Repossession of Horses Results in Significant Damages Against Bank

April 23, 2010 | Erin Herbold

Here, the plaintiff purchased a tract of land and obtained a mortgage on the real estate from the defendant, a bank.  The real estate secured the mortgage and the bank had an additional security interest in the plaintiff’s horses. A few years later, the plaintiff defaulted on her mortgage with the bank, and the bank filed a petition for foreclosure. However, before the sheriff’s sale, the plaintiff moved herself and her horses to her sister’s property. After the sheriff’s sale, there remained a $7,990 deficiency on the bank loan. Thus, the bank’s loan committee decided to “repossess” the plaintiff’s horses. The bank’s loan officer took possession of fifteen horses, including four horses that actually belonged to the plaintiff’s sister. The plaintiff discovered that the horses were “missing” by finding the fence between her former property and her sister’s property cut down. Panicked, the plaintiff and her sister drove around during the night, searching for their horses.

The next day, the plaintiff discovered that the bank had, indeed, repossessed the horses. The plaintiff visited the bank and an argument over the horses ensued. Finally, the plaintiff’s sister wrote a check to satisfy the deficiency on the loan in exchange for the return of the horses. At that time, the plaintiff and her sister were presented with a release of the loan and a provision that unconditionally released the bank from any liability for the seizure of the horses or trespassing. The plaintiff and her sister refused to sign the release.

The plaintiff and her sister filed suit against the bank for conversion, civil extortion, trespass onto property, and intentional infliction of emotional distress. The trial court found that the taking of the plaintiff’s horses was wrongful and amounted to a conversion. As a result, the plaintiff and her sister were entitled to reasonable and necessary expenses and damages.

On the issue of intentional infliction of emotional distress, the plaintiff testified that she was “frantic” and “sickened” when she learned her horses were missing. She also testified at trial that the dispute caused her entire family, most especially her sister, to become very upset. The loan officer testified that he only intended to take the plaintiff’s horses, on the advice of legal counsel. After extensive testimony, the jury found the bank and loan officer liable for trespass and warded the plaintiff and her sister damages in the amount of $10,000 each for past mental pain and suffering. The jury also found that the loan officer was personally liable for punitive damages in the amount of $80,000 to the sister and $55,000 to the plaintiff. The bank was ordered to pay punitive damages in the amount of $25,000 a piece to the sisters. However, the jury failed to award any damages for the tort of intentional infliction of emotional distress.

On appeal, the bank and the loan officer argued that the damages were “excessive, duplicative, and contrary to law.” The appellate court noted, however, that a jury’s function is to assess and award damages and the court determined that the actual damages award was not flagrantly excessive or out of reason or lacking in evidentiary support.  So, the $10,000 award for mental pain and suffering was upheld.  However, the damages for conversion and damages for injury to the horses lacked evidentiary support.  The animals were not outwardly damaged, even though the plaintiffs claimed that they suffered an emotional impact.

The appellate court, most importantly, addressed the propriety of the punitive damages award imposed on the bank and the loan officer. Iowa law (§668A.1) states that the parties must have engaged in willful and wanton conduct, as supported by a preponderance of the evidence for the jury to award punitive damages. Here, the jury award was supported by the evidence and testimony of the parties. Thus, the punitive damages award stood in this case, because it was not duplicative or excessive. The case was remanded to the trial court, merely to recalculate the damages for the injuries the horses sustained, if any.  Becker, et al. v. Longinaker,et al., No. 0-0960/09-0833, 2010 Iowa App. LEXIS 304 (Iowa Ct. App., Apr. 21, 2010).