Opinion
No. C6-01-1572
Filed June 4, 2002.
Appeal from the District Court, Clay County, File No. C600196.
Steven J. Cahill, (for appellants)
Paul A. Sortland, (for respondents)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In this land dispute, the trial court awarded respondents $819 in rental value for disputed land on which appellants trespassed, and the jury awarded $50,000 in punitive damages. Appellants argue that the trial court erred in sustaining the jury's punitive-damages award because there was insufficient evidence to show that appellants deliberately disregarded respondents' rights. Alternatively, appellants argue that the punitive-damages award must be significantly reduced. Respondents, pursuant to their notice of review, argue that the court erred by awarding them the property's rental value rather than lost profits. Because there was sufficient evidence in the record to show that appellants deliberately disregarded respondents' rights and because the court correctly determined that respondents' actual damages were limited to the reasonable rental value of the land, we affirm.
FACTS
In 1996, respondents Lee and Arlene Garner purchased a 32-acre tract of land in Spring Prairie Township. In 1998, appellants Brantner Farms and Charles Brantner, owner of Brantner Farms, purchased a 310-acre tract of land that abuts respondents' property on the west and north. When Brantner purchased his land, he believed that his land included the disputed 6.5 acre tract, an irregular piece of land that lies between the parties' properties. Brantner admitted that he did not read the legal description of his property but believed that he owned the property because (1) the previous owner said that the tract was part of the property he was purchasing; (2) government maps showed that the disputed land was included in the previous owner's land; (3) there was no fence or markers indicating the tract was separate from his land; and (4) there were remnants of an old fence between his property and the adjoining property.
In approximately 1997, Lee Garner became interested in growing echinacea on the disputed tract. In preparation for planting echinacea, Garner researched the crop, tested the soil, surveyed the property, purchased equipment for cultivating echinacea, and had his neighbor disk the property to kill off weeds and grass. Following the disking, Brantner told Garner that he owned the property and threatened to have Garner arrested and his equipment confiscated if Garner continued to trespass on the land. Garner explained that he owned the property and that he had it surveyed. Because Brantner is a county commissioner, Garner believed his threats had credibility and stayed off the property until he could have it surveyed again.
Despite being told by Garner and his surveyor that the property did not belong to him, Brantner still believed that he owned the property and reseeded the tract. Garner claims that this trespass destroyed two years of echinacea crop because Brantner planted grass and other seeds that corrupted the land making it extremely difficult to grow echinacea.
In January 2000, Brantner Farms filed a complaint seeking a judgment of ownership of the disputed tract based on adverse possession or boundary by practical location. Respondents counterclaimed alleging trespass and invasion of privacy and joined Charles Brantner as a party. In March 2000, appellants filed an amended complaint to include a trespass claim against respondents on land adjacent to the disputed property. Respondents moved to amend their counterclaim to include punitive damages.
Appellants voluntarily dismissed these claims before trial after learning that respondents did own the land and that there was not enough evidence to support either claim.
In February 2001, the trial court denied respondents' motion to include punitive damages. In March 2001, the court granted appellants' partial summary-judgment motion dismissing respondents' invasion-of-privacy claim and denied respondents' motion to reconsider punitive damages. But after the supreme court determined that punitive damages are recoverable for injury to property in Jensen v. Walsh, 623 N.W.2d 247, 251 (Minn. 2001), the court vacated its previous order and granted respondents' motion to include punitive damages. In May 2001, the court concluded that respondents' $300,000 loss-of-profit claim for the two years Garner was prevented from growing echinacea was too speculative. The court determined that the proper measure of damages was the reasonable rental value of the land.
At trial, Garner testified that he believed Brantner's trespass was motivated by ill will. Garner claimed that Brantner was retaliating because Garner opposed Brantner's proposal to donate part of his property to a public park in his son's honor. On May 17, 2001, the jury answered a special verdict form in the following manner:
1. By clear and convincing evidence, do you find that Charles Brantner acted with deliberate disregard for the rights of Lee and/or Arlene Garner?
Answer: Yes.
2. If your answer to Question 1 was "Yes," then answer this question:
What amount of punitive damages will serve to punish Charles Brantner, and/or Brantner Farms, Inc., and discourage others from behaving in a similar way?
Answer: $50,000.
The trial court awarded respondents $819 in compensatory damages, the reasonable rental value of the land. On July 30, 2001, the court denied both parties' JNOV motions. This appeal followed.
DECISION
Appellate courts review the denial of a motion for judgment notwithstanding the verdict de novo. Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998). A trial court's denial of a JNOV motion "must be affirmed, if, in the record, there is any competent evidence reasonably tending to sustain the verdict." Id. (quotation omitted). "Unless the evidence is practically conclusive against the verdict, this court will not set the verdict aside." Id. (quotation omitted).
I.
Appellants argue that the punitive-damages award is unsupported by the evidence and contrary to law. Appellate courts review de novo whether punitive damages are available for intentional damage to property, where the only damage is to property. Jensen v. Walsh, 623 N.W.2d 247, 249 (Minn. 2001).
Minnesota law provides that punitive damages are allowed in civil actions upon clear and convincing evidence that the defendant's acts show deliberate disregard for the rights or safety of others. Minn. Stat. § 549.20, subd. 1(a) (2000). A defendant acts with deliberate disregard for the rights or safety of others if the defendant acts intentionally in disregard of facts that create a high probability of injury to the rights or safety of others. Id., subd. 1(b)(1), (2) (2000).
Appellants first contend that the trial court failed to apply the clear-and-convincing standard in its review of the jury's punitive-damages determination. Specifically, appellants argue that (1) there was no clear-and-convincing evidence presented at trial to demonstrate that Brantner's trespass was based on his ill will toward Garner and (2) there was clear-and-convincing evidence that Brantner had a good-faith belief that he owned the property and was relying on his attorney's advice when he reseeded the tract to comply with his CRP contract. The court properly instructed the jury on (a) the clear-and-convincing standard for punitive damages, (b) the good-faith defense to trespass to land, and (c) the good-faith defense when relying on an attorney's advice. And in denying appellants' JNOV motion, the trial court found that there was sufficient evidence to sustain the jury's finding that punitive damages were warranted, including evidence that Brantner's trespass was motivated by ill will against respondents and that Brantner trespassed despite respondents' claims that they had legal title to the disputed property. Although the trial court did not use the clear-and-convincing language in its memorandum, it appropriately viewed the evidence in a light most favorable to the special jury verdict and found sufficient evidence to sustain the jury's finding. See Hanks v. Hubbard Broad., Inc., 493 N.W.2d 302, 309 (Minn.App. 1992) (stating that appellate courts must view the evidence in a light most favorable to the jury verdict and should not disturb the verdict if the jury's special-verdict finding can be reconciled on any reasonable theory), review denied (Minn. Feb. 12, 1993).
USDA Conservative Reserve program where landowner contracts with the government to receive annual payments in exchange for maintaining the land.
Appellants attempt to undermine the jury's finding by arguing that there was insufficient evidence to support a punitive-damages award. But it is well-settled that judging the credibility of witnesses and the weight given to their testimony rests within the province of the fact-finder. Fontaine v. Hoffman, 359 N.W.2d 692, 694 (Minn.App. 1984). Appellants argue that, because one could infer from the evidence that Brantner acted with ill will and in disregard of respondents' rights and that Brantner acted with a good-faith belief that he owned the property, neither hypothesis is proven. The fact, however, that a party offers a plausible alternative explanation of what occurred does not compel the trier of fact to accept his or her explanation. See Varner v. Varner, 400 N.W.2d 117, 121 (Minn.App. 1987) (stating that the fact-finder is not required to believe even uncontradicted testimony if there are reasonable grounds to doubt its credibility). Because appellants merely disagree with the jury's credibility determinations, their arguments fail.
Appellants next argue that recent changes in punitive-damages law made it improper for the trial court to defer to the jury's determination that punitive damages were appropriate. Although appellants do not articulate what standard of review the court should have applied, they argue that the review cannot merely be whether there was sufficient evidence to support the punitive-damages award. Appellants refer to recent federal court decisions that found due process violations in "grossly excessive" punitive-damages awards. Cooper Indus. v. Leatherman Tool Group, Inc., 532 U.S. 424, 121 S.Ct. 1678 (2001); BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996); In re Exxon Valdez, 270 F.3d 1215 (9th Cir. 2001). The Supreme Court specifically held that appellate courts should review determinations of the constitutionality of punitive-damages awards de novo, but when no constitutional issue is raised, the review is abuse of discretion. Cooper, 532 U.S. at 433, 436, 121 S.Ct. at 1684-86. Here, because appellants only argue that the court improperly deferred to the jury's determination that punitive damages were appropriate and do not challenge the constitutionality of the award, the trial court's deference to the jury was appropriate.
Appellants also present a separate challenge to the constitutionality of the award addressed in the next section, but this challenge is based solely on the amount of the award and not on the standard of review the court applied in determining whether the amount was "grossly excessive."
Appellants also argue that punitive damages are not appropriate here because the supreme court in Jensen limited punitive damages to "intentional" damage to property. The purpose of punitive damages is to punish the perpetrator, deter repeat behavior, and deter others from engaging in similar behavior. Jensen, 623 N.W.2d at 251. In determining whether punitive damages should be allowed, the focus is on the wrongdoer's conduct rather than the type of damage that results from the conduct. Id. A party may seek "punitive damages in an action for intentional damage to property where the only damage is to property." Id.
Appellants argue that because Brantner did not "intend" to harm respondents' property by reseeding it, punitive damages are not appropriate. Again, the jury was instructed that, to find that punitive damages apply, they must find that Brantner acted with deliberate disregard for the rights or safety of respondents, not that Brantner intended to harm respondents' property. The jury could have based its finding that Brantner intentionally disregarded facts that proved he did not own the property on the following evidence: (a) Brantner was informed by Garner and Garner's surveyor that he did not own the property, (b) Brantner's deed did not include the property, and (c) the plat map did not show this tract as part of Brantner's property. Although Brantner contends that he only intended to reseed the property, the jury found that his actions intentionally disregarded respondents' rights to their property. This is sufficient under Jensen to allow punitive damages.
Appellants further argue that, because the supreme court implied in Jensen that punitive damages should be allowed only in the most egregious cases, punitive damages are not warranted here because Brantner's damage was not serious. The supreme court, however, concluded that in addressing punitive damages, the correct focus is on the wrongdoer's conduct and not on the type of damage that results from the conduct. Id. at 251. Here, the jury determined that Brantner's conduct demonstrated a deliberate disregard for respondents' rights to their property and this finding justifies a punitive-damages award. The facts, viewed in the light most favorable to the jury's verdict, demonstrate an intentional violation of respondents' property rights.
Appellants also contend that Skelton v. Doble, 347 N.W.2d 81 (Minn.App. 1984), review denied (Minn. July 26, 1984), should determine the outcome of this case. But the plaintiffs in Skelton retained the disputed property under a good-faith belief of colorable title. Id. at 82. Skelton did not contain any reference to personal animosity between the parties separate from the disputed property or refer to any evidence discrediting the good-faith defense. Here, the court concluded that there was some evidence that demonstrated Brantner's trespass was motivated by ill will resulting from respondent Garner's strong opposition to Brantner's proposal to donate part of his land to a public park in his son's honor. The jury did not find Brantner's good-faith defense credible. This finding may have stemmed from Brantner's ill will toward respondents or from Brantner's trespass despite his knowledge of the survey, the plat map, and the legal description of his property that demonstrated that he did not own the land. Because there is evidence to support the jury's punitive-damages award, Skelton does not control here.
Appellants finally argue that this court should impose the three-prong analysis used in disparate treatment cases to determine whether punitive damages are appropriate here. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824 (1973) (stating that a plaintiff first must establish a prima facie case of disparate treatment based on a discriminatory factor; if plaintiff establishes a prima facie case, the burden shifts to the defendant to articulate a legitimate reason for the action; and then burden shifts back to plaintiff to demonstrate this legitimate reason was pretextual). Appellants fail to cite any caselaw that has used this method for determining the availability of punitive damages and are attempting to extend the law on punitive damages. "[T]he task of extending existing law falls to the supreme court or the legislature, but it does not fall to this court." Terault v. Palmer, 413 N.W.2d 283, 286 (Minn.App. 1987), review denied (Minn. Dec. 18, 1987). Furthermore, even if appellants are not trying to change the law, they fail to provide a valid reason why a new analysis should apply to the propriety of a punitive-damages award on appeal.
II.
Appellants alternatively argue that, if the punitive-damages award stands, the amount must be significantly reduced because it is "grossly excessive" under both Minnesota law and a due-process analysis.
A. Minnesota Law
Determining the amount of a punitive-damages award lies within the exclusive province of the fact-finder and the decision will not be disturbed on appeal unless the amount is so excessive that it is unreasonable. Jensen v. Hercules, Inc., 524 N.W.2d 748, (Minn.App. 1994), review denied (Minn. Apr. 28, 1995). The district court must review the punitive-damages award and make specific findings on the seriousness, profitability, and duration of the misconduct, and on the party's awareness of the excessiveness and hazards of his misconduct. Minn. Stat. § 549.20, subds. 3, 5 (2000); see also Molenaar v. United Cattle Co., 553 N.W.2d 424, 430 (Minn.App. 1996) (remanding for district court findings required by Minn. Stat. § 549.20, subd. 5, even though appellate court reinstated the jury's determination that punitive damages were appropriate), review denied (Minn. Oct. 15, 1996).
Here, the trial court made specific findings pursuant to Minn. Stat. § 549.20, subd. 5, and concluded that the $50,000 punitive-damages award was not grossly excessive. As to the seriousness of the hazard, the court found Brantner's trespass substantial because it constituted an intentional disregard for respondents' right to the free use and enjoyment of their property. As to the profitability of Brantner's conduct, the court found that Brantner did not significantly profit from his trespass. As to the duration of the trespass, the court found that Brantner trespassed four separate times by reseeding the property. As to the degree of Brantner's awareness of the hazard he caused, the court found that before his trespass, he was aware of facts that showed that he did not own the land. As to the financial condition of Brantner, the court found that he owned real property valued in excess of $200,000. And as to the effect of other likely punishment imposed, the court found that Brantner has never been charged with criminal trespass, has never paid any other penalties or fines, and that it is unlikely that Brantner will receive any other punishment for his trespass. The trial court made sufficient findings under the statute because it reviewed the award in light of all the relevant factors. Furthermore, appellants do not challenge any of these findings or argue that the court failed to make appropriate findings under the statute; they merely argue that the award was excessive under Minnesota law.
B. Due Process
Appellate courts review a trial court's determination of the constitutionality of a punitive-damages award de novo. Cooper, 532 U.S. at 436, 121 S.Ct. at 1685-86. The constitutionality of punitive damages is reviewed under the Due Process Clause to determine if they are "grossly excessive." BMW, 517 U.S. at 562, 116 S.Ct. at 1592. In BMW, the Supreme Court considered three guideposts to determine if punitive damages were grossly excessive: (1) the degree of reprehensibility of the parties' actions, (2) the ratio between the actual harm inflicted and the punitive damages, and (3) the difference between the punitive damages and the civil penalties authorized or imposed in comparable cases. Id. at 574-75, 116 S.Ct. at 1598-99.
Here, the trial court found that the jury's punitive-damages award was not grossly excessive because the amount was necessary to punish appellants and to deter future similar conduct. Moreover, the court reasoned that the jury could have viewed appellants' trespass as a violation of respondents' free use and enjoyment of their property and that respondents could have lost their land if they had succumbed to Brantner's trespass.
1. Degree of reprehensibility
The degree of reprehensibility is "[p]erhaps the most important indicium of the reasonableness of a punitive damages award." Id. at 575, 116 S.Ct. at 1599. It is also indicative of the constitutionally permissible size of the award; the higher the degree of reprehensibility, the higher the award. Id. Therefore, the degree of reprehensibility should be roughly proportional to the gravity of the offense. Id.
Appellants argue that Brantner's trespass was not harmful because "there is nothing inherently malicious or harmful about planting grass seed on agricultural land." Appellants again fail to recognize that the reprehensibility of Brantner's conduct is not based on the damage he caused, but rather on his disregard and infringement of respondents' ownership rights.
2. Ratio between actual harm and punitive damages
There must be a "reasonable relationship" between the actual harm caused and the punitive-damages award. BMW, 517 U.S. at 580, 116 S.Ct. at 1601. The Supreme Court has consistently rejected the notion that the constitutional line is marked by a simple mathematical formula, even one that compares actual and potential damages to the punitive award.
Id. at 582, 116 S.Ct. at 1602 (citation omitted).
Appellants next argue that, because the punitive-damages award of $50,000 is 61 times the amount of the $819 compensatory award, there is no reasonable relationship between the actual harm caused and the punitive-damages award. Although courts have observed that the punitive-damages award must bear a reasonable relationship to the injury, such an argument fails when there is a small compensatory award.
A proportional rule need not apply to a small compensatory-damage award because it would negate the purpose of deterring the defendant from engaging in the same reprehensible conduct in the future. See TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 459-62, 113 S.Ct. 2711, 2721-22 (1993) (stating that the reasonable relationship between actual harm and punitive damages is only one of several factors that must be examined to determine the appropriateness of the award and it is not controlling in every case); see also Edwards v. Jewish Hosp. of St. Louis, 855 F.2d 1345, 1352 (8th Cir. 1988) (holding that to apply the proportionality rule to a nominal-damages award would invalidate most punitive-damages awards because only very low punitive-damages awards would bear a reasonable relationship to the amount of a nominal-damages award). Appellants' proposed four-to-one proportionality rule would reduce the punitive-damages award to $3,276, an amount that would not significantly deter appellants from engaging in similar conduct.
3. Comparable penalties for the misconduct
A reviewing court that must determine whether a punitive-damages award is excessive should "accord `substantial deference' to legislative judgments concerning appropriate sanctions for the conduct at issue." BMW, 517 U.S. at 583, 116 S.Ct. at 1603 (citation omitted).
Finally, appellants argue that the punitive-damages award is excessive compared to the comparable crime and penalty here. Criminal trespass is a misdemeanor punishable by a sentence of not more than 90 days or a fine of not more than $1,000, or both. Minn. Stat. § 609.605, subd. 1 (2000) (criminal trespass statute); Minn. Stat. § 609.02, subd. 3 (2000) (defining the penalty for a misdemeanor). Here, the trial court noted that appellant had not been charged with criminal trespass but did not compare the penalty for a criminal trespass with the punitive-damages award. Although the comparable criminal penalty is less than the punitive damages amount, the $1,000 fine is not sufficient to deter appellants' behavior in the future. Appellants failed to demonstrate that under the Supreme Court's three guideposts, the jury's punitive-damages award is "grossly excessive" and unconstitutional under the Due Process Clause.
III.
Respondents argue that the court improperly determined that the damages for Brantner's trespass was the reasonable rental value of the property. The amount and extent of damages is ordinarily a question of fact, but whether the trial court's theory of valuation of damages is speculative or erroneous is a question of law. Snyder v. City of Minneapolis, 441 N.W.2d 781, 789 (Minn. 1989). The proper measure of damages for continuing trespass to land is the reasonable rental value of the land during the period of the trespass or the diminution of the rental value of the land until the time of trial. Id. (diminution of the rental value); Kortsan v. Poor Richards, Inc., 290 Minn. 339, 341, 188 N.W.2d 415, 417 (1971) (reasonable rental value). The measure of damages for destruction or injury to growing crops is the value of the crops as they were standing at the time and place of their destruction. Poynter v. County of Otter Tail, 223 Minn. 121, 132, 25 N.W.2d 708, 715 (1947). If it is impracticable to show the value of growing crops, diminution in the rental value of the land due to the injury is the proper measure of damages. Larson v. Lammers, 81 Minn. 239, 241, 83 N.W. 981, 981 (1900).
It is undisputed that at the time of Brantner's trespass respondents had not yet seeded or begun growing echinacea on the disputed property. Therefore, there was no destruction or injury to crops involved in this case. As the court concluded, unless there is a separate and independent tort, general damages are not recoverable for trespass to land. The court properly awarded $819 in compensatory damages, an amount that the parties stipulated was the reasonable rental value of the land.
Respondents argue, based on Poppen v. Wadleigh, 235 Minn. 400, 51 N.W.2d 75 (1952), that their damages for Brantner's trespass are not limited to rental value and that they can also seek $350,000 in lost profits for their echinacea crop. The lost-profit damage award in Poppen was based on the plaintiff's unlawful eviction from his leased land, which prevented him from planting the remainder of his crops for the season. Id. at 402, 51 N.W.2d at 76. The court reasoned that, because an unlawful eviction is a breach of contract, the plaintiff was entitled to recover the lost profits that he would have realized from the crops because these damages were reasonably foreseeable at the time the parties entered into the contract. Id. at 405, 51 N.W.2d at 78.
Respondents argue that "there is no good reason to differentiate between the damages which can be proved under these two circumstances." This argument ignores the fact that the damage award in Poppen was based on the defendant's breach of contract and did not involve a determination of damages for trespass to land. Respondents cannot properly justify their entitlement to lost profits resulting from a trespass to land through a contractual analysis for damages.
Respondents also argue that their lost-profits claim was not "too speculative" because their experts were prepared to testify, based on similar crops of echinacea, what the average yield, average price, and ordinary expense of harvesting and marketing the crops would be. "[D]amages which are speculative, remote, or conjectural are not recoverable." Leoni v. Bemis Co., 255 N.W.2d 824, 826 (Minn. 1977) (quotation omitted). There must be evidence of a reasonable basis on which to base the amount of the lost-prospective-profits award. Id. Generally, proof of lost profits in a new business is too speculative to provide a basis for recovery. Id. Because a new business lacks a history of profits, there will rarely be enough evidence on which to base an award of damages without engaging in speculation or conjecture. Id. The circumstances of a particular case will determine whether lost future profits have been proved with adequate certainty. Id.
Here, respondents did not present any evidence of lost future profits stemming from Brantner's trespass because the trial court ruled in a pretrial motion that such a claim was too speculative. The trial court found that at the time of the trespass, Garner had not even started producing echinacea and that, if the claim was allowed, the jury would have to speculate that (1) Garner's property would have been certified for production of echinacea; (2) Garner would have been a proficient producer of the crop; (3) the land would have produced the amounts and quality proposed by Garner's experts; (4) Garner could obtain appropriate contracts with third parties for the resale of the crop; (5) the weather conditions in 1999 and 2000, which had flooded his crop, would not have hampered Garner's production of the crop; (6) the property did not contain any chemical residues that would preclude growing the crop; and (7) the market value for the crop would have been favorable.
As the court notes, there were too many uncertain factors here simply to rely on evidence of a similar crop yield and price to determine respondents' lost profits. Furthermore, there was no evidence that such a comparison would have been helpful in this case. Although Garner had done soil testing on the disputed property to ensure that the property was suited for echinacea, he was new to growing echinecea and to farming. Therefore, in addition to the other variables that would have impacted his crop's growth, it was too speculative to assess the amount and quality of the crop and the market price of the crop to determine a reasonable lost-profit award. Because of the speculative nature of respondents' loss-of-profits claim, the trial court correctly limited respondents' damages to the reasonable rental value of the land during the period of Brantner's trespass.