- Case Type:
- Case Status:
- Reversed and Remanded
- 19-3051/3052 (6th Circuit, Oct 19,2020) Not Published
- The Sixth Circuit vacated the district court's judgment as to damages and remanded for further proceedings, but affirmed in all other respects.
- Procedural context:
- Individual chapter 11 debtor-plaintiff and creditor-defendant filed cross-appeals of the district court's decision adopting the bankruptcy court's award of $116,000 in damages based on unjust enrichment but refusal to award $1 million in punitive damages under Florida law.
- An individual chapter 11 debtor filed an adversary proceeding against his former business partner/creditor and his entities. Debtor asserted state law claims seeking, among other things, to rescind assignments to the creditor and to obtain damages for the creditor's fraudulent conduct. Following trial, the bankruptcy court prepared a report and recommendation recommending that the district court enter a judgment in favor of the plaintiff debtor on certain counts for rescission, awarding damages of $116,000 for unjust enrichment and $1 million for punitive damages but denying the other requests for damages, and dismissing the remaining counts as moot. The district court adopted the bankruptcy court's report and recommendation, including that the bankruptcy court had "related to" jurisdiction and that the creditor had waived his right to a jury trial, but sustained the creditor's objection to punitive damages based on the district court's sua sponte holding that Florida law required underlying compensatory damages (not equitable damages) to support an award of punitive damages. The Sixth Circuit affirmed the district court's decision except as to the punitive damages. It held that Florida law did not require an award of compensatory damages for an award of punitive damages. The Sixth Circuit vacated the judgment as to the damages and remanded for the district court to consider other damages issues.
- STRANCH, BUSH, and LARSEN
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