Ala. River Grp., Inc. v. Conecuh Timber, Inc.
Ala. River Grp., Inc. v. Conecuh Timber, Inc.
Opinion of the Court
*235Conecuh Timber, Inc., Ayres Forestry, Inc., BAR Forest Products, LLC, Dry Creek Loggers, Inc., Pea River Timber Company, Inc., Pineville Timber Co., LLC, and THE Timber Company, LLC (sometimes referred to as "TTC") (hereinafter collectively referred to as "the wood dealers"), sued Alabama River Group, Inc. ("ARG"), and ARG's chairman and chief executive officer George Landegger (hereinafter collectively referred to as "the ARG defendants"
I. Facts and Procedural History
As part of the Food, Conservation, and Energy Act of 2008, also known as the 2008 Farm Bill, the United States Congress created BCAP to help stimulate the development of renewable "bioenergy" sources and to assist agricultural- and forest-land owners and operators with the use of eligible material in a "biomass conversion facility" ("BCF").
*236On October 28, 2009, the FSA published a notice outlining what biomass materials were eligible for a BCAP subsidy ("the BCAP materials list"). As concerns this case, the BCAP materials list authorized the payment of a subsidy for eligible timber products such as tree branches, treetops, wood chips, and bark; however, the BCAP materials list specifically enumerated materials that were not eligible for a BCAP subsidy, including what is known in the timber and paper-making industries as "black liquor."
On October 29, 2009, the day after the FSA released the BCAP materials list, the United States Department of Agriculture ("the USDA") discussed BCAP in a telephone conference call with representatives of the timber and paper-making industries, including Landegger. During the call, an FSA official responded to a written question about black liquor by stating that "black liquor is not going to be eligible" for the BCAP subsidy and that, "[i]f a wood residue or pulp material is brought to a pulp mill, the component of that would be turned into black liquor and would not be an eligible material." Landegger asked why black liquor was ineligible, stating he was "not sure what the rationale was for removing black liquor as an eligible material or pulp as a byproduct." The official responded that all the details of BCAP were still being worked out in the regulatory process and that there could be substantial changes in the forthcoming rules.
Although BCAP did not provide any direct benefits to pulp-mill owners, Landegger decided to participate in the program by obtaining certification for two pulp mills operated by Landegger's companies in Monroe County, Alabama (the two companies eventually became ARG).
*237ARG also explained to those wood dealers, however, that it would pay a reduced, below market price for wood products delivered to ARG mills that were eligible for BCAP subsidies, with the expectation that the BCAP subsidies would make up for that discount and provide an additional profit for wood dealers as well. ARG further represented that, if the BCAP subsidies were not paid to wood dealers or were lower than expected, it would pay the "difference" and make wood dealers "whole." The parties dispute, however, whether the "difference" ARG agreed to pay was the difference between the below market price ARG paid and the actual market price in effect at that time or the difference between the below market price ARG paid and the net price the wood dealers expected to get after the advertised BCAP subsidies were paid.
As an example of ARG's BCAP-related transactions with the wood dealers, one of those dealers-Ayres Forestry-was receiving $39 per ton for wood products delivered to the ARG pulp mills before the start of BCAP. An ARG representative explained that Ayres Forestry would receive only $31 per ton from ARG for delivering wood products on the BCAP materials list, but it would also receive a BCAP subsidy of $12.12 per ton from the FSA, thus resulting in a net gain of $4.12 per ton for Ayres Forestry (and an $8 savings per ton for ARG). To receive the BCAP subsidy, Ayres Forestry had to submit to the local FSA office a form, copies of the sales contracts, and sales receipts signed by the ARG mills in their capacity as a BCAP-qualified BCF and reflecting the amount of eligible material delivered. ARG, as a BCF, was required to measure moisture content and tonnage and other relevant qualities of the wood delivered and to certify how much of the wood was eligible under BCAP. ARG required Ayres Forestry and the other wood dealers to use a system by which drivers delivering "BCAP wood" to ARG had to use a card of a particular color.
ARG concluded that there was some ambiguity in the interpretation of the BCAP materials list, specifically whether it barred the payment of a BCAP subsidy for the delivery of only processed black liquor but not materials converted into black liquor. The FSA had stated its intent in the above-referenced conference call that it would not approve wood used for black liquor. Moreover, ARG's chief financial officer and Landegger's son-in-law, Arick Rynearson, sent an e-mail to Landegger warning that "USDA has made their intent clear-they want to exclude black liquor." "We can push it," Rynearson wrote, "but I suspect that in the end, we will end up only having our bark and forest residue qualify." Nevertheless, ARG, with approval from Landegger, made the decision to certify as eligible materials for BCAP subsidies those wood materials that would ultimately be converted into black liquor.
This decision allowed ARG to calculate approximately 50-55% of a tree as eligible under the BCAP materials list, rather than approximately 10-12% of a tree that otherwise would be eligible, thus resulting in higher subsidy payments for the wood dealers and, presumably, more profit for all the parties. In early December 2009, ARG processed an initial "test" load delivered by a wood dealer (not one of the plaintiffs) pursuant to this interpretation of the BCAP materials list. ARG provided the wood dealer with a delivery ticket stating that 54% of the "bone dry tons" of the wood delivered to ARG qualified for the BCAP subsidy. The FSA state office paid the full subsidy on that 54% certification. On December 21, 2009, ARG began processing timber products in this same manner for approximately 50 different wood dealers who agreed to haul wood to ARG.
*238The wood dealers testified at trial that they were ignorant of the fact that ARG was including in its calculation of eligible materials wood products ARG used in the production of black liquor.
On January 21, 2010, after someone apparently complained to the FSA about ARG, the FSA suspended ARG from participating in BCAP and halted relevant BCAP subsidies to wood dealers who hauled to ARG, explaining in an e-mail sent to county FSA offices that "there may be possible discrepancies in the methods used by [ARG] to determine the percentage of product that is being used for biomass." ARG thereafter learned that the suspension was caused by its decision to certify for a BCAP subsidy material that was being converted to black liquor. ARG immediately began working to get the suspension lifted, and ARG officials, including Landegger, subsequently met with FSA officials in Washington, D.C., to explain their interpretation of the BCAP materials list and to attempt to resolve the dispute and ARG's suspension.
While it worked to reverse the suspension, ARG told the wood dealers that the suspension was just the result of a misunderstanding and encouraged them to continue to deliver their products to the ARG pulp mills, even though the suspension meant no BCAP subsidies would be paid for wood delivered to ARG. For instance, wood dealer John Ayres of Ayres Forestry testified that, after ARG was suspended, Mark Bond of ARG told Ayres: "We are not really kicked out. Everything was legal. We got the formula approved by the FSA. Just a misunderstanding. We are going to get put back in the program." Accordingly, in order ostensibly to "help" the wood dealers with their decreased cash flow after ARG's suspension from BCAP, ARG agreed to "advance" the wood dealers the difference between the lower, below market rate ARG was paying and the market rate for all deliveries made during the suspension. ARG drafted promissory notes for those advances and required the wood dealers to sign them in order to receive the advance payments. ARG claimed at trial that it did not intend to demand payment on the notes if the BCAP subsidies were not paid to the wood dealers.
On February 8, 2010, the FSA published for public comment its proposed rules governing BCAP. The proposed rules explicitly provided that black liquor was "not an eligible material" and that BCAP subsidies would not be paid for "[e]ligible material delivered to a qualified [BCF] used to produce black liquor." The proposed rules were to become final in October 2010.
On February 24, 2010, the deputy administrator for farm programs of the FSA revoked ARG's status as a qualified BCF and tentatively found (1) that ARG had engaged in a scheme or artifice to present false information to the FSA in connection with BCAP and (2) that ARG was liable for the amount of BCAP subsidies that had been improperly paid to wood dealers based on ARG's certification as eligible for a BCAP subsidy materials that were delivered to ARG and converted into black liquor. ARG appealed the FSA's decision. While ARG's appeal was pending, many wood dealers continued to deliver wood products to ARG and to file requests for BCAP subsidies with the FSA, continuing to do so through April 2010-when BCAP ended for the fiscal year-with the hope that the FSA would reconsider its decision to terminate ARG's involvement in BCAP. On March 1, 2010, ARG once again began paying wood dealers full market price for delivered materials.
In November 2010, Landegger, on behalf of ARG, formally entered into a settlement with the FSA resolving the dispute *239over BCAP subsidies that had been improperly paid to wood dealers based on ARG's certification as eligible for a BCAP subsidy materials that ARG turned into black liquor and settling all outstanding requests for BCAP subsidies made by wood dealers for materials delivered to ARG after ARG's suspension on January 21. Pursuant to this settlement, the FSA agreed to withdraw its previous finding that ARG had engaged in a scheme to submit false information to the FSA and to reverse ARG's January 21 suspension and February 24 termination from BCAP as a qualified BCF. The FSA and ARG also agreed that the amount of the BCAP subsidy for all deliveries before January 21 would be recalculated to exclude payments for materials converted to black liquor and that this same formula would be used to calculate the subsidies wood dealers were entitled to for products delivered after January 21. ARG agreed to set up an account of $2.4 million from which payments would be made to the FSA and then to wood dealers who did not receive BCAP subsidies for wood delivered to ARG because of the suspension. The outstanding BCAP subsidies for wood products delivered after January 21, however, would be subtracted from overpayments made before January 21, and the FSA agreed to make additional BCAP subsidy payments to any given wood dealer only to the extent the amount owed exceeded the amount of previous overpayment. If a wood dealer still had an overpayment thereafter, ARG agreed to reimburse the FSA for that amount.
On October 6, 2010, before ARG entered into its settlement with the FSA, the wood dealers sued ARG, Landegger, and Steve Harris-the president of an ARG affiliate involved in the operation of ARG's pulp mills-in the Monroe Circuit Court, asserting breach-of-contract, negligence, wantonness, and multiple fraud claims. The wood dealers alleged fraudulent misrepresentation against all defendants but alleged breach of contract against only "[ARG] and/or fictitious defendants A-L," excluding Landegger and Harris. The gravamen of the wood dealers' complaint was that ARG had made various misrepresentations to them related to its participation in BCAP in order to induce them to sell wood products to ARG at a reduced price and that they had suffered economic damage as a result.
ARG, Harris, and Landegger filed an answer denying the allegations, and ARG asserted counterclaims against all the wood dealers except Pineville Timber Co. and THE Timber Company based on the promissory notes those entities had executed for funds ARG advanced them during the time the FSA was not paying BCAP subsidies for timber products delivered to ARG. The wood dealers denied those counterclaims. The wood dealers amended their complaint and added additional plaintiffs, and ARG filed amended counterclaims against six of the wood dealers.
A lengthy pretrial process ensued, during which the ARG defendants broadly allege that the trial court failed to properly manage the case. See, e.g., the ARG defendants' brief, at pp. 2-5. By agreement of the parties, a trial date was finally set for August 24, 2015. On May 26, 2015, approximately one month after that trial date had been set, a New York federal district court sentenced Landegger to two months in federal prison followed by six months of home confinement in Connecticut for an unrelated criminal matter.
The trial began on August 24, 2015. During the course of the trial, the wood dealers dropped their deceit, negligence, and wantonness claims. The trial court ultimately charged the jury only on the wood dealers' misrepresentation and breach-of-contract claims, as well as ARG's counterclaims based on the promissory notes executed by some of the wood dealers. As to the breach-of-contract claim, the trial court gave charges on both express and implied contracts, over the objection of the ARG defendants to the implied-contract charge. As to the wood dealers' misrepresentation charge, the ARG defendants sought, over the objection of the wood dealers, an instruction on promissory fraud. The trial court declined to give the promissory-fraud instruction. The trial court instructed the jury with respect to the verdict form as follows:
"There are three defendants. And you can find against one or all three, defendant Alabama River Group, Inc., defendant Steven Harris, and defendant George Landegger.
"And these are compensatory damages, which would be returned under-if you find the plaintiffs, they had a contract and it was breached by the defendants, or if you find that the defendants committed fraud."
On August 31, 2015, the jury returned a general verdict in favor of the wood dealers and against ARG and Landegger for $8,092,692.71-a combined total of $1,092,692.71 in compensatory damages and $7,000,000 in punitive damages. The jury found Harris not liable on all claims against him. The jury also ruled against ARG on its counterclaims. On September 3, 2015, the trial court entered a judgment consistent with the jury's verdict. However, in accordance with the statutory cap on punitive damages set forth in § 6-11-21, Ala. Code 1975, the trial court subsequently reduced the punitive damages awarded, resulting in a total judgment of $6,395,489.37.
On October 5, 2015, the ARG defendants filed postjudgment motions, including a motion for a judgment as a matter of law, a motion for a new trial, and a motion for remittitur of the compensatory and punitive damages. After a December 3, 2015, Hammond / Green Oil
II. Standards of Review
"This Court reviews de novo the grant or denial of a motion for a [judgment as a matter of law], determining whether there was substantial evidence, when viewed in the light most favorable to the nonmoving party, to produce a factual conflict warranting jury consideration. Alfa Life Ins. Corp. v. Jackson,906 So.2d 143 , 149 (Ala. 2005) (citing Ex parte Helms,873 So.2d 1139 , 1143-44 (Ala. 2003) ). ' " '[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' " ' Dolgencorp, Inc. v. Hall,890 So.2d 98 , 100 (Ala. 2003) (quoting Wal-Mart Stores, Inc. v. Smitherman,872 So.2d 833 , 837 (Ala. 2003), quoting in turn *241West v. Founders Life Assurance Co. of Florida,547 So.2d 870 , 871 (Ala. 1989) )."
Jones Food Co. v. Shipman,
In reviewing a trial court's rulings on jury instructions, a motion for new trial, a motion for a continuance, and exclusion of evidence, this Court considers whether the trial court exceeded its discretion. Wood v. Hayes,
In reviewing damages, this Court reviews an award of punitive damages de novo and with no presumption of correctness to "ensure that all punitive damage awards comply with applicable procedural, evidentiary, and constitutional requirements, and to order remittitur where appropriate." § 6-11-21(i), Ala. Code 1975. See also §§ 6-11-23(a) and 6-11-24(a), Ala. Code 1975; Schaeffer v. Poellnitz,
III. Discussion
On appeal, ARG and Landegger argue that they were entitled to a judgment as a matter of law on some of the wood dealers' claims or, in the alternative, that they are entitled to a new trial based on errors they allege the trial court committed (1) in charging the jury, (2) in denying their request for a continuance so Landegger could attend the trial, and (3) in excluding certain evidence at trial. ARG and Landegger also argue, alternatively, that this Court should further remit both the compensatory and punitive damages awarded the wood dealers.
A. Misrepresentation Claims Against ARG
The ARG defendants first argue that the trial court erred in denying their motions for a judgment as a matter of law ("JML") because, they say, the wood dealers failed to produce at trial substantial evidence of a misrepresentation of existing material fact. Specifically, the ARG defendants make the following arguments: (1) that the evidence at trial showed merely that the alleged misrepresentations made to the wood dealers were either actually true or not material and (2) that the alleged misrepresentations concerned acts or events to occur in the future, sounding in promissory fraud rather than misrepresentation.
By statute, misrepresentation claims are a type of legal fraud: namely, "[m]isrepresenta *242tions of a material fact made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently and acted on by the opposite party." § 6-5-101, Ala. Code 1975. This Court has articulated the elements of a misrepresentation claim as follows:
"1) [A] misrepresentation of material fact, 2) made willfully to deceive, recklessly, without knowledge, or mistakenly, 3) which was reasonably relied on by the plaintiff under the circumstances, and 4) which caused damage as a proximate consequence. See Foremost Ins. Co. v. Parham,693 So.2d 409 , 421-22 (Ala. 1997) (citing § 6-5-101, Ala. Code 1975, and Harrington v. Johnson-Rast & Hays Co.,577 So.2d 437 (Ala. 1991) )."
Bryant Bank v. Talmage Kirkland & Co.,
On appeal, the parties do not dispute the sufficiency of the evidence as to all the elements of misrepresentation. No arguments are presented concerning the degree of falsity (second element), reasonable reliance (third element), or causation (fourth element). The ARG defendants focus on the first element of misrepresentation; they argue that the wood dealers offered no evidence of a misrepresentation of material existing fact. Any alleged misrepresentation made by the ARG defendants, they argue, was either true, not material, or mere opinion. Specifically, the ARG defendants point to the alleged representations by the ARG defendants (1) that ARG "had become properly qualified facilities for BCAP," which the ARG defendants claim was a true statement; (2) that the wood dealers' wood materials were eligible for BCAP subsidies, which the ARG defendants claim was also a true statement; and (3) that ARG's suspension from BCAP was "just a misunderstanding," which the ARG defendants claim was merely a statement of opinion or prediction. Thus, argue the ARG defendants, there was no, or at least not substantial, evidence in the trial court to support a misrepresentation claim.
The wood dealers respond that the trial court had before it substantial evidence of several false and material representations and that, on appeal, the ARG defendants selectively take out of context certain statements in the record to support their arguments. The wood dealers do not dispute that ARG's mills were, at least initially, qualified BCFs; in fact, the amended complaint expressly alleged that the ARG defendants applied to the FSA and were "approved to be a qualified energy conversion facility." Rather, the wood dealers alleged that the qualification of ARG's mills as BCFs was a threshold representation upon which the rest of the misrepresentations made to the wood dealers largely depended. As the amended complaint alleged:
"In 2009, [the ARG] [d]efendants approached [the wood dealers] regarding the purchase of eligible materials for BCAP. [The ARG] [d]efendants represented that APP [Alabama Pine Pulp Company, Inc.] and ARP [Alabama River Pulp Company, Inc.] had become properly qualified facilities for BCAP. [The ARG] [d]efendants also stated that in order to sell wood to [ARG], [the wood dealers] would be required to reduce the price of their wood below market rates. In exchange for the reduction in price, [the ARG] [d]efendants ensured that [the wood dealers] would receive the BCAP matching payments, which, according to [the ARG] [d]efendants, would be well over the required reduction in price, and would result in higher profit for [the wood dealers]. [The ARG] [d]efendants also represented that [the wood dealers] would be paid the *243amounts agreed upon, including the amount due under BCAP, even if [the wood dealers] did not receive their BCAP matching payment."
Seen in context, the ARG defendants' representation about its mills' BCAP qualification was never alleged to be a false statement in itself, but it was alleged to be a material predicate for the alleged misrepresentations that followed. In the words of the trial court, "[b]y becoming qualified in [BCAP], [the] ARG [defendants] aimed to take advantage of federal matching payments for eligible materials delivered to ARG by wood dealers and used by ARG to make energy." Therefore, although we agree with the ARG defendants that their representation that the ARG mills were each a "qualified facility for BCAP" was, standing alone, a true statement, we agree with the wood dealers that it was also material to the series of misrepresentations allegedly made to the wood dealers about BCAP and the parties' respective roles in it.
In response to the ARG defendants' next argument-that the representation that the wood dealers' products delivered to ARG were eligible for BCAP subsidies was true-the wood dealers respond that the statement was only partially true: although a portion of the wood delivered was eligible for a BCAP subsidy, wood that was converted to black liquor was not. The evidence submitted below indicates that the FSA did not consider wood converted to black liquor to be an eligible material under the BCAP materials list, that black liquor was expressly listed as an in eligible material on the BCAP materials list, and that ARG and Landegger knew the FSA's position on black liquor and material converted to black liquor. Nevertheless, unbeknownst to the wood dealers, ARG included wood material used to make black liquor in its BCAP subsidy calculations and then expressly used this larger subsidy "formula" to induce the wood dealers to deliver their wood to ARG's mills instead of its competitors' mills. For example, John Ayres of Ayres Forestry testified that ARG told him "that [ARG] had a formula that was better than the other mills and that if I hauled wood to them, that I would get paid about two more dollars a ton than if I hauled wood" elsewhere. When asked if ARG mentioned "that they put black liquor in the formula" or if he otherwise knew that, Ayres responded: "No." Wade Rolison of BAR Forest Products testified that, when ARG explained that, under BCAP, BAR's sale price would be lowered $8 per ton, Rolison was assured that ARG "had gotten approved," showed them the ticket from the "test run" by another wood dealer, and told Rolison he would receive about $4 more per ton under BCAP if they sold to ARG. Malcolm Smith of Conecuh Timber was asked on cross-examination whether he understood that the reason ARG was "claiming a higher percentage of the wood as eligible" for a BCAP subsidy was because of the inclusion of material used to make black liquor. Smith responded: "None of that was ever mentioned in our meeting, nothing about black liquor.... [ARG] told me that that was their formula for the BCAP.... I didn't know anything about a formula." Mackey Bruce of Pea River was asked whether he knew anything about "the formula that [ARG] was giving" him to support the prices it quoted him. Bruce replied: "Absolutely not." He was asked whether ARG told him "they were running this risk trying to include black liquor in that." Bruce stated: "I had no idea." When Tommy Mosley of Pineville Timber expressed doubts that he would get a higher price after the BCAP subsidy was paid, ARG assured him that " '[i]t works' " and stated that ARG had "sent a test load through"
*244and " '[t]hey paid it. Everything is fine.' " David Wright of THE Timber Company was induced to sell to ARG at its reduced price for BCAP because of ARG's assurance that, after the BCAP subsidy, "it was more money than the other mills the way they were doing their formula. They were the experts, you know. And so I was not the expert." The evidence at trial demonstrated that ARG represented to the wood dealers that they would receive a higher BCAP subsidy by selling to ARG, even though ARG's proprietary "formula" included a substantial amount of material that was ineligible for a BCAP subsidy.
ARG's representations to the wood dealers that they would receive a BCAP subsidy, even if true for part of the wood products at issue, was not true as to material used to make black liquor. It is no defense that the statements ARG made were, at best, "half-true."
" ' "To tell half a truth has been declared to be equivalent to the concealment of the other half. A partial and fragmentary disclosure, accompanied by the willful concealment of material and qualifying facts is not a true statement, and is as much a fraud as an actual misrepresentation, which, in effect, it is." ' "
Jackson Co. v. Faulkner,
Next, the parties dispute whether ARG's repeated characterization of its suspension from BCAP as "just a misunderstanding" was actionable as misrepresentation or was merely opinion or prediction. The ARG defendants argue that the suspension was a misunderstanding with the FSA and that describing it as such was merely a statement of ARG's opinion or a prediction that the FSA would eventually agree with ARG's position. For support, the ARG defendants cite Crowne Investments, Inc. v. Bryant,
In the present case, however, there was sufficient evidence from which to conclude that the ARG defendants' statements were not merely an opinion or a prediction about events to occur in the future. For instance, Mark Bond of ARG assured Ayres Forestry after ARG was suspended *245from BCAP that "[w]e are not really kicked out. Everything was legal. We got the formula approved by the FSA. Just a misunderstanding. We are going to get put back in the program." These statements described not future events but past actions by the FSA and the current status of ARG: that the FSA had approved ARG's "formula" for eligible materials and that ARG mills were not "really kicked out" of BCAP. In Crowne, this Court found it significant in determining whether the insurance agent's statement was mere opinion that he said he "thought" he had found life-insurance coverage for his client. By contrast, ARG's alleged statements about its BCAP suspension and status were categorical, with no qualifying words of opinion such as "we think" or the like. We conclude, therefore, that there was sufficient evidence introduced from which to conclude that the ARG defendants' statements about ARG's suspension from BCAP were statements of material fact and not merely opinion or a prediction about future events. The ARG defendants' first argument that their statements were true or immaterial is unconvincing.
The ARG defendants' next argument is that the trial court erred in denying their motion for a JML because, they say, the alleged misrepresentations concerned acts or events to occur in the future, sounding in promissory fraud rather than misrepresentation. Promissory fraud, unlike misrepresentation, is a claim "based upon a promise to act or not to act in the future." Ex parte Moulton,
The ARG defendants argue that the complaint alleged promissory fraud instead of misrepresentation, that the wood dealers emphasized promissory fraud in their opening statements and in trial testimony, and that the wood dealers then "waived" their promissory-fraud claim by withdrawing their claim alleging deceit and by objecting to the ARG defendants' requested jury instruction on promissory fraud. For example, the ARG defendants focus on the representations alleged in the complaint that the wood dealers "would receive" the BCAP subsidies from the FSA; that those subsidies "would be" more than the reduction in price, which "would result" in higher profits for the wood dealers; and that, after ARG was suspended from BCAP, the ARG defendants "would pay" the matching BCAP subsidies even if the FSA did not. The ARG defendants point to similar statements by the wood dealers' attorneys in opening statements and by representatives of the wood dealers who testified at trial.
The representations at issue here, argue the ARG defendants, are like the promises made by the bank in Southland Bank that the bank "would extend a loan" to the plaintiffs. Southland Bank,
*246
The wood dealers respond that their misrepresentation claim is one of fraud in the inducement, not promissory fraud. " ' "Fraud in the inducement consists of one party's misrepresenting a material fact concerning the subject matter of the underlying transaction and the other party's relying on the misrepresentation to his, her, or its detriment in executing a document or taking a course of action." ' " Farmers Ins. Exch. v. Morris,
The wood dealers also direct us to International Resorts, Inc. v. Lambert,
Even if, as the ARG defendants argue, there was also evidence in the record below that sounded in promissory fraud, a claim of misrepresentation is not necessarily mutually exclusive with a promissory-fraud claim. We have upheld findings of liability for both misrepresentation and promissory fraud where the record below supported each claim. See, e.g., Target Media Partners Operating Co. v. Specialty Mktg. Corp.,
B. Claims Against Landegger
The ARG defendants argue that the trial court erred in denying Landegger's motion for a JML on the wood dealers' breach-of-contract and misrepresentation claims. We address the ARG defendants' arguments concerning each claim in turn.
As to the breach-of-contract claim, the parties dispute whether the wood dealers actually asserted a breach-of-contract claim against Landegger, the ARG defendants being in the curious position of arguing that the wood dealers did assert such a claim. The wood dealers dispute this, and the trial court agreed with the wood dealers in its postjudgment order, holding that "there was no such claim in the case for the court to consider for purposes of Landegger's motion for [a JML]."
To support their argument that a breach-of-contract claim against Landegger was essentially "smuggled" into this case and survives on appeal, the ARG defendants assert both that the complaint alleges and that the trial court charged the jury with a breach-of-contract claim against Landegger. As to the complaint, the ARG defendants argue that "the count for breach of contract demanded judgment against the 'Defendant s,' " which, the ARG defendants argue, included Landegger. Count four of the amended complaint provides as follows, in relevant part:
"37. At all time herein, Defendants APP [Alabama Pine Pulp Company, Inc.], ARP [Alabama River Pulp Company, Inc.], and/or Fictitious Defendants A-L were under a contractual obligation to pay the timber or wood prices agreed upon between the [wood dealers], and Defendants, including any BCAP matching payment, including those payments as represented by Defendants Landegger, Harris, and Fictitious Defendants A-L, who had actual and apparent authority to bind Defendants APP and ARP and/or Fictitious Defendants A-L to those representations, and who did thereby bind Defendants APP and ARP and/or Fictitious Defendants A-L to those representations.
"38. Defendants APP and ARP and/or Fictitious Defendants A-L breached their contractual obligations by failing and refusing to properly pay the amounts due under their agreement with [the wood dealers] thereunder.
"....
"WHEREFORE, [the wood dealers] demand judgment against Defendants in an amount of compensatory damages as will be determined by a jury at trial of this cause, plus interest and costs."
(Emphasis added.) The ARG defendants point to one word from the complaint-"Defendants"-to demonstrate that count four asserted a breach-of-contract claim *248against Landegger. The ARG defendants give no further explanation, nor do they identify which of the 12 uses of the word "defendants" in count four includes Landegger.
As a plain reading of count four indicates, the allegations therein refer only to "Defendants APP, ARP [now collectively ARG] and/or Fictitious Defendants A-L." In paragraph 38 only "Defendants APP and ARP and/or Fictitious Defendants A-L" are alleged to have "breached their contractual obligations" to the wood dealers. The only reference to Landegger anywhere in count four is the allegation in paragraph 37 that "Landegger, Harris, and Fictitious Defendants A-L" had "actual and apparent authority to bind" and "did thereby bind Defendants APP and ARP and/or Fictitious Defendants A-L to those representations." (Emphasis added.) Landegger and Harris, therefore, are expressly excluded from the group of defendants accused of breach of contract, that group being repeatedly articulated in count four as the predecessor entities to ARG "and/or Fictitious Defendants A-L." In this context, the concluding demand for "judgment against Defendants" in count four would most naturally be read to be seeking judgment against the defendants specified in count four.
The ARG defendants also argue that this surreptitious breach-of-contract claim against Landegger survived the trial proceedings and was submitted to the jury. They point to two excerpts from the jury instructions where, according to the ARG defendants, the trial court "expressly instructed the jury that it could find against Mr. Landegger on this claim." The ARG defendants focus on three or four uses of the plural "Defendant s" by the trial court in its lengthy oral instructions. The wood dealers respond that they reiterated numerous times leading up to trial that they were not bringing a breach-of-contract claim against Landegger, beginning with their response to Landegger's summary-judgment motion. The wood dealers assert that, in the context of the entire jury charge, the evidence at trial, and their concessions, the jury instructions cannot be read as importing a breach-of-contract claim against Landegger. Finally, the wood dealers argue, the ARG defendants failed to object to the jury charge or seek clarification thereof.
It seems doubtful to us that a claim not found in the complaint and expressly disavowed by the plaintiffs before trial would somehow be formed whole cloth by a few lines in a lengthy jury instruction. But we need not decide such a question because, as the wood dealers note and the ARG defendants do not dispute, the ARG defendants made no specific and timely objection to these portions of the trial court's oral instruction.
"Based on Rule 51, [Ala. R. Civ. P.,] this Court has stated: '[T]o preserve his argument as to the jury instruction, [the appellant] must have: (1) objected before the jury retired to consider its verdict; (2) stated the matter that he was objecting to; and (3) supplied the grounds for his objection.' "
Chestang v. IPSCO Steel (Alabama), Inc.,
We therefore conclude that the ARG defendants failed to adequately preserve for appellate review the issue whether the trial court's jury instructions introduced a claim of breach of contract against Landegger. Having held here that there was no breach-of-contract claim asserted against Landegger in the amended complaint, we have no reason to conclude that the trial court erred in denying Landegger's motion for a JML on this issue.
Next, the ARG defendants argue that Landegger made no misrepresentations in this case and that the trial court therefore erred in denying his motion for a JML on this claim. The parties do not dispute that Landegger never communicated directly with the wood dealers. The parties also concede that Landegger made the decisions that "ARG would (a) treat the portion of wood used to make black liquor as BCAP-eligible, and (b) pay the [w]ood [d]ealers the market price if the FSA did not pay as expected." The ARG defendants argue that, even so, neither decision constituted participating in a misrepresentation.
The wood dealers, citing Crigler v. Salac,
"In order to hold an officer of a corporation liable for the negligent or wrongful acts of the corporation, 'there must have been upon his part such a breach of duty as contributed to, or helped bring about, the injury; that is to say, he must be a participant in the wrongful act.' Fletcher's Cyclopedia of Corporations, § 1137 at 208."
Landegger was the owner of the company that operated the two ARG mills, and, as Harris stated at trial, Landegger "had the final word" on the major decisions to be made on the corporate level for the parent company and the ARG mill companies. The parties concede that Landegger approved the plan for ARG to certify as eligible for a BCAP subsidy the portion of wood used to make black liquor. Evidence introduced below also indicates that Landegger directly participated in conference calls with the USDA and learned that the *250USDA's interpretation of the BCAP materials list was such that material used for black liquor was ineligible for BCAP subsidies. Rynearson, ARG's chief financial officer and Landegger's son-in-law, warned him of the same. Landegger admitted to knowing the risk being taken, therefore, when he approved ARG's policy of certifying for a BCAP subsidy the portion of wood used to make black liquor.
" 'It is a well settled rule in this state that a person is liable for the torts which he or she commits, regardless of the capacity in which that person acts.' " Inter-Connect, Inc. v. Gross,
C. Jury Instruction on Implied Contracts
The ARG defendants argue next that the trial court erred in instructing the jury on both implied contracts and express contracts, which the ARG defendants argue are "generally incompatible." See Kennedy v. Polar-BEK & Baker Wildwood P'ship,
The wood dealers respond that jury instructions on both implied contracts and express contracts were appropriate here because (1) the ARG defendants asserted counterclaims against the wood dealers alleging breach of an implied contract and (2) the ARG defendants "hotly contested" at trial the existence of an express contract. The wood dealers also note that in Kennedy, cited by the ARG defendants for the proposition that jury instructions on both implied contract and express contract are generally incompatible, this Court nevertheless went on to hold that both instructions may be sustained. See Kennedy,
The record shows that in the trial court the ARG defendants did dispute, or appeared to dispute, both the terms and the existence of an express contract. In their answer to the first amended complaint, the ARG defendants admitted "that the wood dealers entered into contracts to sell wood to be delivered to [ARG]," but they denied the wood dealers' assertions regarding the terms of those contracts. At trial, witnesses for the ARG defendants described the prices promised to the wood dealers as mere "estimates" or "mathematical examples," and "not guarantees." On the other hand, the wood dealers testified that ARG promised them specific prices for their wood, testified about the prior course of dealing and the relationship between the parties, and described the general nature of the lumber industry, where agreements were often based on prior dealings. At the close of trial, the ARG defendants objected *251to a jury instruction on implied contract but filed in open court their own proposed jury instruction stating: "The [wood dealers] claim that the [ARG] defendants defrauded them, were negligent in contracting with them, and then breached the alleged contract. The [ARG] defendants deny that there was a contract, that they breached any alleged contract, or defrauded the [wood dealers]." (Emphasis added.) Finally, in closing arguments, one attorney for the ARG defendants concluded his portion of the arguments by stating plainly: "And when y'all go out and make your decision, there's no contract here. There's no contract. And there's certainly-there's no fraud. And Ladies and Gentlemen, I'm going to ask you to return a verdict for all the defendants." (Emphasis added.)
The ARG defendants concede that there was evidence below to support a claim alleging the existence of express oral contracts, but they do not dispute the wood dealers' argument that there was also evidence introduced below to support a claim alleging the existence of implied contracts. Instead, the ARG defendants appear to argue that a claim of breach of an implied contract is always improper when there is evidence of the existence of an express contract. Although generally mutually exclusive, claims of breach of both express and implied contracts may be alternatively submitted to a jury where both theories of contract were "highly disputed and remained a question of fact." Kennedy,
"In this case, existence of an express contract (allegedly formed by Kennedy's acceptance by performance of Polar-BEK's unilateral offer) was highly disputed and remained a question of fact, as did the alternative existence of an implied contract. Thus, the law may recognize an implied contract where the existence of an express contract on the same subject matter is not proven. Thus, it was for the jury to decide whether an express contract existed, or an implied contract, and we conclude that the trial court properly submitted both alternative contract theories to the jury."
Moreover, in another case quoted by the ARG defendants, GE Capital Aviation Services, supra, this Court did not permit both claims of breach of express contract and of implied contract to proceed, not because it is never permissible, but because in that particular case the Court did not "find any evidence that would support an implied-contract theory."
D. Denial of Continuance for Landegger and Excluding Portions of His Deposition
The ARG defendants argue that the trial court erred in denying a continuance of the trial, which was scheduled and was held during the period of Landegger's home confinement in Connecticut resulting from his federal criminal conviction. The ARG defendants also argue that the prejudice of Landegger's absence was compounded by the trial court's error in excluding positive character evidence regarding Landegger, which, they assert, was triggered by the wood dealers' counsel *252impugning Landegger's character and "opening the door" to such evidence at trial.
As to the first issue, the ARG defendants argue that they were denied a fair trial because of the denial of the continuance and Landegger's subsequent inability to personally defend himself and ARG at trial. On May 26, 2015, Landegger was sentenced to 60 days' imprisonment in New York followed by 6 months' home confinement in Connecticut. One month later on June 26, 2015, the ARG defendants filed a motion in the trial court to continue the scheduled trial until the following civil jury term in 2016. In their motion, the ARG defendants argued that "it does not appear that [Landegger] will be available to appear for trial before the end of February 2016," that Landegger was "indispensable to the defense of this case," and that his absence "would adversely affect the presentation of his case and the cases of the other defendants." The ARG defendants added in their motion that they "come to this court with hats in hand" because Landegger had "previously requested that this case be continued before he was sentenced, and that they agreed to an August 24 trial date." Landegger's home confinement began on August 24, 2015, the first day of the scheduled trial.
On July 2, 2015, the trial court issued an order denying the ARG defendants' motion for a continuance. In its posttrial order, the trial court referred to this matter, explaining:
"As to Defendant Landegger's contention that he was unfairly prejudiced by being unable to appear at the trial, the court notes that it granted several continuances in this matter (pending for nearly 5 years), and offered to assist Landegger's counsel in obtaining a reprieve from house arrest to attend the trial, but was never asked to provide assistance. Defendant's counsel made no showing of any efforts to obtain an exemption from house arrest for the trial."
After the trial, at the very beginning of the Hammond / Green-Oil hearing, the trial court again raised the issue of Landegger's absence at the trial, apparently responding to the ARG defendants' assertion in posttrial motions that the court "excluded [Landegger] from his trial." The court asserted: "[W]ell, that's true and not true. But I want to put this on the record." The court continued:
"During the course of the trial I said to one of the defense counsel that if I could do anything-he was getting off on to house arrest as I understand. I said if I could do anything to get him-and this was off the record-to get him to come to the trial, sign anything, issue any order, I would do it. And the lawyer replied to me that they had checked with the New York counsel-his New York counsel, and it was either impossible or impractical, whichever. But I just want that on the record."
No comment in response to this statement, by any counsel, is reflected in the record. In their brief before this Court, the ARG defendants do not directly dispute this statement by the trial court but argue that the court's offer, "if made, was too late for Mr. Landegger to get to trial" and to prepare therefor. The ARG defendants argue that Landegger was prejudiced by the court's denial of a continuance because, they say, he was tried in absentia for fraud in a punitive-damages case, his absence "undoubtedly led the jury to make an adverse inference on his credibility," and he would have been an indispensable participant at trial, both on his own behalf and on behalf of ARG. Therefore, argue the ARG defendants, the trial court exceeded its discretion in not continuing the trial until Landegger could attend.
*253Civil litigants in Alabama have no right to a continuance of a trial, nor do incarcerated parties have a right to personally attend or testify at trial.
"A trial judge has broad discretion to grant or deny a motion for continuance, Wood v. Benedictine Society of Alabama, Inc.,530 So.2d 801 , 805 (Ala. 1988), and it is firmly established that continuances are not favored, and therefore the trial court's denial of a motion for continuance will not be reversed unless an abuse of discretion is shown. Selby v. Money,403 So.2d 218 , 220 (Ala. 1981) ; see Cramton v. Altus Bank,596 So.2d 902 (Ala. 1992)."
Griffin v. American Bank,
In support of their argument that the trial court erred in denying a continuance, the ARG defendants provide only one footnote with a string cite of three cases: Lane v. Lane,
In Lane, the Court of Civil Appeals reversed a judgment of divorce and ordered a new trial because the trial court had denied a continuance requested by the wife, who did not have an attorney, and then, despite her collapsing in court and being taken away for medical evaluation, the court held a trial without her and divided the parties' assets. The lead opinion in Lane, authored by Retired Appellate Judge Wright, writing for the court, reversed the divorce judgment because of the indispensability of the wife's presence at trial and because the division of property was based upon "the uncertain testimony of the husband."
In Barbee, the Court of Civil Appeals unanimously reversed a divorce judgment entered on default of the husband, who was pro se and incarcerated in prison.
"There is nothing in the record, including the case action summary, that indicates any ruling by the court on the defense of improper venue; no setting of the case for hearing nor notice to the husband of a setting for trial; and no indication that any of the husband's motions were considered by the trial court or that his condition of imprisonment far from the courthouse was considered."
Barbee,
In the present case, Landegger, represented by able counsel, moved for a continuance two months before the scheduled trial date, a date to which the ARG defendants had agreed. When the ARG defendants filed the motion to continue on June 26, 2015, the litigation was in its fourth year and the trial court had already granted several continuances. The ARG defendants asserted in their motion that, "[u]nder the terms of his incarceration and home confinement, it does not appear that he will be available to appear for trial before the end of February 2016." Attached to the motion were the judgment, sentence, and supervised-release conditions for Landegger's federal crime. Under *255"Special Conditions of Supervision" of Exhibit B, the document reads: "During this period of home confinement, the defendant may leave his home only to work, attend school, participate in religious services, and attend medical appointments for himself and his immediate family, and for such other activities approved by the Probation Office." The ARG defendants assert that, after he was released to home confinement in August 2015, the first week of trial in this case, Landegger had difficulties contacting his assigned probation officer and thus could not have obtained permission to travel. However, such matters occurring after the trial court's order are not relevant to whether the trial court exceeded its discretion at the time it denied the continuance motion. "[N]ormally, a reviewing court determines the correctness of a trial court's ruling as of the time when it was made and according to what the record shows was before the lower court at that time." Johnson v. State,
Furthermore, even if Landegger was indeed unable to attend the trial, the ARG defendants have not shown that the trial court exceeded its discretion in denying the motion for a continuance. In Barbee, the only majority opinion from an Alabama court cited by the ARG defendants, a default judgment was entered against an imprisoned, pro se husband where the trial court both ignored the threshold issue of improper venue and failed to give the husband proper notice of the trial date. By contrast, Landegger faced no "stacked deck" against him as did the incarcerated appellant in Barbee: there was no last-minute scramble for a continuance, no prerequisite matter (such as venue) to be resolved, no allegation that Landegger or his counsel did not receive proper notice or had had insufficient access to legal research or case materials, and no default judgment against him. When the ARG defendants' third motion to continue was filed, they noted that Landegger had already been deposed once and made no assertion that he could not be deposed again; thus, the trial court might have presumed Landegger had sufficient time to be deposed a second time before trial. Although out-of-state and unavailable parties may certainly desire, with good reasons, to be personally present at their trial, the Alabama Rules of Civil Procedure, as we said in Hubbard, expressly provide that, for situations like Landegger's, the "proper course [was] to take his own oral or written deposition under Rule 30 or 31, [Ala. R. Civ. P.], to be used at trial as specifically provided in Rule 32(a)(3)(C), [Ala. R. Civ. P.]."
*256Relatedly, the ARG defendants also argue that the trial court erred in excluding the admission of certain portions of Landegger's deposition to allegedly rebut the wood dealers having "open[ed] the door" with evidence meant to impugn Landegger's character. Specifically, the ARG defendants assert that the wood dealers' counsel "told the jury that Mr. Landegger had made a lot of money off the backs of people in Monroe County, sold his mills, taken the money, and left the county." The ARG defendants argue that, under the doctrine of curative admissibility, portions of Landegger's deposition describing more of his contributions to Monroe County and "the testimony of Pete Black to the same effect" should have been admitted to rebut the statements by the wood dealers' counsel. See 1 McElroy's Alabama Evidence § 14.01 (6th ed. 2009); Mutual Sav. Life Ins. Co. v. Smith,
The record shows, however, that counsel for the wood dealers actually said the following:
"They want to talk about Mr. Landegger, Mr. Landegger came to Monroe County and the good things he has done. He has made a lot of money off the backs of the people in Monroe County. He has made a lot of money. And he has sold his mill and he has gone on."
In context, counsel was arguing to the jury that punitive damages should be assessed against the ARG defendants, who were accused of breach of contract and fraud. Counsel's brief mention of the "good things [Landegger] has done" for Monroe County and that he "made a lot of money" and then sold his mill and had "gone on" does not appear to be a patent attack on Landegger's character, at least not on a plain reading of a cold record. But that is why such matters as admissibility of evidence, including under the doctrine of curative admissibility, are matters within the " 'great discretion' " of the trial court, Bowers v. Wal-Mart Stores, Inc.,
In the instant case, the only case cited by the ARG defendants to support their argument is Mutual Savings Life Insurance, supra. In Mutual Savings the Court of Civil Appeals did not reverse but affirmed an order granting a new trial because curative evidence was not permitted at trial after defense counsel characterized the defendant as a "small company,"
*257E. Exclusion of the FSA State Committee Fact-Finding Report and the Wood Dealers' Letter
The ARG defendants argue next that the trial court erred in excluding two documents from admission at trial: (1) a memorandum prepared by the Alabama FSA State Committee and sent to the deputy administrator for farm programs in the USDA, dated March 11, 2010 ("the report"); and (2) a letter from several wood dealers to Landegger and Harris seeking "written confirmation of agreements made by [ARG] to us concerning ... BCAP ...." ("the wood dealers' letter"). We will address each document in turn and, again, consider "whether the trial court exceeded its discretion in excluding the evidence." Swanstrom v. Teledyne Cont'l Motors, Inc.,
The report is a three-page memorandum on USDA-FSA letterhead, dated March 11, 2010, and addressed to the "Deputy Administrator for Farm Programs" from the "Alabama FSA State Committee." The ARG defendants even include a certification of their copy of the report signed by the then Secretary of Agriculture. The subject line reads: "Alabama River Pulp Company and Alabama Pine Pulp Company, Inc." The first heading of the main body reads: "Report on Fact-Finding Hearing." The report begins with its purpose:
"Pursuant to your request of March 9, 2010, the [State Committee] held a hearing for the subject entities for the purpose of fact finding for your office. The goal was to afford the Alabama River Pulp Company and Alabama Pine Pulp Company, Inc. the opportunity to present additional information for consideration before your issuance of a final adverse determination. At the hearing, recorded by a court reporter, the two BCF program participants (hereafter referred to as 'companies') were represented by attorneys, along with their staff from the two companies."
The report describes the hearing with ARG, reports the fact-finding that was made, and provides several recommendations to the deputy administrator about ARG and its relationship to BCAP. Most notably, according to the ARG defendants, is that the state committee in the report recommended that the deputy administrator, in his final determination, (1) "reinstate [the ARG mills] as eligible BCFs"; (2) "conclude that there was no 'scheme or devise [sic]' " on the part of ARG; and (3) consider that, although ARG failed to follow its BCAP certification agreement with the FSA, it did not do so "knowingly and willfully." The state committee also stated it was "unable to refer to any authority in the form of an Agency handbook or final rule to administer" BCAP and noted that the "[USDA's Notice of Funds Availability], a few BCAP Notices and web postings have been the only written authority for implementation of this massive program."
The parties do not dispute the relevance of the report; rather, they dispute whether *258the report falls within the hearsay exception for "public records and reports" in Rule 803(8)(C), Ala. R. Evid. According to Rule 803(8)(C), the following are excepted from the hearsay rule:
"Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth ... (C) in civil actions and proceedings and against the state or governmental authority in criminal cases, factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness."
(Emphasis added.) The ARG defendants argue that the report is a public record and that, even though the deputy administrator did not accept the recommendations in the report, the report was "final" for the state committee's purposes and served as "an integral step in the administrative appeals process." Therefore, argue the ARG defendants, the trial court should have admitted the report under Rule 803(8)(C).
The wood dealers respond that the report should not be considered "factual findings" resulting from an "investigation"; rather, they argue, it was merely a "recommendation" with proposed factual findings to a higher authority in the FSA. Moreover, according to the wood dealers, the trial court properly exercised its discretion in excluding the report because it may have considered the report to have a "lack of trustworthiness" under Rule 803(8)(C) inasmuch as the findings and recommendations of the report had been rejected by the deputy administrator, the "ultimate decisional authority."
First, under Rule 803(8), the report is undeniably a "[r]ecord[ ], report[ ], statement[ ], or data compilation[ ], in any form," of a "public office[ ] or agenc[y]"-namely, a record or report generated by and for the USDA generally and the FSA specifically. Second, we disagree with the wood dealers that the report is not part of a fact-finding investigation because it was, they say, an intra-agency, nonfinal recommendation of only proposed findings of fact. The report facially identifies as a report on "a hearing ... for the purpose of fact finding" for the office of the deputy administrator and concludes with thanking the deputy administrator for the opportunity to conduct this "fact-finding effort." Moreover, the stated "goal" of the hearing, according to the report, "was to afford [ARG] the opportunity to present additional information for consideration before your issuance of a final adverse determination." Even if the recommendations made in the report were rejected by a higher ranking official, nothing about the report indicates it does not contain "factual findings resulting from an investigation pursuant to lawful authority." The report, up to this point in the analysis, qualifies rather easily under Rule 803(8)(C) as a "public record."
Third, however, " Rule 803(8) grants trial courts the discretion to exclude an otherwise qualified public record from evidence if 'the sources of information or other circumstances indicate a lack of trustworthiness.' " Swanstrom,
"decided that 'legal conclusions' are not made admissible through Federal Rule 803(8)(C). The Hines opinion offers some guidance for distinguishing 'factual' conclusions *259from 'legal' conclusions: 'Another way of looking at this inquiry is: Would the conclusion, if made by the district court, be subject to the clearly erroneous standard of review on appeal? If so, then the conclusion is factual; if not, then the conclusion is legal.'886 F.2d at 303 ."
The 11th Circuit in Hines also quoted Advisory Comments to the federal rule that "set forth several considerations to aid in determining the trustworthiness of a public report: the timeliness of the investigation; the skill and experience of the investigator; whether the investigator held any sort of a hearing; and the investigator's impartiality. These considerations are not meant to be exhaustive."
In the present case, the report suffers from several considerations, both facially and external to it, that would indicate its untrustworthiness. First, as the wood dealers argued below and in this Court, the primary findings and recommendations in the report were ultimately rejected by the deputy administrator. To the extent that the ARG defendants wanted to introduce only the report as bearing the imprimatur of the federal agency administering BCAP, the intra-agency recommendations in the report were rejected by the deputy administrator on behalf of the FSA, meaning that the FSA's opinion on the ARG defendants' actions regarding BCAP, both before the report was issued and after in the final adverse determination, were consistently the opposite of the state committee's. The trial court might have considered the admission of a report extracted from the intermediate level of an administrative-appeals process to be largely misleading and confusing for the jury and more prejudicial than probative. "[P]ublic reports, otherwise admissible under Rule 803(8)(C), may nonetheless be excluded in whole or in part if the trial court finds that they are ... more prejudicial than probative." Hines,
Second, the trial court may have considered the report to contain inadmissible legal conclusions inasmuch as the state committee recommended that the deputy administrator conclude that the ARG defendants employed "no 'scheme or devise [sic],' " that their failure to comply with BCF certification agreement was "not done knowingly and willfully," and that the written regulations governing BCAP were deficient or lacking entirely. Such legal opinions might be relevant to the claims of misrepresentation against the ARG defendants; indeed, the ARG defendants tout these very portions of the report as their reasons for desiring its admission. As legal opinions in a public record, however, they are generally inadmissible under Rule 803(8)(C). Compare Rule 803(8), Ala. R. Evid., Advisory Committee's Notes (noting that "a naked legal conclusion found in a police accident report could be excluded if it would not be helpful, as required by Ala. R. Evid. 701(b), or would not assist the trier of fact, as required under Ala. R. Evid. 702").
Third, the hearing conducted by the state committee was attended by and featured statements from only the ARG defendants. No other affected parties or witnesses were heard, rendering the hearing *260and the fact-finding more of an echo chamber of the ARG defendants' positions and arguments rather than a fair investigative report.
Fourth, the state committee in the report confessed its own lack of expertise on BCAP, which it called a "very new" program, stating that "[i]t would certainly take more than a few hours to educate the [state committee] on BCAP to prepare itself to render comprehensive findings on these submitted facts."
Fifth, the conclusion portion of the report touts BCAP as "an economic stimulus for economic growth in rural Alabama" and notes that the then President was "pressing us to participate in job forum listening sessions." Therefore, warns the report, "we would be hard pressed to explain why USDA is making a decision that is so counterproductive to the big focus ... jobs ... jobs ... jobs." Such statements indicate a potential bias by the state committee in favor of pleasing the President by avoiding an FSA determination perceived to be contrary to the ARG defendants and, by extension, inhibitive of "economic growth in rural Alabama."
These five considerations, although not exhaustive, lend support to the trial court's decision to exclude the report as untrustworthy under Rule 803(8)(C) or as otherwise inadmissible. The ARG defendants have not demonstrated that the trial court exceeded its discretion in excluding the report from evidence at trial.
The ARG defendants also argue that the trial court erred in excluding the wood dealers' letter of June 18, 2010, sent to Landegger and Harris. Landegger and Harris did not sign the wood dealers' letter. The wood dealers' letter begins ominously by noting that, although ARG and the wood dealers formerly enjoyed a "good" business relationship, "things are changing." Citing the "imminent sale" of ARG's assets, the writers ask "for written confirmation of agreements made by [ARG] to us concerning ... BCAP" and posit two "points of agreement" concerning the promissory notes ARG asked the wood dealers to sign. The letter continues, however, and notes that, when ARG was suspended from BCAP, the amounts ARG advanced to the wood dealers via the promissory notes were less than the BCAP subsidy that was being paid before the suspension, leading to a difference that "will amount to a loss" for the wood dealers. The wood dealers' letter then proposes:
"Because of this we are requesting that in the event that a partial BCAP payment is made to the wood suppliers by the FSA along the lines as other competing mills percentages were paid, then all promissory notes will be voided. If any amounts are paid over above the percentages of the competing mills, then that amount will be returned to [ARG] as full payment of said promissory notes. This would somewhat satisfy most transactions that were made by wood suppliers during the BCAP period for which [ARG] made cash advances as referenced by promissory notes."
(Emphasis added.) The ARG defendants, who do not quote the portion of the letter set forth above, argue that the trial court erred in excluding the wood dealers' letter because the letter was written before the wood dealers had asserted a legal claim, the letter sought only to confirm existing business agreements, and the letter did not offer "valuable consideration" as compromise. See Rule 408, Ala. R. Evid. The wood dealers argue that the letter was plainly an offer to compromise and is therefore inadmissible under Rule 408. We agree.
*261Rule 408 prohibits the admission of evidence of "furnishing or offering or promising to furnish-or accepting or offering or promising to accept-a valuable consideration in compromising or attempting to compromise the claim" when such evidence is "offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount." Rule 408(a)(1). The broader scope of Rule 408, unlike at common law, prohibits even "conduct or statements made in compromise negotiations regarding the claim." Rule 408(a)(2). See also Rule 408, Ala. R. Evid., Advisory Committee's Notes (noting "breadth of exclusion" extended beyond common law). This Court summed up the "well established" principles regarding the admissibility of settlement communications as follows:
"The general rule is that offers of compromise by one party to another in a civil action, whether before or after the litigation is begun, [are] inadmissible. Glaze v. Glaze,477 So.2d 435 (Ala. Civ. App. 1985). Alabama courts also recognize that conversations in connection with settlement negotiations are inadmissible. Chandler v. Owens,235 Ala. 356 ,179 So. 256 (1938). Negotiations looking to a compromise of controversies are privileged and inadmissible. See, Ford v. Bradford,212 Ala. 515 ,103 So. 549 (1925). Likewise, offers to perform that are conditional amount to mere efforts to settle a pending claim and are thus inadmissible. Yeager v. Hurt,433 So.2d 1176 (Ala. 1983)."
Super Valu Stores, Inc. v. Peterson,
In the instant case, the wood dealers' letter plainly moves from seeking to memorialize business agreements made under "good" times of old to an offer for a new and different arrangement made in light of "changing" and "imminent" circumstances. The very issues raised in the wood dealers' letter regarding the promissory notes and BCAP subsidies paid (and then suspended) are the same issues that, just a few months after, crystallized into an actual lawsuit between the wood dealers and the ARG defendants. Thus, the ARG defendants' argument that the wood dealers' letter was sent before the wood dealers had asserted their claims (or the ARG defendants their counterclaims) is not dispositive because the prohibition in Rule 408 generally applies "whether before or after the litigation is begun." Super Valu Stores,
We therefore reject the ARG defendants' arguments in favor of the admissibility of the wood dealers' letter as contrary to the broad, well established rule against the admission of offers to compromise under Rule 408. The trial court did not exceed its broad discretion in excluding the wood dealers' letter from evidence.
The ARG defendants have failed to demonstrate reversible error in the trial court's and the jury's determination of their liability to the wood dealers.
We turn now to the compensatory and punitive damages awarded.
F. Compensatory Damages
The ARG defendants argue that the compensatory damages awarded the wood dealers are excessive and largely unsupported by the evidence. They ask this Court to remit the total compensatory-damages award from $1,092,692.71 to $313,528.82. The wood dealers disagree and argue that, as the trial court held in its posttrial order, the compensatory damages are supported by the evidence and that it was within the independent discretion of the jury to award that amount, even though it is greater than the amount the wood dealers demanded.
Our review of an award of compensatory damages is guided by the following well established principles:
" 'The authority to disturb a jury verdict on the ground of excessiveness of damages is one which should be exercised with great caution....
" '....
" 'We begin by recognizing that the right to a trial by jury is a fundamental, constitutionally guaranteed right, Art. I, § 11, Const. of 1901, and, therefore, that a jury verdict may not be set aside unless the verdict is flawed, thereby losing its constitutional protection. It is only in those cases that a trial court, pursuant to [Ala]. R. Civ. P. 59(f), and this Court, pursuant to [Ala.] Code 1975, § 12-22-71, may interfere with a jury verdict. Insofar as damages are concerned, a jury verdict may be flawed in two ways. First, it may include or exclude a sum which is clearly recoverable or not as a matter of law, or which is totally unsupported by the evidence, where there is an exact standard or rule of law that makes the damages legally and mathematically ascertainable at a precise figure. In these situations, a trial court may, and should, reduce or increase the amount of the verdict to reflect the amount to which the parties are entitled as a matter of law. Second, a jury verdict may be flawed because it results, not from the evidence and applicable law, but from bias, passion, prejudice, corruption, or other improper motive. It is this category of cases that most troubles both trial and appellate courts.
" 'The cases have consistently held that in deciding whether a jury verdict is excessive because it is the result of passion, bias, corruption, or other improper motive, a trial judge may not substitute his judgment for that of the jury. We have also recognized that the trial judge is better positioned to decide whether the verdict is so flawed. He has the advantage of observing all of the parties to the trial-plaintiff and defendant and their respective attorneys, as well as the jury and its reaction to all of the others. There are many facets of a trial that can never be captured in a record, so that the appellate courts are at a special disadvantage when they are called upon to review trial court action *263in this sensitive area, although increasingly they are required to do so.' "
National Ins. Ass'n v. Sockwell,
On appellate review, we presume a jury verdict is correct, " 'and that presumption is strengthened by the trial court's denial of a motion for a new trial.' " Line v. Ventura,
" '[D]amages may be awarded only where they are reasonably certain. Damages may not be based upon speculation.... However, "this does not mean that the plaintiff must prove damages to a mathematical certainty.... Rather, he must produce evidence tending to show the extent of damages as a matter of just and reasonable inference." C. Gamble, Alabama Law of Damages § 7-1 (2d ed. 1998), as cited in Industrial Chemical [& Fiberglass Corp. v. Chandler,547 So.2d 812 , 820 (Ala. 1988) ]. The rule that one cannot recover uncertain damages relates to the nature of the damages, and not to their extent. If the damage or loss or harm suffered is certain, the fact that the extent is uncertain does not prevent a recovery.' "
Deng v. Scroggins,
The jury awarded the wood dealers the following compensatory damages, respectively:
Ayres: $76,876.17 BAR: $178,536.88 Conecuh: $248,932.22 Dry Creek: $343,634.87 Pea River: $109,670.88 Pineville: $98,542.50 TTC: $36,499.19 _________ _____________ TOTAL: $1,092,692.71
The ARG defendants argue that the compensatory damages awarded to the wood dealers are excessive in two ways: (1) the wood dealers "inflated" their own damages by $682,349.94
On the first point, the ARG defendants argue that the proper measure of compensatory damages in this case is the following formula: the total of the discounted price paid to the wood dealers by ARG, plus the full BCAP subsidy value for wood identified as BCAP wood and delivered to ARG from December 21, 2009, to April 30, 2010, minus the total amounts paid by ARG and FSA for BCAP wood delivered to ARG for the same date range. The ARG defendants provide a general citation to Hammond, but they do not challenge this portion of the compensatory-damages award as a matter of law; they appear to be arguing that this "inflated" portion of the compensatory damages is "unsupported by the evidence." Hammond,
Ayres: $19,365.89 BAR: $0 Conecuh: $68,638.88 Dry Creek: $64,714.73 Pea River: $59,574.58 Pineville: $73,163.55 TTC: $28,071.19 _________ ___________ TOTAL: $313,528.82
By these calculations, the ARG defendants assert that the wood dealers' award should be reduced by $682,349.94 and provide extensive record citations to support their proposed calculations.
The wood dealers argue that the ARG defendants place before this Court the same figures and formulas that the ARG defendants presented to the jury below but ignore the evidence that the wood dealers put before the jury to support their damages claims. For example, the wood dealers note, John Ayres of Ayres Forestry testified on direct examination that he produced a "detailed ticket listing out of my accounting program, detailing every ticket that I hauled from the time I signed [up for BCAP] through the BCAP period of April 30th." This ticket listing was entered into evidence as Plaintiffs' Exhibit 305A. Ayres explained his calculations provided in Exhibit 305A:
"Q. [Counsel for wood dealers:] That calculation was done off BCAP settlement detail sheets that [ARG] gave you?
"A. Right off the scale tickets.
"Q. That they gave you?
"A. Yes.
"Q. Okay. And the detailed listing of the amount of tons and the location and the date, that's all-those are all business records that are kept in your office?
"A. Correct.
*265"Q. And they're generated from the [ARG] settlement tickets that you received from [ARG]?
"A. Right.
"Q. All right. Now, tell the jury what you've done to calculate your damage, other than what you told me, how you came up with the total there on the back page.
"A. So what I'm claiming is that I should be due a BCAP settlement, a BCAP matching payment for every load of wood I hauled from the time I signed AD-245 and became an [Eligible Materials Owner under BCAP] until the time the program ended.
"Q. Okay.
"A. And I calculated my eligible dry tons times the forty-five dollars a ton and came down there with a total. And then I subtracted the monies that I was paid by the FSA.
"Q. All right. Hold on. Before we get to that amount, tell me-so you took essentially the number that Mark Bond gave you, compared it to the BCAP settlement sheets, multiplied that times the number of tons that you hauled, according to your business records. All right. And then what was the total that you came up with that you should have been paid?
"A. Two hundred and twenty-three thousand one hundred and nineteen dollars and fifty-two cents."
Ayres continued his testimony, discussing what his final damages figure did not include:
"Q. All right. And then what did you subtract from that amount?
"A. Then I subtracted the monies that I actually received from the FSA.
"Q. Okay.
"A. Then I subtracted the promissory notes.
"Q. Okay.
"A. And then on the back page, I subtracted eight dollars a ton for all the other tons that I hauled under the blue card.
"Q. Okay.
"A. And for a net of fifty-nine thousand one hundred and thirty-five dollars and seventy-nine cents.
"Q. Okay. Why did you subtract the eight dollars a ton?
"A. Well, the eight dollars a ton was what Mark and I agreed on. And even though it was not supposed to be subtracted and even though [ARG] was not supposed to get financial gain off of my wood, I subtracted it because that's what we had agreed on.
"Q. All right. And so you've taken that into account, right?
"A. Yes, sir.
"Q. And you've taken into account the amount you received from the FSA, the BCAP payments?
"A. Right.
"Q. And you've already subtracted the promissory notes that they claimed from you?
"A. Right."
On cross-examination, counsel for the ARG defendants thoroughly questioned Ayres on his figures and methodology and offered into evidence exhibits for the defense. Additionally, counsel for the ARG defendants also offered into evidence several exhibits related to Ayres's calculations. Like John Ayres, each of the other six wood dealers had a representative witness testify to their respective company's damages and underlying calculations in much the same way. And for each witness, the ARG defendants cross-examined (and re-crossed) him, countered with their own *266evidence, and, in their case-in-chief, presented expert testimony.
In their appellate attack on this portion of the compensatory damages, the ARG defendants are essentially asking this Court to reexamine the competing arithmetic of the parties, to reweigh the competing testimony and exhibits, and to substitute the jury's verdict with the ARG defendants' formula of the appropriate final sum. Just as "[a] trial court may not substitute its judgment for that of the jury when the jury has returned a compensatory verdict that is supported by the record," Spivey,
Witnesses for every wood dealer testified to the amount of, and the calculations used to determine, their requested damages, and supporting documentation was entered into evidence. Deferring as we must to the fact-finder, a judgment bolstered by the trial court's posttrial ruling in the plaintiffs' favor, Line,
In their second challenge to the compensatory damages, the ARG defendants argue that the jury's award exceeded what the wood dealers demanded by a total of $96,813 and that the damages should be remitted accordingly.
The ARG defendants' first argument against these "extra" damages is that, as a matter of law, the wood dealers could not recover damages on the contract and also recover reliance damages, citing Goolesby v. Koch Farms, LLC,
As noted above, however, the wood dealers' witnesses did not leave the jury to calculate their damages by guesswork. Rather, the wood dealers testified in varying detail to their economic harm incurred and also itemized the amounts they did not include in their final damages figure, including BCAP subsidies received and the "advances" received from ARG with promissory notes. They testified to the economic hardship they suffered by continuing to haul their wood to ARG after ARG's suspension from BCAP. For example, as Ayres testified, he tallied his gross total for what he believed he "should have been paid" to be $223,119.52. From that number, he testified that he subtracted the BCAP subsidies he received from the FSA, the amount of the promissory notes from ARG, and, finally, $8 per ton for wood he hauled to ARG that was not eligible for a BCAP subsidy. As Ayres explained: "Well, the eight dollars a ton was what Mark and I agreed on. And even though it was not supposed to be subtracted and even though [ARG] was not supposed to get financial gain off of my wood, I subtracted it because that's what we had agreed on." (Emphasis added.) For any one or all of those reasons, the jury may have taken the testimony of those wood dealers who presented more exacting calculations of their increased transportation costs (THE Timber Company) or the amounts other mills paid them (Dry Creek) and applied those figures as estimated damages applicable to some of or all the other similarly situated wood dealers. In its discretion, the jury may have seen fit to include certain amounts of the damages that even the wood dealers (like Ayres) thought should be credited to the ARG defendants' benefit, including the amount the ARG defendants required the wood dealers to discount their prices during the BCAP, thus raising the total compensatory-damages award.
The question is not whether this Court's (or the trial court's) arithmetic might yield different numbers, and we decline the ARG defendants' implicit invitation to measure the "extra" compensatory damages awarded with "mathematical certainty." "If the evidence furnishes data for an approximate estimate of the amount of damages, it is sufficient to support a judgment." J.M. Marsh, Alabama Law of Damages § 2:7 (6th ed. 2012). We hold that the "extra" compensatory damages, like the bulk of the award, is adequately supported by the record before us and that the ARG defendants have not met their burden of showing otherwise.
G. Punitive Damages
The ARG defendants appeal the trial court's denial of their motion for a JML on the punitive damages awarded to the wood dealers, arguing that no punitive damages should have been awarded or, alternatively, that the punitive-damages award should be remitted. We address each alternative argument in turn.
1. Clear and Convincing Evidence
The ARG defendants first argue that no punitive damages should be awarded in this case because, they say, the wood dealers did not prove "by clear and convincing evidence" that the ARG defendants engaged in "oppression, fraud, wantonness, *268or malice with regard to the plaintiff[s]," as required by § 6-11-20(a), Ala. Code 1975. "[C]lear and convincing evidence" is defined in § 6-11-20(b)(4) as follows:
"Evidence that, when weighed against evidence in opposition, will produce in the mind of the trier of fact a firm conviction as to each essential element of the claim and a high probability as to the correctness of the conclusion. Proof by clear and convincing evidence requires a level of proof greater than a preponderance of the evidence or the substantial weight of the evidence, but less than beyond a reasonable doubt."
We have repeatedly explained how, as here, a trial judge ruling on a motion for a JML should be guided by this clear-and-convincing-evidence standard:
" '[T]he "clear and convincing" standard requires the trial judge to do more than merely determine whether the nonmoving party has presented substantial evidence to support the claim for punitive damages. It is not the trial judge's function when ruling on a directed verdict [now referred to as a JML] or J.N.O.V. [now referred to as a postverdict JML] motion to weigh the evidence; rather, he must view the evidence in a light most favorable to the nonmoving party. If in viewing the evidence in that light the judge reasonably can conclude that a jury could find the facts in favor of the nonmovant and that the jury could be firmly convinced of that decision after considering the evidence in opposition, then the judge should deny the motion.' "
Cheshire v. Putman,
In applying the clear-and-convincing-evidence standard, the ARG defendants urge this Court to "weigh the conflicting evidence," echoing Justice Houston's special concurrence in Hunt Petroleum Corp. v. State,
*269Cheshire,
" '[t]he purely objective standard of whether the party having the burden of proof has produced proof to create an issue requiring resolution by a jury,' although when this Court reviews the ruling on such a motion, 'the evidence must be reviewed in the light most favorable to the nonmoving party.' "
Ferguson v. Baptist Health Sys., Inc.,
The trial court below denied the ARG defendants' renewed motion for a JML as to punitive damages, holding that the demand for punitive damages was properly submitted to the jury and ruling that "the evidence presented demonstrated by clear and convincing evidence the reprehensible actions of the [ARG] defendants, which included a scheme to profit off of a government stimulus program and timber dealers." The trial court concluded that "[t]he jury heard evidence from which it reasonably could have concluded that [the ARG] defendants consciously and deliberately engaged in fraud in its representations to [the wood dealers] causing substantial harm." The ARG defendants argue that the wood dealers failed to produce clear and convincing evidence of "oppression, fraud, wantonness, or malice"-the four categories specified in § 6-11-20. "Fraud" is expressly defined in § 6-11-20(b)(1) as follows:
"An intentional misrepresentation, deceit, or concealment of a material fact the concealing party had a duty to disclose, which was gross, oppressive, or malicious14 and committed with the intention on the part of the defendant of thereby depriving a person or entity of *270property or legal rights or otherwise causing injury."
To support their argument that there was no clear and convincing evidence of fraud, however, the ARG defendants do not argue that the wood dealers failed to "produce[ ] proof to create an issue requiring resolution by a jury," Ferguson,
Based on our review of the record, we find clear and convincing evidence from which a jury could find that ARG and/or Landegger intentionally misrepresented to the wood dealers material facts about BCAP, about the status of the ARG mills as qualified BCFs after ARG's suspension from BCAP, and about whether wood material delivered to ARG's mills was eligible for a BCAP subsidy. Moreover, there was clear and convincing evidence that these intentional misrepresentations were designed to use BCAP to lower the price paid to the wood dealers, depriving the latter of "property or legal rights or otherwise causing injury" to them. We conclude, therefore, that "there was evidence of such quality and weight that a jury of reasonable and fair-minded persons could find by clear and convincing evidence that the defendant consciously or deliberately engaged in fraud." Ex parte Norwood Hodges Motor Co.,
2. Remittitur of Punitive Damages
Alternatively, the ARG defendants argue that the punitive damages awarded are excessive and should be remitted. The jury awarded the wood dealers a combined total of $1,092,692.71 in compensatory damages plus $1,000,000 each in punitive damages. Upon the ARG defendants' unopposed motion to reduce the punitive damages according to the statutory cap set forth in § 6-11-21, Ala. Code 1975,
*271Plaintiff Compensatory Punitive Combined Ayres: $76,876.17 $711,200 $788,076.17 BAR: $178,536.88 $711,200 $889,736.88 Conecuh: $248,932.22 $746,796.66 $995,728.88 Dry Creek: $343,634.87 $1,000,000 $1,343,634.87 Pea River: $109,670.88 $711,200 $820,870.88 Pineville: $98,542.50 $711,200 $809,742.50 TTC: $36,499.19 $711,200 $747,699.19 ___ _____________ Total: $6,395,489.37
After a Hammond / Green Oil hearing, the trial court denied the ARG defendants' motion for further remittitur.
Generally, "the purpose of punitive damages is not to compensate the plaintiff but to punish the wrongdoer and to deter the wrongdoer and others from committing similar wrongs in the future." Green Oil Co. v. Hornsby,
" 'In reviewing a punitive-damages award, we apply the factors set forth in Green Oil [Co. v. Hornsby,539 So.2d 218 (Ala. 1989) ], within the framework of the "guideposts" set forth in BMW of North America, Inc. v. Gore,517 U.S. 559 ,116 S.Ct. 1589 ,134 L.Ed. 2d 809 (1996), and restated in State Farm Mutual Automobile Insurance Co. v. Campbell,538 U.S. 408 , 418,123 S.Ct. 1513 ,155 L.Ed. 2d 585 (2003). See AutoZone, Inc. v. Leonard,812 So.2d 1179 , 1187 (Ala. 2001) ( Green Oil factors remain valid after Gore ).
" 'The Gore guideposts are: "(1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases." Campbell,538 U.S. at 418 ,123 S.Ct. 1513 . The Green Oil factors, which are similar, and auxiliary in many respects, to the Gore guideposts, are:
" ' "(1) the reprehensibility of [the defendant's] conduct; (2) the relationship of the punitive-damages award to the harm that actually occurred, or is likely to occur, from [the defendant's] conduct; (3) [the defendant's] profit from [its] misconduct; (4) [the defendant's] financial position; (5) the cost to [the plaintiff] of the litigation; (6) whether [the defendant] has been subject to criminal sanctions for similar conduct; and (7) other civil actions [the defendant] has been involved in arising out of similar conduct."
" ' Shiv-Ram, Inc. v. McCaleb,892 So.2d 299 , 317 (Ala. 2003) (paraphrasing the Green Oil factors).' "
CNH America, LLC v. Ligon Capital, LLC,
a. Gore Guidepost 1: Degree of Reprehensibility
" '[T]he most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility *272of the defendant's conduct.' " Campbell,
"the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident."
According to the Campbell rubric, the first two considerations do not support a finding of reprehensibility on the part of the ARG defendants: the harm caused by the ARG defendants was not physical and did not demonstrate a disregard for anyone's health or safety. The next three considerations, however, support a finding of reprehensibility. As to the "financial vulnerability" of the plaintiffs, the ARG defendants argue that the wood dealers were not "elderly, poor, disabled, or illiterate" but were "successful businessmen." The ARG defendants cite no support for the idea that businessmen (or businesses) cannot be considered "financially vulnerable." In the instant case, the purpose of BCAP was to provide assistance for wood dealers in a struggling economy, not to provide a financial windfall for paper mills. But the ARG defendants positioned themselves as the BCAP experts and "gatekeepers" to the BCAP subsidies and urged as many wood dealers as they could to sell them wood at a discounted price. When the FSA suspended ARG from BCAP, thereby prohibiting any wood dealer from obtaining a BCAP subsidy for wood delivered to ARG's mills, the ARG defendants doubled down and told the wood dealers to continue delivering wood to ARG's mills anyway. For example, Malcolm Smith, president and part-owner of Conecuh Timber, testified that Conecuh was "going in the red" because it had contracted to pay timberland owners a higher price for their timber based on the ARG defendants' promise that Conecuh would receive a BCAP subsidy for the wood it delivered to ARG's mills. Terry Chapman, Conecuh's CEO, stated that Conecuh was "running out of cash and couldn't borrow any more money to operate on." Tommy Mosley, co-owner of Pineville Timber, testified that he asked ARG if he could "just continue like we are" and was told: "If you want to do business with [ARG], you are going to do BCAP." When asked at trial about whether he had had a choice to sign the promissory notes, Mosley responded: "Yes, sir, we could go out of business or we could stay in business. That was our choice." Moreover, ARG responded to the financial crisis of the wood dealers no longer receiving BCAP subsidies by paying them what they called an "advance" to compensate them in part, but they also made the wood dealers sign promissory notes therefor. In short, the ARG defendants used BCAP subsidies against the wood dealers for their own profit and responded to the wood dealers' deepening financial vulnerability by converting the wood dealers' losses into debts owed to ARG and enforced by a countersuit. We find ample evidence from which to conclude that the wood dealers were financially vulnerable and became more so throughout the duration of ARG's manipulation of BCAP.
As to the last two considerations of reprehensibility, the conduct of the ARG defendants involved repeated misrepresentations to the wood dealers to induce, and *273then to keep them, delivering wood to ARG's mills. Their decision to certify as eligible for a BCAP subsidy wood used to make black liquor affected every wood dealers' delivery to ARG's mills during BCAP. The misrepresentations here were not isolated incidents, and the ARG defendants' argument in their brief that BCAP was a "one-time program" lasting a few months is inapposite. Moreover, the harm to the wood dealers was caused, we have already held, by the ARG defendants' intentional misrepresentations.
In sum, three of the five Campbell factors support a finding of reprehensibility regarding the ARG defendants' conduct toward the wood dealers.
b. Gore Guidepost 2: Disparity Between Harm that Occurred and Punitive-Damages Award
Under the second Gore guidepost, the Campbell Court refused to impose a "bright-line ratio" of punitive damages to compensatory damages and reiterated its reluctance to "identify concrete constitutional limits on the ratio between harm, or potential harm, to the plaintiff and the punitive damages award.
The ARG defendants correctly note that the trial court "did not explain how the jury could justifiably award the same amount of punitive damages ($1 million) to each Wood Dealer," given the range of compensatory damages awarded.
Plaintiff Compensatory Capped Punitive Ratio Ayres: $76,876.17 $711,200 9.25 BAR: $178,536.88 $711,200 3.98 Conecuh: $248,932.22 $746,796.66 3.00 Dry Creek: $343,634.87 $1,000,000 2.91 Pea River: $109,670.88 $711,200 6.48 Pineville: $98,542.50 $711,200 7.22 TTC: $36,499.19 $711,200 19.49
Nothing in the record supports the wide range of punitive-to-compensatory ratios. In fact, when we consider the defendants' conduct that supports the punitive damages we see that the wrongdoing toward each wood dealer was generally the same. Although some wood dealers brought more BCAP wood to ARG's mills than others, resulting in higher economic damage, there was no material deviation in the facts and circumstances of the ARG defendants' misrepresentations toward the wood dealers. Therefore, the jury's award of a uniform $1,000,000 in punitive damages to every wood dealer appears to be arbitrary and not based upon any relationship to the compensatory damages.
In determining what the reasonable and proportionate ratio in this case ought to be, we note that the wood dealer who was awarded the highest compensatory damages, Dry Creek, was awarded the lowest damages ratio, even after application of the damages cap, of just under 3:1. The Gore and Campbell opinions addressed in general terms circumstances where a low or a high damages ratio "may comport with due process,"
Beyond the internal logic of the 3:1 ratio that arises from a reasonable and proportionate application of Dry Creek's damages ratio to those of the other wood dealers, we have described the 3:1 proportion as "a ratio for which substantial support can be found under Alabama law." Sockwell,
Although we continue to refuse to identify any bright-line numerical value that would judicially cap punitive damages for all cases, we conclude that in the present case the second Gore guidepost, informed by Campbell and Alabama law, favors a remittitur to a 3:1 ratio of the punitive damages awarded to the wood dealers whose awards are not less than this 3:1 ratio: namely, Ayres, BAR, Pea River, Pineville, and THE Timber Company. No remittitur is necessary, therefore, for Dry Creek and Conecuh, whose damages ratios stand at 2.91:1 and 3:1, respectively.
c. Gore Guidepost 3: Similar Criminal or Civil Penalties
The third Gore guidepost is the comparison between the punitive-damages award and the civil or criminal penalties authorized or imposed in comparable cases. Campbell,
We have repeatedly noted that the Hammond / Green Oil factors are " 'similar, and auxiliary in many respects, to the Gore guideposts.' " CNH America,
d. Green Oil : Reprehensibility
We thoroughly discussed the reprehensibility of the ARG defendants' conduct under the "more narrow [review] under Gore and because we have concluded that [their] conduct was reprehensible under Gore, we need not readdress reprehensibility in our Hammond/Green Oil analysis." Shiv-Ram,
e. Green Oil : Relationship of Award to Likely or Actual Harm
We have already considered the ratio of the punitive-damages award to that of the compensatory damages and remitted the wood dealers' awards to a 3:1 ratio. The ARG defendants provide no additional arguments or reasons that this factor favors additional remittitur.
f. Green Oil : ARG Defendants' Profit from Misconduct
Concerning the profitability of the ARG defendants' wrongful conduct, we have said that " 'the punitive damages should remove the profit and should be in excess of the profit, so that the defendant recognizes a loss.' " Green Oil,
Additionally, the ARG defendants anticipated making in excess of $10 million through their manipulation of BCAP, although this estimate included profit made on wood dealers not parties to this suit and for a longer period of participation than *277what actually occurred. But even an intended profit may be considered under this Green Oil factor. See Tanner v. Ebbole,
However, as the trial court noted, the ARG defendants ultimately failed to provide sufficient documents detailing their financial position, including their financial gain from BCAP and the wood dealers. Without the relevant financial documentation, ARG's claims of a low profit was and is difficult to verify. Thus, we find that this factor does not weigh in favor of a remittitur.
g. Green Oil : Defendants' Financial Position
The ARG defendants expressly waived reliance upon this factor in the trial court and, on appeal, concede that this factor weighs against remittitur.
h. Green Oil : Plaintiffs' Costs of Litigation
Under this factor, " '[a]ll the costs of litigation should be included, so as to encourage plaintiffs to bring wrongdoers to trial.' " Green Oil,
i. Green Oil : Other Mitigating Criminal or Civil Sanctions
The last two Green Oil factors advise mitigation of the punitive damages "[i]f criminal sanctions have been imposed on the defendant ... [or] [i]f there have been other civil actions against the same defendant, based on the same conduct."
In summary, after considering the Gore guideposts and the Hammond / Green Oil factors, we conclude that the wood dealers' awards of punitive damages in this case should be remitted to an internally consistent 3:1 ratio for each wood dealer, with the exception of Dry Creek and Conecuh, whose awards are already within or at that ratio.
IV. Conclusion
We affirm the trial court's judgment as to liability and compensatory damages. We affirm the punitive damages awarded to Dry Creek Loggers, Inc., and to Conecuh *278Timber, Inc. With respect to the punitive-damages awards of the remaining wood dealers, the judgment of the trial court is affirmed on the condition that those wood dealers file with this Court, within 21 days, a remittitur of the punitive-damages awards to a 3:1 ratio. The respective remittitur for said wood dealers should be as follows:
Plaintiff Compensatory Remitted Punitive Ayres: $76,876.17 $230,628.51 BAR: $178,536.88 $535,610.64 Pea River: $109,670.88 $329,012.64 Pineville: $98,542.50 $295,627.50 TTC: $36,499.19 $109,497.57
Should any wood dealer fail to timely file the respective remittitur, the judgment as to that wood dealer will be reversed and the cause remanded for a new trial. See Ross v. Rosen-Rager,
AFFIRMED IN PART AND AFFIRMED CONDITIONALLY IN PART.
Main, Wise, and Bryan, JJ., concur.
Stuart, C.J., and Bolin, J., concur in part and concur in the result.
Shaw, J., concurs in the result.
Sellers, J., recuses himself.
BOLIN, Justice (concurring in part and concurring in the result).
I concur with the main opinion with the exception of Part III.F, concerning compensatory damages, as to which I concur in the result only.
Stuart, C.J., concurs.
Steve Harris, the president of an ARG affiliate involved in the operation of ARG's pulp mills, was also named as a defendant. The jury found in his favor, and he is not involved in this appeal. For that reason, we have not included him in the definition of the ARG defendants.
Two other plaintiffs were initially in the complaint (Johnson and Associates, LLC, and Webb-Taylor Timber, Inc.), but on March 18, 2014, the trial court dismissed their claims with prejudice and entered a final judgment against them for violating the trial court's order to respond to the ARG defendants' discovery requests. Three other plaintiffs-Pea River Timber Company, Inc., Pineville Timber Co., LLC, and THE Timber Company, LLC-were not named in the initial complaint but were added in the amended complaint filed April 18, 2011.
Pub. L. No. 110-246, §§ 9001, 9011 (2008).
Black liquor is a dark slurry of water, chemicals, and other materials removed from the wood as a by-product of the paper-making process. Black liquor is created when wood chips are heated under pressure with a chemical mixture known as "white liquor" in large vessels called digesters, the object of which is to separate other undesirable materials from the cellulose fibers in wood that make up raw wood pulp. Once these undesirable materials are separated from the wood pulp in the digester, they combine with the other materials used in the process to form black liquor. This black liquor is then sent to the recovery boiler, where it is heated to remove the water, and the materials extracted from the wood are burned to create heat and power for use in the pulp mill. During the burning process, the nonflammable chemicals in the initial white-liquor mixture are also separated and removed, becoming "green liquor." Green liquor is then treated with lime to become white liquor that can subsequently be used again in the digester when the cycle is repeated. Pulp mills create their own black liquor as part of the paper-making process; some pulp mills also purchase additional black liquor from other sources to help meet their energy needs.
At the time of the transactions underlying this dispute, those two pulp mills were operated by two separate Landegger-controlled companies-Alabama River Pulp Company, Inc. ("ARP"), and Alabama Pine Pulp Company, Inc. ("APP"). In July 2010, both pulp mills were sold to Georgia-Pacific Corporation and ARP and APP thereafter merged and became ARG. ARP and APP were the initial defendants named in the wood dealers' complaint; however, ARG was substituted shortly before the trial began. For convenience, we refer to ARG as the owner of the two pulp mills.
Landegger was convicted of a failure to report a foreign bank account to the Internal Revenue Service, a violation of
Hammond v. City of Gadsden,
By contrast, all six of the other counts in the wood dealers' amended complaint allege claims against the "Defendants" generally, never specifying individual defendants as does count four.
In the third case in the string-cite by the ARG defendants on the continuance issue-a 1975 case from the Supreme Court of Colorado-the plaintiff in a false-imprisonment and slander case moved through counsel for a two-month continuance, his first, two days before trial because he was incarcerated in Mexico and therefore was unable to attend trial. Gonzales v. Harris,
As part of their arguments that the trial court's rulings rendered the trial unfair, the ARG defendants also argue that the court erred in failing to grant their motions to compel their discovery requests, in failing to enforce the court's scheduling order, and in allowing the wood dealers "to introduce evidence identified at the 11th hour." The ARG defendants cite no authority for these arguments, however, so we consider them to be effectively waived. See Rule 28(a)(10), Ala. R. App. P.; Jimmy Day Plumbing & Heating, Inc. v. Smith,
In their arguments against the allegedly excessive $682,349.94 in compensatory damages, the ARG defendants specifically argue that the compensatory damages of plaintiffs Ayres, BAR, Conecuh, Dry Creek, and Pea River should be reduced and provide extensive record citations, but they make no such arguments or record citations regarding the damages awarded to Pineville and THE Timber Company. We therefore consider the ARG defendants' challenge to compensatory damages for Pineville and for THE Timber Company to be waived as to this issue.
According to our calculations, if $96,813 is subtracted from $1,092,692.71 (the jury award of compensatory damages), the resulting amount is $995,879.71, from which is subtracted $313,528.82 (the proved compensatory damages). The resulting amount of alleged overpayment is $682,350.89, not $682,349.94.
In Hunt Petroleum, the majority opinion reversed the trial court's judgment on the basis of liability and so never reached the punitive-damages award, but Justice Houston in his special concurrence quoted the clear-and-convincing-evidence standard of § 6-11-20 and expounded on his view of the statutory standard as follows:
"The phrase 'when weighed against evidence in opposition' is very important. Unlike the typical review of a judgment based on a jury verdict where we must, as the jury may, disregard evidence submitted by the defendant when that evidence is disputed, when evaluating the propriety of punitive damages under Ala. Code 1975, § 6-11-20, we are required to weigh the conflicting evidence."
As to the qualifying phrase in § 6-11-20(b)(1) that the fraud must be "gross, oppressive, or malicious," we have held the meaning of the latter words to be subsumed within the former word:
"The terms 'malicious' and 'oppressive,' as defined [in § 6-11-20(b)(2) & (5), respectively], and the term 'gross,' which is defined as inexcusable, flagrant, or shameful, see Talent Tree Personnel Services, Inc. v. Fleenor,703 So.2d 917 (Ala. 1997), are subsumed within the definition of fraud in § 6-11-20(b)(1). In other words, it cannot seriously be argued that an intentional act of fraud committed for the purpose of 'depriving a person or entity of property or legal rights or otherwise causing injury,' is not a gross, malicious, or oppressive act, as those terms are defined in § 6-11-20. In short, for purposes of applying § 6-11-20(b)(1), the terms 'gross,' 'malicious,' and 'oppressive' are redundant."
Prudential Ballard Realty Co. v. Weatherly,
Section 6-11-21(a), Ala. Code 1975, limits punitive-damage awards in cases such as this one to "three times the compensatory damages ... or five hundred thousand dollars ($500,000), whichever is greater." According to subsection (f) thereof, the $500,000 fixed-sum cap "shall be adjusted as of January 1, 2003, and as of January 1 at three-year intervals thereafter, at an annual rate in accordance with the Consumer Price Index [CPI] rate." The ARG defendants' motion to reduce the punitive damages according to § 6-11-21, using the 2015 January CPI adjustment, calculated the fixed-sum cap to be $711,200.
The ARG defendants argue that the ratios between the punitive damages and compensatory damages awarded were "unreasonable" and "excessive" and, citing Campbell, that they should be remitted to 1:1; they make no arguments, however, as to the disparate ratios among the wood dealers. The wood dealers do not address the second guidepost of Gore at all.
"[R]atios greater than those we have previously upheld may comport with due process where 'a particularly egregious act has resulted in only a small amount of economic damages.' [Gore,
Campbell,
In general, it would be inappropriate for a court to base the amount of punitive damages awarded to one plaintiff upon harm done to other similarly situated plaintiffs in the same case. " '[W]e can find no authority supporting the use of punitive damages awards for the purpose of punishing a defendant for harming others.' " Guyoungtech USA, Inc. v. Dees,
Reference
- Full Case Name
- ALABAMA RIVER GROUP, INC., and George Landegger v. CONECUH TIMBER, INC.
- Cited By
- 6 cases
- Status
- Published