HOUSTON – Spinning Star Energy, a provider of wind turbine energy, was awarded an increase of approximately $3.4 million in addition to the $15.3 million awarded by a lower court to compensate for the unauthorized sale of some of its property and its diminished value caused by the sale.
A three-judge panel in the Court of Appeals for the 1st District of Texas on March 29 modified the ruling of the 269th District Court of Harris County, increasing the amount of damages awarded to Spinning Star Energy LLC.
According to the opinion, the original lawsuit was filed by Spinning Star in an attempt to recover possession of 12 wind turbine generators sold at auction without its knowledge. The turbines had been stored at a facility owned by TransProject. When Spinning Star fell behind in making storage fee payments, TransProject sold the turbines in an online auction to Violet Rose Holdings LTD for $1.14 million in December 2013.
Spinning Star did not discover that the turbines had been sold until Jan. 20, 2014, and filed suit over allegations of conversion and wrongful foreclosure and sought declaratory judgment regarding the title and lien status of the turbines. In August 2016, the trial court awarded Spinning Star possession of the turbines in addition to $18.76 million, deemed to be the value of the turbines. However, the trial court said that the turbines’ fair market value at the time Spinning Star regained possession of them had diminished by $3.46 million, and the award was reduced to $15.3 million.
The total damages awarded by the trial court to Spinning Star for its conversion claim was only $15.3 million, the fair market value of the turbines at the time the company regained possession, as determined by the trial court.
The appeals court ruled that “as a result of the trial court’s conclusion that Spinning Star was not entitled to receive diminution in-value damages because it had elected to regain possession of the property, the measure of damages applied by the trial court undercompensated Spinning Star by $3.46 million.”
The judges also said that Spinning Star’s actions to not only recover its property, but receive payment for damages, should not prevent the company from the right to receive additional monetary damages. They stated that tort damages are intended to fully compensate a plaintiff for its loss by returning the plaintiff to the position it would have been in but for the defendant’s tortious conduct.
“... We modify the judgment and award Spinning Star the undisputed amount of the diminution in the fair market value of the turbines from the time of conversion until Spinning Star regained possession of the converted property,” the ruling states.
The appeals court also said that such awards are not intended to be financial windfalls and cannot overcompensate or undercompensate the plaintiff for its injury. The court ruled that “neither plaintiff nor defendant should be unjustly enriched by damages award for conversion claim.”
The panel consisted of Justice Russell Lloyd, Justice Evelyn Keyes and Justice Harvey G. Brown.