Rel: 12/5/14




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          SUPREME COURT OF ALABAMA
                           OCTOBER TERM, 2014-2015
                            ____________________

                                    1121415
                             ____________________

           Victor Deng and DM Technology & Energy, Inc.

                                           v.

  Clarence "Buddy" Scroggins and Complete Lighting Source,
                            Inc.

    Appeal from Jefferson Circuit Court, Bessemer Division
                         (CV-07-0563)

BRYAN, Justice.

      Victor Deng and DM Technology & Energy, Inc. ("DM"),

appeal from a judgment based on the jury's verdict entered by

the Jefferson Circuit Court in favor of Clarence "Buddy"

Scroggins       and    Complete      Lighting       Source,      Inc.     ("Complete
1121415

Lighting"), on their claims against Deng and DM alleging

breach of contract and fraud.       We affirm the judgment as to

the breach-of-contract claim but reverse the judgment as to

the fraud claim, and we remand the case to the circuit court

for a new trial on that claim.

                  Facts and Procedural History

    Scroggins is the owner of Complete Lighting, an Atlanta-

based company that sells lighting equipment, including lamps,

ballasts,   and   fixtures.   Deng    is   the   owner   of   DM,   a

California-based company that also sells lighting equipment.

Scroggins began to work as a sales representative for DM in

late 2004 or early 2005. Scroggins testified that the parties

originally intended for Scroggins to sell DM's fluorescent

products but that he had difficulty selling those products

because DM did not have the necessary stock to fill the orders

he generated.

    As part of its business, Complete Lighting sold lighting

equipment to owners of aquariums.      Scroggins became aware of

concerns expressed by aquarium owners related to high energy

consumption, costs, and heat caused by existing aquarium-

lighting fixtures.    Scroggins testified that, in response to


                                2
1121415

those concerns, he developed an idea for an LED lamp tube that

could be used in aquariums.                   Scroggins did not have the

ability to manufacture the LED lamp tube, so he communicated

his   idea    to     Deng,   who     owned     a     company        in    China   with

manufacturing capabilities. Deng developed a prototype of the

LED   lamp    tube,    which    he     sent    to       Scroggins.          Scroggins

testified that the first prototype was "not even close" to his

original idea.         He discussed his concerns with Deng, who,

according to Scroggins, sent him a second prototype that was

better.      However, Scroggins still was not satisfied with the

prototype.     Scroggins testified that the third prototype Deng

sent him was something that Scroggins thought was marketable.

      While    the    prototype      for      the       LED   lamp       tube   was   in

development, a friend of Scroggins's, Skip Busby, suggested an

alternative use for the LED lamp tubes in display counters in

retail businesses, such as Wal-mart Stores, Inc. ("Wal-mart").

Busby     arranged     a     meeting     for        Deng      and    Scroggins        in

Bentonville,       Arkansas,    with     one       of    Wal-mart's        suppliers,

Leggett & Platt, Inc., to demonstrate the LED lamp tubes.                             In

July 2006, while in Bentonville but before the meeting with

Leggett & Platt, Scroggins and Deng executed an agreement that


                                        3
1121415

had been drafted by Scroggins ("the exclusivity agreement").

The exclusivity agreement provided, among other things:

         "1. [DM] gives the right to sell to Complete
    Lighting exclusively for one year from the signed
    date. At the end of this term, said contract will
    be reviewed and re-negotiated if needed.

         "2. [DM] guarantees 5% commission for present
    and future sales from any and all customers
    [Complete Lighting] brings of the LED [lamp] [t]ube.

         "3.   [DM] guarantees to deliver product in
    quality condition.

         "4.    [DM] guarantees not to sell [to]
    customer[s] direct[ly] without commissions to
    [Complete Lighting] under any circumstances."

    As a result of their meeting with Leggett & Platt,

Gabriel Logan, a limited liability company that sells to Wal-

mart through Leggett & Platt, expressed interest in the LED

lamp tube and, in November 2006, purchased 25 samples, or

$88,940.22 worth of product, from DM.   The samples were to be

used in a test run in stores.   Scroggins testified that he had

received very positive feedback from Wal-mart and "Zales,"

presumably Zales Jewelry Company, to whom Scroggins testified

he had sent a sample.

    From July 2006 to March 2007, there were no further sales

of LED lamp tubes.   Scroggins testified that he had trouble


                                4
1121415

getting working samples from DM that could be delivered to

customers.   Another difficulty in selling the LED lamp tubes

was that the drivers in the samples kept burning out.1      In

August 2006, Deng applied for a patent for the LED lamp tube

in the United States.    Deng was listed as the sole "inventor"

of the LED lamp tube.    Scroggins was not named in the patent

application.

    In March 2007, Deng sent Scroggins a letter, stating:

         "It is with regret that we find the need to
    terminate the contract of 'exclusiveness' regarding
    the LED Lamp Tubes as manufactured by us. It is our
    belief that the conditions of said agreement have
    not been fulfilled. Over an eight month period only
    one customer has been produced.      As with you, we
    also believed the future potential of this customer
    could have been vastly significant. However, [DM]
    has invested a large amount of dollars for this
    product's    R[esearch]   &   D[evelopment].     And
    unfortunately, to help continue this new product's
    growth,   DM   feels   it   need[s]   to  have  more
    sales/customers by this time.

         "This termination will be effective March 31,
    2007. All commissions accrued up to that date will
    be paid as per our agreement."

Deng did not pay Scroggins a commission on the November 2006

sale to Gabriel Logan.


    1
     It was later discovered that the problem was not in the
design of the LED lamp tube but in the LED lighting itself,
which was not manufactured by DM.
                                5
1121415

    In April 2007, Scroggins and Complete Lighting sued Deng,

DM, and BARTCO Lighting ("BARTCO"), a company to whom Deng and

DM had sold some "Retrofit LED tubes." Scroggins and Complete

Lighting alleged in the complaint:

         "14. Upon information and belief, and prior to
    the ... unilateral termination of the [exclusivity
    agreement], DM Technology and Deng and BARTCO
    entered into a conspiracy to not only defraud
    Scroggins and Complete Lighting of the proprietary
    LED Lamp Tubes technology they created, but also any
    and all future commissions or sales associated with
    the LED Lamp Tubes.

         "15.   Upon information and belief, and in
    furtherance of the conspiracy, DM Technology and
    Deng entered into an agreement with BARTCO wherein
    BARTCO would [sell] the LED Lamp Tubes that were
    created by Scroggins and Complete Lighting and
    subsequently manufactured by DM Technology and Deng.

         "16.   Scroggins and Complete Lighting also
    completed sales to Gabriel Logan and are owed back
    commissions for sales.

         "17. Scroggins and Complete Lighting are owed
    past and future commissions on sales of all LED Lamp
    Tubes by DM Technology and Deng and BARTCO.

         "18. Upon information and belief, DM Technology
    and Deng have sold BARTCO over 2.8 million dollars
    of LED Tubes, for which Scroggins and Complete
    Lighting are owed a five percent (5%) commission of
    $140,000.00.

         "19.    Upon  information  and  belief, DM
    Technology, Deng and BARTCO have continued the
    conspiracy by continuing to market the LED Lamp


                              6
1121415

       Tube[s], by effectuating further sales of LED Lamp
       Tubes."

       Scroggins and Complete Lighting sought an injunction

preventing Deng, DM, and BARTCO from manufacturing, making, or

selling the LED lamp tubes.      They also sought damages for,

among other claims, breach of contract and fraud.          BARTCO was

eventually dismissed from the case and is not a party to this

appeal.

       The action was removed to federal court but was remanded

to the Jefferson Circuit Court because of "fatal procedural

defects in the removal."     Deng and DM moved the circuit court

to dismiss the claims against them, arguing that the court did

not have jurisdiction over them.     The circuit court initially

granted their motion but later set aside the dismissal on

Scroggins and Complete Lighting's motion to alter, amend, or

vacate the judgment.

       In March 2013, the case was tried before a jury.            At

trial, questions were posed regarding an alleged promise by

Deng to include Scroggins's name on the patent for the LED

lamp    tubes.   Scroggins   testified   that   he   and    Deng   had

discussed patenting the idea for LED lamp tubes but did not

discuss a time frame for securing that patent.

                                 7
1121415

      Prior to trial, Scroggins had testified by affidavit in

June 2007 and again in May 2008 that

           "[a]pproximately a year to a year and a half
      into th[e] process [of developing the LED lamp tube]
      Deng suggested that the LED light needed to be
      patent[ed].

           "I did not have the funds available to pay for
      the patent, so we agreed that the patent would be
      submitted in DM Technology's name.

           "It was during this time period that I became
      concerned that once the technology was patented
      there would be nothing to prevent Deng from stealing
      my idea.

           "Therefore, in exchange for the patent being
      issued to DM Technology's name instead of mine, we
      agreed that I would be the exclusive agent
      throughout the United States to [sell] the LED Lamp
      Tubes [that] DM Technology manufactured.         We
      subsequently   entered   into   [the   exclusivity]
      agreement."

      However,     Scroggins       testified    at   trial    that    the

exclusivity agreement was executed in exchange for allowing

Deng to put his name as well as Scroggins's name on the LED-

lamp-tube patent.     Scroggins further testified at trial that

the exclusivity agreement was "a temporary thing while we

worked on ... getting [me] on the patent, whatever we had to

do.     It   was   more   of   a   short-term    protection   for    me."

Scroggins also testified that if Deng had not agreed to


                                     8
1121415

include him on the patent, Scroggins "would have looked for

another source" to manufacture the LED lamp tube.

     Scroggins testified that around November 2006 he learned

that a patent application for the LED lamp tube was pending in

China.    The Chinese patent application did not name Scroggins

as an inventor. Scroggins testified that he called Deng about

the omission and that Deng assured him that this was the

"standard process" in China and that it "would not affect

[their]      relationship    and   the     plans    that      [they]    had,"

presumably related to securing the United States patent.

Scroggins also testified that Deng told him the application

for the patent in China was unrelated to the United States

patent application.

     Deng     testified     at   trial   that      he   did    not     include

Scroggins's name on the United States patent application

because the LED lamp tube was not Scroggins's idea.                       Deng

testified that Scroggins was a sales representative and that

he, Deng, "never had an intent to put Buddy Scroggins'[s] name

on   th[e]    patent"   because    "[i]t    [was]       not   [Scroggins's]

business."




                                    9
1121415

    At the close of Scroggins and Complete Lighting's case-

in-chief, Deng and DM, on the one hand, and Scroggins and

Complete Lighting, on the other, separately moved for a

judgment as a matter of law ("JML"), which motions were

denied.     They renewed those motions at the close of all the

evidence.    The circuit court denied the renewed motions for a

JML as well and submitted only the breach-of-contract and

fraud claims to the jury.     The breach-of-contract claim was

based on Deng and DM's alleged failure to pay Scroggins the

commission owed on the sale to Gabriel Logan, and the fraud

claim was based on Deng's alleged fraudulent promise to put

Scroggins's name on the patent.     The jury returned a verdict

in Scroggins and Complete Lighting's favor on both claims and

awarded them $4,750 in compensatory damages on the breach-of-

contract claim, $1.5 million in compensatory damages on the

fraud claim, and $1.5 million in punitive damages on the fraud

claim.2

    2
     Deng and DM argue that the $1.5 million in compensatory
damages was actually an award for "nominal compensatory
damages." Deng and DM's brief, at 28. Scroggins and Complete
Lighting argue that the verdict form identified those damages
as "Nominal/Compensatory" damages and that the jury clearly
chose compensatory rather than nominal damages. Deng and DM
cite no evidence to the contrary. The circuit court described
the damages awarded for the fraud claim as "compensatory
                               10
1121415

    On May 1, 2013, Deng and DM filed a motion, renewing

their request for a JML or, in the alternative, requesting a

new trial.   Scroggins and Complete Lighting opposed Deng and

DM's motion and moved the circuit court to strike evidence

attached to Deng and DM's motion related to an allegedly fake

2003 Chinese patent for the LED lamp tubes and unauthenticated

tax returns for DM.       They also moved for sanctions against

Deng and DM.    After a hearing, the circuit court entered an

order denying Deng and DM's motion for a JML or, in the

alternative, a new trial and also denying Scroggins and

Complete Lighting's motion for sanctions.        The circuit court

went on to grant Scroggins and Complete Lighting's motion to

strike    evidence   of   the   2003   Chinese   patent   and   the

unauthenticated tax returns.      The circuit court also entered

a separate order awarding Scroggins and Complete Lighting

court costs in the amount of $4,133.44.          Deng and DM have




damages" in its judgment based on the jury's verdict, and Deng
and DM refer to them as "compensatory damages" in their
renewed motion for a JML or, in the alternative, for a new
trial. In fact, they raise the argument that the damages are
"nominal compensatory damages" for the first time on appeal.
"'An issue may not be raised for the first time on appeal.'"
Allsopp v. Bolding, 86 So. 3d 952, 962 (Ala. 2011).
                                 11
1121415

appealed only the denial of the motion for a JML or a new

trial.

                                    Issues

    Deng and DM allege that the circuit court erred in

denying their motion for a JML or, in the alternative, a new

trial because, they argue, (1) the fraud claim is preempted by

federal patent law and, therefore, the circuit court did not

have jurisdiction over that claim; (2) Scroggins and Complete

Lighting changed the basis of their fraud claim during the

course of the trial, which, Deng and DM argue, constituted

"trial    by     ambush";   (3)     the      fraud   claim   was   based    on

contradictory      testimony      by    Scroggins;     (4)   Scroggins     and

Complete Lighting did not present evidence of several elements

of a fraud claim; (5) the compensatory-damages award for the

fraud    claim    was   based     on    speculative    evidence;     (6)   the

punitive-damages        award     was     not   supported    by    clear   and

convincing evidence; and (7) the punitive-damages award was

the result of prejudice, bias, passion, or other improper

motive.    Deng and DM also argue, in the alternative, that the

punitive-damages award is excessive and that they are entitled

to a remittitur of those damages.


                                        12
1121415

                    Standards of Review

         "When reviewing a ruling on a motion for a JML,
    this Court uses the same standard the trial court
    used initially in deciding whether to grant or deny
    the motion for a JML. Palm Harbor Homes, Inc. v.
    Crawford, 689 So. 2d 3 (Ala. 1997).        Regarding
    questions of fact, the ultimate question is whether
    the nonmovant has presented sufficient evidence to
    allow the case to be submitted to the jury for a
    factual resolution. Carter v. Henderson, 598 So. 2d
    1350 (Ala. 1992). The nonmovant must have presented
    substantial evidence in order to withstand a motion
    for a JML. See § 12–21–12, Ala. Code 1975; West v.
    Founders Life Assurance Co. of Florida, 547 So. 2d
    870, 871 (Ala. 1989). ... In reviewing a ruling on
    a motion for a JML, this Court views the evidence in
    the light most favorable to the nonmovant and
    entertains such reasonable inferences as the jury
    would have been free to draw.      Id.  Regarding a
    question of law, however, this Court indulges no
    presumption of correctness as to the trial court's
    ruling. Ricwil, Inc. v. S.L. Pappas & Co., 599 So.
    2d 1126 (Ala. 1992)."

Waddell & Reed, Inc. v. United Investors Life Ins. Co., 875

So. 2d 1143, 1152 (Ala. 2003).

    With regard to a motion for a new trial, this Court has

stated:

    "'"It is well established that a ruling on a motion
    for a new trial rests within the sound discretion of
    the trial judge. The exercise of that discretion
    carries with it a presumption of correctness, which
    will not be disturbed by this Court unless some
    legal right is abused and the record plainly and
    palpably shows the trial judge to be in error."'"




                             13
1121415

Baptist Med. Ctr. Montclair v. Whitfield, 950 So. 2d 1121,

1126 (Ala. 2006) (quoting Curtis v. Faulkner Univ., 575 So. 2d

1064, 1065–66 (Ala. 1991), quoting in turn Kane v. Edward J.

Woerner & Sons, Inc., 543 So. 2d 693, 694 (Ala. 1989), quoting

in turn Hill v. Sherwood, 488 So. 2d 1357, 1359 (Ala. 1986)).

         "Furthermore, a jury verdict is presumed to be
    correct, and that presumption is strengthened by the
    trial court's denial of a motion for a new trial.
    In reviewing a jury verdict, an appellate court must
    consider the evidence in the light most favorable to
    the prevailing party, and it will set aside the
    verdict only if it is plainly and palpably wrong."

Delchamps, Inc. v. Bryant, 738 So. 2d 824, 831 (Ala. 1999)

(citations omitted).

                               Analysis

    As a threshold matter, we note that Deng and DM allege no

error in either the jury's verdict or the circuit court's

judgment as they relate to the breach-of-contract claim or the

compensatory-damages       award   related    to   that   claim.   "'An

argument not made on appeal is abandoned or waived.'" Muhammad

v. Ford, 986 So. 2d 1158, 1165 (Ala. 2007) (quoting Avis Rent

A Car Sys., Inc. v. Heilman, 876 So. 2d 1111, 1124 n.8 (Ala.

2003)).   Therefore, the judgment is affirmed insofar as it

relates   to   Scroggins    and    Complete   Lighting's     breach-of-


                                   14
1121415

contract claim, and the remaining arguments will be addressed

only as they relate to the fraud claim.

    Deng and DM argue that the circuit court "lacked subject

matter jurisdiction over the case because [Scroggins and

Complete    Lighting's]    claims       attacked        the   validity    and

ownership of a patent."         Deng and DM's brief, at 12.               The

United    States   Code,   28    U.S.C.   §   1338(a),        provides,    in

pertinent part, that "[t]he [federal] district courts shall

have original jurisdiction of any civil action arising under

any Act of Congress relating to patents" and that "[n]o State

court shall have jurisdiction over any claim for relief

arising under any Act of Congress relating to patents."3

    Deng    and    DM argue     that,   "prior     to    trial,    Scroggins

maintained that the LED Lamp Tube was his idea.                    Scroggins

also testified that he and Deng agreed that the patent would

be submitted in DM Technology's name, only.                       In return,

Scroggins would be the exclusive agent throughout the United

States to sell the LED Lamp Tube."            Deng and DM's brief, at

    3
     Again, we note that the breach-of-contract claim did not
relate to the patent for the LED lamp tube, but to Deng and
DM's alleged failure to pay Scroggins and Complete Lighting
the commission owed under the exclusivity agreement. Thus,
our analysis of this jurisdiction issue is limited to the
fraud claim.
                                   15
1121415

14.   However, Deng and DM argue, at trial "Scroggins[ and

Complete Lighting's] counsel told the jury that the case

centered on who actually invented the LED Lamp Tube," id., and

"[Scroggins] testified that Deng had obtained the patent of

Scroggins's idea without Scroggins's knowledge or permission."

Id., at 15.        Deng and DM argue that "[t]his ... changed

[Scroggins's]      case   from   one   based   upon   the    [exclusivity

agreement]    to   one    attacking    the   validity   of    the   patent

itself."     Id.    Therefore, Deng and DM argue, Scroggins and

Complete Lighting's fraud claim is federally preempted under

§ 1338(a) and the circuit court did not have jurisdiction over

that claim.

      Deng and DM also cite the statement from University of

Colorado Foundation, Inc. v. American Cyanamid Co., 196 F.3d

1366, 1372 (Fed. Cir. 1999), that "the field of federal patent

law preempts any state law that purports to define rights

based on inventorship" and argue that,

      "[i]n returning a verdict in Scroggins[ and Complete
      Lighting's] favor on the fraud count, the judgment
      necessarily had to have determined that Scroggins,
      not DM Technology, was the 'inventor' of the LED
      Lamp Tube.   In doing so, the jury stepped into a
      field that is within the exclusive jurisdiction of
      the federal courts, rendering the judgment as void
      as a matter of law."

                                   16
1121415

Deng and DM's brief, at 15.

    However, in HIF Bio, Inc. v. Yung Shin Pharmaceuticals

Industrial Co., 600 F.3d 1347, 1354 (Fed. Cir. 2010), the

United States Court of Appeals for the Federal Circuit ("the

Federal Circuit") stated: "Despite th[e] broad language [in

American Cyanamid], this court has emphasized that a claim

arises under the patent laws only if the inventorship issue is

essential to the resolution of the claims."           The Federal

Circuit noted:

    "The district court's jurisdiction under § 1338(a)
    'extend[s] only to those cases in which a well-
    pleaded complaint establishes either that federal
    patent law creates the cause of action or that the
    plaintiff's right to relief necessarily depends on
    the resolution of a substantial question of federal
    patent law, in that patent law is a necessary
    element of the well-pleaded claims.'"

HIF Bio, 600 F.3d at 1352 (quoting Christianson v. Colt Indus.

Operating Corp., 486 U.S. 800, 808-09 (1988)).

    Citing   American   Cyanamid,   among   others,   the   Federal

Circuit concluded in HIF Bio that the plaintiffs' claims for

a declaratory judgment as to inventorship and slander of title

were preempted by federal patent law because a determination

of inventorship was essential to the resolution of those

claims.   The Federal Circuit went on to conclude, however,

                              17
1121415

that "patent law [was] not essential to plaintiffs' remaining

causes of action," including their fraud claims, because "each

cause of action could be resolved without reliance on the

patent laws." 600 F.3d at 1355. The Federal Circuit concluded

that, even though the question of inventorship may be relevant

to a claim, that claim is not preempted where "a determination

of inventorship is not essential to any of the ... elements of

[the claim]."   HIF Bio, 600 F.3d at 1356.

    The issue of the inventorship of the LED lamp tube may be

relevant to Scroggins and Complete Lighting's fraud claim, but

it is not essential to the particular elements of that claim.

         "'Fraud'    is   defined  as   (1)   a   false
    representation (2) of a material existing fact (3)
    relied upon by the plaintiff (4) who was damaged as
    a proximate result of the misrepresentation.     If
    fraud is based upon a promise to perform or abstain
    from performing in the future, two additional
    elements must be proved: (1) the defendant's
    intention,    at    the   time  of    the   alleged
    misrepresentation, not to do the act promised,
    coupled with (2) an intent to deceive."

Coastal Concrete Co. v. Patterson, 503 So. 2d 824, 826 (Ala.

1987) (citation omitted).

    Scroggins and Complete Lighting's fraud claim is based on

Deng's allegedly false promise to put Scroggins's name on the

patent application for the LED lamp tube, his alleged lack of

                              18
1121415

intent when he made the promise to fulfill that promise, and

the damage Scroggins and Complete Lighting allegedly suffered

by relying on that promise.      Scroggins's status as the actual

inventor of the LED lamp tube is not essential to proving any

of those allegations or any other element of a fraud claim

based on an allegedly false promise. Thus, although the issue

of inventorship may be relevant to the fraud claim in this

case, it is not essential to a resolution of that claim, and

"[Scroggins and Complete Lighting's] right to relief [does

not] necessarily depend[] on the resolution of a substantial

question of federal patent law."       Christianson, 486 U.S. at

809.       Thus, the fraud claim is not federally preempted under

§ 1338(a), and Deng and DM are not entitled to have that claim

dismissed for lack of subject-matter jurisdiction.       See HIF

Bio, supra.4

       4
     Deng and DM also cite Hunter Douglas, Inc. v. Harmonic
Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998), for the
proposition that "if a state-law cause of action requiring a
'false statement' as an element attacks the validity of a
patent, it necessarily depends on a question of federal patent
law and the federal courts have exclusive subject matter
jurisdiction over the action, even where no federal cause of
action is otherwise involved." Deng and DM's brief, at 13.
However, Scroggins and Complete Lighting have not challenged
the validity of the patent or requested any changes be made to
the patent or sought a declaration of rights under the patent.
Instead, they have alleged that Deng fraudulently promised to
                                  19
1121415

    Deng and DM also argue that even if the circuit court has

jurisdiction over the fraud claim, they are entitled to a JML

on that claim because "Scroggins [and Complete Lighting]

failed    to   ...   present   evidence   of   reasonable   reliance,

proximate cause of damages, or intent to deceive."           Deng and

DM's brief, at 42.      With regard to reasonable reliance, Deng

and DM argue that "Scroggins's testimony that he relied on

Deng's alleged promise that Scroggins would be put on the

Patent is unreasonable as a matter of law.         Scroggins drafted

the [exclusivity] [a]greement.         That [a]greement stated that

only Deng would be listed on the patent."             Deng and DM's

brief, at 46.

    However, the exclusivity agreement does not address the

acquisition of a patent for the LED lamp tube or state who

would be listed on any patent.         Scroggins testified at trial

that Deng promised him that "[he] would be a partner" and that

"[he] would be on [the patent]." Scroggins testified that "if

[Deng] had not made that promise," Scroggins would have

located a different source to manufacture the LED lamp tube.


include Scroggins on the patent application for the LED lamp
tube and that Scroggins and Complete Lighting suffered damage
as a result of that false promise.      Thus, Deng and DM's
reliance on Hunter Douglas is misplaced.
                                  20
1121415

When the evidence is viewed in the light most favorable to

Scroggins and Complete Lighting as nonmovants, see Waddell,

supra, Scroggins's testimony is sufficient to create a jury

question as to whether Scroggins reasonably relied on Deng's

alleged promise. Thus, Deng and DM have not demonstrated that

they are entitled to a JML in this regard.5

    Deng and DM next argue that they are entitled to a JML on

the fraud claim because "Scroggins [and Complete Lighting]

presented no evidence that any alleged misrepresentations by

Deng proximately caused damage to Scroggins [and Complete

Lighting]."   Deng and DM's brief, at 47.     Deng and DM argue

that, "[u]nder federal patent law, co-inventors of a patent

are not accountable to one another for profits or sales of the


    5
     Deng and DM also argue that Scroggins's reliance on
Deng's promise to put his name on the patent was unreasonable
because, they say, Scroggins was on notice of the alleged
misrepresentation. However, it is unclear how the evidence
they cite in support of this argument –- i.e., that Scroggins
believed that a retrofit LED tube was essentially the same as
an LED lamp tube, that Scroggins was aware that Deng had sold
retrofit LED tubes to BARTCO a few months before the
exclusivity agreement was signed, that Scroggins prepared the
exclusivity agreement to protect his interest in the LED lamp
tube, and that "Scroggins could not reasonably have believed
that Deng agreed that the Retrofit and LED Lamp Tube[s] were
the same product," Deng and DM's brief, at 47, –- would put
Scroggins on notice that Deng's alleged promise to put his
name on the patent was false.
                             21
1121415

patented product.   Thus, even [if] Scroggins had been listed

on the Patent of the LED [l]amp [t]ube, Deng would have had no

duty to pay Scroggins any royalties." Deng and DM's brief, at

48.   However, Scroggins and Complete Lighting did not allege

injuries in the form of lost royalties but, instead, alleged

that Deng and DM had essentially stolen the idea for the LED

lamp tubes by not including Scroggins on the patent and that

Scroggins and Complete Lighting were entitled to recover

damages based on "the value of the stolen product" and lost

opportunities for future sales of that product. Scroggins and

Complete Lighting's brief, at 67.

      Deng and DM also make the following argument in their

brief:

           "Scroggins did not present any evidence that he
      ever attempted to apply for a patent on the LED Lamp
      Tube; nor did Scroggins present any evidence that he
      ever tried to stop the patent application process;
      nor did he complain to the Patent and Trademark
      Office that Deng was attempting to patent his idea.
      Thus, it is illogical to conclude the Deng's alleged
      misrepresentation that he would put Scroggins on the
      Patent was the proximate cause of any damage[]
      Scroggins may have suffered."

Deng and DM's brief, at 48.

      However, Scroggins testified that Deng had promised to

include him on the patent that he, Deng, was going to apply

                              22
1121415

for, that Scroggins learned that Deng had applied for a patent

in China in Deng's name only some months after the application

had been filed, and that when Scroggins asked Deng about it,

Deng assured him that everything would be as they had planned

(i.e., that both Scroggins and Deng would be included on the

United States patent application for the LED lamp tube). This

testimony is sufficient to create a question of fact as to

whether Deng's allegedly false promise to include Scroggins on

the   patent   proximately   caused   Scroggins   and   Complete

Lighting's alleged injuries.   Therefore, Deng and DM have not

demonstrated that they are entitled to a JML in that regard.

      Deng and DM also argue that they are entitled to a JML on

the fraud claim because, they say, Scroggins and Complete

Lighting "failed to present substantial evidence that, when

Deng allegedly promised to put Scroggins on the Patent, Deng

had a present intent to deceive Scroggins and not perform his

promise.   Deng's alleged failure to perform a promised act is

not sufficient proof of a present intent to deceive."       Deng

and DM's brief, at 49.   However, Deng testified at trial that

he never intended to include Scroggins's name on the patent.

Deng and DM do not argue or cite any authority indicating that


                               23
1121415

this testimony, combined with Scroggins's testimony that Deng

had promised to put his name on the patent, is insufficient to

create an issue of fact for the jury as to Deng's intent at

the time the alleged promise was made.   Thus, Deng and DM have

not demonstrated that the circuit court erred in denying their

motion for a JML on that basis.

    Deng and DM argue that they are entitled to a new trial

"because [the jury's verdict] was based upon pure speculation

by Scroggins."   Deng and DM's brief, at 22.   Deng and DM argue

that, "[i]n Alabama, damages cannot be based upon speculation;

rather, they must be direct and reasonably certain." Deng and

DM's brief, at 22.

    This Court has stated:

    "[D]amages may be awarded only where they are
    reasonably certain. Damages may not be based upon
    speculation. ... However, 'this does not mean that
    the plaintiff must prove damages to a mathematical
    certainty ....    Rather, he must produce evidence
    tending to show the extent of damages as a matter of
    just and reasonable inference.' C. Gamble, Alabama
    Law of Damages § 7-1 (2d ed. 1998), as cited in
    Industrial Chemical [& Fiberglass Corp. v. Chandler,
    547 So. 2d 812, 820 (Ala. 1988)]. The rule that one
    cannot recover uncertain damages relates to the
    nature of the damages, and not to their extent. If
    the damage or loss or harm suffered is certain, the
    fact that the extent is uncertain does not prevent
    a recovery."


                              24
1121415

Jamison, Money, Farmer & Co. v. Standeffer, 678 So. 2d 1061,

1067 (Ala. 1996).        See also Alabama Power Co. v. Alabama

Public Serv. Comm'n, 267 Ala. 474, 478, 103 So. 2d 14, 17

(1958) ("One of the fundamental rules of damages is that to be

compensable they must be direct and reasonably certain, not

remote and speculative."); Crommelin v. Montgomery Indep.

Telecasters, Inc., 280 Ala. 391, 394, 194 So. 2d 548, 551

(1967) ("[N]either the fact nor amount of damages, nor the

cause of the damages, can rest solely on speculation.").

    "'This Court has held that "the general rule is that

compensatory damages are intended only to reimburse one for

the loss suffered by reasons of an injury to a person or

property."     Sessions Co. v. Turner, 493 So. 2d 1387, 1390

(Ala. 1986).    It is equally well established that damages may

not be awarded where they are remote or speculative.'" Torsch

v. McLeod, 665 So. 2d 934, 940 (Ala. 1995) (quoting United

Servs. Auto. Ass'n v. Wade, 544 So. 2d 906, 912 (Ala. 1989)).

In a fraud action, "[t]he purpose of damages ... is to place

the defrauded person in the position he would occupy if the

representations    had   been   true.   All   naturally   resulting

damages, including expenses incurred as a result of the fraud,


                                 25
1121415

are recoverable, but they must be actual damages proved at

trial."   Wilhoite v. Franklin, 570 So. 2d 1236, 1237 (Ala.

Civ. App. 1990) (citation omitted).

    Scroggins and Complete Lighting argue that, as a result

of Deng's fraudulent promise to include him on the patent for

the LED lamp tubes, they lost out on the value of that

product, including future sales of the product.    At trial,

Scroggins testified as follows:

         "Q: When ... you and [Deng] first started
    talking about this product and you told him about
    your idea as it developed, did y'all ever discuss
    either of y'all's opinions about the value of the
    product?

          "A: Yes, sir, we both did.

         "Q: And what, if anything, did [Deng] say about
    the value –- his opinion of the value of the
    product?

          "A: We both agreed it was in the millions."

    Scroggins also testified that the possibility that the

LED lamp tubes could be used for more than aquarium lighting

substantially increased Scroggins's opinion of its value.   He

stated:

         "When [Wal-mart] looked at what they were
    looking at, they come out telling me what else it
    could be used for.    What I thought it was worth
    multiplied by 100-fold because we were talking now

                             26
1121415

    not only –- not only displays, we were talking
    refrigerator cabinets.      We were talking shoe
    displays. We were talking sporting displays. We
    were talking every display you could think of in the
    store and that was only one customer, so you know."

    When asked what his opinion as to the value of the LED

lamp tubes was based on, Scroggins responded:

         "That you had one trial store that was crazy
    about it for one particular part of that store and
    when they came out and brought out everything else
    that it could be done with, things I hadn't even
    thought of, that I realized that one store had just
    quadrupled or whatever the word is and that was only
    one store out of all of them in the United States,
    all the different people."

    Scroggins cited no other basis for his testimony that the

LED-lamp-tube idea was worth millions, and Scroggins and

Complete Lighting presented no other evidence as to the value

of the LED lamp tubes or the amount of the loss they incurred

as a result of the alleged fraud.     During closing arguments,

Scroggins   and   Complete   Lighting's   counsel   attempted   to

establish a formula that would support Scroggins's testimony

that the value of the LED lamp tubes was "in the millions."

Scroggins's counsel stated:

         "[L]et's talk about the damages and why there is
    sort of a legitimate basis. ... We know that there
    was a Gabriel Logan sale that consisted of $90,000
    for 25 stores.


                                27
1121415

         "Now, for 25 stores, that's approximately or
    exactly $3,600 per store. ... So Walmart at the time
    had over 5,200 stores and Buddy testified about
    that. ...

          "....

         "Now, 5,200 at $3,600 per store, that's how much
    it is, $18,720,000, a big number, a substantial
    number. You can do that for all sorts of stores.
    Gabriel Logan would have been selling to everybody.
    I think -– I think -– who knows, Target
    [Corporation] has thousands of stores talking about
    thousands of stores, 1.2 million –- I mean, excuse
    me, 6.12 million.

         "Well, what would the commission be on ideas
    like that, talking about times .05. I mean, we're
    just talking about what he would be entitled to
    under an exclusive agreement.      We're not even
    talking about what he would be entitled to if he
    owned half the patent like he was supposed to. I'm
    trying to be pretty conservative here and when
    you're conservative here, you're talking about
    almost one million dollars just on Walmart, just on
    Walmart. So there is evidence of damages that you
    could say yes, that is a reasonable amount of
    damages."

    The arguments of counsel are not evidence. Scroggins did

not testify as to the per unit value of the LED lamp tubes or

indicate that he had reached his estimate of the value by

taking the per unit cost and multiplying it by the number of

stores Wal-mart had in operation.   No evidence was presented

that would corroborate counsel's statement that there was

5,200 Wal-mart stores in operation at the time Scroggins and

                             28
1121415

Deng sold the 25 samples to Gabriel Logan6 or that Target

Corporation had "thousands" of stores in operation.

       Moreover, there was no evidence presented other than

Scroggins's conjecture that future sales to Wal-mart or Target

were pending or likely to happen or that the LED lamp tubes

had been marketed to or sought after by any customers for any

purposes other than aquarium or display-case lighting.                 In

fact, Deng and DM presented undisputed evidence that, in spite

of the apparent initial enthusiasm of the "one trial store,"

no sales of the LED lamp tubes were made beyond the 25 samples

sold       to   Gabriel   Logan   in   2006.   Deng   and   DM   received

$88,940.22 for that sale, and that amount did not include the

cost of repairs that had to be made to the 25 samples as a

result of problems with the LED lighting.             Thus, Scroggins's

testimony as to the value of the LED lamp tubes was highly

speculative and was insufficient to justify the jury's award

of $1.5 million in compensatory damages on the fraud claim.




       6
     Scroggins was asked during trial to give a "ballpark"
figure of how many stores Wal-mart had, to which he responded:
"Five thousand, you know, sticks out."      Scroggins did not
testify as to the basis of that estimate, and no other
evidence was presented to support it.
                                       29
1121415

    Scroggins and Complete Lighting argue that Scroggins's

testimony as to the market value of the LED lamp tubes was in

the nature of opinion evidence, pursuant to § 12-21-114, Ala.

Code 1975, and Delmore v. Gonzales, 903 So. 2d 140 (2004), and

that such testimony is sufficient to support the compensatory-

damages award.   Section 12-21-114 provides: "Direct testimony

as to the market value is in the nature of opinion evidence;

one need not be an expert or dealer in the article, but may

testify as to value if he has had an opportunity for forming

a correct opinion."   In Delmore, this Court determined that

the testimony of the plaintiffs as to the value of certain

property they had inherited from their mother and that, they

argued, had been converted by their stepfather was admissible

to prove damages.

    This Court stated:

    "[A]ll that is required under §12-21-114, Ala. Code
    1975; Rule 701, Ala. R. Evid., and Williamson[ v.
    Stephens, 577 So. 2d 1272 (Ala. 1991),] is that a
    person's testimony as to value be rationally based
    on their perception or based on an opportunity to
    form a correct opinion. The evidence, when viewed
    in light most favorable to [the plaintiffs], shows
    that their testimony was rationally based on their
    perceptions or that they had an opportunity for
    forming a correct opinion as to the value of their
    mother's personal property because their mother
    owned some of the property when [one of the

                              30
1121415

    plaintiff's] lived with her and they both visited
    their mother's home on a frequent basis. The manner
    in which [the plaintiffs] determined the value of
    their mother's personal property goes to the weight
    that will be assigned by the jury but is not a
    question of admissibility.        The trial court
    erroneously excluded the list of personal property
    that included [one of the plaintiff's] determination
    of the value of the personal property. The judgment
    is reversed as to this issue, and the case is
    remanded for further proceedings consistent with
    this opinion."

Delmore, 903 So. 2d at 144.

    Deng and DM's argument here is not that Scroggins's

testimony    as     to    the    value    of   the    LED    lamp     tubes   was

inadmissible       but    that   the     testimony,     by   itself,     is   not

competent    evidence       supporting         the    jury's     $1.5   million

compensatory-damages award.            See Johnson v. Harrison, 404 So.

2d 337, 340 (Ala. 1981) ("The rule has long been established

that the party claiming damages has the burden of establishing

the existence of and amount of those damages by competent

evidence.    ...    The    award    of    damages     cannot     be   made    upon

speculation, and the plaintiff has the burden of offering

evidence tending to show to the required degree, the amount of

damages     allegedly       suffered.").             Moreover,      unlike    the

plaintiffs' testimony in Delmore, Scroggins's testimony that

the LED lamp tubes were worth "millions" was not a statement

                                         31
1121415

as to the actual market value of the LED lamp tubes but as to

the    potential         market   value       of   that     product      based     on

speculation as to potential uses and future sales. Delmore is

distinguishable in that regard.

      Scroggins and Complete Lighting also argue that Deng and

DM's failure to object to Scroggins's testimony that the value

of the LED lamp tubes was "in the millions" "pretermits"

consideration         of      their     argument      on    appeal       that     the

compensatory-damages award is based on speculative evidence.

Scroggins and Complete Lighting's brief, at 39.                          They cite

Robbins v. Sanders, 890 So. 2d 998 (Ala. 2004), in support of

that argument.           However, in Robbins, this Court addressed

whether a failure to object to evidence of certain damages

presented at trial precluded the defendant from arguing on

appeal that "the trial court improperly awarded damages for

claims that were not pleaded in the plaintiffs' complaint."

890    So.    3d    at    1009.       Robbins      does    not   stand    for     the

proposition that a failure to object to specific testimony as

to    the    amount      of   damages    when      that    testimony     is     given

precludes      an    argument     on    appeal      that    that   testimony       is




                                         32
1121415

insufficient, by itself, to support the damages award.                      Thus,

Scroggins's reliance on Robbins is misplaced.

    Moreover,      although   Deng      and    DM    did    not    object    when

Scroggins    testified    that    the    LED    lamp       tubes    were    worth

"millions," they did argue in their motion for a JML at the

close of Scroggins and Complete Lighting's case-in-chief and

in their renewed motion for a JML at the close of all the

evidence    that   the   claimed     damages        were    based    on     "pure

speculation."       Deng and DM also objected during closing

arguments to figures presented by Scroggins and Complete

Lighting's counsel, purportedly giving a "legitimate basis"

for the damages.       Deng and DM argued that the figures were

"just pure speculation.          There's no testimony about that."

This objection and the arguments made in the motions for a JML

were sufficient to preserve this issue for appellate review.

See Ex parte Couilliette, 857 So. 2d 793, 794 (Ala. 2003)

("'"[T]o preserve an issue for appellate review, it must be

presented to the trial court by a timely and specific motion

setting    out   the   specific    grounds      in    support      thereof."'"

(quoting McKinney v. State, 654 So. 2d 95, 99 (Ala. Crim. App.

1995)).


                                    33
1121415

      The jury's award of $1.5 million in compensatory damages

on the fraud claim was based on speculative evidence as to

possible future uses and the value of potential future sales

of the LED lamp tubes.     "Although they need not be proved to

a mathematical certainty, 'damages [for fraud] may not be

awarded where they are remote or speculative.          A jury must

have some reasonable basis for the amount of its award.'"

Systrends, Inc. v. Group 8760, LLC, 959 So. 2d 1052, 1075

(Ala. 2006) (quoting Parsons v. Aaron, 849 So. 2d 932, 949

(Ala. 2002)).   Therefore, "[t]here being no evidentiary basis

for   the   compensatory   damages   awarded   [to   Scroggins   and

Complete Lighting on the fraud claim]," the circuit court

erred plainly and palpably in denying Deng and DM's motion for

a new trial.    See Systrends, 959 So. 2d at 1079.

      Moreover, "[b]ecause the compensatory-damages award has

been eliminated, the punitive damages awarded on this claim

must also be vacated."     Systrends, 959 So. 2d at 1079 (citing

Life Ins. Co. of Georgia v. Smith, 719 So. 2d 797, 806 (Ala.

1998) ("We now require ... that a jury's verdict specifically

award either compensatory damages or nominal damages in order

for an award of punitive damages to be upheld.").                Our


                                34
1121415

decision in this regard pretermits consideration of Deng and

DM's arguments that they were entitled to a new trial because

the award of punitive damages was not supported by clear and

convincing evidence, was excessive, or was the result of

prejudice, bias, passion, or other improper motives.           Our

holding in this regard also pretermits consideration of Deng

and DM's arguments that they were entitled to a new trial

because, they argue, Scroggins and Complete Lighting changed

the nature of their fraud claim at trial or because, they say,

Scroggins's   testimony   at   trial   contradicted   his   earlier

affidavit testimony.

                           Conclusion

    For the foregoing reasons, we reverse the circuit court's

judgment based on the jury's verdict in favor of Scroggins and

Complete Lighting on the fraud claim and remand the case for

the entry of an order granting a new trial as to that claim.

We affirm the circuit court's judgment as to the breach-of-

contract claim.

    AFFIRMED IN PART; REVERSED IN PART; AND REMANDED WITH

DIRECTIONS.

    Moore, C.J., and Stuart, Bolin, Parker, Murdock, Shaw,

Main, and Wise, JJ., concur.

                                35
