Al-Sabah v. Agbodjogbe

ALIA SALEM AL-SABAH, Plaintiff, v. JEAN AGBODJOGBE, et al., Defendants.

Civil Case No. SAG-17-730

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

March 19, 2020

MEMORANDUM OPINION

On November 22, 2017, Plaintiff Alia Salem Al-Sabah ("Al-Sabah") filed a nine-count Amended Complaint against Defendants Jean Agbodjogbe ("Agbodjogbe"), N&A Kitchen, LLC ("N&A Kitchen"), N&A Kitchen II, LLC ("N&A Kitchen II"), 5722 York Road, LLC ("5722 York Road"), and 9 Jewels, LLC ("9 Jewels"). ECF 76. A nine-day jury trial commenced on January 21, 2020. See ECF 236-240, 242-45, 249. The jury entered a verdict in favor of Al-Sabah against each Defendant on each count submitted, and awarded her $7,641,800 in compensatory damages, and an additional $1,000,000 in punitive damages. ECF 256; see also ECF 259 (Order of Judgment). On February 10, 2020, the parties submitted post-trial motions. The final motion remaining for adjudication is Defendants' Motion for Remittitur ("the Motion"). ECF 265. Al-Sabah opposed, ECF 269, and Defendants replied, ECF 277. For the reasons that follow, Defendants' Motion will be granted, though the Court will reduce, but not eliminate, the punitive damages award.

I. FACTUAL BACKGROUND

The instant lawsuit dates back to Al-Sabah's initial filing of the Complaint on March 17, 2017, ECF 1, which she amended with Defendants' consent on November 22, 2017, ECF 75, 76. The Amended Complaint sought money damages from Agbodjogbe and his co-conspirators, the corporate Defendants, under eight claims for relief: Fraudulent Misrepresentation (Count I); Fraudulent Concealment (Count II); Conversion (Count III); Civil Conspiracy (Count IV); Detrimental Reliance (Count V); Unjust Enrichment (Count VI); Breach of Contract (Count VII); and Breach of Agency Duties (Count VIII). Id. ¶¶ 1, 46-89. As relevant here, Al-Sabah requested both compensatory and punitive damages in each Count, save for her Breach of Contract claim. Id. Finally, Count IX of the Amended Complaint sought various forms of declaratory relief against all Defendants. Id. ¶ 93. Al-Sabah tried five of these claims to the jury: Fraudulent Misrepresentation, Fraudulent Concealment, Breach of Agency Duties, Unjust Enrichment, and Civil Conspiracy. Prior to trial, Al-Sabah abandoned her Detrimental Reliance claim, and all of her claims against Defendant ASA Foundation, Inc. ECF 232 at 16. During trial, Al-Sabah also abandoned her Conversion claim, as well as all remaining claims against Defendant Nandi Scott. ECF 241; ECF 248.

The jury trial in this case began on January 21, 2020, and concluded on January 31, 2020. ECF 236-40, 242-45, 249. Over the span of those nine days, the jurors heard extensive testimony from just two party-witnesses: Alia Salem Al-Sabah, and Jean Agbodjogbe. A brief summary of the trial testimony, relevant to the issue of punitive damages, follows.

The parties stipulated that between September, 2014, and April 16, 2016, Al-Sabah wired over $7.8 million to Defendants. See ECF 232 at 17-18 (Stipulations of Fact). These transfers were received by either 9 Jewels or N&A Kitchen, id., and were used by Defendants to purchase various residential and commercial real estate properties, id. at 18-19. The evidence demonstrated, however, that those properties are all heavily encumbered, with several having entered foreclosure proceedings. Agbodjogbe testified that Nailah's Kitchen continues tooperate at the 5722 York Road property, and that the restaurant currently generates "tens of thousands" of dollars in net revenue. Outside of this, neither party presented any evidence establishing any of the corporate Defendants' net worth.

As to Agbodjogbe, the jury heard evidence that he maintains a personal bank account with the Municipal Employees Credit Union of Baltimore, Inc. ("MECU"), Pl.'s Trial Ex. 505, 507-09, that was not disclosed to Al-Sabah during pre-trial discovery, Pl.'s Trial Ex. 9 at 15-16. Agbodjogbe did acknowledge that in May, 2017, he transferred $100,000 to Touba Bollo, a Senegalese company that he created and owns. See Pl.'s Trial Ex. 512. He also introduced two HUD-1 Settlement Statements showing the amounts of money disbursed to him pursuant to mortgages N&A Kitchen took out on two of the commercial properties, see Defs.' Trial Ex. 194-95.¹ Agbodjogbe, however, did not present any financial statements or other documents indicating his current net worth. Instead, he repeatedly testified that "every penny" that Al-Sabah sent to him "went into the business," for costs such as paying contractors, architects, and restaurant supply vendors. However, the only limited evidence of such expenses was that introduced by Al-Sabah (such as an online order from the "Webstaurant Store" for equipment exceeding $200,000). Agbodjogbe did not introduce any documentary evidence to support his contention that he had expended all of the monies received from Al-Sabah on renovating the commercial properties.

Prior to the Court's conference with the parties regarding the jury instructions on January 30, 2020, the Court raised concerns with counsel for both parties on the record, indicating that it was not sure whether it could submit the issue of punitive damages to the jury based on the factual record developed at trial. After hearing arguments from both parties, the Court ruled thatthe issue of punitive damages could go to the jury. Relying on Darcars Motors of Silver Spring, Inc. v. Borzym, 379 Md. 245 (2004), the Court reasoned that Al-Sabah had no duty to put forward evidence regarding the Defendants' ability to pay punitive damages. The Court further found that there had been some evidence of Defendants' finances adduced at trial. Though the evidence was "probably not to the extent that one optimally would have in a punitive damages situation," the Court found that the evidence was sufficient to allow the jury to consider whether punitive damages were appropriate. The Court thereafter gave the jury the following instruction on punitive damages:

If you find for the plaintiff and award damages to compensate for the injuries or losses suffered, you may go on to consider whether to make an award for punitive damages. To award punitive damages, you must find by clear and convincing evidence the defendant acted with malice. Malice is conduct motivated by evil motive, intent to injure, ill will, or fraud. The purpose of punitive damages is not to compensate the plaintiff, but to punish the defendant and to deter others from this type of conduct in the future. An award for punitive damages should be:

(1) In an amount that will deter the defendant and others from similar conduct.

(2) Proportionate to the wrongfulness of the defendant's conduct and the defendant's ability to pay.

(3) Not designed to financially destroy a defendant.

An award of punitive damages in this case requires that the defendant acted with malice. While an award for compensatory damages may be based upon a finding that the defendant made a representation with reckless indifference to its truth, this is not sufficient to warrant the award of punitive damages. Negligence, however gross, is not enough to award punitive damages. A defendant's knowledge of the falsity of a representation, coupled with an expectation that a plaintiff would rely upon a representation, is the state of mind that justifies an award of punitive damages.

For punitive damages to be recoverable as a result of the breach of a fiduciary duty owed by the defendant to the plaintiff, the wrongful conduct must be characterized by evil motive, intent to injure, ill will, or fraud.

After just hours of deliberation following nine days of testimony, the jury found Agbodjogbe liable on each claim for relief, and further found that each corporate Defendant had conspired with Agbodjogbe to perpetrate the fraud on Al-Sabah. ECF 256. The jury awarded Al-Sabah $7,641,800 in compensatory damages, and an additional $1,000,000 in punitive damages, jointly and severally against each Defendant. Id.; ECF 259 (Order of Judgment).

II. LEGAL STANDARDS

Litigants may lodge two kinds of challenges to a jury's punitive damages award: a constitutional challenge, or a Rules-based challenge. In the first type of challenge, litigants may argue that the punitive damages award is "grossly excessive," in violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution. See, e.g., BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). In making that assessment the Court must consider: (1) the reprehensibility of the defendant's conduct; (2) the "disparity" between the harm, or potential harm, that the plaintiff suffers, and the punitive damages award; and (3) the difference between the punitive damages award at issue, and those issued in other "comparable cases." Id. at 574-75; see also State Farm Mut. Ins. Co. v. Campbell, 538 U.S. 408, 418 (2003).

In lieu of a constitutional challenge, litigants may pursue the second type of relief: a motion under Federal Rule of Civil Procedure 59(a) for a new trial nisi remittitur. See Atlas Food Sys. & Servs., Inc. v. Crane Nat'l Vendors, Inc., 99 F.3d 587, 593 (4th Cir. 1996); see also id. at 595 ("[T]he Seventh Amendment imposes no barrier to the trial judge's participation in determining the amount of a punitive damages award through the review mechanism provided by remittitur and Rule 59(a)."). "Remittitur is a process, dating back to 1822, by which the trial court orders a new trial unless the plaintiff accepts a reduction in an excessive jury award." Id. (citation omitted). As has long been recognized in this Circuit, litigants may not receive ajudgment as a matter of law, under Federal Rule of Civil Procedure 50, on the issue of punitive damages, if a jury renders the award. Def. Indus., Inc. v. Nw. Mut. Life Ins. Co., 938 F.2d 502, 507 (4th Cir. 1991) (en banc). While the Court is to respect the parties' Seventh Amendment right to a jury trial, "a remittitur may be assessed in...