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Casciola v. F.S. Air Service, Inc. (09/23/2005) sp-5943
Casciola v. F.S. Air Service, Inc. (09/23/2005) sp-5943
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| PHILLIP D. CASCIOLA,
| ) |
|
| ) Supreme Court No. S-
11023 |
|
Appellant, | ) |
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| ) Superior Court
No. |
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v. | ) 3AN-02-6489
CI |
|
| ) |
|
F. S. AIR SERVICE, INC., | ) O P I N I O
N |
|
| ) |
|
Appellee. | ) [No. 5943 -
September 23, 2005] |
|
| ) |
|
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|
|
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Phillip Volland, Judge.
Appearances: Phillip D. Casciola, pro se,
Bradenton, Florida. Gregory A. Miller and
Daniel C. Kent, Birch Horton Bittner and
Cherot, Anchorage, for Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Phillip Casciola and his wholly-owned corporation,
Jetbroker.com, Inc. (Jetbroker), obtained $25,000 from F.S. Air
Service, Inc. (F.S. Air) by misrepresenting Jetbrokers ability to
procure two Learjet engines for F.S. Air. F.S. Air sued Casciola
and Jetbroker for misrepresentation and breach of contract after
Jetbroker failed to deliver the engines or return the deposit.
Following summary judgment and a damages trial, Casciola and
Jetbroker were held jointly and severally liable for compensatory
and punitive damages. Casciola now appeals the partial summary
judgment order finding him personally liable for Jetbrokers
actions, as well as the awards of compensatory and punitive
damages. We affirm the superior court in all respects.
II. FACTS AND PROCEEDINGS
A. Factual Background
F.S. Air is a charter flight service based in
Anchorage. F.S. Air has a long-term medevac and personnel
transport contract with a hospital in Bethel which requires F.S.
Air to be ready to fly on forty-five minutes notice at all times.
Two F.S. Air Learjets are dedicated to medevac duty.
Phillip Casciola is a resident of Florida and the
founder, sole shareholder, and president of Jetbroker. Jetbroker
is ostensibly in the business of buying, selling, and appraising
engines and parts for jet aircraft.
In March 2002 the engines of one of F.S. Airs Learjets
needed replacement. F.S. Air responded to an advertisement for
freshly overhauled Learjet engines from Jetbroker. After
inspecting detailed descriptions of the engines provided by
Jetbroker, F.S. Air signed a letter drafted by Casciola on March
13, 2002 that listed the terms of the parties agreement.
Jetbroker agreed to broker two engines to F.S. Air in exchange
for $100,000 and the cores of F.S. Airs current engines.
Jetbroker required an immediate deposit of $25,000 with the
remaining $75,000 due upon delivery of the engines. After
agreeing to Casciolas terms and signing the letter, F.S. Airs
president, Sandra Butler, immediately wired $25,000 to Jetbrokers
Florida bank account.
Jetbroker did not deliver the engines. Casciola wrote
to F.S. Air on March 26, 2002 that there seems to be a logbook
problem with the engines that we had anticipated securing and
outsourcing for you, and asked for a few more days to settle the
logbook problem. Casciola also asked if F.S. Air wanted
Jetbroker to attempt to secure two other engines.
On April 3, 2002 Sandra Butler asked Casciola to return
the $25,000 deposit because the two engines that Jetbroker had
agreed to broker were unavailable. Casciola agreed to refund the
deposit but asked F.S. Air to release Jetbroker from the March 13
agreement. F.S. Air agreed to release Jetbroker from the
agreement as long as Jetbroker returned the $25,000. Casciola
responded by asking for a mutual release and offering to secure
other suitable engines for F.S. Air. On April 15, 2002 Sandra
Butler signed and delivered a mutual release to Jetbroker once
again asking Jetbroker to refund the deposit. Casciola replied
that the mutual release would be acceptable with a few minor
changes but expressed his hope that the release would be
unnecessary and that F.S. Air would allow Jetbroker to locate
alternative engines. F.S. Air accepted Jetbrokers changes and
informed Jetbroker that F.S. Air had secured engines from another
source and desired nothing further to do with [Jetbroker], except
to get its money back. F.S. Air also promised to file suit
against Jetbroker if the deposit was not promptly refunded.
On April 19, 2002 Jetbroker replied that the contract
provided more than twenty business days to perform and expressed
dissatisfaction that F.S. Air had purchased engines through
another vendor. Because F.S. Air no longer needed engines,
Jetbroker offered to provide some other type of aviation related
service or product to earn our fees. Jetbroker also requested
that the parties submit their dispute to mediation, but approved
of the mutual release. F.S. Air replied by demanding that
Jetbroker refund the deposit and reiterating that there is no
possibility of F.S. Air doing any further business with
[Jetbroker]. On April 22, 2002 F.S. Air filed this suit.
B. Proceedings
F.S. Airs complaint advanced claims for breach of
contract against Jetbroker and intentional and negligent
misrepresentation against Jetbroker and Casciola. F.S. Air asked
for compensatory and punitive damages.
Casciola did not obtain counsel for Jetbroker or
himself. He has attempted to represent Jetbroker and himself pro
se throughout the proceedings below and this appeal. He filed an
answer and counterclaim on behalf of himself and Jetbroker in May
2002. In July 2002 the superior court granted F.S. Airs Motion
to Strike Jetbrokers Answer and Counterclaim because Jetbroker
had not obtained corporate counsel as required by AS 22.20.040.
Superior Court Judge Eric Sanders ordered Jetbroker to obtain
corporate counsel by August 7, 2002. Jetbroker did not obtain
corporate counsel, and Judge Sanders entered a default judgment
against Jetbroker on August 21, 2002 for failure to appear and
answer or otherwise defend this action.
In October 2002 F.S. Air moved for partial summary
judgment against Casciola for misrepresentation both in his
personal capacity and in his role as an officer/shareholder for a
sham corporation. Casciola did not oppose F.S. Airs motion.
Judge Sanders granted the motion without an opinion on November
7, 2002.
Casciola also failed to respond to F.S. Airs discovery
requests. F.S. Air moved to compel discovery and deem its
Requests for Admission to be admitted. Casciola did not oppose
the motion or respond to F.S. Airs earlier discovery requests.
Judge Sanders granted F.S. Airs motion on November 28, 2002.
Among other facts, Casciola was deemed to have admitted that
neither he nor Jetbroker possessed the advertised engines between
March 2002 and September 2002 and that neither he nor Jetbroker
possessed the authority to broker or sell the two jet engines
involved in this case.
The case proceeded to trial on compensatory and
punitive damages. Casciola submitted an Answer to Plaintiffs
Trial Brief but did not otherwise participate in the trial.
Superior Court Judge Phillip R. Volland conducted a bench trial
on February 27, 2002. Judge Volland found that F.S. Air had
proven by a preponderance of the evidence that it had been
injured in the amount of $30,000 and held Jetbroker and Casciola
jointly and severally liable for the damages.
Judge Volland also determined that F.S. Air had shown
by clear and convincing evidence that [d]efendants conduct was
outrageous, malicious, and done with bad motives and/or reckless
indifference to F.S. Airs interests, to deliberately pocket F.S.
Airs $25,000 for Defendants own financial profit and to F.S. Airs
detriment. . . . Defendants actions also appear . . . to have
been . . . part of a series of deliberate actions. Judge Volland
held Jetbroker and Casciola jointly and severally liable for
$300,000 in punitive damages.
Casciola appeals.
III. STANDARD OF REVIEW
We review a grant of summary judgment de novo.1 We
will affirm if there are no genuine issues of material fact and
if the movant is entitled to judgment as a matter of law.2 Since
Cooper Industries, Inc. v. Leatherman Tool Group, Inc.,3 we
review de novo whether a punitive damages award is grossly
excessive under the due process clause of the Fourteenth
Amendment.4
IV. DISCUSSION
A. Casciolas Briefing Is Adequate Only in Regard to His
Arguments Concerning Punitive Damages and Piercing the
Corporate Veil.
We do not consider arguments that are inadequately
briefed.5 We have held that where a point is specified as error
in a brief on appeal, but the point is not given more than
cursory statement in the argument portion of the brief, [it] will
not be considered by the court but will be treated as abandoned.6
We apply a more lenient standard to pro se litigants.7 To avoid
waiver, a pro se litigants briefing must allow his or her
opponent and this court to discern the pro ses legal argument.8
Even a pro se litigant, however, must cite authority and provide
a legal theory.9
Casciolas briefing on appeal is for the most part
insufficient and difficult to follow. Because his argument10
regarding the compensatory award does not allege any errors by
the superior court or articulate a legal theory, we will not
consider it. But his argument that the superior court erred by
piercing the corporate veil and holding him personally liable for
Jetbrokers misdeeds and his argument that the punitive damages
award was inappropriate outline recognizable legal theories and
cite identifiable authorities. Given our lenient stance towards
pro se litigants, we will address these two arguments.
B. Casciola Is Liable for the Compensatory and Punitive
Damages Award Regardless of his Personal Liability for
Jetbroker.
As noted, F.S. Air named Casciola as a defendant in his
individual capacity based on his intentional misrepresentations.11
F.S. Air moved for partial summary judgment on two issues: (1)
Casciolas liability for misrepresentation, and (2) Casciolas
personal liability for Jetbrokers corporate wrongdoing. Casciola
failed to oppose the motion, and Judge Sanders granted partial
summary judgment. Following trial, Judge Volland entered an
order noting that Judge Sanders previously ruled in this matter
that F.S. Air is entitled to judgment from both Defendants.
Judge Volland determined that Jetbroker and Casciola were jointly
and severally liable to F.S. Air in the amount of the $30,000 for
compensatory damages and $300,000 for punitive damages. Casciola
has not challenged on appeal either Judge Vollands conclusion
that he is jointly liable, or Judge Sanderss finding of liability
in his personal capacity for his individual acts of
misrepresentation.
Instead, Casciola contends that Judge Sanders erred in
granting summary judgment to F.S. Air regarding his personal
liability for Jetbrokers wrongdoing. He argues that there was
insufficient proof before Judge Sanders that Jetbroker functioned
as a mere instrumentality of his will.12 We need not address this
argument. Even if F.S. Air were not entitled to summary judgment
regarding Casciolas personal liability for Jetbroker, Casciola
has not contested that he would still be jointly liable in his
individual capacity for both punitive and compensatory damages
because of his misrepresentations. Consequently, a reversal
would not alter Casciolas liability, and error, if any, would be
harmless.
C. The Punitive Damages Award Is Not Excessive.
Casciola does not appeal Judge Vollands ruling that
F.S. Air has shown by clear and convincing evidence that F.S. Air
is entitled to recover punitive damages, jointly and severally,
from Jetbroker and Casciola. Rather, Casciola contests the
amount of punitive damages awarded, arguing that a $300,000 award
is grossly excessive in comparison to the $30,000 compensatory
award. Because Casciola engaged in extremely reprehensible
conduct, Alaska case law and statutory law gave notice that a
high ratio between punitive and compensatory damages was
possible, and since a large award is necessary to deter this type
of fraud, we conclude that the award does not violate either
Alaska or federal law.
1. The punitive damages award does not violate Alaska
law.
Casciola has not argued that the punitive award
violates Alaska law. Consequently, we would not ordinarily
address the application of Alaska law to the punitive award.
However, in light of Casciolas claim that the punitive award
violates federal due process, and the emphasis placed by the
United States Supreme Court on the reprehensibility of misconduct
and the existence of comparable civil and criminal penalties for
particular misconduct,13 we review Alaska law on punitive damages
and on civil and criminal penalties for comparable misconduct as
a guide.
As a preliminary matter, we note that Alaska law does
not prescribe a fixed ratio, or range of ratios, between punitive
and compensatory damages.14 Though both AS 09.17.020 and the
United States Supreme Court suggest that three- or four-to-one
ratios between punitive and compensatory damages are appropriate,15
we have upheld punitive damages far in excess of these ratios.16
Our reluctance to adopt a fixed ratio is motivated in part by the
fact that punitive damage awards must be tailored to case-
specific facts in order to achieve optimal deterrence and
punishment.17 Where compensatory damages may be small relative to
the cost of litigating, or where the nature of a tortfeasors
scheme makes deterrence and punishment difficult, a higher ratio
may be necessary to create the incentives necessary to vindicate
Alaskas legitimate interest in preventing particularly malignant
conduct.18
Alaska Statute 09.17.020(c) identifies seven factors
relevant to the determination of an appropriate punitive damages
award:
(1) the likelihood at the time of the conduct
that serious harm would arise from the
defendants conduct;
(2) the degree of the defendants awareness of
the likelihood described in (1) of this
subsection;
(3) the amount of financial gain the
defendant gained or expected to gain as a
result of the defendants conduct;
(4) the duration of the conduct and any
intentional concealment of the conduct;
(5) the attitude and conduct of the defendant
upon discovery of the conduct;
(6) the financial condition of the defendant;
and
(7) the total deterrence of other damages and
punishment imposed on the defendant as a
result of the conduct, including compensatory
and punitive damages awards to persons in
situations similar to those of the plaintiff
and the severity of the criminal penalties to
which the defendant has been or may be
subjected.
These factors are well-represented in this case.
Casciola intentionally deceived F.S. Air in order to obtain
$25,000,19 and he continued to lie to F.S. Air to conceal his
fraud and to delay legal action.20 The facts admitted by Casciola
strongly resemble criminal conduct21 and could form the basis for
charges carrying substantial fines and jail time.22 Casciolas
conduct also resembles a series of unlawful business practices
under AS 45.50.471(b).23 Such unlawful business practices can
result in civil penalties of up to $5,000 per violation.24 Alaska
law also specifically authorizes larger punitive awards to punish
intentional torts motivated by financial gain.25
Additionally, the record supports the conclusion that a
substantial penalty is necessary to punish Casciola and to deter
him, and others like him, from similar misconduct in the future.
Ample evidence demonstrates that Casciolas misconduct in this
case was merely one part of an ongoing pattern of fraud and
misrepresentation. Casciola appears to have engaged in an
identical scheme on at least one previous occasion: Casciola was
deemed to have admitted that he was a defendant in a case filed
by Heritage Christian to recover an unreturned $200,000 deposit
made by Heritage Christian to purchase a jet.26 As the superior
court noted, Casciola is the sole officer of eight Florida
corporations engaging in jet aircraft engine and part sales and
appraisals. During the course of this litigation, Casciola has
continued to solicit business from F.S. Air through his other
corporations.
A large award is also necessary in order to change the
dynamic of Casciolas fraudulent scheme. Currently a victim of
Casciolas scheme must choose between accepting a fractional
refund, thereby leaving Casciola with undeserved thousands, and
pursuing an expensive and uncertain vindication in the courts.
F.S. Air faced this difficult choice.27 At this juncture, it is
not clear that F.S. Air would not have been economically better
off had it accepted some fractional refund in April or May 2002.
Though the nominal values of the awards in this case are quite
large, F.S. Air must discount them by the strong possibility that
Casciola will never pay. F.S. Air has also spent a great deal of
time, energy, and money in seeking its refund. Other victims may
allow Casciola to skim their deposits in order to make the
economic best of a bad situation. Given this dilemma, a large
punitive award is necessary to provide victims with an incentive
to pursue proper legal action.
2. The punitive damages award does not impinge on
Casciolas federal due process rights.
Casciola argues that the punitive damages award is
grossly excessive and violates the due process clause of the
Fourteenth Amendment. We disagree. The award is
constitutionally sound given the reprehensibility of Casciolas
conduct, the necessity of a large penalty to alter the incentives
of this type of fraud, and the potential penalties available
under Alaska criminal and civil law.
In BMW of North America, Inc. v. Gore,28 the United
States Supreme Court recognized that [p]unitive damages may
properly be imposed to further a States legitimate interests in
punishing unlawful conduct and deterring its repetition.29 Only
when an award can fairly be categorized as grossly excessive in
relation to these interests does it enter the zone of
arbitrariness that violates the Due Process Clause of the
Fourteenth Amendment.30 In relevant part, Gore held that a
punitive award may be grossly excessive where a tortfeasor lacked
notice of the magnitude of the sanction that a state might
employ.31
To determine whether a tortfeasor had fair notice of
the potential magnitude of a punitive damages award, the Supreme
Court has identified three guideposts:
(1) the degree of reprehensibility of the
defendants misconduct; (2) the disparity
between the actual or potential harm suffered
by the plaintiff and the punitive damages
award; and (3) the difference between the
punitive damages awarded by the jury and the
civil penalties authorized or imposed in
comparable cases.[32]
These guideposts are meant to provide a flexible guide to the
requirements of due process. In practice, the guideposts
identify a range of ratios of punitive to compensatory damages
that are presumptively acceptable and prescribe constitutionally
permissible reasons for deviating upwards. Though the Supreme
Court is careful to say that there is no bright-line rule and
that due process cannot mandate a specific ratio, it also notes
that statutes authorizing punitive damages extending back 700
years have emphasized double, treble, or quadruple damages and
that a four-to-one ratio may be close to the constitutional line.33
The Court noted that the most important justification for
departing upward from the constitutional comfort zone of three-
or four-to-one is the reprehensibility of the misconduct.34 We
turn now to an application of the BMW v. Gore guideposts.
a. Casciolas conduct was extremely
reprehensible.
[T]he most important indicium of the reasonableness of
a punitive damages award is the degree of reprehensibility of the
defendants conduct.35 The Supreme Court has set out factors to
consider in measuring the reprehensibility of the tortious
conduct:
We have instructed courts to determine the
reprehensibility of a defendant by
considering whether: the harm caused was
physical as opposed to economic; the tortious
conduct evinced an indifference to or a
reckless disregard of the health or safety of
others; the target of the conduct had
financial vulnerability; the conduct involved
repeated actions or was an isolated incident;
and the harm was the result of intentional
malice, trickery, or deceit, or mere
accident.[36]
While only two of these criteria apply to Casciolas
conduct Casciolas conduct involved intentional deceit and
involved a series of misrepresentations (indeed, it appears to be
part of a larger pattern of wrongdoing) the facts in this case
more than demonstrate the egregiousness of Casciolas conduct.
The analysis undertaken above pursuant to Alaska law shows that
Alaska considers Casciolas conduct to be extremely blameworthy.
The superior court found that Casciolas actions were outrageous,
malicious and with bad motives . . . to deliberately pocket F.S.
Airs $25,000 for Defendants own financial profit and to F.S. Airs
detriment. This finding was correct given the undisputed
evidence at trial that Casciolas actions were not part of an
isolated incident but emblematic of a larger pattern of fraud and
that the injuries suffered by F.S. Air flowed from Casciolas
intentional malice, trickery, or deceit.
b. The ratio of punitive to compensatory damages
is not excessive.
Under the second guidepost, which compares punitive
damages with actual damages, the Supreme Court has not prescribed
a bright-line rule for when a punitive damages award so far
exceeds actual damages that the award violates the due process
clause.37 The Court has noted, however, that few awards exceeding
a single-digit ratio between punitive and compensatory damages,
to a significant degree, will satisfy due process,38 and also has
stated that an award of more than four times the amount of
compensatory damages might be close to the line of constitutional
impropriety.39
This guidepost does not proscribe particular ratios as
presumptively unconstitutional. Rather, it is a rule of thumb a
general prediction regarding what ratios will satisfy due
process. Whether or not a given ratio does satisfy due process,
however, depends on other factors, including analysis under the
other two stated guideposts. Due process, as noted by the lower
federal courts, allows for larger awards relative to the
compensatory damages when appropriate.40 In this case, the ratio
between punitive and actual damages awarded is ten-to-one. While
this ratio may exceed the Supreme Courts preference for single-
digit ratios, it does so only slightly, and it is a far lower
ratio than any of those that have actually been invalidated by
the Supreme Court.41 More importantly, we are satisfied that the
award is more than adequately justified when the other guideposts
the reprehensibility of the conduct and the civil penalties
imposed in comparable cases are considered, as in the other
sections of this Opinion. Consequently, while the ratio between
the punitive award and the compensatory award is sufficiently
high to draw scrutiny, the ratio passes constitutional muster.
c. There is no disparity between the award and
similar punitive damage awards or civil
penalties in Alaska.
The third guidepost in Gore is the disparity between
the punitive damages award and the civil penalties authorized or
imposed in comparable cases. 42 The Supreme Court has also looked
to criminal penalties that could be imposed.43 As we have already
seen, Alaska law authorizes substantial criminal and civil
penalties for the conduct admitted by Casciola, as well as
enhanced punitive damages.44 Given these penalties, Casciola was
on notice that he could face harsh punishment for his conduct.
This analysis of the BMW v. Gore guideposts leads us to
conclude that the punitive damages award here does not violate
Casciolas due process rights. Casciolas acts in deceiving F.S.
Air in order to steal a large sum of money were highly
reprehensible. Casciola was on notice that his conduct could
result in severe penalties. A large punitive award is necessary
to provide the incentive for victims to seek compensation and to
reduce the efficacy of Casciolas scheme. Given these
considerations, we conclude that the size of the punitive award
does not violate federal due process.
V. CONCLUSION
Because any error in piercing the veil would be
harmless and because the punitive award does not violate due
process, we AFFIRM the superior court in all respects.
_______________________________
1 Alakayak v. British Columbia Packers, Ltd., 48 P.3d
432, 447 (Alaska 2002).
2 Id.
3 532 U.S. 424 (2001) (instructing appellate courts to
review constitutionality of punitive damages awards de novo).
4 Central Bering Sea Fishermens Assn v. Anderson, 54 P.3d
271, 277 (Alaska 2002). Prior to Cooper Industries, we reviewed
a lower courts decision on a motion for remittitur or new trial
regarding punitive damages for abuse of discretion. Id.
5 Lewis v. State, 469 P.2d 689, 692 n.2 (Alaska 1970).
6 Id. See also Great Divide Ins. Co. v. Carpenter ex
rel. Reed, 79 P.3d 599, 608 n.10 (Alaska 2003) (Points that are
inadequately briefed are considered waived.).
7 Breck v. Ulmer, 745 P.2d 66, 75 (Alaska 1987) (citing
Haines v. Kerner, 404 U.S. 519, 520 (1972)).
8 Peterson v. Ek, 93 P.3d 458, 464 n.9 (Alaska 2004).
9 Id.
10 Casciolas compensatory damages argument consists only
of a paragraph requesting us to review a long list of cases in
which awards were reduced on appeal. No citations are provided
for these cases. The submission is unreviewable.
11 All persons may be found liable for their own
intentional tortious conduct, including acts of fraudulent
misrepresentation. The corporate form does not shield corporate
officers or employees who commit torts on behalf of their
employer from personal liability. As an Oregon appellate court
has stated, [t]here is no reason to protect corporate officers or
employees who authorize, direct and participate in tortious
conduct by their corporate principal. If the corporation commits
a tort as a result of intentional action on the part of its
officers or employees, these agents are also responsible. Schram
v. Albertsons, Inc., 934 P.2d 483, 491 (Or. App. 1997) (quoting
Wampler v. Palmerton, 250 OR 65, 77, 439 P.2d 601 (1968)). See
also Scribner v. OBrien, Inc., 363 A.2d 160, 168 (Conn. 1975)
(when an agent or officer commits or participates in the
commission of a tort, whether or not he acts on behalf of his
principal or corporation, he is liable to third persons injured
thereby.); Robsac Indus., Inc. v. Chartpak, 497 A.2d 1267, 1271
(N.J. App. Div. 1985) (Corporate officers are personally liable
to persons injured by their own torts, even though they were
acting on behalf of the corporation and their intent was to
benefit the corporation.); Oxmans Erwin Meat Co. v. Blacketer,
273 N.W.2d 285, 289 (Wis. 1979) (An individual is personally
responsible for his own tortious conduct. A corporate agent
cannot shield himself from personal liability for a tort he
personally commits or participates in by hiding behind the
corporate entity; if he is shown to have been acting for the
corporation, the corporation also may be liable, but the
individual is not thereby relieved of his own responsibility.).
We do not address whether the corporate form shields individuals
from liability for negligent torts committed on behalf of the
corporation.
12 In Uchitel Co. v. Telephone Co., 646 P.2d 229, 234-35
(Alaska 1982), we held that it was appropriate to pierce the
corporate veil and hold a dominant shareholder personally liable
for a corporations wrongdoing if the corporation functioned as
the mere instrumentality of the dominant shareholder. To
determine when a corporation functioned as the mere
instrumentality of its dominant shareholder, we adopted a six-
part test adapted from the eleven-part test announced in Jackson
v. General Electric Co., 514 P.2d 1170 (Alaska 1973), for
piercing the corporate veil in the context of a parent
corporations liability for its subsidiary. Uchitel, 646 P.2d at
235. The six-part test instructed:
In adapting the quantitative approach from
the parent-subsidiary cases to the individual
shareholder-corporation context the following
factors should be considered: (a) whether the
shareholder sought to be charged owns all or
most of the stock of the corporation; (b)
whether the shareholder has subscribed to all
of the capital stock of the corporation or
otherwise caused its incorporation; (c)
whether the incorporation has grossly
inadequate capital; (d) whether the
shareholder uses the property of the
corporation as his own; (e) whether the
directors or executives of the corporation
act independently in the interest of the
corporation or simply take their orders from
the shareholder in the latters interest; (f)
whether the formal legal requirements of the
corporation are observed.
Id. See also Nerox Power Systems, Inc. v. M-B Contracting Co.,
54 P.3d 791 (Alaska 2002) (articulating Uchitel quantitative test
in slightly modified form). Uchitel also held that a dominant
shareholder could be held personally liable for corporate acts if
the corporate form is used to defeat public convenience, justify
wrong, commit fraud, or defend crime. Id. at 234 (citation
omitted). In this case, Casciola claimed that F.S. Air had not
presented sufficient evidence of the elements of the six-part
test for instrumentality to justify summary judgment. We decline
to evaluate this claim because Casciola will remain liable for
the entire judgment even if we were to reverse on this issue. We
do note, however, that Casciola failed to address F.S. Airs
assertion that piercing the corporate veil was appropriate
because Casciola used Jetbroker as a front for fraud. Such abuse
of the corporate form may justify piercing the corporate veil
even in the absence of a showing of instrumentality. Id.
13 See BMW of N. America v. Gore, 517 U.S. 559, 574-75
(1996). See also infra Part IV.C.2.
14 Fyffe v. Wright, 93 P.3d 444, 457 (Alaska 2004) (citing
Norcon, Inc. v. Kotowski, 971 P.2d 158, 175-77 (Alaska 1999)).
15 See AS 09.17.020(f)(1), (g)(1)-(2); State Farm Mut.
Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (four-to-one
ratio of punitive to compensatory damages may approach
constitutional line). Note that AS 09.17.020, by its terms,
permits juries to depart from these suggested ratios, so long as
the total punitive damages award falls within the maximum dollar-
value statutory cap.
16 See, e.g., Cent. Bering Sea Fishermens Assn v.
Anderson, 54 P.3d 271, 274-77 (Alaska 2002) (approving $600,000
in total punitive damages and $48,000 in compensatory damages for
constructive termination and defamation); Laidlaw Transit, Inc.
v. Crouse ex rel. Crouse, 53 P.3d 1093, 1096-97 (Alaska 2002)
(approving $500,000 in punitive damages and $19,259 in
compensatory damages against school bus company that employed
drug-using driver); Era Aviation, Inc. v. Lindfors, 17 P.3d 40,
43, 49 (Alaska 2000) (ordering $725,000 punitive award remitted
to $500,000 where compensatory damages for emotional distress
equaled $50,000); IBEW, Local 1547 v. Alaska Utility Constr.
Inc., 976 P.2d 852, 853-55 (Alaska 1999) (affirming $212,500
punitive award against union that engaged in outrageous picketing
behavior where compensatory damages totaled $11,622.05); Norcon,
Inc. v. Kotowski, 971 P.2d 158, 161, 174-77 (Alaska 1999)
(ordering $3,000,000 punitive award remitted to $500,000 where
compensatory damages totaled slightly more than $10,000 in sexual
harassment suit).
17 See Norcon, 971 P.2d at 179 (Eastaugh, J., concurring)
(discussing desirability of punitive damage awards that are
tailored to provide optimal deterrence given litigation costs).
18 Id.
19 The superior court deemed Casciola to have admitted
that he knowingly entered a contract to sell to F.S. Air jet
engines which he did not possess nor have authority to broker or
sell, and that, in partial consideration for these engines, F.S.
Air paid a $25,000 deposit to Casciola which has not been
refunded. Casciola has not attempted to dispute these facts on
appeal.
20 Casciola initially told F.S. Air that the engines could
not be delivered because of a logbook problem. He then promised
to return the deposit if F.S. Air executed a release. After F.S.
Air executed a revised release to Casciolas specifications,
Casciola explained that he had engines available for [F.S. Airs]
inspection and proposed continuing to do business but did not
return the deposit. Given Casciolas admissions, we are confident
that none of these statements was true.
21 For example, knowingly taking advantage of anothers
false impressions to obtain $25,000 could constitute theft by
deception, a class B felony. See AS 11.46.100, .120, .180; AS
11.81.900(18). Similarly, Casciolas acts could fit the elements
of a scheme to defraud, another class B felony. See AS
11.46.600.
22 An offender convicted of a class B felony may be
sentenced to a maximum of ten years imprisonment, AS
12.55.125(d), and fined as much as $100,000. AS 12.55.035(b)(3).
23 AS 45.50.471(b)(12) defines using or employing
deception, fraud, false pretense, false promise,
misrepresentation, or knowingly concealing, suppressing, or
omitting a material fact with intent that others rely upon the
concealment, suppression or omission in connection with the sale
or advertisement of goods or services whether or not a person has
in fact been misled, deceived or damaged as unlawful business
practices.
24 AS 45.50.501(a) authorizes the attorney general to
bring an action in the name of the state against parties engaging
in practices that violate AS 45.50.471. Pursuant to such an
action, a penalty of $5,000 per violation may be assessed against
a party who violates AS 45.50.471. See AS 45.50.551(b). In
addition, injured private parties in this chapter are statutorily
authorized to seek treble damages, AS 45.50.531(a), and costs and
full reasonable attorneys fees. AS 45.50.537.
25 Compare AS 09.17.020(f) with AS 09.17.020(g).
26 Heritage Christian Center paid Casciola a $200,000
deposit for the jet but never received the airplane or a refund
of its deposit.
27 During April and May 2002 Casciola attempted to delay
F.S. Air by requesting a letter releasing Casciola from the
contract, then a mutual release between the parties, then changes
to the mutual release, and followed by a claim that the contract
allowed Casciola more than twenty business days to perform.
These letters contained several requests for settlement, even
though Casciola had earlier admitted that F.S. Air was entitled
to a full refund of the deposit. This behavior culminated in a
May 7, 2002 letter in which Casciola expressed his desire to
settle and implicitly warned F.S. Air that legal action would be
futile because of a variety of legal and accounting issues.
Combined with Casciolas demonstrated bad faith, this line of
correspondence communicates a simple message: F.S. Air should
compromise or get nothing.
28 517 U.S. 559 (1996). The plaintiff in Gore sued BMW
for fraud in Alabama court after discovering that his new car had
been damaged and the car repainted before delivery. Id. at 563.
A jury awarded Gore $4,000 in actual damages and $4,000,000 in
punitive damages. Id. at 565. The punitive damages figure
reflected the estimated actual damages suffered by all BMW owners
in Gores position nationwide. Id. at 564-65. After the Alabama
Supreme Court reduced the award to $2,000,000, BMW appealed to
the U.S. Supreme Court. Id. at 567.
29 Id. at 568.
30 Id.
31 Id. at 574-75.
32 State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.
408, 418 (2003) (citing Gore, 517 U.S. at 575).
33 Id. at 424-25.
34 Id. at 419; Gore, 517 U.S. at 575.
35 Campbell, 538 U.S. at 419 (citing Gore, 517 U.S. at
575).
36 Id. (citing Gore, 517 U.S. at 576-77).
37 Id. at 425.
38 Id.
39 Id.
40 See Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,
285 F.3d 1146, 1151-52 (9th Cir. 2002) (ten-to-one ratio was
justified in stolen trade secrets case by need to deter large
corporation from such conduct); Johansen v. Combustion Engg,
Inc., 170 F.3d 1320, 1336-39 (11th Cir. 1999) (approving ninety-
three-to-one ratio in water pollution case because (1) large fine
was necessary to deter large corporate defendant, (2) misconduct
caused small injury and was difficult to detect, and (3)
defendant was on notice that similar conduct might earn
substantial civil penalties); Kimzey v. Wal-Mart Stores, Inc.,
107 F.3d 568, 577-78 (8th Cir. 1997) (imposing ten-to-one ratio
in egregious sexual harassment case). Federal appellate courts
have also upheld punitive damage awards that far exceed the ten-
to-one ratio in actions under 42 U.S.C. 1983 where plaintiffs
suffered only nominal injuries. See Williams v. Kaufman County,
352 F.3d 994, 1016 (5th Cir. 2003) (upholding punitive damage
award of $15,000 per plaintiff for Fourth Amendment violations);
Lee v. Edwards, 101 F.3d 805, 810-11 (2d Cir. 1996) (holding that
Gore ratio guidepost does not apply to 1983 claims where actual
damages are nominal). In the context of an action for punitive
damages under the Federal Fair Housing Act, 42 U.S.C. 3601-3631,
the Fifth Circuit rejected the argument that a punitive damages
ratio exceeding ten-to-one required remittitur. Lincoln v. Case,
340 F.3d 283, 293 (5th Cir. 2003).
41 The Supreme Court has never struck down a punitive
award that was only ten times greater than accompanying
compensatory award. In Gore, the punitive damages equalled 500
times the compensatory damages, which the Court called
breathtaking. 517 U.S. at 582-83. In Cooper Indus., Inc. v.
Leatherman Tool Group, Inc., 532 U.S. 424 (2001), the ratio of
punitive to compensatory damages was ninety-to-one. Id. at 426.
And in Campbell, the ratio was 145-to-one. 538 U.S. at 412.
42 Campbell, 538 U.S. at 428 (quoting Gore, 517 U.S. at
575).
43 Id.
44 See supra Part IV.C.1.
