Norris O. and Betty J. Whitley - Page 3

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          as an independent contractor under a contract between the two.              
          Academy fired him in July 1986.  When it did, it was                        
          contractually obligated to pay him renewal commissions on                   
          policies that he or an agent under his supervision had sold.                
          After his firing, Academy remitted to him reduced monthly                   
          commissions.  It also stopped sending to him the paperwork                  
          documenting his commissions.                                                
               In September 1987, petitioner sued Academy for breach of               
          contract and conversion, praying in his complaint for an award of           
          actual and punitive damages.  Petitioner alleged that Academy was           
          liable to him for:  (1) An unlawful termination of contracts with           
          resulting failure to pay money due thereunder (breach of contract           
          and conversion), (2) unfair trade practices (also seeking treble            
          damages and attorney’s fees), (3) a termination of resident                 
          counselor status, (4) a failure to pay commissions, and (5) the             
          fraudulent filing of Federal tax forms reporting income not paid            
          to him.  Following a jury trial, the United States District Court           
          hearing the case directed a verdict against Academy for breach of           
          contract and sent the issues of conversion and resulting damages            
          to the jury.  The judge instructed the jury as follows with                 
          respect to punitive damages:                                                
                    The plaintiffs [petitioner and another person not                 
               relevant herein] are also seeking punitive damages in                  
               their conversion cause of action.                                      
                    The law permits the jury, under certain                           
               circumstances, to award punitive damages in order to                   
               punish a wrong-doer for some extraordinary misconduct,                 
               and to serve as a warning not to engage in such conduct                
               in the future.                                                         

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