Maurer v. Clausen Distributing Co. ( 1996 )

NO. 95-124
IN THE SUPREMECOURT OF THE STATE OF MONTANA
1996
DAVID MAURER,
Plaintiff, Appellant,
and Cross-Respondent,
CLAUSEN DISTRIBUTING CO., a Montana
corporation, and MICHAEL A. TUCKER,
Defendants, Respondents,
and Cross-Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Monte D. Beck and John J. Richardson,
Beck Law Offices, Bozeman, Montana
For Respondents:
Keith Keller, Keller, Reynolds, Drake,
Johnson & Gillespie, Helena, Montana
Submitted on Briefs: January 4, 1996
Decided: February 8, 1996
I
'Clerk
Justice Charles E. Erdmann delivered the opinion of the Court.
This is an appeal from an order of the First Judicial District
Court, Lewis and Clark County, granting a new trial on the jury's
award of damages against Clausen Distributing Co. and Michael A.
Tucker, and a cross-appeal from the District Court's exclusion of
evidence and giving of jury instructions. We reverse in part and
affirm in part.
We restate the issues as follows:
1. Did the District Court err in ordering a new trial on the
issue of punitive damages?
2. Did the District Court err in ordering a new trial on the
issue of compensatory damages?
3. Did the District Court err in excluding evidence of
events other than the accident that could have lead to Maurer's
depression?
4. Did the District Court err in denying a new trial on the
issue of punitive damages because evidence of Clausen's employees'
work-related convictions for driving under the influence (DUIs) was
excluded?
5. Did the District Court err in denying a new trial because
instructions were given to the jury on Clausen's vicarious
liability for punitive damages?
FACTS
Michael Tucker was a salesperson for Clausen Distributing Co.,
a Helena beverage and bar supply wholesaler and distributor. On
November 25, 1991, Tucker was returning from his Townsend sales
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route when he ran into the rear of a Montana Highway Patrol vehicle
parked on the side of the highway. David Maurer, a motorist who
had been stopped by the patrolman, was sitting in the front
passenger seat of the patrol car and was injured when he was thrown
to the floor of the car.
Tucker pled guilty to a charge of driving while under the
influence of alcohol. His blood alcohol content over an hour after
the accident was .17 percent. Defendants Clausen and Tucker
admitted liability for the accident and a trial was held to award
compensatory damages and determine liability for punitive damages.
At trial, Tucker testified that he drank five or six beers that day
while he was servicing his Townsend customers. Clausen's policy
permitted salespersons to use their discretion in consuming alcohol
while working. Clausen did not amend this policy as it pertained
to Tucker, even though Clausen was aware that Tucker had received
two citations for DUIs prior to this accident.
As a result of the accident, Maurer suffered pain in his neck
and back which he alleged prevented him from performing duties
essential to running a ranch. Maurer became severely depressed,
quit the family ranch, and moved from Montana. Clausen and Tucker
attempted to introduce evidence of non-related felony charges
against Maurer which could have caused his depression and disrupted
his established course of life. The District Court did not allow
the evidence because of its prejudicial effect.
Clausen also attempted to introduce evidence that no Clausen
driver had, until this accident, received a DUI while working. The
3
District Court excluded this evidence, finding it was not relevant
to the issue of punitive damages.
At the proposal of jury instructions, the District Court ruled
that a pattern instruction on vicarious liability would be given.
Clausen objected to the giving of this instruction.
The jury awarded $l,OOO,OOO in punitive damages against
Clausen and $75,000 in punitive damages against Tucker. Clausen
filed a motion for a new trial and the District Court concluded
that the jury's awards for punitive damages were based on passion
and prejudice and exceeded the amount necessary to punish Clausen
and Tucker. Accordingly, the District Court ordered a new trial on
the determination of punitive damages.
The jury also awarded Maurer $570,349 in actual damages,
$500,000 of which was for loss of established course of life, and
$50,000 for pain and suffering. Maurer had requested $90,000 for
loss of established course of life. Although requested by Maurer,
the jury did not award any damages for loss of earnings or loss of
earning capacity. The District Court concluded that the jury's
award for compensatory damages was excessive and granted a new
trial on the issue of compensatory damages as well.
Maurer appeals the District Court's granting of a new trial on
the issues of punitive and compensatory damages. Clausen and
Tucker cross-appeal the District Court's evidentiary and legal
rulings relevant to a new trial.
4
ISSUE 1
Did the District Court err in ordering a new trial on the
issue of punitive damages?
The District Court vacated the jury's award for punitive
damages of $l,OOO,OOO against Clausen and $75,000 against Tucker.
The District Court ordered a new trial because it concluded that
these awards were excessive. This Court will not disturb a
district court's decision to grant or deny a new trial absent a
manifest abuse of discretion. Baxter v. Archie Cochrane Motors,
Inc. (1995), 271 Mont. 286, 287-88, 895 P.2d 631, 632.
Section 25-ll-102(5), MCA, provides that a district court may
vacate a jury's verdict and grant a new trial when the jury's award
of damages is excessive and appears to have been given under the
influence of passion or prejudice. As required by § 27-l-
221(7) Cc), MCA, the District Court reviewed the jury's verdict and
considered the factors set forth in subsection (7) (b). Those
factors include:
(i) the nature and reprehensibility of the
defendant's wrongdoing;
If:!, the extent of the defendant's wrongdoing;
the intent of the defendant in committing the
wrong ;
(iv) the profitability of the defendant's
wrongdoing, if applicable;
(v) the amount of actual damages awarded by the
jury;
(vi) the defendant's net worth;
iix)' any other circumstances
' that may operate to
increase or reduce, without wholly defeating, punitive
damages.
5
The court found that Clausen had a net worth of $944,534 in
1993 and taxable income of $31,662 (average for 1990 to 1993). The
court found that Tucker had no evidence of net worth but that he
had been rehired by Clausen at a yearly salary of $27,000. Based
on those findings, the court concluded:
Although an award of punitive damages was proper in
this case, it appears that the award was the result of
passion or prejudice. Passion and prejudice can, of
course, be strong when drinking and driving result in an
accident. The significant factor here, however, is the
excessive amount of the award.
There was no evidence regarding Tucker's net worth.
The award against him was almost three times his annual
salary. While Tucker's conduct was certainly reprehen-
sible and should in no way be condoned, the amount
awarded exceeds the amount necessary to punish him.
The amount awarded against Clausen Distributing
exceeded the company's net worth. The award must be
sufficient to get the company's attention, but in this
case, the award exceeds the amount necessary to
adequately punish this Defendant and to serve as an
example to it and others.
A review of the record reveals that the punitive damages
assessed against Clausen were not excessive when compared to
Clausen's overall financial condition. Section 27-l-221(7) (a),
MCA, states that 'I [iln the separate proceeding to determine the
amount of punitive damages to be awarded, the defendant's financial
affairs, financial condition, and net worth must be considered."
We note that Clausen declared taxable income of $0 to $49,000
between 1990 and 1993, even though its yearly sales were between
$3,400,000 to $4,600,000. Actually, Clausen had a policy of
retaining profits within the corporation. Clausen's general
manager testified that Clausen's yearly retained profits averaged
6
between $850,000 and $l,OOO,OOO. In addition, Clausen kept
$300,000 to $400,000 in cash on hand for expenditures. Clausen's
balance sheet valued many of the company's assets at their historic
cost when purchased up to thirty-five years ago. Testimony was
presented that at this time the warehouse alone is worth between
$550,000 and $800,000. Nevertheless, the District Court failed to
consider the appreciation of these assets, as well as Clausen's
policy of retaining profits, which resulted in a decrease of the
company's taxable income.
Tucker's financial condition was also valued improperly by the
District Court. After noting there was no evidence of Tucker's net
worth, the District Court concluded that Tucker's salary did not
support an award of punitive damages in the amount of $75,000. In
Gurnsey v. Conklin Co., Inc. (1988), 230 Mont. 42, 55, 751 P.2d
151, 158, we stated a plaintiff is not required to show proof that
a defendant's net worth supports an award of punitive damages. If
the defendant's net worth does not support an award of punitive
damages, the defendant must produce evidence to that fact.
Gurnsey, 751 P.2d at 158. Tucker should not gain an advantage from
failing to produce evidence of his net worth. Accordingly, there
was no evidence that Tucker's net worth could not support a
punitive damage award of $75,000, and so, the District Court erred
in vacating the jury's award of punitive damages against Tucker.
For these reasons, we conclude that the District Court's order
for a new trial on the issue of punitive damages was a manifest
abuse of discretion, and therefore, reverse the District Court on
this issue.
ISSUE 2
Did the District Court err in ordering a new trial on the
issue of compensatory damages?
The issue of damages was submitted to the jury on a line item
verdict form. Maurer asked the jury to return a verdict of:
Past medical expenses $ 12,598 80
Future medical expenses 20,000 00
Out-of-pocket expenses 440 00
Pain and suffering 65,520 00
LOSS of established course of life 90,000 00
Loss of earnings 35,642 00
Loss of earning capacity 2,241,761 00
The jury returned a verdict of:
Past medical expenses $ 12,598 80
Future medical expenses 7,310 50
Out-of-pocket expenses 440 00
Pain and suffering 50,000 00
LOSS of established course of life 500,000 00
Loss of earnings -O-
Loss of earning capacity -O-
The District Court noted that the jury's award for loss of
established course of life was more than five times the amount
requested by Maurer. On these facts, the court concluded that an
award of $500,000 for loss of established course of .ife was
excessive and appeared to have been given under the influence of
passion or prejudice. Accordingly, the court ordered a new trial
on compensatory damages pursuant to 5 25-ll-102(5), MCA. We will
review the court's decision to grant a new trial to determine if
the court abused its discretion. See Baxter, 895 P.2d at 632.
8
Maurer attempts to justify the jury's award for his loss of
established course of life by pointing to the fact the jury awarded
less compensation as a whole than was requested. This justification
is fallacious. The jury's award for Maurer's loss of established
course of life cannot be considered as damages to offset the jury's
refusal to award damages for Maurer's loss of earnings and earning
capacity. On the contrary, the jury found that Maurer suffered no
loss of earning capacity.
Maurer produced evidence to support an award of $90,000 for
loss of established course of life. Instead, the jury awarded
$500,000. Unreasonable damages cannot be recovered. Section
27-l-302, MCA. Thus, an award must be reduced when it substantially
exceeds that which the evidence can sustain. Safeco Ins. Co. v.
Ellinghouse (1986), 223 Mont. 239, 254, 725 P.2d 217, 226. The
record does not support the jury's award of $500,000 for loss of
established course of life. Therefore, the District Court did not
abuse its discretion in ordering a new trial for compensatory
damages on this issue and we affirm that portion of the District
Court's order.
ISSUE 3
Did the District Court err in excluding evidence of events
other than the accident that could have lead to Maurer's
depression?
During trial, Maurer produced evidence that after the car
accident he was depressed. This depression lead Maurer to leave
the family ranch and contributed to his "course of life" damages.
9
Clausen and Tucker attempted to introduce evidence that Maurer
became depressed and left the ranch because of other reasons.
Specifically, an event occurred in August 1990 where Maurer's
former girlfriend's neck was broken during an altercation with him
and which resulted in her being rendered quadriplegic (the Miller
incident). In December 1990, she filed a civil suit against him
which was settled in August 1991. In addition, Maurer was
criminally charged with aggravated assault, a felony. Following a
jury trial he was acquitted from the felony charge in January 1993.
Maurer claims the evidence was inadmissible because the
defendants offered no proof linking Maurer's psychological
condition with the Miller incident and that the defendants merely
wanted to ask a highly prejudicial question. The defendants
counter that the incident's link to Maurer's depression was
self-evident and that the jury could consider the evidence from a
common sense viewpoint. The District Court acknowledged the
significant stress of the incident and its resulting criminal
charges. Nevertheless, the court excluded the evidence because of
its prejudicial nature.
Although relevant, evidence may be excluded if its probative
value is substantially outweighed by the danger of unfair
prejudice. Rule 403, M.R.Evid. The decision whether or not to
exclude such evidence will not be reversed by this Court unless the
district court has abused its discretion. Newville v. State, Dept.
of Family Svcs. (19941, 267 Mont. 237, 260, 883 P.2d 793, 806
10
(citing Kimes v. Herrin (1985), 217 Mont. 330, 333, 705 P.2d 108,
110) .
We conclude that the Miller incident was certainly a stress
provoking event which may have contributed to Maurer's depression
and its probative value was not substantially outweighed by its
prejudicial nature. We further conclude that the District Court
abused its discretion in excluding evidence of the Miller incident
for that reason. The jury should have been given the opportunity
to determine to what degree, if any, the stress from the Miller
incident contributed to Maurer's loss of established course of
life. See 5 26-l-202, MCA.
The defendants intended to introduce evidence of the Miller
incident during cross-examination of Maurer and his witnesses in
order to rebut evidence that Maurer was depressed as a result of
his injury. Before this rebuttal could be admitted, the defendants
must have produced testimony to the fact that the Miller incident
contributed to Maurer's depression and his leaving the ranch.
[Wlhen the admissibility of evidence depends upon proof
of other connecting facts, the court may admit such
evidence subject to the condition that further evidence
be introduced sufficient to support a finding of those
connecting facts.
Rule 104(b), M.R.Evid. In Kimes and Newville, we held that
evidence of an event which may have contributed to an injury is not
admissible unless the evidence establishes a causal connection
between the event and the injury. Newville, 883 P.2d at 806;
Kimes, 705 P.2d at 110.
11
As we are remanding this case to the District Court for a new
trial on compensatory damages for loss of established course of
life, the District Court should admit evidence of the Miller
incident if such evidence is offered and the proper foundation has
been laid.
ISSUE 4
Did the District Court err in denying a new trial on the issue
of punitive damages because evidence of Clausen's employees'
work-related DUI convictions was excluded?
At trial, the defendants' counsel asked Clausen Distributing's
general manager the following:
During that period of time until Mr. Tucker's work-
related DUI, how many other DUIs have your employees had
that were work related?
The District Court sustained Maurer's objection to the question.
On the defendants' motion for new trial, the District Court
reviewed its ruling and concluded that evidence of whether any of
the employees of Clausen Distributing had ever had a work-related
DUI was irrelevant. We will review the District Court's denial of
a new trial for an abuse of discretion. See Baxter, 895 P.2d at
632.
The defendants assert that prior to Tucker's accident there
were no work-related DUIs among Clausen's employees. The
defendants claim that evidence to this fact would vindicate
Clausen's policy of tolerating drinking on the job and would
therefore be relevant to whether punitive damages should be
assessed against Clausen. The court, however, found that the
12
jury's award for punitive damages was based on Clausen's conduct in
placing Tucker in a position where he was permitted to drink and
drive despite Clausen's knowledge of Tucker's two previous DUIs.
We have stated that evidence is irrelevant when it does not tend to
make any requisite factors for punitive damages more or less
probable. Derenberger v. Lutey (1983), 207 Mont. 1, 11, 674 P.2d
485, 489. Accordingly, the DUI records are irrelevant because they
do not tend to disprove the egregiousness of Clausen's conduct for
which the jury assessed an award of punitive damages.
We therefore conclude the District Court did not abuse its
discretion in denying a new trial for admissibility of evidence and
hold that the District Court did not err in denying a new trial on
the issue of punitive damages.
ISSUE 5
Did the District Court err in denying a new trial because
instructions were given to the jury on Clausen's vicarious
liability for punitive damages?
The District Court instructed the jury on vicarious liability.
Clausen contends that the pattern instruction given was not
intended for punitive damage actions and was thus not appropriate
in this case. On a motion for new trial, the court concluded that
the instruction was a correct statement of Montana law and giving
it was not grounds for a new trial.
The jury returned a verdict against Clausen finding that
Clausen should "be assessed punitive damages as a result of its
conduct." Clausen's argument that the jury instruction was not
13
appropriate is moot because the jury found Clausen liable for
punitive damages based on its own conduct under s 27-1-221, MCA,
rather than under a vicarious liability theory. In seeking review
of an instruction, the party claiming error must show prejudice in
order to prevail. Hall v. Big Sky Lumber & Supply, Inc. (1993),
261 Mont. 328, 332, 863 P.2d 389, 392 (citing Walden v. State
(1991) I 250 Mont. 132, 818 P.2d 1190). In this case, Clausen was
not prejudiced by the court's instruction because the jury did not
assess damages against Clausen for Tucker's conduct but for its
own.
We will not overturn the court's denial of a new trial absent
an abuse of discretion. Baxter, 895 P.2d at 632. We conclude the
District Court did not abuse its discretion, and therefore, did not
err in denying a new trial because the appropriateness of the
instruction was a moot point.
In summary, we reverse the District Court's grant of a new
trial on the issue of punitive damages, and we affirm the District
Court's grant of a new trial on the issue of compensatory damages
for loss of established course of life. We also affirm the
District Court's denial of a new trial on the issues of employee
work-related convictions and jury instructions. On remand to the
District Court for new trial, we direct the court to admit evidence
of the Miller incident so long as the proper foundation has been
laid.
Justice
14
we concur:
15