Tina McPherson v. Suburban Ann Arbor, LLCTina McPherson v. Suburban Ann Arbor, LLC
OPINION AND ORDER DENYING PLAINTIFF‘S MOTION FOR ENHANCED DAMAGES, GRANTING PLAINTIFF‘S MOTION FOR PREJUDGMENT INTEREST, AND DENYING PLAINTIFF‘S MOTION FOR IMMEDIATE ENFORCEMENT OF JUDGMENT
A jury returned a verdict in favor of the plaintiff on her claims under the Fair Credit Reporting Act (FCRA), Equal Credit Opportunity Act (ECOA), Michigan Regulation of Collection Practices Act (MRCPA), Michigan Motor Vehicle Sales Finance Act (MMVSFA), and Michigan Credit Reform Act (MCRA), and for improper repossession under the Uniform Commercial Code (U.C.C.), and conversion of personal property. The jury awarded the plaintiff $15,000 in actual damages, answered a special interrogatory fixing the value of the converted property at $23,000, and also awarded the plaintiff $350,000 in punitive damages. The plaintiff now seeks to recover treble damages on the conversion claim, along with three times her actual damages for the violation of Michigan‘s Regulation of Collection Practices Act. She also asks the Court to award prejudgment interest at an unspecified rate and in an indeterminate sum, and she asks the Court to permit immediate enforcement of the judgment contrary to the usual 30-day stay of execution under
Enhanced damages are discretionary under Michigan law, and the Court believes that the punitive damage award serves the purpose of such an award. The Court, therefore, will deny the motion to treble the awards. If the defendant seeks remittitur of that aspect of the verdict, however, the Court will revisit that determination. The plaintiff is entitled to prejudgment interest from the date the complaint was filed on all claims. There is no good reason offered to depart from the 30-day stay of judgment enforcement under
I. Background
The plaintiff sued the defendant car dealership based on an alleged bait-and-switch
After the verdict was returned, the Court directed the plaintiff to file an appropriate motion stating her position on whether any part of the damage award should be multiplied. The plaintiff also filed a motion for an award of prejudgment interest, and a motion for leave to undertake execution of the judgment immediately upon entry, curtailing the usual stay of execution under
II. Enhanced Damages
At least two Michigan statutes permit the Court to multiply a jury damage award under certain circumstances. Under the MRCPA, the Court may order a defendant to pay a “civil fine of not less than 3 times the actual damages” if the Court finds that the defendant‘s conduct amounted to a “a willful violation” of the Act.
The plaintiff contends that the Court should treble the $15,000 actual damage verdict for her MRCPA claim and enhance the recovery for her statutory conversion claim by multiplying by three the value of the converted property, which the jury found to be $23,000. She reasons that (1) the defendant knew that it was violating the MRCPA and wrongfully converting the plaintiff‘s property, (2) as a licensed dealer in the heavily regulated market of auto sales, it had a “higher duty” to comply with applicable licensing provisions and regulations on motor vehicle sales, (3) the injury to the plaintiff was the product of an established practice of regulatory violations undertaken by the defendant to enrich itself, (4) the defendant‘s trial strategy was to advance a wholly unrepentant stance that it admittedly had violated the law, but that it was not culpable because it only later learned that what it was doing was illegal, (5) the defendant was warned about its illegal practices by Michigan regulatory authorities, (6) the plaintiff was not the only victim of the defendant‘s persistent abusive practices, and (7) the defendant‘s wrongful conduct persisted over months of unlawful attempts to persuade the plaintiff to renegotiate the purchase, and when it was given every opportunity to relent and right the wrong, it steadfastly refused to do so.
The defendant responds that (1) treble damages under the conversion statute generally are recognized by Michigan courts as a species of “punitive damages,” (2) in general under Michigan law a plaintiff must prove willful conduct by a defendant
Enhancing damages under these statutes is committed to the Court‘s discretion. The plaintiff acknowledges that premise for the conversion statute. And the cases make clear that “the trial court [is] entrusted with the discretion to treble — or not treble — the damages under
The plaintiff maintains, however, that trebling damages under the MRCPA is mandatory, despite the identical language used in each of the statutes. See
The plaintiff in this case already received an award of punitive damages that is more than 9.2 times the amount of her actual damages as determined by the jury. That multiplier, as the Supreme Court has held, is on the cusp of excessive punitive damage awards that may trench on due process concerns. In BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), the Court observed that punitive damages exceeding “single digit” multiples of an actual damage award may survive due process scrutiny only in the most exceptional cases. Id. at 582 (“[L]ow awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine.“); see also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (“Our jurisprudence and the principles it has now established demonstrate . . . that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.“); Kidis v. Reid, 976 F.3d 708, 715-16 (6th Cir. 2020) (“In more extreme cases, where many or all of the reprehensibility factors are satisfied, due process still constrains an ensuing punitive damages award. In those cases, a punitive damages award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. A higher ratio may be justified
Here, the jury awarded significant economic damages amounting to $38,000, so this is not the sort of case where merely nominal or trivial actual damages were assessed, resulting in a disproportionate multiplier with any significant award of punitive damages. On the other hand, the defendant‘s conduct in this case certainly justifies a damage award that exceeds actual damages for all the reasons punitive damages are permitted: “to punish the defendant for wrongful conduct and to deter others from similar conduct in the future.” Lindenberg v. Jackson Nat‘l Life Ins. Co., 912 F.3d 348, 362 (6th Cir. 2018) (citation omitted); see also Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 292 (1989) (“Damages are designed not only as a satisfaction to the injured person, but likewise as punishment to the guilty, to deter from any such proceeding for the future and as a proof of the detestation of the jury to the action itself.“) (quoting Wilkes v. Wood, Lofft. 1, 18-19, 98 Eng. Rep. 489, 498-499 (K.B. 1763)). The defendant here misrepresented the status of the finance contract, attempted to coerce the plaintiff into signing a different deal that contained terms that she deemed unfavorable to her (e.g., a mandatory arbitration clause), and then repossessed the vehicle that was titled in her name, all because the dealership wanted to avoid the legal consequence of carrying the finance paper, which is what the law required under those circumstances.
Nonetheless, the jury‘s punitive damage award vindicated those concerns. Trebling the actual damages is not necessary to achieve a just result. Moreover, in light of the clear due process concerns presented by a large punitive damage award skirting the outer boundary of single-digit multiples, and the absence of any additional features of the case that otherwise might justify an even more extreme multiplier, the proper exercise of discretion is to reject any further multiple damages.
At oral argument on the motion, defense counsel signaled her intention to file a remittitur motion addressing punitive damages. If such a motion is filed and granted, it may be appropriate to revisit the ruling on the motion to enhance damages. That determination, however, will await another day. For now, the motion to enhance the damages in the jury‘s verdict will be denied.
III. Prejudgment Interest
The plaintiff argues broadly that prejudgment interest is provided for by state law on several components of the damage award including compensatory and punitive damages. The defendant concedes that an award of prejudgment interest is required under Michigan state law as to the value of the property converted, and only from the date of filing of the complaint. However, it argues that the award of prejudgment interest on all of the other claims is left to the Court‘s discretion under applicable state and federal law, and the Court should decline the request for prejudgment interest based on the same equitable factors argued above in relation to the multiplication of damages.
“Prejudgment interest is a measure that ‘serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered, thereby achieving full compensation for the injury those damages are intended to redress.‘” Schneider v. Cnty. of San Diego, 285 F.3d 784, 789 (9th Cir. 2002) (quoting West Virginia v. United States, 479 U.S. 305, 311 n.2 (1987)). “The essential rationale for awarding prejudgment interest is to ensure that an injured party is fully compensated for its loss.” City of Milwaukee v. Cement Div., Nat. Gypsum Co., 515 U.S. 189, 195 (1995).
“The general rule is that in the absence of a statutory provision the award of prejudgment interest is in the discretion of the court.” Bricklayers’ Pension Tr. Fund v. Taiariol, 671 F.2d 988, 990 (6th Cir. 1982). “[T]he decision to award prejudgment interest ‘should be a function of (i) the need to fully compensate the wronged party for actual damages suffered, (ii) considerations of fairness and the relative equities of the award, (iii) the remedial purpose of the statute involved, [and] (iv) such other general principles as are deemed relevant by the court.‘” In re ClassicStar Mare Lease Litig., 727 F.3d 473, 495 (6th Cir. 2013) (quoting Wickham Contracting Co. v. Local Union No. 3, IBEW, AFL-CIO, 955 F.2d 831, 833-34 (2d Cir. 1992)).
In a federal diversity case, state law governs whether prejudgment interest should be awarded. Conte v. Gen. Housewares Corp., 215 F.3d 628, 633 (6th Cir. 2000). However, “[t]his circuit adheres to the rule that in an action based on federal question jurisdiction, the award of prejudgment interest is committed to the sound discretion of the trial court.” Young v. Langley, 840 F.2d 19, 1988 WL 12805, at *1 (6th Cir. 1988) (table decision) (citing E.E.O.C. v. Wooster Brush Co. Emps. Relief Assoc., 727 F.2d 566, 579 (6th Cir. 1984); Bricklayers’ Pension Tr. Fund v. Taiariol, 671 F.2d 988, 990 (6th Cir. 1982)). The Court exercised its federal question jurisdiction in this case, due to the pleading of claims under federal law including the Fair Debt Collection Practices Act.
The plaintiff is entitled to prejudgment on her state law claims, which include the value of the converted property, set by the jury at $23,000. See
The question remains how prejudgment interest should be calculated. “Because . . . the federal courts need not incorporate state law as the federal common law rule for the applicable prejudgment interest rate, . . . the determination of the prejudgment interest rate [is] within the sound discretion of the district court.” Ford v. Uniroyal Pension Plan, 154 F.3d 613, 619 (6th Cir. 1998). “Although a district court may look to state law for guidance in determining the appropriate prejudgment interest rate, we have held previously that the statutory postjudgment
The plaintiff agrees that interest should run from the date of filing the complaint on all the claims except the conversion claim. For that, she contends that interest should be calculated from the date the property was converted.
“In a conversion action, interest from the date of conversion to the date of entry of judgment is to be included in the damages calculation.” Newberry State Bank v. N. Microsystems, Inc., No. 193110, 1998 WL 1991634, at *3 (Mich. Ct. App. June 2, 1998) (citing Holcomb v. Bullock, 353 Mich. 514, 525, 91 N.W.2d 869, 874 (1958)). However, “[t]he concept of common-law interest as an element of damages is distinct from an award of statutory prejudgment interest.” Ibid. (citing
The parties each submitted supplemental filings with their interest calculations under various methods. There is a slight difference between the two amounts. The Court believes that the defendant‘s calculation is accurate. The Court will award prejudgment interest on the $23,000 conversion award of $3,894.11, and on the $15,000 compensatory award for the rest of the claims of $2,539.64.
IV. Immediate Execution
The defendant responds that the plaintiff has presented no evidence supporting the unfounded claim that it has dissipated or is in the process of dissipating assets, and in cases of similar accusations district
“[T]he Federal Rules of Civil Procedure generally stay the execution or enforcement of a district court judgment for only 30 days after its entry.
As the defendant points out correctly, the plaintiff has presented no evidence of any allegedly fraudulent disposition of assets by the defendant either previously or presently. The motion does not incorporate any offer of proof, nor is it accompanied by any affidavit testimony or documentary evidence demonstrating that the defendant unlawfully has sequestered any assets beyond the reach of the plaintiff‘s recovery. In the absence of such evidence, and particularly where the plaintiff has adequate legal process at hand to vindicate her interests as a judgment creditor, courts have declined requests to dissolve the automatic stay. E.g., Deutsche Bank Nat‘l Tr. Co. v. Cornish, 759 F. App‘x 503, 505 (7th Cir. 2019) (“The lender in this case has not shown . . . that there is such a risk [of asset dissipation] here, as might be the case if insurance or property taxes were not paid or if the property were abandoned or being neglected. The [appellee] has the security it bargained for, and the appeal should proceed in the ordinary course.“).
Shortly before trial, the Court denied a request to adjourn the trial and for a pre-judgment levy of assets, which was motivated by the same concerns about collectability. The same grounds for the denial of that motion apply with equal force now:
[T]he plaintiff‘s rights to recover any assets allegedly wrongfully transferred adequately are protected by operation of law. Under the Michigan Uniform Voidable Transactions Act (MUVTA),
Mich. Comp. Laws § 566.31 et. seq., property transfers are voidable when made “(a) with actual intent to hinder, delay, or defraud any creditor of the debtor” or “(b) without receiving a reasonably equivalent value in exchange for the transfer or obligation” and the creditor “(ii) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor‘s ability to pay as they became due.”Mich. Comp. Laws § 566.34(1)(a)-(b)(ii) . The MUVTA defines a debtor as a “person liable on a claim.”Mich. Comp. Laws § 566.31(f) . Similarly, a creditor is a “person that has a claim.”Id. § 566.31(d) . A claim is “a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”Id. § 566.31(c) . If, as the plaintiff contends, the defendant acted in derogation of her rights as a judgment creditor, she may take appropriate action under the law to enforce those rights.
[Additionally], the defendant is (or was) organized as a limited liability company (LLC) in the State of Michigan, and its operations therefore are governed by the state‘s Limited Liability Company Act, Mich. Comp. Laws § 450.4101 et seq. That statute prohibits an LLC from making any distributions to members that would render it insolvent. SeeMich. Comp. Laws § 450.4307(1) . The statute further provides that a member of a limited-liability company who assents to or receives a distribution in violation ofMich. Comp. Laws § 450.4307 is “personally liable, jointly and severally, to the limited liability company for the amount of the distribution.”Mich. Comp. Laws § 450.4308 . If the defendant‘s principal acted contrary to the law to contrive the defendant‘s insolvency and frustrate the satisfaction of any judgment that the plaintiff obtains, then she may pursue appropriate legal remedies to claw back any allegedly wrongful distributions.
Order Denying Plf.‘s Motion for Injunctive Relief, ECF No. 141, PageID.3009-10. The same remedies that the Court recognized as available then remain available to the plaintiff if and when legal grounds may arise to pursue them.
The plaintiff has not put forth any evidence to substantiate her espoused concerns about the defendant‘s dissipation of assets, and she has adequate legal remedies to protect her interests and to recover any allegedly fraudulently conveyed property that should be applied to pay her judgment. The motion prospectively to dissolve the automatic stay of the judgment under
V. Conclusion
The Court does not find an adequate basis to enhance the compensatory damages awarded by the jury in this case. The plaintiff is entitled to prejudgment interest on the compensatory awards to run from the date of filing the complaint in this case. The Court does not find an adequate basis to prematurely dissolve the automatic stay of judgment enforcement established by
Accordingly, it is ORDERED that the plaintiff‘s motion to enhance damages (ECF No. 155) is DENIED.
It is further ORDERED that the plaintiff‘s motion for prejudgment interest (ECF No. 163) is GRANTED. The plaintiff may recover prejudgment interest on the $23,000 conversion award in the amount of $3,894.11, and on the $15,000 compensatory award for the rest of the claims in the amount of $2,539.64. No prejudgment interest will be awarded on the punitive damage award of $350,000. Judgment will enter for the plaintiff in the amount of $394,433.75.
It is further ORDERED that the plaintiff‘s motion for immediate enforcement of the judgment (ECF No. 164) is DENIED.
Dated: February 28, 2024
s/David M. Lawson
DAVID M. LAWSON
United States District Judge