in light of whether punitive damages are inadequate to punish and deter Clark.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether compensatory damages based solely on attorney fees were proper | Cohen incurred defense costs due to Clark's fraud. | Attorney fees are not compensatory damages absent statutory/contractual provision. | Reversed; no proper evidentiary basis for compensatory damages; nominal damages on remand. |
| Whether the punitive damages award is constitutionally excessive given nominal compensatory damages | Punitive award should reflect egregious conduct and total damages. | Punitive award within Gore factors and statutory framework. | Remand for retrial on punitive damages; potential adjustment downward; ratio issue acknowledged but not dispositive. |
| Whether Clark preserved the claim of breach of an oral contract to warrant a jury instruction | Oral contract claim should have been instructed to the jury. | Oral contract instruction not properly preserved for review. | Not preserved for review; instruction issue deemed not palpable error. |
Key Cases Cited
- Gore v. BMW of N. Am., Inc., 517 U.S. 559 (Supreme Court 1996) (set Gore factors for excessiveness of punitive damages)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (Supreme Court 2003) (guides de novo review of punitive damages; Gore factors)
- Batson v. Clark, 980 S.W.2d 566 (Ky.App. 1998) (equitable exception to American Rule for attorney fees)
- Smith v. Bear, Inc., 419 S.W.3d 49 (Ky.App. 2013) (attorney fees discretionary; not typically triable by jury)
- Jackson v. Tullar, 285 S.W.3d 290 (Ky.App. 2007) (compensatory damages defined; attorn ey fees distinction)
- Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830 (Ky. 2005) (American Rule for attorney fees)
- Stoll Oil Refining Co. v. Pierce, 343 S.W.2d 810 (Ky. 1961) (nominal damages; recovery framework)
- Alexander v. S & M Motors, Inc., 28 S.W.3d 303 (Ky. 2000) (punitive damages vs. attorney fees relationship)
- Romanski v. Detroit Entm’t, L.L.C., 428 F.3d 629 (6th Cir. 2005) (ratio factor limited relevance when nominal damages awarded)
- Gibson v. Kentucky Farm Mut. Ins. Co., 328 S.W.3d 195 (Ky.App. 2010) (damages framework relevant to compensatory vs punitive)