On August 14, 2014, a Missoula County jury awarded our client Kelly Logging, Inc. $17 million in punitive and compensatory damages against Billings-based First Interstate Bank. The jury verdict concluded a 7-day trial before Judge Edward P. McLean. The case was the Kelly family’s response to the bank’s illegal 2009 “setoff” of $762,000 in the family business’s checking account. The bank used that money to pay off one of Kelly Logging’s loans with the bank. The loan was current, not due, and had not matured when the bank took the checking account money to pay off the loan. Bill G. Kelly and his wife Frances founded Kelly Logging in the late 1950s.
With the help of their son Jerry and his wife Angie, they grew the business into Montana’s largest logging company. This family-owned company once employed nearly 50 workers. Kelly has been a leader in Best Management Practices to help raise logging industry standards.
In 2013, Kelly was forced to shut down after struggling to survive for almost four years following First Interstate’s wrongful setoff of Kelly’s checking account. Judge McLean ruled before trial that the bank’s setoff of the checking account funds violated Montana law. The jury unanimously found that the bank’s misconduct damaged Kelly Logging in the amount of $286,550 and further warranted punitive damages. Montana law authorizes juries to award such damages in certain kinds of cases to punish wrongdoers and send a message to other potential wrongdoers.
After a short punitive damages trial in which the jury learned the bank’s net worth was $838 million and no one from the bank testified that the bank was sorry for or regretted what it had done to the Kellys’ business, the jury returned an additional punitive damages verdict of $16.8 million representing 2% of the bank’s net worth; the amount suggested in closing: 1-2% of the bank’s net worth.
THE COURT: Plaintiff’s argument?
MR. PAOLI: Thank you, Your Honor. Good afternoon. So, ladies and gentlemen of the jury, we have your verdict. We appreciate it, and we respect it.
Just like all of the process that comes out of this courthouse, we respect it.
I didn’t hear, once, the bank say they were sorry – not once.
I was lucky enough to have been given a book that – small books always have those great pearls of wisdom in them, and this one is All I Really Need to Know, I Learned in Kindergarten.
And, what does it tell us? Share everything, play fair, put things back where you found them. Don’t take things that aren’t yours. Say you’re sorry when you hurt someone.
No expression of remorse or sorrow. All we’re going to do is get it in writing.
And, that’s all they think they did wrong? They violated the law, and I know you understand that well.
The instruction, that His Honor read to you, earlier, talks about how you are to consider the nature, extent, and enormity of the wrong. The intent is one of the things that you look at.
There’s clear intent here to go grab the money, no doubt about it, knowing that they don’t have the authority, knowing that they don’t have a change in terms. You’ve already told us that they breached the contract. The intent here is clear.
You’re also to consider, of course, the wealth of First Interstate Bank. It’s right here in the instruction, and that’s why we put on the net worth.
Your verdict should be of such amount as will deter First Interstate Bank from and warn others against similar acts of misconduct.
And, now, we ask you to warn and send a message that – we’ll respect the Judge’s Orders, that we will not take what’s not ours.
One percent of eight hundred and thirty-eight million dollars is eight million dollars, as you well know. Two percent is sixteen million dollars.
Ladies and gentlemen, speak to the bank in the terms that they understand. That’s money.
In addition to compensatory and punitive damages, Kelly was awarded attorney’s fees and costs incurred to pursue justice in this case. District Court Judge Ed McLean entered final judgment against First Interstate Bank in the amount of $24,637,852 with attorney’s fees, costs, and accrued interest.