Appeals from the Superior Court of the District of Columbia (CA-6547-98) (Hon. Linda D. Turner, Trial Judge)
Before Terry, Ruiz, and Glickman, Associate Judges.
The opinion of the court was delivered by: Terry, Associate Judge
Appellant, Lavern Chatman, seeks reversal of the trial court's decision to hold her jointly and severally liable for $1.4 million in punitive damages because of her involvement in a fraudulent conveyance. Appellant argues (1) that there was insufficient evidence of malice to permit the court to award punitive damages, and insufficient evidence of her net worth to support an award in that amount; (2) that the trial court abused its discretion by refusing to hear testimony -- which was available but not presented at trial -- about her net worth before denying her post-trial Rule 60 (b) motion; and (3) that the award of punitive damages was so excessive that it violated her due process rights. We affirm the trial court's finding of liability and its denial of appellant's post-trial motion, but remand for further proceedings to determine her net worth and the appropriate measure of damages. Because appellant's net worth was not adequately established at trial, we do not reach her due process argument.
In 1996, a group of 297 plaintiff-employees of the J.B. Johnson Nursing Home ("the employees") brought a class action against Urban Shelters & Healthcare, Inc., the company that managed the nursing home, alleging violations of the District of Columbia wage payment law. See D.C. Code § 36-108 (1997).
Urban Shelters was a private corporation of which Roy Littlejohn owned all the stock. Also named as defendants were Roy Littlejohn, his wife and daughter, and another corporation which he controlled. *fn1 On May 6, 1998, at the end of a non-jury trial, the trial judge announced in open court that the corporate veil was to be pierced and found each defendant -- the two corporations, Roy Littlejohn, his wife Marilyn, and their daughter Robin -- jointly and severally liable for $1,447,651.99 in damages.
Instead of immediately entering judgment, the judge asked each party to draft written findings of fact and conclusions of law consistent with his oral ruling. On May 20, 1998, the judge issued his written findings and signed the judgment. However, on May 8, only two days after the Littlejohns heard that they would be held personally liable for over $1.4 million (but before the judgment was entered), they conveyed all of their personal property to appellant, a longtime friend and associate with whom Roy Littlejohn had had a friendship and business relationship spanning fifteen years. *fn2 Roy Littlejohn and appellant prepared a Bill of Sale and a Lease Agreement to document the transaction. According to the Bill of Sale, appellant paid $16,640 for all personal property contained in the Littlejohns' residence, $3,400 for their jointly owned 1988 Volvo, and $6,500 for Roy Littlejohn's individually owned 1991 Jaguar -- a total of $26,500.
Appellant never took actual possession of this property, but immediately "leased" it back to the Littlejohns. Under the Lease Agreement, appellant was to receive $500 per month for the Littlejohns' use of the cars, and $500 per month for their use of the household property. Roy Littlejohn cashed appellant's $26,500 check, and then immediately gave her $10,000 for what he later described as a ten-month "pre-payment" on the lease. Thereafter, however, Littlejohn never made another payment to appellant, nor did she attempt to enforce the lease once the payments stopped.
On August 21, 1998, a Deputy United States Marshal arrived at the Littlejohns' home to execute a writ of attachment on their personal property to enforce the court's judgment. Roy Littlejohn greeted the marshal with the aforementioned documents and informed him that he was no longer the owner of the property. A few days later, on August 26, the employees filed a second suit (the instant case) against the Littlejohns and appellant, alleging that the purported sale of the Littlejohns' property to appellant was a fraudulent conveyance made with the "intent to hinder, delay, and defraud the plaintiff/creditors," in violation of D.C. Code §§ 28-3104 (a) and 28-3105 (1996), and that the defendants had engaged in a conspiracy to violate these statutes. The employees asked the court to invalidate the sale and sought the value of the transferred assets in actual damages and $1.4 million in punitive damages. *fn3
On March 6, 2001, almost three years after the second suit was filed, the case went to trial before a different judge. The crux of appellant and Littlejohn's defense was that the property had been transferred to appellant as collateral for a series of loans appellant made to Roy Littlejohn throughout 1998. *fn4 When questioned about the peculiar nature of this transaction, appellant testified that she had never seen a bill of sale or a lease, nor did she know how a lease worked despite her substantial education and business experience. *fn5
After a three-day non-jury trial, the court found appellant and Roy Littlejohn liable on all three counts of the complaint, but also found that "the evidence was not sufficient to show that Mrs. Littlejohn was involved in the fraudulent transfer . . . ."
The court explicitly rejected appellant's testimony, finding it to be "patently incredible." It further found that "the papers drawn up by the parties were entirely bogus, and that anyone with Ms. Chatman's background and sophistication knew it." The court was therefore satisfied that "the plaintiffs have demonstrated by the preponderance of the evidence that the two were engaged in a civil conspiracy to defraud." *fn6
The court also found appellant and Littlejohn jointly and severally liable for $1.4 million in punitive damages, ruling that there was "clear and convincing evidence that Mr. Littlejohn and Ms. Chatman acted with evil motive, actual malice and with willful disregard for the rights of the plaintiffs." The court characterized their behavior as "outrageous and grossly fraudulent," especially considering the disparity in wealth between appellant and Littlejohn and the "people whom they scammed." The court also described the transaction as a "deliberate scheme to get around a lawful judgment," and stated that in its opinion "each defendant needs to be punished for their conduct [and] each defendant needs to serve as an example to prevent others from acting in a similar way."
Following the trial, appellant filed a "motion to remit or, in the alternative, set aside the punitive damage award," citing Superior Court Civil Rules 59 (a), 59 (e), and 60 (b). The court denied that motion after a hearing, and appellant noted the instant appeal, ...