Evergreen West Business Center v. Emmert

An equitable remedy is not available to a party simply because a jury returns a lesser award than requested. Additionally, 600,000:1 ratio for punitive damages is not excessive when it is necessary to deter future tortious conduct.

Emmert, a former partner of Evergreen West Business Center LLC (Evergreen) appealed the district court's finding that he had a fiduciary duty to Evergreen. Evergreen cross-appealed the district court's decision that the jury's award of $600,000 of punitive damages for $1 of nominal damages was excessive, and asked the court to allow a constructive trust as an equitable remedy. Evergreen was formed to purchase and develop property using a loan through West Coast Bank. When Evergreen defaulted on the loan, Emmert, a member of Evergreen, purchased the property for his own benefit at the foreclosure sale instead of working with West Coast for Evergreen's interest. Evergreen claimed that Emmert was unjustly enriched when he violated his fiduciary duty, and brought suit for punitive damages. When the court found that the punitive damages awarded were excessive, Evergreen asked to form a constructive trust as an equitable remedy that required the property be sold, and the proceeds be given to Evergreen after Emmert's buying expenses are reimbursed. The Court of Appeals found that Emmert's agreement to deal with West Coast Bank was enough to prove he owed Evergreen a fiduciary duty and that Emmert's secret negotiation with West Coast Bank for his own benefit violated this duty. The Court of Appeals also found that the constructive trust was not valid as an equitable remedy because the remedy of awarding nominal damages at law was adequate and an equitable remedy cannot be used to correct a disappointing jury verdict. Lastly, the Court found than an award of $600,000 of punitive damages for $1 of nominal damages is not necessarily excessive because $1 of nominal damages is low, and Oregon courts have previously allowed the ratio between punitive damages and nominal damages to be higher when it supports the policy goal of deterrence. Reversed and remanded.