James B. Nutter & Company v. Dean Witter Reynolds, Inc.
Docket: 93-3153
Court: Court of Appeals for the Eighth Circuit; April 6, 1994; Federal Appellate Court
James B. Nutter Company (Nutter) won a jury verdict for $19,835.38 against Dean Witter Reynolds, Inc. (Dean Witter) for conversion, stemming from Dean Witter's refusal to return $17,866.21 related to a Government National Mortgage Association (GNMA) adjustable rate Pool Certificate. The jury ruled against Dean Witter's counterclaim regarding Nutter's alleged failure to provide a proper certificate. However, the trial court did not allow the jury to consider Nutter's claim for punitive damages, which Nutter appealed, asserting this was an error.
The dispute originated from a sale of three GNMA securities, where a disagreement arose about the reset date of a certificate. Nutter believed it was January, while Dean Witter believed it to be April. Although the reset date was not explicitly mentioned during negotiations, both parties had reasonable beliefs about it. Dean Witter received the certificate on December 17, 1991, and was not required to pay until the settlement date of January 22, 1992. On January 20, Dean Witter received a payment of $17,866.21 but later refused to pay Nutter after realizing the reset date was January, not April, and returned the certificate at the end of January for a loss.
Nutter argued that the trial court's refusal to submit punitive damages was erroneous, citing Dean Witter's lack of communication, failure to investigate the dispute, and continued withholding of the funds as indicative of reckless disregard for Nutter's rights. The appellate court ultimately affirmed the trial court’s decision.
Nutter argues that the district court mistakenly denied its request for a jury instruction on punitive damages and did not grant a new trial on that issue. Under Missouri law, punitive damages for intentional torts require conduct that is outrageous due to the defendant's malicious intent or reckless disregard for others' rights. To prove this, a plaintiff must demonstrate a significant degree of fault, indicating the defendant's actions were willful, wanton, or malicious. However, the review of the evidence indicated that Dean Witter acted with good faith and conducted an investigation, concluding that Nutter sent the incorrect certificate. The court found no basis for punitive damages, as Dean Witter's conduct did not meet the threshold of outrageousness. Additionally, Nutter contested the exclusion of certain testimonial evidence from Dean Witter's account executive, but the court upheld the evidentiary rulings as proper. Consequently, the judgment was affirmed, and Nutter's claim regarding attorney’s fees was deemed moot due to the ruling on punitive damages.
