Rain Bird Corp v. National Pump Company LLC;

* Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
1
United States Court of Appeals
Fifth Circuit
F I L E D
June 14, 2005
Charles R. Fulbruge III
Clerk
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 04-60735
RAIN BIRD CORP
Plaintiff - Appellee
v.
NATIONAL PUMP COMPANY LLC; ET AL
Defendants
ROBERT MILTON
Defendant - Appellant
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Appeal from the United States District Court
for the Northern District of Mississippi
2:02-CV-18-M-D
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Before GARWOOD, GARZA, and BENAVIDES, Circuit Judges.
PER CURIAM:*
In this tort action, Defendant-Appellant Robert Milton
(“Milton”) appeals the district court’s entry of final judgment
in favor of Plaintiff-Appellee Rain Bird Corp. (“Rain Bird”) and
its assessment of actual and punitive damages against him.

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2
Having reviewed the record and considered the briefs and
arguments on appeal, we affirm the judgment of the district court
and uphold the award of actual and punitive damages.
Milton raises three issues on appeal. First, Milton
contends that the district court’s findings of fact are clearly
erroneous inasmuch as they disregard certain evidence presented
by Milton at trial. Following a bench trial, we review the
district court’s findings of fact for clear error. See Energy
Mgmt. Corp. v. City of Shreveport, 397 F.3d 297, 302 (5th Cir.
2005). In light of the record viewed in its entirety, and given
that the district court’s findings were based largely on
determinations regarding witness credibility, see Schlesinger v.
Herzog, 2 F.3d 135, 139 (5th Cir. 1993), we conclude that the
district court’s account of the facts did not disregard evidence
and was not clearly erroneous.
Second, Milton asserts that the district court erred in
finding in favor of Rain Bird, and against Milton, as to Rain
Bird’s causes of action. Specifically, Milton complains that it
was error for the district court not to accept his version of the
facts and that, had the district court done so, judgment in his
favor would be warranted. In essence, Milton’s argument under
this assignment of error amounts to nothing more than a complaint
that the district court erred in declining to adopt facts more to
Milton’s liking. As discussed supra, in light of the record

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viewed in its entirety, and given that the district court’s
findings were based largely on determinations regarding witness
credibility, the district court’s account of the facts was not
clearly erroneous.
Finally, Milton contends that the district court erred in
its assessment of damages against Milton in four respects. In
reviewing damages assessments, “[a]bsent an error of law, [we]
will sustain the amount of damages awarded by the fact finder,
unless the amount is clearly erroneous or so gross or inadequate
as to be contrary to right reason.” Vogler v. Blackmore, 352
F.3d 150, 154 (5th Cir. 2003) (citations omitted).
With respect to damages, Milton first contends that the
district court ignored cost of investment in determining Rain
Bird’s lost future profits. We find this argument to be without
merit. The earnings projections relied on by the district court
to assess Rain Bird’s lost future profits specifically account
for cost of investment, calculated on an annualized basis as a
yearly depreciation deduction. Therefore, we conclude that the
district court did not err in calculating Rain Bird’s lost future
profits.
Milton next contends that the district court erred in
considering the projected earnings pro-forma introduced as
Exhibit P-110 as evidence of Rain Bird’s lost future profits. On
appeal, Milton argues that because the challenged pro-forma was

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not prepared for the specific purpose of demonstrating Rain
Bird’s lost future profits, the district court’s reliance on that
pro-forma was clearly erroneous. Because Milton did not object
at trial to either the introduction or reliability of the
challenged pro-forma, we need not determine whether the district
court’s reliance on that pro-forma was clearly erroneous. See
Colonial Refrigerated Transp., Inc. v. Mitchell, 403 F.2d 541,
552 (5th Cir. 1968) (citations omitted).
Third, Milton contends that the district court erred in
awarding Rain Bird damages in the amount of the severance package
Milton awarded himself from the coffers of Golf Course Irrigation
Services, Inc. (“GCIS”). We find Milton’s argument to be without
merit. In awarding himself a severance package that was not part
of his proper compensation, Milton breached his fiduciary duty to
Rain Bird, as the pledgee of GCIS stock, by unjustly enriching
himself by the amount of the severance package. See Gibson v.
Manuel, 534 So. 2d 199, 202 (Miss. 1988); Knox Glass Bottle Co.
v. Underwood, 89 So. 2d 799, 814-15 (Miss. 1956). Accordingly,
Milton is liable to Rain Bird for the amount of the severance
package, irrespective of any harm to GCIS or any diminution in
value of the GCIS stock pledged to Rain Bird. See Knox, 89 So.
2d at 815. Therefore, the district court’s assessment of damages
against Milton in the amount of his GCIS severance package was
not clearly erroneous.

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1 We note that Milton raises only a constitutional
challenge to the size of the district court’s punitive damages
award. Because Milton does not raise an excessiveness challenge
under Mississippi state law, we decline to address that issue.
5
Lastly, Milton contends that the district court’s assessment
of $500,000 in punitive damages against him runs afoul of the
constitutional prohibition against grossly excessive or arbitrary
punitive damages awards.1 Because Milton challenges the
constitutionality of the size of the district court’s punitive
damages award, we review Milton’s challenge de novo. See Watson
v. Johnson Mobile Homes, 284 F.3d 568, 572 (5th Cir. 2002).
In BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996),
the United States Supreme Court articulated three guideposts that
courts should consider in determining whether an award of
punitive damages is constitutionally excessive. The three
guideposts are: (1) the degree of the defendant’s
reprehensibility; (2) the disparity between the harm or potential
harm suffered by the victim and the punitive damages award; and
(3) the sanctions authorized for comparable misconduct. See
Gore, 517 U.S. at 575-85; see also State Farm Mut. Auto. Ins. Co.
v. Campbell, 538 U.S. 408, 418 (2003) (reiterating the importance
of the Gore guideposts).
Regarding the first Gore guidepost, the harm Milton
inflicted on Rain Bird was purely economic in nature and Milton’s
conduct evinced no indifference to, or reckless disregard for,

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the health and safety of others. See Gore, 517 U.S. at 576.
However, “[t]o be sure, infliction of economic injury, especially
when done intentionally through affirmative acts of misconduct,
or when the target is financially vulnerable, can warrant a
substantial penalty.” Id. In the instant case, Milton’s conduct
included: (1) knowingly providing defendant National Pump
Company (“NPC”) with Rain Bird’s confidential information,
enabling NPC to essentially steal Rain Bird’s prospective
customers; (2) improperly transferring to NPC GCIS’s secured
assets, in knowing violation of the Loan and Security Agreement
with Rain Bird; and (3) continuing to transfer GCIS’s secured
assets to NPC in violation of a preliminary injunction entered by
the district court, resulting in the district court holding
Milton in contempt of court. Accordingly, we conclude that the
combination of economic injury to Rain Bird and Milton’s multiple
affirmative acts of misconduct supports a punitive damages award.
Regarding the second Gore guidepost, the $500,000 in
punitive damages assessed against Milton is substantially less
than the $2,869,167 in actual damages caused by Milton’s conduct,
resulting in a punitive damages-to-actual damages ratio of 0.17.
This fractional ratio does not even come close to approaching the
ratio contemplated as questionable by the Supreme Court. See
Campbell, 538 U.S. at 410. Accordingly, we conclude that the
second Gore guidepost supports upholding the amount of punitive

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damages assessed against Milton.
Regarding the final Gore guidepost, the comparable sanctions
under Mississippi state law for the disposal of property that is
secured by a lien are up to one year’s imprisonment, a fine not
exceeding the value of the property disposed of, in this case
$90,000, or both. See Miss. Code Ann. § 97-17-75 (1972). This
provision imposes relatively severe penalties on wrongdoers,
indicating the seriousness with which the state views the
wrongful action. Accordingly, we conclude that the relevant
civil and criminal penalties under Mississippi state law provided
Milton with constitutionally adequate notice of the severity of
the penalty that the state may impose. See Gore, 517 U.S. at
584. Therefore, we uphold the district court’s punitive damages
award against Milton.
For the foregoing reasons, we affirm the judgment of the
district court with respect to Milton and uphold the actual and
punitive damages awards against Milton.

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