F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                                     PUBLISH
                                                                           JUL 28 1997
                      UNITED STATES COURT OF APPEALS
                                                                        PATRICK FISHER
                                                                               Clerk
                                 TENTH CIRCUIT



 FEDERAL DEPOSIT INSURANCE
 CORPORATION, acting in its corporate
 capacity,

       Plaintiff,
 v.
 SANDRA B. HAMILTON and L.G.                              No. 96-6104
 HAMILTON, individuals,

       Defendants-Appellees,
 v.
 NCNB TEXAS NATIONAL BANK, and
 NationsBank, Successor in Interest to
 NCNB Texas National Bank,

       Defendant-Third Party Defendant-
       Appellant.


             APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE WESTERN DISTRICT OF OKLAHOMA
                          (D.C. No. CIV-92-843-A)


Drew Neville of Linn & Neville, P.C., (Russell A. Cook and Brinda K. White of Linn &
Neville, P.C., and Connor L. Helms of Woska, Hasbrook, Dowd, Underwood & Helms,
with him on the brief), Oklahoma City, Oklahoma, for Defendants-Appellees.

Kirk D. Fredrickson of Bright & Barnes, P.C., (Douglas N. Gould of Thomas, Gould &
Nix, with him on the brief), Oklahoma City, Oklahoma, for Defendant-Third Party
Defendant-Appellant.
Before ANDERSON, BALDOCK, and EBEL, Circuit Judges.


BALDOCK, Circuit Judge, delivering the Opinion of the Court as to Parts I and II, in
which ANDERSON, Circuit Judge, concurs, and as to Part III, in which ANDERSON
and EBEL, Circuit Judges, concur.

EBEL, Circuit Judge, delivering the Opinion of the Court as to Part IV, in which
ANDERSON, Circuit Judge, concurs.


This case is before us a second time. In Federal Deposit Insurance Corp. v. Hamilton, 

(10th Cir. 1995), we, inter alia, reversed the district court’s award of $44,000

actual damages and $1,200,000 punitive damages on Defendant Hamiltons’ Oklahoma

state fraud claim against Third-Party Defendant NationsBank. The facts of this case are

set forth in that opinion and need not be restated here except to the extent necessary to our

discussion of the issues. Suffice it to say that in Hamilton we remanded the case to the

district court to reconsider its finding of fraud against NationsBank in light of facts which

the district court apparently overlooked. We explained:

              Here, the district court found that NationsBank committed fraud
       through its agent, Warren, by knowingly making materially false
       representations regarding repairs between March and October 1991.
       However, the record reflects that NationsBank spent in excess of $20,000
       on repairs to the property during the period in which the district court found
       fraudulent conduct.

              Unfortunately, we cannot discern from the record whether the district
       court considered the effect, if any, of the $20,000 in expenditures on the
       Hamiltons’ fraud claim under the law of Oklahoma . . . even though the
       issue as to whether the Hamiltons are entitled to recover on their fraud
       claim was clearly presented.


                                              2


. We rejected, however, NationsBank’s claim that Oklahoma

law prohibits an award of punitive damages in any case arising out of contract. We

concluded that the Hamiltons might recover punitive damages if, “on remand, the district

court again finds that NationsBank committed the independent willful tort of fraud” under

Oklahoma law. 

On remand, the district court again found just that, and

reinstated its award of $44,000 actual damages and $1,200,000 punitive damages against

NationsBank. The district court found that the $20,000 in expenditures to which we

referred in our prior opinion were not “part of a good faith ongoing effort to fulfill Mr.

Warren’s false promises to the Hamiltons and the Bank’s total repair obligations under

the Lease, but instead as part of Mr. Warren’s deceptive scheme.”

Aplt. Supp. App. at 897.1




       1
              The district court described the scheme as follows:

               The goal of Mr. Warren’s deceitful plan was to induce the Hamiltons
       to make repairs at their own expense that the Bank was obligated to make
       under the Lease. Mr. Warren hoped for the Bank to benefit from the
       Hamiltons’ assumption of repair and maintenance costs through one of
       three possible scenarios: (a) sale of the property to the Hamiltons without
       fair adjustment to the purchase price for the value of the Hamiltons’
       expenditures; (b) a new lease on terms significantly less advantageous to the
       Hamiltons with respect to repair and maintenance obligations; or (c)
       eviction of the Hamiltons from the property after they had made significant
       expenditures and improvements to the property.

Aplt. Supp. App. at 897.

                                              3
       NationsBank again appeals claiming that (1) Oklahoma law does not recognize a

cause of action in fraud for entering into a contract with no intention to perform where

acts in furtherance of performance occur; (2) the evidence was insufficient to support the

district court’s finding of fraud; (3) the district court imposed punitive damages for an

improper purpose; and (4) the punitive damage award is grossly excessive. NationsBank

requests reversal of the fraud judgment or, in the alternative, a remittitur on the punitive

damage award. Our jurisdiction arises under 28 U.S.C. § 1291. We review a district

court’s determination of state law de novo. Salve Regina College v. Russell, 

, 231 (1991). Similarly, we review the propriety of a punitive damage award de novo.

Patton v. Tic United Corp., 

, 1243 (10th Cir.), cert. denied, 

(1996). We will not disturb a district court’s findings of fact, however, unless those

findings are clearly erroneous giving due regard to the district court’s opportunity to

determine the witnesses’ credibility. Fed. R. Civ. P. 52(a). Applying these standards, we

affirm in part and reverse in part.

                                              I.

       NationsBank asserts that Oklahoma law precludes a finding of fraud because the

Bank took actions in furtherance of its contractual obligation to repair the rental property.

NationsBank advanced this argument in its first appeal as well. 

. We agree with NationsBank’s interpretation of Oklahoma law. Indeed, in Furr v.

Thomas, 

, 1272 (Okla. 1991), the Oklahoma Supreme Court held that to


                                              4
avoid a claim for the independent tort of fraud in a case arising out of contract,

subsequent actions of the promisor “must be toward the fulfillment of a promise.”

Because in Furr the promisor admitted that his subsequent actions were not in furtherance

of his promise to perform under the contract, the court concluded that the question of

fraud was properly submitted to the jury. 

properly interprets Oklahoma law, the problem with

NationsBank’s argument is that the district court did not find that the Bank’s undertaking

of certain repairs was in furtherance of its promise to perform its contractual obligations

to the Hamiltons. To the contrary, the district court expressly found on remand that--

       The Bank undertook this work not as part of a good faith ongoing effort to
       fulfill Mr. Warren’s false promises to the Hamiltons and the Bank’s total
       repair obligations under the Lease, but instead as part of Mr. Warren’s
       deceptive scheme. This gesture of “good faith,” like the moratorium on rent
       payments Mr. Warren unilaterally imposed in April 1991, was designed to
       string the Hamiltons along until he could either convince them to buy the
       property or coerce them to sign a new lease.

Aplt. Supp. App. at 897-98 (emphasis in original).

       In Oklahoma, the parties’ purpose and intent to a disputed contract is a question of

fact. See Continental Natural Gas, Inc. v. Midcoast Natural Gas, Inc., 

,

1188 (Okla. Civ. App. 1996). In our prior opinion, we recognized that the question of

whether part performance of a contract was “toward the fulfillment of a promise” under

Oklahoma law was a question of fact which the district court must decide on remand.

. If Oklahoma law absolutely barred the Hamiltons’ fraud


                                              5
claim, a remand would have been unnecessary. Because our review of the record reveals

that the district court’s finding as to NationsBank’s motive in undertaking certain repairs

of the property is not clearly erroneous, but is a subject upon which reasonable minds

might differ given the conflicting testimony of the parties, we will not disturb the court’s

finding. Accordingly, NationsBank’s first argument must fail.2

                                              II.

       NationsBank next asserts that the evidence was insufficient to support the district

court’s finding of fraud. To establish fraud, Oklahoma law requires the proponent to

show by clear and convincing evidence “a false material representation made as a positive

assertion which is either known to be false, or made recklessly without knowledge of the

truth, with the intention that it be acted upon by a party to his or her detriment.” Rainbow

Travel Serv. v. Hilton Hotels Corp., 

, 1240 (10th Cir. 1990). In Tice v.

Tice, 

, 1171 (Okla. 1983), the Oklahoma Supreme Court set forth the basis

for a fraud claim based on failure to fulfill a promise:




       2
              Even if we were to view the district court’s determination regarding
NationsBank’s motive as a mixed question of fact and law, “the quintessentially factual
question of intent” predominates, requiring us to apply the clearly erroneous standard of
review. See United States v. Richard, 

, 853 (10th Cir. 1992) (internal
quotations and citation omitted).

                                              6
       Fraud can be predicated upon a promise to do a thing in the future when the
       promisor’s intent is otherwise. The basis of fraudulent misrepresentation is
       the creation of a false impression and damage sustained as a natural and
       probable consequence of the act charged. The fraudulent representation
       need not be the sole inducement which causes a party to take the action
       from which the injury ensued. The key is that without the representation the
       party would not have acted. The liability for misrepresentation depends
       upon whether the person relying thereon was in fact deceived.

       In this case, the district court expressly found all the elements necessary to

establish fraud under Oklahoma law. The district court found that NationsBank, through

Warren, made representations that the Bank would make certain repairs which Warren

knew to be false. The court also found that NationsBank did this with the intent that the

Hamiltons would detrimentally rely on such representations. The court found:

               Beginning in March 1991 and continuing until October 2, 1991, Mr.
       Warren repeatedly made false promises that all necessary repairs would be
       made and that they would be made in a timely fashion. He made these
       promises with the intent not to perform them, but with the knowledge that
       nonperformance, and specifically failure to repair critical items or making
       untimely repairs, would be disastrous to the Hamiltons’ business plan. Mr.
       Warren’s true intent was to take care of only a few items immediately and
       to delay making repairs that he knew were necessary to preserve or restore
       the functional integrity of the property. By delay, Mr. Warren hoped to
       avoid incurring additional repair and maintenance costs until he succeeded
       in extricating the Bank from its onerous obligation under the Lease to repair
       and maintain “all functions of the property.” He also intended to put
       pressure on the Hamiltons.

Aplt. Supp. App. at 896-97.

       Unquestionably, the evidence conflicted in this case. The district court chose to

believe the Hamiltons rather than NationsBank. The court expressly rejected Warren’s

testimony that he never intended to deceive the Hamiltons as unbelievable:

                                              7
       The Court’s finding that the Bank, acting through Mr. Warren, acted
       fraudulently is based in large part on the Court’s observation of Mr.
       Warren’s demeanor and manner of testifying. Watching him, the Court was
       firmly convinced that he was a deceitful, calculating opportunist in his
       dealings with the Hamiltons. He was well aware of and purposefully
       exploited the Hamiltons’ particular vulnerability. After becoming familiar
       with the Hamiltons’ situation, Mr. Warren capitalized on the weak points in
       their business plan, namely, that they could ill afford to wait for the Bank to
       make numerous basic repairs nor abandon the considerable investment they
       had already made in starting up their business on the property.

Aplt. Supp. App. at 898-99.

       As in its prior appeal, 

-30, NationsBank argues that its

expenditure of over $20,000 in June 1991 to repair the property’s security system,

sprinkler system, and guest house floor illustrates that NationsBank did not intend to

deceive the Hamiltons. We agree that this evidence may be viewed in that way.

However, viewing the evidence in a light most favorable to the prevailing party as we

must, see 

, the evidence showed that NationsBank assured the

Hamiltons when they executed the lease that the Bank would make all necessary repairs

to the property. Aple. App. at 87, 209. The Bank even placed a $1,000 per year limit on

the amount the Hamiltons were required to expend to maintain the property. Aplt. App.

Vol. I at 6. Yet, NationsBank did not authorize any repairs in 1992. Aple. App. at 68.

As of February 1993, the property needed repairs costing a total of $109,860. Aple. App.

at 1-7, 234. Sandra Hamilton described some of the problems which arose:

       [W]hen we moved in, there were bullet holes everywhere, . . . none of the
       doors would open, the cabinet doors were falling off . . . in the kitchen and
       the utility room. Plumbing just kept--it was just one thing after another.

                                              8
      You’d get a toilet fixed, another toilet would break; the sink would break;
      the sewers kept backing up because they were full of just stuff from sitting
      there so long. . . . [T]he electric was really a problem, there were live wires
      everywhere inside the house. Light fixtures were broken. Ceiling fans
      wouldn’t work, they had just frozen up . . . . We had shorts everywhere.
      The Jacuzzi in my room shorted out, flames flicked up the wall. I bumped
      my arm against one of the light switches in my bathroom and it knocked me
      across the room at one point. Another point, kitchen range shorted out,
      fumes everywhere. The kitchen stove caught on fire and literally burned
      up. Most every appliance broke. The air conditioners all went out at one
      time or another. After the air conditioner got fixed, then the heaters broke.
      . . . I spent the entire winter of ‘91 and the entire winter the following year
      working in a coat with a fire in the fireplace, when I had somebody that
      could go get logs to build one, because we had absolutely no heat for two
      whole winters. We had no oven for nine months. . . . The scorpions were
      falling out of the light fixtures, and of course we still had the wasp problem.
      . . . The place was infested with wasps. And it was one of the things we
      specifically addressed before we even moved in.

Aple. App. at 89-90.

      The evidence supports the district court’s finding that the Bank did not make the

necessary repairs in accordance with the lease, and refused to do so unless the Hamiltons

entered into a more definite lease agreement under terms more advantageous to the Bank.

Aple. App. at 214; Aplt. App. Vol. I at 103-04. NationsBank admitted that the lease had

“not turned out to be a good deal for the bank and we want[ed] out.” Aplt. App. Vol. II

at 268. The Hamiltons in the meantime made over $100,000 worth of improvements to

the property during the term of the lease, and as a result are now broke. Aple. App.

at 251-52, 319.

      On appeal, our inquiry is limited to whether the record contains evidence to

support the district court’s findings, and we believe this record amply does. How we

                                            9
might decide this case in the first instance is of no import. Under our standard of review,

we will overturn the district court’s findings “only if our review of the record leaves us

with a definite and firm conviction that a mistake has been made.” ITT Life Ins. Corp. v.

Farley, 

, 981 (10th Cir. 1986). It is exclusively within the district court’s

province to (1) appraise credibility, (2) determine the weight to be afforded testimony, (3)

draw reasonable inferences from the facts, (4) resolve conflicts in the evidence, and (5)

ultimately set forth findings of fact and conclusions of law. We are not empowered to

undertake a review of the evidence which would amount to a trial de novo. Accordingly,

we uphold the district court’s finding of fraud against NationsBank.

                                             III.

       NationsBank claims that if we uphold the district court’s finding of fraud, we still

must issue a remittitur reducing the court’s $1,200,000 punitive damage award because

the district court improperly awarded punitive damages to compensate the Hamiltons

rather than punish NationsBank. According to NationsBank, the district court committed

error warranting a remittitur when the court stated on the record:

       The purpose of the Court’s award of punitive damages was to grant
       recompense to the Hamiltons where the standard damages calculations
       would not. The amount awarded was the quantum the Court felt would
       sufficiently compensate the Hamiltons for their treatment by plaintiff and
       third party defendant and for any hardships they suffered as a result.

Aplt. App. Vol I. at 45-A, 3-4.




                                             10
       The district court’s authority to impose punitive damages in this case arose under

23 Okla. Stat. Ann. § 9A (West 1987) (repealed 1995). Section 9A allows an award of

punitive damages under Oklahoma law “for the sake of example, and by way of punishing

the defendant,” to exceed an award of actual damages where the court finds “that there is

clear and convincing evidence that the defendant is guilty of conduct evincing a wanton

or reckless disregard for the rights of another, oppression, fraud or malice, actual or

presumed . . . .” The Oklahoma Supreme Court has emphasized that although an award

of punitive damages may result in a windfall to the plaintiff, the purpose of such damages

in Oklahoma is to punish the offender and deter others from like wrongs for the benefit of

society. Dayton Hudson Corp. v. American Mutual Liability Ins. Co., 

,

1158 (Okla. 1980).

       Even assuming without deciding that the district court’s comments to which

NationsBank objects were improper, these comments cannot be viewed in isolation. In its

Journal Entry of Judgment prior to NationsBank’s first appeal, the district court expressly

stated, consistent with Oklahoma law, that the award of punitive damages against

NationsBank was to set an example and punish the Bank: “The fraud by Nation’s agent,

Ward Warren, was shown by clear and convincing evidence and was so egregious,

wanton and malicious that punitive damages . . . should be awarded against Nations to set

an example and to punish Nations for the benefit of the public.” Aptl. App. Vol I at 50.

On remand, the district court reiterated its previous finding: “Mr. Warren’s fraudulent


                                             11
conduct was so egregious, wanton and oppressive as to warrant an award of punitive

damages as determined by the Court’s previous findings.” Aplt. Supp. App. at 900.

Accordingly, we reject NationsBank’s claim that the district court imposed punitive

damages for an improper purpose under Oklahoma law.

                                           IV.

       Whether the punitive damage award violates the Federal Constitution is a question

separate and apart from Oklahoma state law. Therefore, we look to United States

Supreme Court cases addressing the limits of punitive damage awards under the due

process clause of the Fourteenth Amendment. Based on these cases, we believe it is

necessary to reduce substantially the punitive damage award imposed by the district court.

The district court awarded $1,200,000 in punitive damages, as compared with the $44,000

in compensatory damages awarded the Hamiltons on their fraud claim. The ratio between

the punitive and actual damages awards, which is approximately 27:1, is

unconstitutionally excessive under the Supreme Court’s decision in BMW of North

America, Inc. v. Gore, 

(1996), and our subsequent decision in

Continental Trend Resources, Inc. v. OXY USA, Inc., 

(10th Cir. 1996),

cert. denied, 

(1997).

       Selecting the maximum constitutionally permissible punitive damage ratio in a

given case is a difficult process. The guidelines offered to date by the Supreme Court in

this regard are somewhat murky. Nonetheless, several of the relevant criteria are clear.


                                            12
In BMW, the Court identified three “guideposts” for evaluating the constitutionality of a

punitive damage award: the “reprehensibility” of the defendant’s conduct; the ratio

between punitive damages and the actual or potential harm suffered; and the difference

between the punitive damage award and the civil and criminal penalties available for

comparable conduct. See 

.

       As a threshold matter, the Supreme Court has indicated that there is a ratio above

which punitive damage awards will rarely be upheld. The Court has stated that a 4:1 ratio

between punitive and actual damages is “close to the line.” Pacific Mut. Ins. Co. v.

Haslip, 

, 23, 24 (1991). Although the Court later upheld an award that was 526

times greater than the compensatory damages, TXO Production Corp. v. Alliance Res.

Corp., 

(1993), the BMW Court explained that award by stating that “in

upholding the $10 million award in TXO, we relied on the difference between that figure

and the harm to the victim that would have ensued if the tortious plan had succeeded.

That difference suggested that the relevant ratio was not more than 10 to 1.” 

. In OXY, we interpreted these decisions to mean that in “economic injury

cases if the damages are significant and the injury not hard to detect, the ratio of punitive

damages to the harm generally cannot exceed a ten to one ratio.” 

.

This is an economic injury case, and there do not appear to be any “hard to detect”

elements of the Hamiltons’ damages, as the $44,000 actual damage award reflects the

costs incurred by the Hamiltons in relying on the bank’s promise to perform the repairs.


                                             13
Thus, under OXY, the 27:1 ratio at issue here is unconstitutionally excessive, and the

award should at least be reduced to a 10:1 ratio.

       However, even a 10:1 ratio will be unconstitutionally excessive in a broad range of

cases. To determine the proper ratio in a given case, we must consider what the Supreme

Court called “[p]erhaps the most important indicium of the reasonableness of a punitive

damages award,” “the degree of reprehensibility of the defendant’s conduct.” 

. Under OXY, in assessing the reprehensibility of a defendant’s conduct,

we ask whether the conduct: “causes economic harm rather than physical harm; would be

considered unlawful in all states; involves repeated acts rather than a single one; is

intentional; involves deliberate false statements rather than omissions; and is aimed at a

vulnerable 

. We also ask whether the defendant engaged in

violent behavior. 

.

       As in OXY, some of the relevant reprehensibility factors are present in this case.

NationsBank was found to have committed fraud, a tort recognized by every state. The

district court found that NationsBank made deliberate false statements, that its conduct

was intentional, and that the bank knew the Hamiltons were in a financially vulnerable

position when the statements were made. On the other hand, this case, like OXY,

involves only economic harm rather than harm to the health or safety of individuals.

“[T]orts causing only economic injury [are] less worthy of large punitive damage awards

than torts inflicting injuries to health or safety.” 

. When the injury


                                             14
is economic, and particularly when it arises out of a contractual relationship where the

parties can and should contractually protect themselves by providing for explicit remedies

in the event of breach, the permissible ratio of punitive damages to actual damages should

be relatively modest. Further, the fact that NationsBank’s conduct here was non-violent

makes it less reprehensible.

       In addition, NationsBank’s treatment of the Hamiltons arose from a single

contractual event whereby the bank leased the property to the Hamiltons. Although the

dispute concerning the bank’s performance of its promises stretched out over some time,

the alleged act of fraud -- the making of a contractual promise to make certain repairs --

was a single event arising from a single contractual relationship. Compare 

(noting that “coercing weaker competitors” was “OXY’s method of

conducting business”). Thus, the reprehensibility factor here militates against punitive

damages that represent a substantial multiple of compensatory damages.

       Second, we look to see whether the state has provided for civil or criminal

penalties for comparable conduct that would alert a defendant that it might face

substantial liabilities beyond mere compensatory damages if it engages in such conduct.

Here, no one suggests that there were any civil or criminal penalties applicable to the

conduct engaged in by NationsBank. Instead, the Hamiltons’ fraud claim arises out of an

alleged breach of contract which, under Oklahoma law, will only rarely sustain a tort

cause of action. This suggests that NationsBank was not on notice that its conduct could


                                             15
give rise to substantial non-compensatory liability. Accordingly, this factor also drives us

to conclude that the maximum constitutionally permissible ratio of punitive to actual

damages is fairly low in this case.

       A factor that cuts the other way, however, is the relatively small size of the actual

damage award of $44,000 in comparison to the size of the defendant. 

. Although we have been cautioned that the size of the defendant should not

ordinarily be a very significant factor, we have also concluded that it is not irrelevant

either. 

. NationsBank is undeniably a large financial institution,

and the $44,000 in fraud damages cannot be expected to serve as much of a deterrent to

any future misconduct. Hence, constitutionally, a higher ratio of punitive to actual

damages is warranted here than would be the case if the base level of compensatory

damages were a significantly higher figure relative to the size of the defendant.

       In OXY, we held that the “maximum constitutionally permissible” punitive

damage to actual damage ratio was 6:1 under the facts of that 

. In

light of that case, we believe that no higher ratio can be constitutionally sustained in this

case. Accordingly, we reverse the $1,200,000 punitive damage award entered by the

district court, and order a remittitur to $264,000, an amount representing six times the

actual damages suffered by the Hamiltons.3


       3
        NationsBank also argues that the size of the punitive damage award violates
Oklahoma law. Oklahoma has not hesitated to strike down or order remittitur in cases
where punitive damages have been excessive. Chandler v. Denton, 

, 868

                                              16
       AFFIRMED IN PART, REVERSED IN PART, and REMANDED.




(Okla. 1987); American National Bank & Trust v. BIC Corp., 

, 427 (Okla.
1994). In those cases, the Oklahoma courts have observed that the Oklahoma punitive
damages statute “shall be strictly construed.” We believe that Oklahoma would
determine that the punitive damage award here was excessive and it would order
remittitur down to a constitutional level, which we have found here not to exceed a ratio
of 6:1, or $264,000.

                                            17
EBEL, Circuit Judge, dissenting:



       I respectfully dissent from Parts I & II of the court’s opinion in this case because I

believe the district court failed to account adequately for Oklahoma’s general reluctance

to award tort remedies in what are essentially breach of contract actions. In my view, the

over $20,000 in expenditures by NationsBank were clearly subsequent actions “toward

the fulfillment of a promise” under the Oklahoma Supreme Court’s decisions in Furr v.

Thomas, 

, 1272 (Okla. 1991), and Citation Co. Realtors v. Lyon, 

, 790-91 (Okla. 1980).

       As a general matter, tort remedies, such as punitive damages, are not available in

breach of contract actions. III E. Allan Farnsworth, Farnsworth on Contracts § 12.8

(1990). On the other hand, Oklahoma, like most states, allows tort recovery in situations

where the defendant’s conduct amounts to an independent tort, such as fraud, as opposed

to a simple breach of contract.1 Specifically, a fraud claim is available where




       1
         Oklahoma has also allowed recovery for tortious breach of contract, but only in
the insurance context for a bad faith refusal to pay under a policy. Christian v. American
Home Ins., 

, 904 (Okla. 1977); McCorkle v. Great Atlantic Ins. Co., 

, 588 (Okla. 1981). The Oklahoma Supreme Court has so far declined to extend
the tortious breach theory to other settings. Rogers v. Tecumseh Bank, 

,
1226 (Okla. 1988) (refusing to recognize tortious breach of commercial loan agreement
and noting that “[t]o impose tort liability on a bank for every breach of contract would
only serve to chill commercial transactions”).
       the promise to act in the future is accompanied by an intention not to
       perform and the promise is made with the intent to deceive the promisee
       into acting where he otherwise would not have done so. The gist of the rule
       is not the breach of promise but the fraudulent intent of the promisor at the
       time the pledge is made not to perform the promise so made and thereby
       deceive the promisee.

. However, Oklahoma has placed an important limitation on this

rule, allowing recovery only in situations where the defendant has not performed

subsequent actions “toward the fulfillment of the promise.” 

.

       The majority affirms the district court’s conclusion that NationsBank defrauded

the Hamiltons by promising to perform repairs to the property without intending to

complete performance of those repairs, despite the fact that the bank performed in excess

of $20,000 in repairs after the promise was made. The district court’s conclusion was

based on its assessment of Mr. Warren’s credibility, and its finding that Warren’s promise

to complete the repairs was only part of a “deceptive scheme.” Aplt. Supp. App. at 897.

Unlike the majority, I do not believe that the district court’s findings regarding the bank’s

subjective motivations are dispositive, so long as the bank took objective steps toward the

fulfillment of its contractual promise, as it did.

       The Oklahoma case law distinguishes between situations where the defendant has

taken objective steps toward the completion of the contract, and cases where such steps

have not been taken. In the former situation, any fraud claim is completely barred,

whereas in the latter situation a fraud claim will lie if the plaintiff can show the other

elements of such a claim. Thus, in Citation, when the plaintiff alleged that a realty

                                               2
company fraudulently misrepresented its intent to sell certain condominium units, the

Oklahoma Supreme Court affirmed the trial court’s grant of summary judgment in favor

of the defendant brokerage based on the “simple fact” that the company attempted to sell

the condominium units at 

. The attempts to sell the units

“remove[d] the issue from the concept of fraud through a promise to execute a future act

made mala fide and relegate[d] the failure to perform to simple nonperformance of a

promise.” 

affirming the grant of summary judgment, the court did not

engage in any analysis of the company’s subjective motivations in attempting to sell the

units, or make any attempt whatever to evaluate the quality of those efforts.

       In Furr, on the other hand, the Oklahoma Supreme Court recognized a valid fraud

claim where the actions taken by the defendant after the contract was entered into were

not directed toward the fulfillment of the promises in the contract. In that case, the

defendant, a real estate developer, promised “to construct a two mile all-weather smooth

service road to serve the 

. Instead of building such a

road, the defendant, who conceded he had decided not to build the promised road before

he finished selling the lots, built a gravel road. 

Because there was no

showing of any action by the defendant “toward the fulfillment of the promise” to build a

smooth, all-weather road, the Oklahoma Supreme Court concluded that the fraud claim

was properly submitted to the jury. 

this case, it is undisputed that NationsBank completed over $20,000 worth of

repairs to the Hamiltons’ property during the relevant time period, and that the items

repaired were among those specifically mentioned on the list of needed repairs prepared

jointly by both the Hamiltons and the bank. As of April 1991, the list of needed repairs

prepared jointly by the Hamiltons and the bank estimated that the total cost of repairs

would be $37,955.51. The repairs completed by the bank were objective steps toward the

fulfillment of the bank’s contractual promise, and the district court did not find otherwise.

Consequently, as in Citation, no fraud claim is available under the undisputed facts of this

case.

        Further, in view of the substantial progress the bank made toward completing its

repair obligations, I believe it was clearly erroneous for the district court to characterize

that performance as “token” and “spurious.” Even assuming that a token act will not

satisfy the Citation/Furr requirement of acts toward the fulfillment of a promise, the over

$20,000 in repairs actually completed by the bank in this case represented over one-half

of the estimated $37,955.51 total repair cost. Half performance cannot reasonably be

considered token performance. Accordingly, I would reverse the district court judgment

in favor of the Hamiltons on the fraud and punitive damages claim, and conclude that on

these facts the Hamiltons’ only valid claim against the bank was on a breach of contract




                                               4
theory.2 However, since the majority has concluded that fraud and punitive damages are

appropriate, I conclude, in part IV of the Court opinion, that the punitive damages

awarded are constitutionally excessive and must be reduced on remittitur.




       2
         Contrary to the majority’s assertion that “a remand would have been unnecessary”
were the Hamiltons’ fraud claim absolutely barred by Oklahoma law, our prior opinion
clearly indicates that a remand was necessary because we could not “discern from the
record whether the district court considered the effect, if any, of the $20,000 in
expenditures on the Hamiltons’ fraud claim under the law of Oklahoma as stated in
Citation and Furr.” FDIC v. Hamilton, 

, 1529 (10th Cir. 1995). At the time
of our prior decision, the Hamiltons continued to dispute whether the bank had performed
any repairs. 

on remand, the district court had concluded that the repairs
performed by the bank were not objective acts toward the fulfillment of the bank’s
promise, the Hamiltons’ fraud claim would have been valid. Thus, a remand was
necessary.

                                             5
BALDOCK, Circuit Judge, dissenting as to Part IV.

       I do not agree that the punitive damage award in this case is constitutionally

impermissible.1 In Pacific Mutual Life Insurance Co. v. Haslip, 

(1991), the

Court upheld an Alabama state court’s punitive damages award four times greater than

the actual damage award. The Court stated, however: “We need not, and indeed cannot,

draw a mathematical bright line between the constitutionally acceptable and the

constitutionally unacceptable that would fit every case.” 

Nevertheless, this

court attempts to do just that.

       Illustrating the difficulty in drawing any clear lines, in TXO Production Corp. v.

Alliance Resources Corp., 

(1993) (plurality), the Court upheld a punitive

damage award of $10,000,000 and an actual damage award of $19,000--a ratio of 526 to

1. Rejecting TXO’s argument that the punitive damage award was grossly excessive, the

Court stated that a fact finder “imposing a punitive damage award must make a

qualitative assessment based on a host of facts and circumstances unique to the particular

case before it. Because no two cases are truly identical, meaningful comparisons of such

awards are difficult to make.” 

Thus, from TXO we must take the lesson that a



       1
         As an initial matter, I do not believe that we need reach the issue of the punitive
damage award’s excessiveness under the Federal Constitution. Footnote three of the
court’s opinion plainly states that the award is excessive under Oklahoma law. Why then
do we need to determine that the award is also excessive under the Federal Constitution?
See Specter Motor Services, Inc. v. McLaughlin, 

, 105 (1944) (“If there is
one doctrine more deeply rooted than any other in the process of constitutional
adjudication, it is that we ought not to pass on questions of constitutionality . . . unless
such adjudication is unavoidable.”).
punitive damage award of over 500 times actual damages is not per se unconstitutional,

and that the propriety of a punitive damage award requires a very fact specific, case by

case analysis.

       In 1996, the Supreme Court decided BMW of North America, Inc. v. Gore, 116 S.

Ct. 1589 (1996). The Court, in a 5 to 4 decision, reversed and remanded a $2,000,000

punitive damage award 500 times greater that the actual damage award of $4,000 against

BMW. In so doing, the Court attempted to provide some guidelines for determining

when a punitive damage award runs afoul of due process as “grossly excessive.” The

Court first explained that any sanction the state imposes upon a tortfeasor must be

designed to protect its own consumers and economy, rather than the consumers and

economies of other states. 

Second, the tortfeasor must have fair notice that

the subject conduct may give rise to punitive measures. 

Third, the tortfeasor

must have fair notice as to the potential magnitude of such measures. Under the third

guideline, the Court identified three guideposts: (1) the degree of reprehensibility of the

tortfeasor’s conduct; (2) the disparity between the harm or potential harm and the punitive

damage award; and (3) the difference between the punitive damage award and the

authorized civil penalties. 

however, again rejected the notion of a

categorical approach applicable to all cases:




                                                2
       Of course, we have consistently rejected the notion that the constitutional
       line is marked by a simple mathematical formula . . . . It is appropriate,
       therefore, to reiterate our rejection of a categorical approach. Once again,
       “we return to what we said . . . in Haslip: ‘We need not, and indeed cannot,
       draw a mathematical bright line between the constitutionally acceptable and
       constitutionally unacceptable that would fit every case. . . .’” 

(quoting 

). In most cases, the ratio will be
       within a constitutionally acceptable range, and remittitur will not be
       justified on this basis.

(emphasis added).

       In this case NationsBank does not assert, and has no basis for asserting, that the

district court sought to protect other than Oklahoma interests in awarding punitive

damages. Nor does NationsBank argue that it did not have fair notice that fraudulent

conduct in Oklahoma might give rise to punitive measures. See Continental Trend

Resources, Inc. v. OXY USA Inc., 

, 638 (10th Cir. 1996) (“It has long been

established in Oklahoma . . . that tortious behavior that is particularly egregious will

warrant punitive damages.”), cert. denied, 

(1997). Instead,

NationsBank’s principle argument, which the court accepts, is that the district court’s

punitive damage award is “grossly excessive,” because the award is twenty-seven times

greater than the $44,000 actual damage award.2 I disagree.




       2
          NationsBank also continues to assert that the evidence does not support the
district court’s finding of fraud, which in turn cannot support the court’s award of
punitive damages. The insufficiency of the evidence, however, is a proposition we have
rejected throughout the opinion.

                                              3
       In BMW, the Court focused on the degree of reprehensibility of the tortfeasor’s

conduct as “ [p]erhaps the most important indicium of the reasonableness of a punitive

damage award.” The Court noted that deceit is more reprehensible than negligence and

that “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.” 

. Similar concerns are echoed in

TXO. See 

. In this case, the district court found that NationsBank,

through Warren, had intentionally deceived the Hamiltons, knowing that they were

financially vulnerable. Aplt. Supp. App. at 896-99. Compare 

(“[T]he record in this case discloses no deliberate false statements, acts of affirmative

conduct, or concealment of evidence of improper motive . . . .”), with 

(stating large punitive damage award was supported by tortfeasor’s “fraud, trickery

and deceit”). As we previously have said, the record supports these findings.

       The court states that in cases of purely economic injury, the ratio of punitive

damages to actual harm cannot exceed 10 to 1. Aside from the fact that the language of

the Constitution contains no support for this conclusion and Supreme Court precedent




                                              4
specifically refuses to prescribe rigid mathematical ratios,3 this case is much more than

one of purely economic injury. Sandra Hamilton testified that, among other problems,

she had no heat in the house for two winters, electrical units in the house repeatedly

shorted out, an electric shock threw her across the bathroom, and the house was infested

with scorpions and wasps. Aple. App. at 89-90. I wonder whether it would make any

difference to this court if the Hamiltons had caught pneumonia, been electrocuted, or

seriously stung. Does a substantial award of punitive damages require that we await such

a tragic occurrence? Surely not! A punitive damage award should be based on exposure

to harm rather than actual harm. NationsBank’s wanton conduct exposed the Hamiltons

and anyone else on the property to an unwarranted risk of personal injury. It is not due to

the Bank’s conduct that nobody was personally injured. The court’s conclusion that

NationsBank’s conduct posed no threat to the health or safety of the Hamiltons cannot be

taken seriously.

       Moreover, we must not forget the punitive nature of punitive damages. The wealth

of the tortfeasor remains a relevant and important consideration in determining the



       3
          I view the recent trend in the federal courts setting arbitrary ratios to decide the
constitutionality of punitive damage awards as unwarranted conservative judicial
activism--perhaps a lesser known evil than, but every bit as menacing as, its first cousin
liberal judicial activism. If a court’s construction of the purportedly applicable
constitutional provision, here the Due Process Clause of the Fourteenth Amendment, has
no support in its text or history, it is difficult to apply and yields unprincipled results. See
generally Wechsler, Toward Neutral Principles of Constitutional Law, 73 Harv. L. Rev. 1
(1959).

                                               5
propriety of a punitive damage award. 

; OXY 

. The record indicates that NationsBank’s net worth is in excess of $8.7 billion. Aplt.

App. Vol III at 689. A $1,200,000 award represents only 14/1000 of one percent of

NationsBank’s net worth. I conclude that the degree of reprehensibility of NationsBank’s

conduct, the degree of difficulty in estimating the Hamiltons’ actual damages,4 and

NationsBank’s significant worth are sufficient to justify the district court’s punitive

damage award against NationsBank. I would affirm the judgment of the district court in

all respects.




       4
         In part IV of the opinion, the court states that “there do not appear to be any
‘hard to detect’ elements of the Hamiltons’ damages, as the $44,000.00 actual damage
award reflects the costs incurred by the Hamiltons in relying on the bank’s promise to
perform the repairs.” This statement is directly contrary to the district court’s conclusion
that standard damage calculations in this case would not adequately compensate the
Hamiltons for the damages they incurred. Aplt. App. Vol I at 45-A, 3-4.

                                              6