James D. Forster v. Patrick W. Boss ( 1996 )

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No. 95-4078WM
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James D. Forster and Joann *
Forster, *
*
Appellees, *
* On Appeal from the United
v. * States District Court for
* the Western District of
* Missouri.
Patrick W. Boss and Janet L. *
Boss, *
*
Appellants. *
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Submitted: June 14, 1996
Filed: October 11, 1996
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Before RICHARD S. ARNOLD, Chief Judge, WOLLMAN, Circuit Judge, and
KORNMANN,* District Judge.
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RICHARD S. ARNOLD, Chief Judge.
This case arises out of the sale of property fronting on the Lake of
the Ozarks in Missouri. The plaintiffs are the buyers of the property,
James D. Forster and Joann Forster. The defendants are the sellers,
Patrick W. Boss and Janet L. Boss. The District Court awarded plaintiffs
both damages, for fraud and breach of contract, and injunctive relief.
Defendants appeal, arguing that plaintiffs are receiving what amounts to
a double recovery: an
*The Hon. Charles B. Kornmann, United States District Judge
for the District of South Dakota, sitting by designation.
injunction that makes them whole plus damages to compensate them for the
loss of the very rights that the injunction has guaranteed. We agree with
this contention in part, and accordingly affirm in part, reverse in part,
and remand for further proceedings.
When defendants, the Bosses, agreed to sell the property to the
Forsters, they represented that the Forsters could obtain a permit for a
boat dock in front of their newly acquired property. In fact, unknown to
the Forsters, the sellers had a boat-dock permit of their own that made it
impossible for the Forsters to obtain the permit they had been promised.
The defendants do not contest the finding made below that they were guilty
of fraud in this respect. And, in fact, when the plaintiffs applied to
Union Electric Company (which created the lake and has the right to grant
permits) for a permit, their application was denied on the ground that the
sellers, the defendants, already had a conflicting permit. To compensate
the plaintiffs for this fraud, the jury awarded $12,250 in compensatory
damages and $10,000 in punitive damages.
The other claim for damages on which the plaintiffs prevailed had to
do with a swim dock. When the property was sold, defendants promised that
they would remove their swim dock from in front of the transferred
property. They did not keep this promise. The jury awarded $2,500 in
compensatory damages to the plaintiffs on account of this breach of
contract.
On appeal, defendants argue first that there was no sufficient
evidence to support the damages verdicts. We disagree. The verdict for
$12,250 on the fraud claim finds ample support in the record. In fact, the
testimony was that the value of the property transferred without the boat-
dock permit was $43,000 less than it would have been with the permit. The
record would have supported a much greater award than was actually given
by the jury. As to the swim dock, the evidence is less specific, but the
defendants' failure to remove their swim dock, so plaintiffs could install
one
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of their own in front of the transferred property, was one of a list of
items in respect of which evidence tended to show that plaintiffs did not
receive full value from the sale. The total amount of damages ascribed to
the entire list was $40,000. No specific figure was given for the swim
dock, but it was of some substantial value, and we do not believe that the
jury exceeded its brief in returning a verdict for the relatively small
amount of $2,500. Certainly there was a breach of contract with respect
to the swim dock. This much is now conceded. We do not think that the
inability to ascribe a more precise value to this item requires the verdict
to be set aside.
The major issue on appeal arises because damages were not the only
relief secured by the plaintiffs. They also got a permanent injunction
ordering defendants to remove the offending swim dock. In addition, and
most important, they got their boat-dock permit from Union Electric. Union
was a party defendant in the District Court. It took no active part in the
trial, except to enter into a stipulation agreeing that if the Court should
hold plaintiffs entitled to a permit under their contract with defendants,
Union would grant the permit to plaintiffs and revoke the permit previously
granted to defendants. This in fact occurred, so plaintiffs now have their
permit and defendants have lost theirs. No future permit may be granted
to defendants that would interfere with plaintiffs' rights.
In this situation, defendants argue that the injunction has made
plaintiffs whole. They have both their swim dock and their boat-dock
permit. Thus, the property transferred to them has exactly the
characteristics defendants agreed it would have: it has a boat-dock permit
attached to it, and it is not encumbered by defendants' swim dock. If
plaintiffs also receive, as damages, money to compensate them for the
difference in the value of the property as promised and the value of the
property as transferred, they have received a double recovery. Plaintiffs
have, in effect,
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received not only damages for fraud and breach of contract, but also
specific performance. They have both the money and the property, and are
in a better position than they would have been in had there been no fraud
or breach of contract in the first place.
We find this argument compelling. Plaintiffs point out that under
Missouri law the measure of damages for fraud in connection with the sale
of land is the difference between the value of the land on the date of sale
as represented, and the value of the land on the date of sale as actually
conveyed. The sale took place in 1991. At that time, according to the
jury, the land as represented was worth $12,250 more than the land as
conveyed. Nothing that happened thereafter, for example, an injunction
guaranteeing plaintiffs their boat-dock permit, can change those facts.
We understand the argument but find it too simplistic. If the argument
were accepted, the entry of an injunction, or the obtaining of the boat-
dock permit in some other way, would be wholly irrelevant to the recovery
of damages, even though one or the other of these events occurred on the
day immediately following the sale. This does not make sense. It is true,
of course, that the lapse of time was greater than one day here -- about
three years, in fact. It is entirely possible that plaintiffs sustained
some sort of damages because they had to wait for the complete fulfillment
of the terms of the sale. The case, however, was not tried on that theory,
and there is no evidence in this record on which damages of this interim
kind could be calculated.
Plaintiffs argue that they sought redress for the violation of two
separate legal rights: their right not to be defrauded and the "littoral
rights" appurtenant to the purchased property. In the abstract, this
proposition makes sense, but it breaks down when we consider it in the
practical context of this case. The very littoral rights that plaintiffs
say are protected by the injunction -- the right to a boat-dock permit and
the right to have defendants' swim dock moved -- are the same rights for
the loss of
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which the award of damages is designed to compensate. We cannot escape the
proposition that the injunction has made plaintiffs whole in the very
respects for which they sought damages. To allow them to keep both the
compensatory damages and the injunction would be a double recovery.
Defendants cite Harris v. Union Electric Co., 766 S.W.2d 80 (Mo.) (en
banc), cert. denied, 492 U.S. 919 (1989), and the citation is apt. There,
plaintiffs had recovered damages on account of the inadequate description
of certain redemption rights in a prospectus for bonds issued by Union
Electric. They subsequently sought an injunction in a separate action to
prevent Union Electric from redeeming the bonds. The Supreme Court of
Missouri held that such injunctive relief was improper. The defect in the
description of plaintiffs' redemption rights had already been fully
remedied by the recovery of damages. They had no right to the further
relief of an injunction forbidding the redemption of the bonds. Union
Electric had, so to speak, bought the right to redeem the bonds, despite
the prospectus's inadequate description of the redemption rights, by paying
the damages awarded in the earlier action. Plaintiffs seek to distinguish
the case by emphasizing their point that the injunction in this case is
designed to protect their littoral rights, which, they insist, are entirely
separate from their right not to be defrauded. As we have already
explained, we do not agree with this contention in the circumstances of the
present case. The damages award has already, in effect, paid plaintiffs
in full for the deprivation of their littoral rights.
We conclude that the case must be remanded for further proceedings.
On remand, it will be up to plaintiffs to elect which remedy they want --
compensatory damages or the injunction. We think, however, that they
should be allowed to retain the $10,000 award of punitive damages in either
event. Defendants' conduct in this case was abusive, and they do not argue
on appeal that the
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award of punitive damages was not based on sufficient evidence. Punitive
damages are not designed to compensate anybody. They are designed to
punish misconduct and to deter future misconduct. The award of punitive
damages, therefore, is not duplicative of the relief contained in the
injunction. It is also clear that a court of equity may award injunctive
relief and actual and punitive damages as an adjunct to its equity
jurisdiction. Martin v. Swenson, 335 F. Supp. 765 (W.D. Mo. 1971). If it
is necessary under Missouri law for some compensatory damages to be awarded
in order to support any award of punitive damages, the District Court is
instructed to award plaintiffs compensatory damages of one dollar on their
fraud claim, plus the punitive damages of $10,000.
To the extent that it holds defendants liable, the judgment is
affirmed. To the extent that it allows plaintiffs to receive both
compensatory damages and an injunction, the judgment is reversed. The
cause is remanded for further proceedings consistent with this opinion.
KORNMANN, District Judge, concurring.
I concur. Most respectfully, I write separately only to express my
opinion that plaintiffs elected a remedy. They sought and received an
injunction and the fruits of it, the boat dock permit. It would be unjust
for plaintiffs to receive the dock permit, as they already have, keep it,
and also recover damages for the claimed loss of the dock permit. My
concern is that if plaintiffs are simply allowed to "give up" the
injunction, our decision may have little practical benefit for defendants
who will already have lost the permit and will still owe the monetary
damages. It may be that the dock permit cannot be retrieved by defendants,
despite the lifting of the injunction. In the alternative, I would have
the District Court determine if plaintiffs have made the election, the
mandate being that plaintiffs are not to be allowed to receive and retain
the dock
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permit as well as the $12,250.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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