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Bennett v. Grant

Supreme Court of Texas

April 28, 2017

Tom Bennett and James B. Bonham Corporation, Petitioners,
v.
Larry Wayne Grant, Respondent

          Argued January 12, 2017

         On Petition for Review from the Court of Appeals for the Third District of Texas

          Don R. Willett Justice.

         In this latest chapter of a long-running dispute, we consider how the harm likely to result from a malicious prosecution should be evaluated in calculating exemplary damages. We conclude the court of appeals erred in considering the harm that plaintiff would suffer from wrongful imprisonment when the chances of this occurring were essentially zero given the expired statute of limitations. Accordingly, we reverse the portion of the court of appeals' judgment awarding exemplary damages. On all other issues, we affirm.

         I. Background

         A. Factual and Procedural Framework

         This suit arises from an infamous cattle-rustling incident in San Saba County.[1] The facts were hotly contested.

         The dispute between two ranchers, Thomas O. Bennett and Randy Reynolds, began over fifteen years ago, when thirteen of Reynolds' cattle meandered onto Bennett's land. Instead of returning the cattle to Reynolds, Bennett instructed his ranch hand, Larry Wayne Grant, to round up the cattle and sell them. Grant was hesitant as to the legality of this request and took photographs of the cattle as they were sold. Reynolds learned of the photos and pressured Grant to turn them over to the police.

         Grant called Bennett and Bennett's employee, Don Rogers, informing them of the existence of the photos. Grant alleged that he only called to urge them to "make it right" with Reynolds. Bennett, however, charged that Grant tried to blackmail him. Grant admitted that he spoke to Rogers about selling the photos to Bennett, but insisted they only "joked about it." Regardless, a month later, Grant gave the photos to the police. Bennett was indicted for cattle theft. He was eventually acquitted, but he and his company, James B. Bonham Corporation, were found liable in the Bennett I civil suit for the converted cattle, resulting in $5, 327.11 in actual damages and $1.25 million in exemplary damages.[2]

         Today's dispute concerns related litigation between Bennett and Grant. Two years after Grant called Bennett and Rogers about the photos, Bennett brought blackmail charges against Grant to authorities in four separate counties. Bennett admitted it was not until after his criminal trial that he reported the phone call and admitted at trial that his primary "goal" in doing so was to put "Grant in prison . . . for what he's done to me." After the district attorneys in three of the counties refused to prosecute Grant, Bennett met with the district attorney in Navarro County, who referred the case to federal authorities. Bennett was displeased with this outcome and contacted the district attorney again, this time presenting a new theory of attempted theft. The district attorney said these charges were barred because of the two-year statute of limitations. Then, for the first time, Bennett claimed that Grant tried to extort money from him a second time, conveniently falling within the limitations period. At trial of the pending suit, the district attorney testified that he was "skeptical" of the new information because it "appeared that there was maybe some tailoring of the facts going on to fit the statute." The new evidence was also notably missing from Bennett's sworn testimony; instead, Bennett testified that all factual allegations against Grant were based on the original phone call. Because of his suspicions, the district attorney refused to prosecute.

         Bennett then met with an attorney who had represented Bonham Corp. for more than twenty years and requested that he write a legal brief concluding that Grant's acts constituted a criminal offense worthy of prosecution. The district attorney said it was this brief, or a subsequent meeting with Bennett, that acted as a "catalyst" convincing him to bring the case to the grand jury. The grand jury, however, was unpersuaded and refused to indict Grant. Undeterred, Bennett again met with Bonham Corp.'s attorney, who advised Bennett to petition for appointment of a special prosecutor in Navarro County to bring the case before the grand jury again. Bennett drafted the petition and acquired 250 signatures from Navarro County residents under a procedure for appointing a special prosecutor.[3] Bennett then met with the district attorney, requesting appointment of his neighbor, Robert Dunn, as special prosecutor. At the time, the district attorney was seeking reelection. Concerned that Bennett's petition drive "wasn't helping" his campaign, he agreed to Dunn's appointment.

         The special prosecutor claimed he used his independent discretion in deciding to bring the case before the grand jury a second time. But he acknowledged that the statements from Bennett and Rogers were "very material to [his] decision to proceed to the grand jury." There were some troubling inconsistencies in the information presented to the special prosecutor. Specifically, there is no evidence that Bennett told the special prosecutor about the second alleged extortion attempt (the non-time-barred attempt) as he had represented to the district attorney. Bennett also claimed, for the first time, that Grant had asked him to pay a specific sum-$5, 000-for the photos. Additionally, the special prosecutor testified that Bennett spoke to him about secretly taped conversations with Grant that substantiated his $5, 000 claim, which the district attorney did not acknowledge in his testimony.

         Bennett's quest to imprison Grant seemed promising after the special prosecutor presented the evidence to a second grand jury and obtained two felony indictments. However, nine months later, the indictments were quashed because the charges were barred by limitations. Years earlier, Bennett had initiated the pending civil suit by suing Grant for slander, based on allegations that Grant had told Reynolds and others that the cattle belonged to Reynolds. After Grant was cleared of criminal charges and his record expunged, he filed a counterclaim in the civil suit for malicious prosecution. A jury found Bennett and Bonham Corp. liable to Grant for malicious prosecution. The trial court awarded Grant $10, 703 in actual damages ($5, 000 for mental anguish and $5, 703 in attorney fees), and $1 million each against Bennett and Bonham Corp. in exemplary damages. The trial court also assessed sanctions of $269, 644.50 against Bennett for filing a frivolous slander claim.

         Bennett and Bonham Corp. appealed, raising numerous issues. They argued that the jury's malicious-prosecution findings were legally insufficient. They also claimed the jury's awards for actual and exemplary damages were not supported by legally sufficient evidence and that the $2 million exemplary-damages award was unconstitutional. The court of appeals concluded the actual-damage awards enjoyed ample support.[4] However, the court remitted the amount of exemplary damages because the ratio between actual and exemplary damages "likely exceed[ed] constitutional limits."[5] The court of appeals reduced exemplary damages to $512, 109 each against Bennett and Bonham Corporation.

         B. Summary of Issues and Our Disposition

         Bennett and Bonham Corp.'s arguments can be grouped into three issues: damages, joinder, and sanctions. First, we conclude the jury's award of mental-anguish damages is supported by legally sufficient evidence. However, the exemplary-damages award remains unconstitutionally excessive, even after it was reformed by the court of appeals. Second, the trial court did not abuse its discretion in allowing Grant to join Bonham Corp. as a defendant. Third, the sanctions awarded against Bennett need not be remanded for reconsideration under Nath v. Texas Children's Hospital.[6]

         II. Analysis

         Here, Bennett and Bonham Corp. do not challenge the court of appeals' determination that legally sufficient evidence supports malicious-prosecution liability. Instead, they challenge the damages awarded, both actual and exemplary, plus the trial court's joinder and sanctions rulings.

         A. Actual Damages

         The trial court awarded actual damages of $10, 703: $5, 000 in mental-anguish damages, and $5, 703 in attorney fees that Grant incurred in defending the criminal charge of attempted bribery.

         The petitioners argue there was insufficient evidence to support mental-anguish damages. We disagree. An award for mental anguish must be supported by either (1) a substantial disruption in the plaintiff's daily routine, or (2) evidence of a high degree of mental pain and distress that is more than mere worry, anxiety, vexation, embarrassment, or anger.[7] There must be evidence of the existence of compensable mental-anguish damages and evidence to justify the amount awarded.[8]

         Non-economic damages, such as mental-anguish damages, "cannot be determined by mathematical precision; by their nature, they can be determined only by the exercise of sound judgment."[9] As we stated in Saenz v. Fidelity & Guaranty Insurance Underwriters, [10] given "the impossibility of any exact evaluation of mental anguish . . . juries [must] be given a measure of discretion in finding damages, [though] that discretion is limited. Juries cannot simply pick a number and put it in the blank. They must find an amount that, in the standard language of the jury charge, 'would fairly and reasonably compensate' for the loss."[11] The amount awarded must be fair and reasonable compensation, given the evidence presented.[12] Admittedly, this standard is simple but not simplistic: "Reasonable compensation is no easier to determine than reasonable behavior-often it may be harder-but the law requires factfinders to determine both."[13] Appellate courts must conduct a meaningful evidentiary review of these determinations.[14]

         In Bentley v. Bunton, [15] we held there was no evidence to support a $7 million mental-anguish award because it was excessive, unreasonable, and "far beyond any figure the evidence can support."[16] Similarly, in Saenz, we rendered a take-nothing judgment because there was no evidence that plaintiff suffered any mental anguish or that the $250, 000 award was fair and reasonable.[17] This case is distinct from these prior cases, as ample evidence supports the relatively modest award of mental-anguish damages.

         Grant's testimony persuasively demonstrates that he suffered a high degree of mental pain and distress. For instance, Grant testified that he knew well before his indictment that Bennett would come after him for showing photos of the stolen cattle to the police. Grant's daily routine was substantially disrupted: He moved four times, trying to keep himself and his family safe from Bennett, built a privacy fence around his property, and even testified that Bennett would appear at depositions with a tape recorder and pencil to obtain Grant's newest address. He was afraid to leave his house and experienced headaches, a weak stomach, a loss of appetite, and sleep deprivation. He stated that he was aware of prior instances where Bennett "had seen that people went to prison." He testified that he fully believed Bennett was capable of doing the same to him, and that he had heard Bennett proclaim he would see Grant "go to the penitentiary." Grant's sister testified that his demeanor had changed significantly, as he closed himself off and became distant from everyone.

         In sum, we agree with the court of appeals that sufficient evidence supports Grant's $5, 000 mental-anguish award. The $5, 703 attorney-fee award is not contested on appeal. Accordingly, we affirm the actual-damages portion of the court of appeals' judgment.

         B. Exemplary Damages

         The more difficult dispute concerns the exemplary-damages award. As noted, the trial court rendered judgment on the verdict and awarded $1 million each against Bennett and Bonham Corporation. The court of appeals then reduced the damages to $512, 109 each. The petitioners claim that even as remitted, the exemplary damages cannot stand. We agree.

         Our review first examines the exemplary-damages cap under state law and then evaluates the award's constitutionality under the United States Constitution.

         1. The Chapter 41 Cap-Busting Exception Applies.

         As a general rule, the Texas Civil Practice and Remedies Code restricts the maximum amount of exemplary damages a trial court may award.[18] But this cap does not apply when a plaintiff seeks exemplary damages based on certain felony criminal conduct.[19] The court of appeals properly held that this case falls under an exception to the cap, namely securing execution of a document (the indictment) by deception.[20] This is a felony under Penal Code section 32.46, which states: "A person commits an offense if, with intent to defraud or harm any person, he, by deception . . . causes another to sign or execute any document affecting property or service or the pecuniary interest of any person."[21]

         Bennett and Bonham Corp. argue that an indictment affects a liberty interest but not a pecuniary interest as contemplated by section 32.46. Although the Penal Code does not define "pecuniary interest, " Texas courts have interpreted it to mean a financial or monetary stake in the matter.[22] The petitioners contend that because an indictment is a formal accusation of a crime and does not directly affect a person's monetary interest, it falls outside the exception. The statute, however, does not by its terms require the document in question to "directly" affect a person's pecuniary interest. Further, while it is true that an indictment is different in kind from financial documents like a bank draft or a promissory note, the statutory text does not require that the complainant have a pecuniary interest in the document itself; rather the document must affect the complainant's pecuniary interest.[23]

         We agree with the court of appeals that when viewing the evidence in the light most favorable to the jury's finding, [24] there is more than a mere scintilla of evidence that Grant's pecuniary interest was affected by the indictment. Grant was required to post a $10, 000 bond immediately to avoid imprisonment and to hire attorneys to quash the indictment. And if convicted of attempted bribery, he could face up to $10, 000 in penalties. The court of appeals correctly applied Chapter 41's cap-busting exception.

         2. The Exemplary-Damages Award Is Unconstitutionally Excessive.

         There is, however, a problem with the court of appeals' analysis of the award's constitutionality. The petitioners contend the remitted dual $512, 109 exemplary-damages awards ...


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