United States District Court, N.D. Ohio, Western Division
JEFFREY J. HELMICK UNITED STATES DISTRICT JUDGE
a five day trial in April 2015, the jury found in favor of
Plaintiff on claims of breach of fiduciary duty and fraud.
(Doc. No. 209). The jury awarded damages in the amount of
$989, 000.00 on the breach of fiduciary duty and zero dollars
on the claim of fraud. (Id.). The jury also awarded
the Plaintiff $1, 135, 000.00 in punitive damages.
the jury trial, the Defendant filed his notice of appeal on
May 27, 2015. (Doc. No. 225). That same day, Defendant filed
an amended motion for leave to file a renewed motion for
judgment as a matter of law. (Doc. No. 226). On June 5, 2015,
the Sixth Circuit Court of Appeals noted they were holding
the Defendant's appeal in abeyance pending rulings on
pending motions. (Doc. No. 233). The Defendant's motion
for judgment as a matter of law was denied on June 2, 2016.
(Doc. No. 266).
November 8, 2016, Defendant Parent moved for an indicative
ruling to amend the prior judgment and apply Indiana's
split-recovery punitive damages statute to the judgment
issued in this case. Following briefing on that issue, I
granted the motion for an indicative ruling pursuant to Fed.
R. Civ. Pl 62.1(a)(3) “if the Sixth Circuit were to
remand the case for this purpose.” (Doc. No. 317). On
July 17, 2017, the Circuit issued a remand to this Court for
that very purpose. (Doc. No. 318).
this matter is before me on the limited issue regarding the
punitive damages award and whether Indiana's
split-recovery statute applies to that award. Defendant
argues that Indiana's split-recovery statute, Ind. Code
§ 34-51-3-6, applies to the punitive damages award.
The Defendant acknowledges this is a novel situation but
advocates the “split-recovery statute of one state
should be recognized to apply to a state law claim in a
federal court sitting outside the subject state.” (Doc.
No. 295-1 at p. 7). In opposition, Plaintiff contends the
Indiana statute is procedural, not substantive, and that
under a choice of law principles, the law of Ohio must be
applied to this award.
diversity cases, state law governs damage awards because
damages are a matter of substantive law.” 17A
Moore's Federal Practice §124.07[a] (3d ed.
2017), citing Browning -Ferris Indus. of Vermont
v. Kelco Disposal, Inc., 492 U.S. 257, 278-79 (1989).
“Erie mandates that a federal court sitting in
diversity apply the substantive law of the forum State,
absent a federal statutory or constitutional directive to the
contrary.” Salve Regina College v. Russell,
499 U.S. 225, 226 (1991), citing Erie Railroad Co. v.
Thompkins, 304 U.S. at 78.
actions, the Supreme Court of Ohio adopted the choice-of-law
approach set forth in the Restatement (Second) of the Law of
Conflicts §§ 145-146 (1974), modifying the
traditional lex loci delicti analysis. Muncie
Power Products, Inc. v. United Tech. Auto., Inc., 328
F.3d 870, 873-875 (6th Cir. 2003), citing
Morgan v. Biro Mfg. Co., 15 Ohio St.3d 339, 342
(1984) (noting “the law of the place of injury controls
unless another jurisdiction has a more significant
relationship to the lawsuit”).
applies the following factors in determining the
“significant relationship” requirement: 1) the
place where the injury occurred; 2) the place where the
conduct causing the injury occurred; 3) the domicile,
residence, nationality, place of incorporation, and place of
business of the parties; 4) the place where the relationship
of the parties is located; and 5) any factors under Section 6
of the Restatement which the court may deem relevant to the
litigation. Morgan, 474 N.E.2d at 289 (citing
Restatement (Second) of the Law of Conflicts § 145
(1971)); see also Wahl v. General Elec. Co., 786
F.3d 491, 499 (6th Cir. 2015). These factors are
to be evaluated “according to their relative importance
to the case.” Morgan, 474 N.E.2d at 289.
“The Restatement test is a fact-driven approach that
necessarily varies from case to case.” MacDonald v.
General Motors Corp., 110 F.3d 337, 346 (6th
the first factor, I find the injury to the Plaintiff occurred
in Ohio. This is where Plaintiff became embroiled in
litigation, initiated in state court over various promissory
notes. Litigation related to the conduct in this case
continues to plague the Plaintiff in this forum. For example,
in this case there are pending motions to intervene by First
Federal Bank to establish an equitable lien against the
judgment or lien of Plaintiff against Defendant (Doc. No.
310), and by Jonathan M. Epling to assert a creditor's
bill against any judgment or lien of Plaintiff against the
Defendant. (Doc. No. 326).
conduct causing the injury took place in Ohio, Indiana, and
Florida. In July 2008, the Defendant traveled to Ohio to
secure Plaintiff's signature to promissory notes and
mortgages on the properties owned by JPSH, LLC, an entity
formed by the parties. Additionally, the Defendant took sole
possession of all financial records of JPSH, including those
held by the Plaintiff in Ohio, after July 2008. While a
resident of Indiana and Florida, Defendant failed to make
payments on the note or notify Plaintiff of the non-payment,
which resulted in foreclosures on the Kentucky and Louisiana
properties, and which were purchased by the Defendant's
entity at foreclosure sales. Notice of the foreclosures was
directed to the Plaintiff in Ohio. The Defendant's
conduct in Ohio put the Plaintiff at risk for the ultimate
failure. On balance, I find this factor weighing in favor of
Ohio as the place where the conduct causing the injury
the domicile, residence, place of incorporation, or place of
business, it is undisputed Plaintiff is a resident of Ohio.
There is a dispute as to the Defendant's residency. In
his answer (Doc. No. 10) to the complaint, Defendant denied
he was a resident of Indiana. There was no testimony
regarding Defendant's residency at trial.
sur-sur reply to his motion, Defendant submits a declaration
stating: “[f]or the years 2009-2012, I was a resident
of Florida. During those years, I also spent a substantial
time living in Indiana.” (Doc. No. 308-1). According to
a January 2011 deposition from the state court litigation,
the Defendant testified that he lived eight months out of the
year in Florida and four months in Indiana. (Doc. No. 307-1).
While the Defendant was presumably an Indiana resident prior
to 2009, the conduct which resulted in harm to the Plaintiff
continued through 2009. This is because the Kentucky and
Louisiana properties went into foreclosure, were ultimately
sold and purchased at ...