Digital Analog Design Corp. v. North Supply Co.

Full title: DIGITAL ANALOG DESIGN CORPORATION, APPELLEE, v. NORTH SUPPLY COMPANY…

Court: Supreme Court of Ohio

Date published: Jul 5, 1989

44 Ohio St. 3d 36 (Ohio 1989)

540 N.E.2d 1358

Opinion

No. 88-107

Submitted February 21, 1989 —

Decided July 5, 1989.

Civil procedure — Damages — Recoveries for multiple claims for punitive damages may not be stacked, when.

O.Jur 3d Damages § 161.

When a course of events is governed by a single animus, even though a defendant may be liable to compensate plaintiff for the damages occasioned by a number of torts committed in such course of events, a defendant may only be punished once by a single award of punitive damages. Recoveries for multiple claims for punitive damages, contained within separately pleaded tort theories, may not be combined, or stacked, when such multiple tort claims arise from the same animus.

APPEAL from the Court of Appeals for Lorain County, No. 4213.

The instant appeal results from an action filed by Digital Analog Design Corporation ("DAD"), appellee herein, against appellant, North Supply Company ("NSC"). By its action, DAD sought to recover both compensatory and punitive damages from NSC for NSC's seizure of goods from DAD's warehouse on the morning of August 1, 1984. The pertinent events upon which this appeal is based are as follows.

In 1981, DAD was created by Lisn Corporation. These corporations were principally organized and operated by Donald Sanneman who is a major shareholder in both of them. DAD's principal activity was the sale and installation of private telephone systems to those who, following the Carter Act of 1979, desired to own their own telephone systems instead of renting or leasing them from the Bell Telephone Company. Eventually, a booming business climate for sales and installation of private telephone systems developed, which was intensified following the January 1, 1984 divestiture of Bell Telephone Company by its parent corporation.

NSC was owned by United Telephone Company of Ohio. NSC was a wholesale supplier of telephone systems and accessories. It was DAD's largest and principal supplier of telephone systems and the only major supplier of the popular TIE telephone system. Initially, DAD purchased systems from NSC on a cash basis. As DAD's sales increased, NSC granted terms of credit which, by 1983, allowed purchases up to $100,000. In September 1983, NSC raised DAD's available credit to $300,000, and also entered DAD into its General Managers Preferred Customer Credit Plan through which DAD received substantial discounts as its amount of purchases increased. DAD also signed a volume sales agreement with NSC in May 1984.

From June or July 1983, the credit sales were secured under a security agreement by which DAD granted to NSC a purchase money security interest in the inventory sold to DAD, and anything of value which might accrue to DAD from any sale or lease of such inventory. Although NSC initially maintained at trial that all its sales were under terms of thirty days net, the security agreement, which was entered into evidence, expressly stated under paragraph 7(a), "Events of Default," that payments are due "sixty [60] days from date of invoice." Also, there was considerable testimony that on several prior occassions some of DAD's purchases had gone over ninety days past due. NSC regularly accepted late payments, and never charged interest on the overdue debt or declared DAD to be in default. On the date in question, there were no amounts owing past ninety days, and only slightly more than one-fourth of the total owed was between sixty and ninety days past due.

Additionally, NSC's subsidiary, North Supply Leasing ("NSL"), engaged in a series of transactions by which it financed the sale and installation of systems to credit-worthy customers of DAD. Under this arrangement, the customer would apply to NSL for credit. Upon approval, DAD would install the system. NSL would then pay DAD the price of the contract minus the amounts owed to NSC for the telephone equipment supplied by it for that specific installation. As of July 25, 1984, NSL owed $80,218.79 to DAD pursuant to this arrangement.

By July 1984, DAD was experiencing cash flow problems. Although it had approximately $1,200,000 owed to it in accounts receivable and from work in progress, DAD owed approximately $485,000 to its suppliers, as follows: Toshiba — $71,000; American Telecom ("ATI") — $84,000; and NSC — $330,000. DAD then began to negotiate with its suppliers for extended repayment terms as well as additional lines of credit. On July 24, Vanke met with, and obtained agreements from, both Toshiba and ATI. The terms of these agreements required payment of the debt, within twelve months, with interest payable at fifteen percent, and included the extension of new lines of credit to DAD.

On July 25, 1984, both Vanke and Sanneman traveled to NSC's headquarters in Kansas. There they met with representatives of NSC, including: Wolfgang Simon, a division controller and head negotiator; David McClure, credit manager of the DAD account; Jean Alley, assistant to McClure; and Carroll Master. The parties negotiated for five hours. NSC strongly disputed at trial that any kind of enforceable agreement was arrived at in this meeting. Nevertheless, at trial, DAD produced a copy of a file memorandum which was prepared immediately after the meeting by David McClure, and which DAD was unaware of until the document was discovered by it in pretrial. It recites that copies were sent to a number of NSC employees including Simon and Master. After setting forth the time and place of the meeting, as well as its participants, the document recites, in pertinent part, as follows:

"The purpose of the meeting was to discuss the payback of their account balance of $327,791 and to discuss future business dealings.

"* * *

"After approximately five hours of negotiations, the following was agreed to:

"1) The amount balance of $327,791 would be paid over a nine-month period with interest at 15%. The first payment would be due August 1, 1984 in the amount of $27,000. Subsequent payments to be made on the first of each succeeding month with increases of $2,500 per month.

"2) A Promissory Note would be signed by Digital and Analog Design Corporation and would be guaranteed by the three related corporations: Digital and Analog Design, Inc., Lisn Corp., and Lisn, Inc.

"3) A new credit line would be established for the exact amount of the first payment once the first payment cleared Digital's bank. No increase in exposure to NSC.

"4) The credit line would increase to equal the amount of the first two payments once the second payment cleared Digital's bank.

"5) The credit line would increase to 50% of the amount of their third payment once the third payment cleared Digital's bank. Balance of payment to reduce NSC exposure.

"6) Financials are to be provided on a monthly basis. Consolidated financials of Digital Analog Design Corp., Digital Analog Design, Inc., Lisn, Inc., and Lisn Corp. dated 6-30-84 reflects [ sic] a negative net worth of $22,688."

At the time of the conference, DAD gave NSC a check for $38,500 which was specifically to pay for new merchandise needed to fulfill existing contracts. NSC, in fact, accepted this check and issued an invoice ordering the delivery of the inventory requested. Also, DAD expressly refused to assign as payment on its account the $80,218.79 owed to it by NSL.

On August 1, 1984, at approximately 7:00 a.m., Wolfgang Simon and a number of other agents of NSC arrived at DAD's Amherst, Ohio, warehouse. After demanding entry, they gave to DAD's employee a notice of repossession, and began loading all visible inventory onto trucks. Upon being apprised of the situation, vice-president Vanke rushed to the warehouse where he confronted Simon. There was testimony that Vanke reminded Simon of their agreement of July 25, and that he ordered him to stop the removal of inventory and to leave the premises. Finally, he pointed out to Simon that NSC's agents were seizing, among other items, inventory which was purchased from other suppliers and some of which notably had the name of another supplier marked on the packages. Simon refused to stop and ultimately seized inventory valued at over $103,000. Approximately $37,000 worth of inventory was discovered to be from suppliers other than NSC, and was thereafter returned to DAD.

At roughly the same time, NSC either stopped shipment on, or repossessed, the promised equipment for which it had been given a check in the amount of $38,500 and applied the check to DAD's account. NSC also refused to forward the $80,218.79 owed to DAD by NSL and instead applied that amount as a payment to NSC upon DAD's account. NSC sent a letter to at least one of DAD's customers demanding that all amounts due to DAD be paid to them. Finally, NSC circulated a return order which stated that DAD had become bankrupt.

On August 28, 1984, DAD filed suit against NSC. Its eight-count complaint asserted that NSC was liable under theories of conversion, trespass, tortious interference with business relations, breach of the July 25, 1984 agreement, two counts of wrongful seizure of property and two counts for breaches of other contracts. DAD sought to recover, in addition to specific compensatory damages, $2,000,000 for consequential injuries and $1,000,000 in punitive damages under each of the above first four theories of liability. By way of counterclaim, NSC asserted that it was owed a total of $330,725.72 upon DAD's account.

The above issues were joined on January 14, 1987 in a trial before a jury. At the close of all the evidence, the trial court granted DAD's motion for a directed verdict upon the issue of conversion of those chattels seized by NSC which had not been sold to DAD by NSC. The trial court denied NSC's motion for a directed verdict by which it sought to be awarded the specific amount of $177,000 upon its counter-claim.

The issues were then submitted to the jury, which thereafter made findings of fact as evidenced by their specific answers of "yes" to the following submitted interrogatories:

"* * * No. 1. Do you find by a preponderance of the evidence that on July 25, 1984, Plaintiff and Defendant entered into an agreement which modified all preceding agreements between them as to the terms of payments of money owed by Plaintiff to Defendant? * * *

"* * * No. 2. Do you find by a preponderance of the evidence the Defendant's removal of goods from Plaintiff's South Amherst, Ohio, warehouse on August 1st, 1984, included goods in which the Defendant had a security interest, but in which such security interest could not rightfully be executed because Plaintiff was not in default thereof? * * *

"* * * No. 3. Do you find by a preponderance of the evidence the Defendant's August 1st, 1984, removal of goods from Plaintiff's South Amherst, Ohio, warehouse in which it had a security agreement, constituted a wrongful conversion of those goods? * * *

"* * * No. 4. Do you find by a preponderance of the evidence that the Defendant'breached the peace in the process of removing goods from Plaintiff's South Amherst, Ohio, warehouse on August 1st, 1984? * * *

"* * * No. 5. Do you find by a preponderance of the evidence that the Defendant's August 1st, 1984 removal of goods from Plaintiff's South Amherst, Ohio, warehouse was willful, wanton and reckless or malicious? * * *

"* * * No. 6. Do you find by a preponderance of the evidence that Plaintiff on or about July 25, 1984, provided a check in the amount of $38,500.00 to Defendant as and for payment on telephone equipment which was to be thereafter shipped by the Defendant to the Plaintiff? * * *

"* * * No. 7. Do you find by a preponderance of the evidence that Defendant cashed the check for $38,500.00 and wrongfully converted to its own use, $38,500.00 which was provided to the Defendant as payment for telephone equipment which was to be shipped by the Defendant to the Plaintiff? * * *

"* * * No. 8. Do you find by a preponderance of the evidence that Defendant's act of removing goods from Plaintiff's South Amherst, Ohio warehouse on August 1st, 1984, was willful, wanton, reckless or malicious? * * *

"* * * No. 9. Do you find by a preponderance of the evidence that the Defendant's removal of goods from Plaintiff's South Amherst, Ohio warehouse on August 1st, 1984, constituted a trespass?"

Having answered unanimously in the affirmative on each of these interrogatories, the jury found in favor of DAD and awarded it $1,187,000 in compensatory damages and $1,500,000 in punitive damages. Also, the jury found in DAD's favor on NSC's counterclaim. The trial court granted, in part, NSC's motion for a judgment notwithstanding the verdict, finding that NSC was entitled to $135,253.12 upon DAD's account.¹ Upon appeal, the court of appeals found in favor of DAD on all issues.

1 This judgment was entered against DAD and Lisn Corporation, new party defendant. This judgment was not appealed.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Wickens, Herzer Panza, Richard D. Panza, William F. Kolis, Jr., and Thomas A. Downie, for appellee.

Gallagher, Sharp, Fulton Norman, Forrest A. Norman, John B. Robertson and Robert H. Eddy, for appellant.

Murray Murray Co., L.P.A., Dennis E. Murray and Kirk J. Delli Bovi, urging affirmance for amici curiae, Nick J. Miller et al.

Lucal McGookey and James E. McGookey, urging reversal for amicus curiae, Wikel Mfg. Co., Inc.

HOLMES, J.

The thrust of appellant's propositions of law seeks review of the damages awarded, both compensatory and punitive. In analyzing such claimed errors, we must proceed being cognizant that the damage awards were made by this jury which had expressed its findings by way of its affirmative answers to the aforestated interrogatories.

I

In its first proposition of law, regarding compensatory damages, NSC asserts that DAD's business finance expert witness, Dr. James E. Zinser, did not base his testimony regarding lost profits upon an analysis of lost net profits, and failed to make any deduction for the operating expenses of the company. More specifically, NSC contends that Dr. Zinser utilized an economic methodology, based upon a "gross operating [profit] margin." It therefore concludes that the lost profits were not demonstrated with reasonable certainty.

We have held that in order to have a recovery for lost profits, the aggrieved party must demonstrate the existence of such profits "with reasonable certainty." Gahanna v. Eastgate Properties, Inc. (1988), 36 Ohio St.3d 65, 521 N.E.2d 814, paragraph one of the syllabus. We have also determined that such party must show not only "(a) what he would have received from the performance so prevented, but also (b) what such performance would have cost him (or the value to him of relief therefrom). Unless he proves both of those facts, he cannot recover as damages the profits he would have earned from full performance of the contract." Allen, Heaton McDonald, Inc. v. Castle Farm Amusement Co. (1949), 151 Ohio St. 522, 526, 39 O.O. 330, 332, 86 N.E.2d 782, 784. Evidence which does not meet these thresholds must be considered speculative and an insufficient basis for an award of damages.

There are, in specific cases, as implied in Allen, supra, exceptions to the general rule requiring that plaintiff expressly prove its own costs for the generation of lost profits. For example, where there would have been no additional costs to the party to generate those profits which he lost, or where he was in fact not relieved from the particular costs which constituted his ongoing and fixed overhead costs, then he need only assert and prove such circumstances. As stated in Allen, supra, "If plaintiff would have been able to perform that work without incurring any additional cost, so that relief from the obligation of performing would not involve any benefit of value to plaintiff, plaintiff might be entitled to * * * [the entire gross profits]. 5 Williston on Contracts (Rev. Ed.), 3793, Section 1352. On the other hand, if the performance of such work would have cost plaintiff more than the amount claimed in the petition, then plaintiff would be entitled to recover nothing * * *." Id. at 525, 39 O.O. at 332, 86 N.E.2d at 784. In this regard DAD's economic expert, Dr. Zinser, appeared to have considerable expertise in his field of economic analysis, with a large number of publications and professional activities to his credit. The evidence would reasonably support his technique of cost-profit analysis, the so-called "time-series analysis and projection." See Chambers, Mullick Smith, How to Choose the Right Forecasting Technique, Harvard Business Review: July-August 1971.

NSC, by comparison, did not produce a comparable expert. Instead, NSC relied upon the testimony of a certified public accountant, and an employee controller of NSC, a Mr. Simon, neither of whom it appears had as extensive training or expertise in the time-series analysis method as had Dr. Zinser, and neither of whom utilized a competing method of analysis to calculate a lesser amount of lost profits. Instead, they merely offered their disagreements with Dr. Zinser's analyses. Having so devised its trial strategy relative to the issue of intermediate loss valuations, NSC has a limited stance in its assertions upon appeal in contending that the deduction of operating expenses from the gross profits for the period under consideration was the correct methodology to be used.

Dr. Zinser testified that the seizure of the inventory had severe repercussions upon DAD's business. After reviewing all of the financial and other records which were also entered into evidence, he concluded that as a result of the seizure of inventory on August 1, 1984, DAD had suffered a total loss in sales of $8,200,000. He then determined that the cost of sales was equal to 72.9 percent of gross sales, leaving a "gross profit margin" of 27.1 percent. Utilizing this margin, Dr. Zinser concluded that DAD lost profits of $12,706 in 1984; $306,914 in 1985; $698,154 in 1986; and $981,873 in 1987. After adjusting for various other factors, he concluded that the total lost profits was $2,014,330.

NSC, through its cross-examination of Dr. Zinser and by its own witnesses, attempted to show that DAD had suffered losses in every year of its operation. However, Dr. Zinser pointed out that such losses accrued by virtue of the opening of five branch offices, and that such expenses would have become fixed, i.e., leveled off, so as to have had little or no effect on the future profits.

This specifically was an issue which was fully contested before the jury. The jury also had before it all of DAD's records which included profits, losses and costs of every kind. Furthermore, there was ample proof that DAD's overhead expenses actually continued for the period under consideration, and this much was admitted by NSC in its reply brief. The salient legal inquiry which emerges is not whether such expenses became fixed, but instead, whether DAD paid such overhead expenses from whatever sales it achieved despite NSC's tortious conduct. Since such overhead expenses did continue, but were actually paid from DAD's sales made during the period of loss calculation, then NSC cannot be heard to argue that these same expenses should, as a matter of law, have been deducted from those sales which DAD lost during that time.

It would appear that, however calculated, there was evidence that the achievement of lost sales would not have resulted in increased costs such that the absence of sales resulted in a benefit of saved overhead expenses to DAD. See Allen, supra. Certainly, there was a sufficient production of evidence that the jury could lawfully have so concluded. Moreover, the jury actually rendered a verdict which was only some fifty-eight percent of the asserted lost profits. We conclude that the jury determination of the compensatory damages here was supported by competent credible evidence.

II

NSC argues here, as it did in the courts below, that several employees of DAD were permitted to state, over objection, that others in the business community, including customers, creditors and competitors, had beliefs, and/or made statements, to the effect that DAD, due to all these surrounding circumstances, was bankrupt and/or that the seizure of its inventory was commonly known. This, NSC asserts, was an erroneous admission of hearsay evidence and, furthermore, allowed DAD to predicate damages involving lost profits, lost employees, and lost reputation upon mere rumors.

Evid. R. 801(C) defines "hearsay evidence" as "a statement, other than one made by the declarant while testifying at the trial * * * offered in evidence to prove the truth of the matter asserted." Not only must a statement be made by someone other than the testifying witness, which out-of-court statement such witness repeats on the stand, but the statement repeated must have as its primary value the showing of the truth which is asserted in the statement. Potter v. Baker (1955), 162 Ohio St. 488, 55 O.O. 389, 124 N.E.2d 140. When viewed in context, the statements complained of by NSC were not adduced to prove anything contained within them, but only that they were, in fact, made. This is an entirely proper use of such out-of-court statements. In addition, as pointed out by DAD, and the courts below, there was considerable other evidence entered of record not only that such statements were consistently made by certain individuals, but that NSC was the fount of such beliefs. NSC had full opportunity to discover and call witnesses to refute such witnesses' alleged prior statements, had it so desired. The challenged testimony was neither hearsay nor prejudicial.

III

NSC complains that the trial court refused to grant a directed verdict upon its counterclaim prior to submission of the issues to the jury. NSC points out that the trial court granted it a judgment notwithstanding the verdict after the trial, and infers therefrom that the trial court should have done likewise before the submission of evidence to the jury. It is argued that the harm of this alleged omission is that NSC was deprived of the opportunity to assert in its closing argument that "North's legal rights had been violated by DAD and that DAD was liable to North Supply." NSC felt that it was clearly disadvantaged and "painted * * * as a `rogue' in the eyes of the jury" by the trial court's decision to grant a partial verdict to DAD on the issue of conversion. NSC concludes that refusal to grant a directed verdict to it caused the jury to render verdicts based upon passion and prejudice.

There is little merit to NSC's assertion. We note that there is no challenge before us of the propriety of the partial directed verdict on the issue of conversion. Nor could such issue reasonably be raised, as the existence of the tort of conversion of inventory not sold by NSC to DAD is fairly obvious from the record. Regardless of the effect of granting such directed verdict, it was proper for the trial court to do so.

NSC's motion for directed verdict, on the other hand, could not reasonably have been granted at the time it was requested. It did not merely request that the jury be told that NSC was yet owed money on account, thus allowing the jury to determine the amount. Instead, NSC requested the trial court to specifically instruct the jury that $177,000 was due and owing upon its counterclaim. After a brief discussion of counsel, the trial court denied the motion. This was appropriate because the actual amount ultimately owed upon account was the subject of dispute at trial. Also, the trial court's grant of a judgment n.o.v. was for the amount of $135,253.12, which was somewhat less than the amount requested by NSC. Moreover, whether an amount was ultimately owed is quite different from the issue of whether it was due on August 1, 1984, at the time of the repossession or whether the existence of the debt constituted a default under the security agreement or the July 25, 1984 agreement. Thus, it was not error for the trial court to deny NSC's motion for a directed verdict.

IV

In its third proposition of law, NSC attacks the award against it for punitive damages. Although technically asserting only one proposition of law, NSC in effect makes two assertions of error. It initially contends that there was no evidentiary basis presented which would allow the matter of punitive damages to be submitted to the jury, and that there was insufficient evidence presented to support the jury's verdict as rendered. In this latter regard, NSC argues that all of the punitive damages demands were premised upon a single animus, that of improper repossession of secured collateral, and that the punitive damages exceeded any single demand. It therefore urges the court to adopt a rule against the stacking of punitive damage claims which have been so premised, and under such circumstances, to limit punitive damages to a single award.

Ohio courts have allowed punitive damages based both upon punitive, as well as deterrent, philosophies. See, e.g., Simpson v. McCaffrey (1844), 13 Ohio 508, 522; Roberts v. Mason (1859), 10 Ohio St. 277; Atlantic G.W. Ry. Co. v. Dunn (1869), 19 Ohio St. 162, 172; Detling v. Chockley (1982), 70 Ohio St.2d 134, 24 O.O. 3d 239, 436 N.E.2d 208; Preston v. Murty (1987), 32 Ohio St.3d 334, 512 N.E.2d 1174.

In a case seeking punitive damages, a jury must first determine that the defendant has acted with malice before determining the amount of punitive damages due to the plaintiff. Smithhisler v. Dutter (1952), 157 Ohio St. 454, 47 O.O. 334, 105 N.E.2d 868, paragraph one of the syllabus; Pickle v. Swinehart (1960), 170 Ohio St. 441, 11 O.O. 2d 199, 166 N.E.2d 227, paragraph two of the syllabus; Detling, supra, at 137, 24 O.O. 3d at 241, 436 N.E.2d at 210. The necessary element of malice may be based upon evidence showing actual malice or malice by implication, i.e., legal malice. This court has recognized that "[o]ne who has committed an act would scarcely admit that he was malicious about it, and so, necessarily, malice can be inferred from conduct." Davis v. Tunison (1959), 168 Ohio St. 471, 475, 7 O.O. 2d 296, 298, 155 N.E.2d 904, 907. Our prior cases have identified two general categories of conduct by which malice may be shown, either actual or by inference. As set forth in the syllabus of Preston, supra, punitive damages may be awarded upon proof of conduct "(1) * * * characterized by hatred, ill will or a spirit of revenge, or (2) a conscious disregard for the rights and safety of other persons that has a great probability of causing substantial harm." (Emphasis added in part.)

In considering the first of NSC's assertions, a combing of the record adduced at trial reveals that there was no evidence presented that NSC was actuated by ill will, hatred, a spirit of revenge or any other desire to vent particular feelings upon another. If, for instance, there had been an express showing that NSC had intended to put DAD out of business, or had intended to obtain DAD's installation business for itself, then such conduct would have supported a finding of actual malice based upon hatred, ill will or spirit of revenge. Detling, supra, at 136-137, 24 O.O. 3d at 241, 436 N.E.2d at 210; Pickle, supra; Rogers v. Barbera (1960), 170 Ohio St. 241, 10 O.O. 2d 248, 164 N.E.2d 162.

However, looking to the record here to see whether the other standard of Preston has been met, i.e., whether the defendant acted with a "conscious disregard for the rights and safety of other persons that has a great probability of causing substantial harm," we find that DAD presented sufficient evidence to show that NSC planned its actions in advance; that the probable results of NSC's actions would do harm to DAD's business because NSC was DAD's major supplier; that the rights of DAD, so established by contract and otherwise, were quite obvious to those in NSC's position; that the various actions by NSC disregarded DAD's property rights and business rights; and that there was a conversion of inventory which was known to have been purchased from other suppliers, but yet had been intentionally seized.

We therefore conclude that the jury was presented with sufficient evidence from which it might reasonably infer malice from the circumstances, finding that NSC acted "with a conscious disregard for the rights of other persons that has a great probability of causing substantial harm." Having so concluded, it was quite appropriate for this jury to have determined that there had been a sufficient showing of legal malice upon which punitive damages may have been assessed.

In its third proposition of law, NSC asserts that, as previously mentioned, an award of damages cannot exceed the punitive damages prayed for in the complaint. This appears to be set forth in Civ. R. 54(C), relied upon by NSC, and which states that "a demand for judgment which seeks a judgment for money shall limit the claimant to the sum claimed in the demand * * *." (Emphasis added.) This is further buttressed by our recent decision in Bishop v. Grdina (1985), 20 Ohio St.3d 26, 20 OBR 213, 485 N.E.2d 704, in which we held that a punitive damages award must be stricken to the extent that it exceeds the amount prayed for in the complaint.

In the case sub judice, DAD's complaint requested a punitive damages award of $1,000,000 in each of four of its eight counts, which, of course, seeks a total possible punitive damages award of $4,000,000. NSC contends that all four of the counts assert claims premised upon a single animus, that of unlawfully acting pursuant to its security agreement. It concludes that it should, therefore, be punished only once, and that as measured by the total amount of punitive damages requested in any single count. We agree with this conclusion.

We believe it is a reasonable conclusion that out of a sense of fairness, in an action seeking punitive damages, the law chould not countenance one to be punished repeatedly for the same act or allow multiple recoveries for such act. Accordingly, punitive damages may not be awarded more than once for a single act.

The issue becomes more complex when a series of acts amounting to one or more courses of conduct have occurred, for thereby any number of torts may have been committed. This is complicated further in that such series of acts could conceivably be determined to be with multiple rather than a single animus, and thereby constitute the commission of a number of torts upon which punitive damages may be assessed. We are persuaded that when it is shown that a course of events is governed by a single animus, even though a defendant may be liable to compensate plaintiff for the damages occasioned by a number of torts committed in such course of events, defendants may only be punished once by a single award of punitive damages. Recoveries for multiple claims for punitive damages, contained within separately pleaded tort theories, may not be combined, or stacked, when such multiple tort claims arise from the same animus.

Turning now to the jury award of $1,500,000 in the instant case, we note that such award exceeds any single punitive damages demand by $500,000. Further, the award is undifferentiated and ostensibly based upon any two, or all four, of the punitive damages claims. Thus, the award of the excess amount may be sustained only if, among the four counts of DAD's complaint in which punitive damages were demanded, there may be found more than one course of events, each of which may be said to have been actuated by an animus unrelated to the others. This requires an analysis of each of the four counts and the proven events to which they relate.

The principal actions of NSC center around its August 1, 1984 seizure of inventory located in DAD's warehouse and protection of its interests under the security agreement. Thus, in its third count, which contains the first demand for punitive damages, DAD sought punitive damages for the tort of conversion. Similarly, in the eighth count for relief, it asserted that NSC "in order to wrongfully seize the chattels referred to above * * * maliciously and intentionally trespassed onto Plaintiff's premises." By their terms, the factual basis upon which both of these torts are premised is the series of events occurring during the seizure of inventory on August 1. Although there was sufficient evidence to support a finding that each tort was individually committed, it is also true that both torts sprang from a single animus, that of seizing inventory, considered to be secured collateral in order to protect NSC's exposed position as a creditor. Thus, only one punitive damage award can be justified despite the fact that two separate torts may have occurred during this activity.

The fourth count of DAD's complaint asserted an entitlement to punitive damages because of NSC's breach of the July 25, 1984 agreement. This breach is described as having been "willful, wrongful and malicious." The law is quite clear in Ohio that: "`As a general rule exemplary damages are not recoverable in actions for the breach of contracts, irrespective of the motive on the part of defendant which prompted the breach. No more can be recovered as damages than will fully compensate the party injured.'" Saberton v. Greenwald (1946), 146 Ohio St. 414, 426, 32 O.O. 454, 458-459, 66 N.E.2d 224, 229, quoting 25 Corpus Juris Secundum, Section 120, at 716. This has been the nearly universal rule for some time: see, e.g., Hadley v. Baxendale (1854), 9 Ex. 341, 156 Eng. Rep. 145; Restatement of the Law 2d, Contracts (1981) 154, Section 355; Farnsworth, Contracts (1982) 842-844, Section 12.8. No matter how willful the breach, "[p]unitive damages are not recoverable in an action for breach of contract." Ketchum v. Miller (1922), 104 Ohio St. 372, 136 N.E. 145, paragraph two of the syllabus. Accordingly, count four provides no basis for the jury to award punitive damages since it is an express claim for breach of contract. It does, however, set forth a sufficient basis for a finding of both compensatory and consequential damages.

The remaining claim for punitive damages is based upon the seventh count which, in essence, alleges that NSC tortiously interfered with DAD's business relations. A review of the wording in this count indicates that it contemplates, as factual bases for the tort, any and all of the following: the seizure of inventory from the warehouse on August 1, 1984; the seizure of funds, later determined to be approximately $80,000, owed to DAD by NSL; and the seizure of in-transit inventory or repossession of inventory which had been paid for by DAD with a $38,500 check. This amount was also retained by NSC and applied upon DAD's account. An analysis of these factual predicates reveals that none of them suffices to justify an independent and separate award of punitive damages.

As previously mentioned, the seizure of inventory from the warehouse on August 1, 1984 is a factual basis which is shared with that underlying both the conversion and the trespass claims. This seizure, whether or not it supports independent and additional awards in tort, is for purposes of a punitive award but one event, possessing one central animus. It does not, therefore, independently constitute another basis for a punitive damages award by its additional recitation within this count.

The seizure of the funds owed DAD by NSL for work performed and their application upon NSC's account, is explainable in two ways, either of which may reasonably negate the punitive damages aspect. First, although not a part of the acts comprising the warehouse seizure, it was nonetheless actuated by the same demonstrable animus as the warehouse seizure, i.e., to obtain the collateral described in the security agreement for the purpose of protecting its exposure. The security agreement granted to NSC a security interest in all accounts receivable which were obtained by the use of any inventory sold to DAD by NSC. This reasonably included the amounts owed to DAD by NSL for installing NSC inventory. Second, as a matter of fact and law, the mere refusal to pay money owed, where the parties are in privity of contract, constitutes nothing more than a breach of contract for which punitive damages generally cannot be awarded.

It is well established that "though a breach of a duty under a contract or lease necessarily interferes with the injured party's business relations with third parties, the injured party is limited to an action for breach of contract and may not recover in tort for business interference." Cherberg v. Peoples Natl. Bank of Washington (1977), 88 Wn.2d 595, 604, 564 P.2d 1137, 1143; Glazer v. Chandler (1964), 414 Pa. 304, 200 A.2d 416; Kvenild v. Taylor (Wyo. 1979), 594 P.2d 972, 977; Bolz v. Myers (Mont. 1982), 651 P.2d 606; N.A. Berwin Co. v. American Safety Razor Corp. (Sup.Ct. 1951), 108 N.Y. Supp. 2d 677. An exception exists, and a tort action may lie, only where the breaching party indicates, by his breach, a motive to interfere with the adverse party's business relations rather than an interference with business resulting as a mere consequence of such breach. Cherberg, supra. In the instant case, there is no evidence of such motive which would create an action in tort. Therefore, regardless of the form in which it was pleaded, DAD's action remains no more than a breach of contract action, identical in all respects to count six.

The third seizure is somewhat more troubling. The decision to seize the apparently in-transit inventory or to repossess it and to apply the cash payment of $38,500 upon account cannot specifically be found to be within the single animus of obtaining secured collateral. This conclusion is based upon the security agreement which, by its express terms, creates a security interest only in those inventories which were purchased from NSC on credit. The inventory here, which was set aside and identified to the contract, was paid for in cash. Accordingly, this was not a seizure of secured collateral, but was instead a breach of a transaction which was entirely separate from all other transactions between the parties. It was therefore a separate animus, even though generally done for the same purpose as the warehouse seizure.

This seizure, although framed in the plaintiff's argument as part of a tortious interference with business count, is, upon the law, pleadings, and record before us, indistinguishable from the breach of oral contract claim in count five, which sets forth all the above facts, including the existence of a contract between the parties. Of course, the jury was requested by interrogatory to state whether such facts additionally constituted the tort of conversion. They unanimously concluded that the amount of $38,500 was in fact tortiously converted. Unfortunately, DAD's complaint makes no mention of a tortious conversion relative to either the amount applied upon account or the inventory seized in transit. The issue was therefore improperly before the jury, although not prejudicially so. The only facts asserted in either counts five or seven describe, in essence, a breach of oral contract claim.

Moreover, in both of the latter two applications of funds upon account, and the seizure of inventory in transit or repossession thereof, the specific existence of both respective contracts was firmly established at trial. Since the breach of these contracts created, at best, only the "incidental consequence" of affecting DAD's business relationships with third persons, only an action in breach of contract exists, for which no punitive damages may be obtained. See DiCesare-Engler Productions, Inc. v. Mainman Ltd. (W.D. Pa. 1979), 81 F.R.D. 703, citing Glazer, supra; Cherberg, supra.

In sum, tortious activity for which a punitive damages award may be sustained occurred in only three of the four counts above. Furthermore, we hold that such tortious activity arose from a single animus, and thus NSC may be punished by only a single punitive damages award. In that DAD requested the amount of $1,000,000 in each of the above three counts, the jury's award for $1,500,000 must be reduced to that sum claimed in any one such demand.

Having considered the asserted propositions of law, we conclude that the judgment of the court of appeals is affirmed in all respects except that, for the reasons set forth above, the award of punitive damages shall be reduced to a total amount of $1,000,000.

Judgment affirmed in part and reversed in part.

MOYER, C.J., SWEENEY and H. BROWN, JJ., concur.

DOUGLAS and RESNICK, JJ., concur in part and dissent in part.

WRIGHT, J., concurs in part and dissents in part.

ALICE ROBIE RESNICK, J., concurring in part and dissenting in part.

I concur in the majority's opinion as to Parts I, II and III. I, however, dissent as to the syllabus and the majority's holding as to Part IV.

The majority holds that the tortious activity arose from a single animus and therefore appellee is only entitled to $1,000,000 in punitive damages. I disagree with the majority's finding that all claims arise from a single animus. I would affirm the award of punitive damages in its entirety, since I find in addition to the seizure of the inventory on August 1, 1984, there was sufficient evidence before the jury to find that appellant, subsequent to the seizure of appellee's goods, continued to interfere with appellee's business, and that such interference was not merely incidental to a breach but rather there was evidence from which a jury could find that the actions of appellant or its agents were willful, wrongful, and malicious — thus creating a separate animus upon which punitive damages could be awarded.

I would affirm the judgment in its entirety.

DOUGLAS, J., concurs in the foregoing opinion.

WRIGHT, J., concurring in part and dissenting in part.

The dynamics of a trial preclude perfection since the price of such a standard is prohibitive. Thus, I can understand the majority's reluctance to disturb the jury verdict in this case. However, in my view the majority opinion misperceives the commercial process when it places credence in the testimony of plaintiff's expert witness as it related to compensatory damages.

We have consistently held that the existence and amount of lost profits must be proven with certainty. "In order for a plaintiff to recover lost profits in a breach of contract action, the amount of the lost profits, as well as their existence, must be demonstrated with reasonable certainty." Gahanna v. Eastgate Properties, Inc. (1988), 36 Ohio St.3d 65, 521 N.E.2d 814, syllabus (explaining Charles R. Combs Trucking, Inc. v. International Harvester Co., 12 Ohio St.3d 241, 12 OBR 322, 466 N.E.2d 883). For the reasons that follow, the method of calculation adopted by plaintiff's expert is so flawed as to require a new trial.

Dr. Zinser failed to properly set forth with any degree of reasonable certainty the amount of lost profit damages. He utilized an economic methodology for proving lost profits which is at war with the legal standard for awarding damages as noted above. The law in this state requires that evidence of lost profits be based upon an analysis of lost "net" profit after the deduction of all expenses impacting on the profitability of the business in question. Dr. Zinser noted the distinction between the analysis of lost profits based on net profits ( i.e., gross sales less cost of goods sold and operating expenses) and the "gross operating margin" of profit (gross sales less only the cost of goods sold). I believe the substantive law of Ohio requires testimony using the first standard. This methodology was ignored in this case, and Zinser's testimony was keyed to the unrealistic and inaccurate approach arising out of gross profit margins.

A graphic demonstration of the problem presents itself here where the plaintiff's expert posited a twenty-seven percent profit margin on a hypothetical sales figure of $8,200,000. Zinser's testimony transformed a company that had never shown even a modest profit into a veritable money machine. Given the state of the whole record I find Dr. Zinser's testimony fanciful at best, at worst outrageous, and certainly not within the confines of "reasonable certainty."

Accordingly, I would grant a new trial on the issue of compensatory damages, with liability not an issue. I concur with Justice Holmes in his analysis of the punitive damages aspect of this case.