Powell, Esq. v. AmGuard Insurance Company

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
JASON C. POWELL, ESQ., :
as personal representative of the :
ESTATE OF MARK KRIEGER, :
:
Plaintiff, : C.A. No. K17C-11-003 JJC
: In and for Kent County
v. :
:
AMGUARD INSURANCE :
COMPANY, :
:
Defendant. :
OPINION
Submitted: December 4, 2019
Decided: March 2, 2020
Defendant’s Motion for Judgment as a Matter of Law – DENIED
Defendant’s Motion for a New Trial – GRANTED
John S. Spadaro, Esquire, John Sheehan Spadaro, LLC, Smyrna, Delaware, Attorney
for Plaintiff.
Thaddeus J. Weaver, Esquire, Dilworth Paxson, LLP, Wilmington, Delaware, John
D. Balaguer, Esquire, White & Williams, LLP, Wilmington, Delaware, & Edward
M. Koch, Esquire, White & Williams, LLP, Philadelphia, Pennsylvania, Attorneys
for Defendant.
Clark, J.
Plaintiff Jason C. Powell, as personal representative of the Estate of Mark
Krieger, (“the Estate”) prevailed in a bad faith insurance action against Defendant
AmGuard Insurance Company (“AmGuard”). The jury found that AmGuard
unreasonably delayed paying Mr. Krieger’s workers’ compensation wage benefits
for seventy-two days.1 It awarded the Estate $500,000 in punitive damages. After
trial, by stipulation of the parties, the Court entered judgment for compensatory
damages in the amount of $28.22.
AmGuard now moves for (1) judgment as a matter of law, (2) a new trial, or
(2) in the alternative, remittitur. Because AmGuard did not renew its motion for
judgment as a matter of law at the close of all the evidence, its post-trial motion for
judgment as a matter of law is procedurally barred.
With regard to its motion for a new trial, however, the jury’s punitive damages
award of $500,000 shocks the Court’s conscience. For that reason, a new trial is
necessary. In this case, the Estate’s summation, made without evidentiary support,
likely inflamed the jury. As a result, the verdict was likely the product of passion or
prejudice. Because the Court cannot fairly conclude that the jury’s decision
regarding liability was not also affected by this passion or prejudice, a new trial
regarding both liability and damages is necessary.
I. Procedural Background and Trial Evidence
The evidence recited herein is the evidence presented during a five day jury
trial in October 2019. It is viewed in the light most favorable to the Estate.
Mr. Krieger suffered a work injury on May 22, 2017. On June 5, 2017,
AmGuard received the claim. That same day, AmGuard wrote Mr. Krieger and told
1
See Def. AmGuard’s Motion for Judgment as a Matter of Law, Ex. 1 (answer through Special
Verdict Form, by the jury, that AmGuard should have started paying workers’ compensation
benefits to Mr. Krieger on July 22, 2017, and that its unreasonable delay in payment ended on
October 2, 2017).
2
him that it could not accept or deny his claim because of a “lack of medical
documentation.” It further wrote that it hoped to complete its investigation within
thirty days. On June 6, 2017, an AmGuard adjuster spoke with a representative of
Mr. Krieger’s employer, Hero Demolition. The Hero Demolition representative told
the adjuster that Mr. Krieger was at the job site early on the day of his injury. He
also alleged that Mr. Krieger intended to steal the company’s copper.
On June 12, 2017, Mr. Krieger underwent an MRI. The MRI report
referenced nine separate bone fractures in his foot and ankle. AmGuard received
that report on July 7, 2017. AmGuard had already received Mr. Krieger’s emergency
room records. Notwithstanding the records and report, AmGuard did not accept Mr.
Krieger’s claim. Instead, it delayed its decision because of alleged “red flags”
regarding (1) Mr. Krieger’s possible drug use, and (2) Hero Demolition’s theft
allegation. AmGuard took no action to investigate either “red flag” between June
6th and July 7th, when it received the MRI report. AmGuard conceded that by no
later than July 12, 2017, it was aware that Mr. Krieger had suffered multiple fractures
in his foot and ankle.
One month after receiving Mr. Krieger’s MRI results, as of August 8, 2017,
AmGuard still had taken no action to investigate these alleged “red flags” and had
not paid Mr. Krieger’s lost wages. On that day, AmGuard first told Mr. Krieger’s
attorney that it was withholding his benefits because of a new allegation—that Mr.
Krieger did not have permission to drive the forklift that injured him. Delaying
payment of no-fault workers’ compensation benefits because the claimant was
allegedly at fault for his injury was strong evidence of unjustified delay.
Once AmGuard notified Mr. Krieger’s attorney of this new red flag (that
AmGuard had taken no action itself to investigate), Mr. Krieger’s attorney
interviewed Hero Demolition’s employees. After doing so, Mr. Krieger’s attorney
relayed the information to AmGuard. At that point, in late August, for the first time,
3
AmGuard investigated Hero Demolition’s claims. When doing so, it easily
confirmed that the employer falsely claimed that Mr. Krieger impermissibly used
the forklift and had attempted theft.
Delay in payment of wages continued, however. For an additional month,
AmGuard contested the severity of Mr. Krieger’s disability and whether AmGuard
should pay an attorneys’ fee. On October 2, 2017, four days before the scheduled
IAB hearing on October 6, 2017, the parties settled the lost wage issue. By that
point, Mr. Krieger had received no income for four months. Despite AmGuard’s
statutory obligation to notify Mr. Krieger in writing of its reasons for delaying
payment, it never provided him with an accurate written explanation.2 It issued its
first check to Mr. Krieger for lost wage benefits on October 2, 2017. Thereafter, it
continued to pay them until Mr. Krieger died from unrelated causes in 2018. Prior
to Mr. Krieger’s death, he sued AmGuard for bad faith delay in investigation and
payment.
Following Mr. Krieger’s death, his counsel retained Jason Powell, Esquire, to
open an estate. Upon motion by Mr. Krieger’s counsel, the Court permitted Mr.
Powell, as the Estate’s personal representative, to be substituted as the plaintiff. Mr.
Krieger died shortly after he filed suit. As a result, he did not testify in a deposition
or participate in formulating discovery responses. As a result, the Estate presented
no evidence at trial regarding the delay’s impact on Mr. Krieger. In fact, the only
evidence permitting even an inference of harm came from AmGuard’s corporate
designee, Edward G. Hennrikus. Namely, Mr. Hennrikus conceded (1) that a forklift
operator would not be expected to be affluent, and (2) that AmGuard knew that
2
See 19 Del. C. § 2362(a) (providing that “an employer or its insurance carrier shall within 15
days after receipt . . . notify . . . the claimant in writing . . . whether the claim is accepted or denied
[and] if it cannot accept or deny the claim, the reasons therefor and approximately when a
determination will be made”). There was no dispute at trial that AmGuard violated this statutory
mandate.
4
withholding Mr. Krieger’s wage replacement benefits for four months caused him
financial distress.3
There were three relevant procedural events at trial. First, following the
Estate’s case-in-chief, AmGuard moved for judgment as a matter of law. It did so
regarding the issues of (1) bad faith and (2) punitive damages stemming from
AmGuard’s allegedly reckless disregard of Mr. Krieger’s rights.4 It argued that the
Estate’s evidence supported only that AmGuard handled the claim in an “imperfect
but not an untimely manner.”5 In response, the Estate emphasized that a mere
suspicion of an insured’s misconduct, without an investigation, was insufficient to
withhold insurance coverage.
The Court denied AmGuard’s motion for judgment as a matter of law. It
explained that a party’s state of mind may be inferred from the circumstances. The
evidence viewed in the light most favorable to the Estate provided a sufficient basis
for a reasonable jury to find that AmGuard (1) delayed Mr. Krieger’s wage payments
without reasonable justification and (2) did so with reckless indifference to his rights
as an insured.6 The trial evidence closely tracked the record evidence presented
during AmGuard’s earlier summary judgment motion. Accordingly, the Court
incorporated its summary judgment decision’s reasoning into its oral denial of
AmGuard’s motion.7
Second, following the defense portion of the case and at the close of all the
evidence, the Estate—but not AmGuard—moved for judgment as a matter of law.8
3
Pl. Answering Br. to Def. Mot. for Remittitur, Ex. B, at 113:8–17.
4
Trial Transcript, Vol. C, at C14:5–C21:5.
5
Id. at C14:14.
6
Id. at C21:18–C22:16.
7
See Powell v. AmGuard Ins. Co., 2019 WL 4509165, at *4–5 (Del. Super. Sept. 19, 2019)
(examining the circumstances and conduct of AmGuard on the summary judgment record, and
explaining that claims of bad faith and punitive damages include highly factual state of mind
considerations, making summary judgment inappropriate on that record).
8
Trial Transcript, Vol. D, at D107:17–D110:21.
5
The Estate argued that AmGuard unjustifiably delayed payment because it had only
a mere suspicion, and not a reasonable basis, to withhold payment.9 In response,
AmGuard argued that it reasonably investigated the employer’s accusation and still
resolved the claim in less than average time.10
The Court denied the Estate’s motion. It held that the trial evidence could
support a reasonable jury’s finding that AmGuard did not act in bad faith for the
following reasons: (1) AmGuard paid Mr. Krieger benefits before an IAB hearing;
(2) Hero Demolition provided AmGuard a report that Mr. Krieger was outside the
scope of his employment when injured; and (3) AmGuard’s expert testified that
AmGuard settled the claim more quickly than the average claim.11 Again, AmGuard
did not renew its motion for judgment as a matter of law at the close of all the
evidence.
Third, and finally, counsel for the Estate made several objectionable and
inflammatory arguments during his closing. The evidence did not support many of
his arguments. Nevertheless, AmGuard did not object to them. Rather, it first raised
this issue in its post-trial motion for judgment as a matter of law.
These objectionable statements included that: (1) AmGuard stole from Mr.
Krieger;12 (2) it used “dirty lies” and “strategies;”13 (3) it used “filthy business
practices;”14 (4) AmGuard “lights their cigars with [the amount of] money [at issue
here;]”and (5) it had a “filthy devotion to money, which they elevate over human
life and human safety and human welfare.”15 The Estate’s counsel also referenced
9
Id. at D108:2–D108:20.
10
Id. at D111:1–D114:6.
11
Id. at D114:10–D118:1.
12
Trial Transcript, Vol. E, at E18:19–20 (stating that AmGuard “stole from Mark Krieger. They
stole from him a fair chance to show them [that the suspicions and allegations were false]”). See
also id. at E19:14–16; E19:22–E20:5.
13
Id. at E20:4–E21:17.
14
Id. at E28:20–21.
15
Id. at E28:21–22.
6
harm to Mr. Krieger that the evidence did not support. Those statements included
claiming Mr. Krieger’s “financial ruin” and that his “lights [were] about to be turned
off.”16 Counsel then described the expected results of an insurance company’s bad
faith, including eviction, foreclosure, credit card debt, hunger, asset repossession,
and homelessness.17
He urged the jury to consider the effects of AmGuard’s conduct on the
community. He also asked the jury to place itself in Mr. Krieger’s position as a
forklift driver with no income.18 He did that by intimating that anyone could find
themselves in Mr. Krieger’s position, such as a juror’s friend, neighbor, child, or
parent.19 At one point, he cautioned the jury that they were surrounded by abusive
corporations and promised them more power in rendering their verdict than they
would ever again have in their lives. Once more, at no point during or after these
arguments, did AmGuard object. Nor did it request a curative instruction or move
for a mistrial.
The jury returned a verdict for the Estate. It found that AmGuard
unreasonably delayed paying wage benefits to Mr. Krieger from July 22, 2017 to
October 2, 2017. It also awarded the Estate $500,000 in punitive damages. In
limine, the Court held that compensatory damages would be capped at the interest
due on any unjustified delay in paying the $7,300 of withheld benefits. Post-trial,
the parties stipulated that those compensatory damages totaled $28.22. The Court
then entered judgment for the Estate in the amount of $500,028.22.
16
Id. at E31:21–23.
17
Id. at E40:5–15.
18
Id. at E39:17–21.
19
Id. at E39:23–E40:2.
7
II. AmGuard’s motion for judgment as a matter of law is procedurally
barred.
Superior Court Civil Rule 50 precludes AmGuard from renewing its motion
for judgment as a matter of law. Rule 50(b) provides that “[w]henever a motion for
judgment as a matter of law made at the close of all the evidence is denied or for any
reason is not granted . . . [s]uch a motion may be renewed by service and filing not
later than 10 days after entry of judgment.”20 AmGuard did not move for judgment
as a matter of law at the close of all the evidence. Rather, it did so only at the close
of the Estate’s case-in-chief. There, the Court denied the motion and incorporated
the reasoning from its summary judgment decision.21 By failing to renew its motion
at the close of all the evidence, AmGuard did not meet a condition precedent to
renew its motion for judgment as a matter of law.22 Accordingly, the motion must
be denied.
III. The punitive damages award shocks the conscience of the Court; a
new trial is necessary.
A. New Trial Standard
20
Sup. Ct. Civ. R. 50(b) (emphasis added).
21
See Powell, 2019 WL 4509165, at *4–5.
22
See William H. Porter, Inc. v. Edwards, 616 A.2d 838 (Del. 1992) (explaining that because the
defendant failed to renew its earlier motion for a directed verdict at the close of all the evidence,
it lacked standing to move for judgment notwithstanding the verdict). The language “at the close
of all the evidence,” which the Delaware Supreme Court based the Porter decision upon, survived
the changes in Superior Court Rule 50 that redesignated directed verdicts as judgments as a matter
of law. See also Pabon v. Geico Corp., 2017 WL 3635569, at *1–2 (Del. Super. Aug. 23, 2017)
(denying the plaintiffs’ motion for judgment as a matter of law where they made the motion at the
close of their case, but failed to renew it at the close of all the evidence); Samson v. Somerville,
2005 WL 1953054, at *1 (Del. Super. July 26, 2005) (finding the plaintiff’s motion for judgment
as a matter of law to be precluded by Rule 50(b) because the plaintiff failed to so move at the close
of all the evidence).
8
Under Delaware law, jury verdicts are given enormous deference.23 Courts
defer to juries’ decisions and “in the absence of exceptional circumstances, the
validity of damages determined by the jury should . . . be presumed.”24 It is also
well recognized that “[a] verdict will not be disturbed as excessive unless . . . it was
the result of passion, prejudice, partiality or corruption; or that it was manifestly the
result of disregard of the evidence or applicable rules of law.”25 In this regard, “[a
damages] verdict should not be set aside unless it is so grossly excessive as to shock
the Court’s conscience and sense of justice, and the injustice of allowing the verdict
to stand is clear.”26
B. Analysis
AmGuard moves for a new trial on three bases: (1) the Court mistakenly
decided two evidentiary issues; (2) notwithstanding AmGuard’s lack of objection,
the Estate’s closing argument was so improper that a new trial is required; and (3)
the jury’s punitive damages verdict was so disproportionate to compensatory
damages that it was against the great weight of the evidence. The third basis requires
a new trial.
1. Admitting evidence that AmGuard issued a statutorily deficient notice
in another case for the limited purpose of proving AmGuard’s state of
mind was not error; nor was admitting AmGuard attorney’s
advertising because that advertising was known to AmGuard before
it hired him.
AmGuard first argues that the Court erroneously admitted an AmGuard
corporate designee’s prior deposition testimony taken in another bad faith insurance
23
Young v. Frase, 702 A.2d 1234, 1236 (Del. 1997).
24
Id.
25
Storey v. Castner, 314 A.2d 187, 193 (Del. 1973) (citation omitted).
26
Id.
9
suit. It objected based on relevance and DRE 403 concerns. Second, AmGuard
argues that the Court erred when admitting an advertising mission statement posted
by its workers’ compensation defense attorney. It objected to that evidence on
relevance and DRE 403 concerns as well. The alleged errors, it argues, caused
sufficient unfair prejudice to require a new trial.
With regard to the first issue, the Court admitted prior testimony taken in the
Rule 30(b)(6) deposition of Edward Hennrikus. That testimony addressed
AmGuard’s conduct in a prior bad faith action. In the prior case, as in the case at
hand, AmGuard failed to provide the proper reason for its delay in accepting the
insured’s claim.27 When admitting this evidence, the Court imposed significant
limitations to mitigate prejudice.28 Namely, the Court ruled admissible only that
testimony related to AmGuard’s written justification for withholding benefits in the
prior case. Furthermore, the grounds for admission were limited to the purposes of
demonstrating AmGuard’s state of mind. In this bad faith/punitive damages context,
this included recidivism and absence of mistake. A punitive damages claim includes
a broadened relevance of recidivism. In addition, this evidence made it more
probable that AmGuard’s actions in the present case were other than accidental.
Although AmGuard did not object to this evidence as being inadmissible
character evidence, the Court nevertheless held an in limine hearing on the record
pursuant to Getz v. State.29 As far as DRE 404(b) is concerned, the Getz criteria
apply in civil cases as they do in criminal cases.30 The Court addressed each of the
27
Sept. 30, 2019 Civil Motions Hearing Transcript, at 90:22–91:4.
28
See id., at 89–92 (providing the Court’s ruling on AmGuard’s motion in limine seeking to bar
evidence from prior litigation). See also Pl. Trial Ex. 22 (Excerpted Video Testimony) (providing
AmGuard’s 30(b)(6) deposition testimony in the matter of Benson v. AmGuard Insurance
Company).
29
538 A.2d 726 (Del. 1988).
30
Mercedes-Benz of N. Am. Inc. v. Norman Gershman's Things to Wear, Inc., 596 A.2d 1358,
1365 (Del. 1991).
10
Getz criteria and found this prior bad act evidence to be admissible for limited
purposes. At the same time, the Court held other proffered prior bad act testimony
to be inadmissible. To mitigate prejudice, the Court offered AmGuard the option
to request a limiting instruction.31 AmGuard did not request a contemporaneous
limiting instruction.32 Nor did it request one in the final jury instructions.
With regard to the other evidentiary issue, AmGuard hired Joseph Andrews,
Esquire, to represent it and the employer’s interests before the IAB. It had
previously retained Mr. Andrews in other cases. At least nine months before
AmGuard hired Mr. Andrews for Mr. Krieger’s case, Mr. Hennrikus testified in a
Rule 30(b)(6) deposition that AmGuard was aware of Mr. Andrews’s internet
advertising.33 Mr. Hennrikus testified in the prior deposition that AmGuard did not
approve of its tone.34
Mr. Andrews’ mission statement, posted on-line during the prior case and at
the time AmGuard hired him for Mr. Krieger’s claim, read as follows:
[this law office] concentrates on Delaware Workers’ Compensation
Defense throughout the entire State of Delaware; whether denying new
claims, terminating open claims, investigating settlement, denying
coverage, or taking proper legal action against those who defraud our
clients. From the moment a claim is reported until brought to its proper
conclusion, our overriding philosophy is to allow clients to close claims
permanently in the most cost-effective way.35
The fact finder needed to assess AmGuard’s state of mind in this bad faith action.
That required the jury to assess AmGuard’s motivation for allegedly delaying the
investigation and payment of the claim.36 In this regard, this statement had relevance
31
Oct. 11, 2019 Office Conference Transcript, at 58.
32
See Trial Transcript, Vol. B, at B208 (renewing and preserving previous objections to the Benson
testimony, but not requesting any curative or limiting instruction in regard thereto).
33
Pl. Trial Ex. 22 (Excerpted Video Testimony), at 107:3–17.
34
Id. at 107:18–108:1.
35
Pl. Trial Ex. 10, at 1.
36
Oct. 11, 2019 Office Conference Transcript, at 33.
11
for the limited purpose of assessing AmGuard’s state of mind.37 Namely, it made it
more probable that AmGuard was pre-disposed to deny Mr. Krieger’s claim. In that
way, it supported an inference that AmGuard possessed a state of mind that more
likely included bad faith and recklessness.38
When addressing the issue in limine, the Court performed a DRE 403 analysis
and found its relevance to not be substantially outweighed by DRE 403 concerns.
Since the Court admitted it for a limited purpose, it offered AmGuard the option to
request a limiting instruction.39 AmGuard proposed one in the parties’ jointly
submitted jury instructions.40 The Court accepted it as proposed by AmGuard and
read it. The instruction provided as follows:
Attorney Advertising Was Not AmGuard's Advertising
You have heard and seen certain information from the website of
attorney Joseph Andrews, who represented AmGuard Insurance
Company, and Hero Demolition, in connection with Mr. Krieger’s
claim for workers’ compensation benefits. That information is Mr.
Andrews’ advertising; it is not AmGuard’s advertising.41
AmGuard’s requested instruction did not address the limited purpose for which the
evidence was offered. AmGuard apparently opted to not request that language for
tactical reasons. Nevertheless, this instruction, given in the form requested by
AmGuard, resolved any issue of unfair prejudice.
Finally, at no time during trial did AmGuard accept the Court’s invitation for
a contemporaneous instruction regarding the advertising.42 Trial decisions regarding
the helpfulness of contemporaneous limiting instructions in a civil case fall within
37
Id.
38
Id. at 33:6–11.
39
Id. at 34:11–20.
40
Joint Proposed Instructions, at 8.
41
Trial Transcript, Vol. E, at E110–11.
42
Trial Transcript, Vol. B, at B208.
12
the purview of the attorney trying the case. The Court properly admitted the
evidence for its limited purpose. At that point, the jury was free to assign it the
weight it felt it was due regarding AmGuard’s state of mind.
2. AmGuard waived its ability to seek a new trial based upon the
Estate’s closing argument because it did not object, request a curative
instruction, or move for a mistrial.
AmGuard argues that the Estate’s closing argument was unduly prejudicial
because it included “intimidation, accusations . . ., wholly conjured scenes of
economic ruin, improper personal comments and vouching concerning AmGuard’s
conduct, [and] . . . blatant Golden Rule violations[.]”43 In response, the Estate argues
that AmGuard waived any such challenge because it failed to object at trial. It also
argues that counsel’s shouting, isolated cursing, and what AmGuard alleges to have
been religious invocations were not so prejudicial as to require a new trial.
At the outset, a party waives its right to raise these issues when it fails to object
at trial.44 AmGuard argues that it did not need to register an objection because the
Court “contemporaneously addressed” a single matter in the Estate’s closing.
During an incident where the Estate’s counsel used a curse word, the Court
intervened, corrected him, and admonished him not to do it again.45 The Court
limited its correction to a particular aspect of appropriate trial decorum. It did not
address any of the matters that AmGuard now challenges.
43
Def. AmGuard’s Motion for Judgment as a Matter of Law, at ¶ 13.
44
See Med. Ctr. of Delaware, Inc. v. Lougheed, 661 A.2d 1055, 1060 (Del. 1995) (explaining that
“[a] party must timely object to improper statements made during closing argument in order to
give the trial court the opportunity to correct any error. We recognize that, for strategy reasons,
counsel may choose not to object to a misstatement made in an opponent's closing remarks, but
the failure to object generally constitutes waiver of the right subsequently to raise the issue”).
Contra Baker v. State, 906 A.2d 139, 151 (Del. 2006) (emphasizing that in the criminal context
“trial judges have a continuing duty to intervene sua sponte, even in the absence of defense
counsel's objection, when a trial prosecutor steps out of bounds” during summation).
45
Trial Transcript, Vol. E, at 41:1–8.
13
In further support, AmGuard makes three additional arguments. First, it
argues that it was plain error for the Court to not grant a new trial because it should
have intervened sua sponte. Second, AmGuard relies upon criminal case authority
addressing prosecutorial misconduct in closing arguments. Third, AmGuard cites
civil authority where the complaining party registered a contemporaneous objection,
or requested a curative instruction immediately after the summation.
At the outset, AmGuard incorrectly charges this Court with plain error. Plain
error is an appellate standard and has no place in a trial court’s analysis.46
Nevertheless, the Court understands that AmGuard’s seeks to impose a post-facto
burden upon the Court to have intervened sua sponte. This disregards that
experienced attorneys, such as trial counsel in this case, often choose not to object
for tactical reasons. Such reasons often include a decision to permit opposing
counsel to overreach, which can impair an opponent’s credibility with the jury. In
fact, counsel for AmGuard took that approach. Much of AmGuard’s closing
argument focused on the lack of evidentiary support for opposing counsel’s
arguments and that he overreached by grossly exaggerating the Estate’s claims. In
hindsight, with this particular jury, the approach did not benefit AmGuard.
Regardless, it was not the Court’s responsibility to make a real time decision to
intervene and countermand AmGuard’s tactical decision to not object.
Second, AmGuard incorrectly relies upon criminal decisions that address
prosecutorial arguments. In criminal cases, the Delaware Supreme Court has often
held that the special role of prosecutors in our criminal justice system sometimes
46
See Capano v. State, 781 A.2d 556, 663 (Del. 2001) (explaining that “[p]lain errors must be
‘apparent on the face of the record.’ As suggested by this language, the issue is whether the error
is apparent from the vantage point of the appellate court in reviewing the trial record, not whether
it was apparent to the trial court in light of then-existing law”).
14
requires a trial judge to intervene absent a criminal defense attorney’s objection.47
The decisions that AmGuard relies upon, such as Kirkley v. State,48 recognize that
“trial judges have a continuing duty to intervene sua sponte, even in the absence of
defense counsel's objection, when a trial prosecutor steps out of bounds.”49
Impermissible prosecutorial conduct includes improper vouching, where the
prosecutor improperly suggests, insinuates, or asserts personal knowledge,50 or
where the prosecutor provides a personal opinion.51 In those instances, if defense
counsel fails to raise a timely objection and the trial judge does not intervene sua
sponte, the appellate court reviews for plain error.52
This was a civil case, however. There was no prosecutor that “occupied a
unique role in the adversary system . . . to seek justice, not merely convictions.”53
Criminal prosecutors have a dual role: to present the State’s case earnestly and to
advance justice by providing the defendant a fair and adequate trial.54 In contrast,
civil cases involve more equally positioned counsel and parties. AmGuard’s
argument is not supported by the criminal case authority it cites.
Third, the civil authority cited by AmGuard involved circumstances where the
challenging party either objected to the argument or requested a timely curative
47
Trump v. State, 753 A.2d 963, 970, n. 30 (Del. 2000) (citing Holtzman v. State, 718 A.2d 528,
1998 WL 666722, at *9 ¶ 23 (Del. 1998) (TABLE) (explaining in the criminal context that “the
United States Supreme Court and this Court have previously said that the trial judge should act to
control the conduct of the attorneys, and at times act sua sponte even without objection” and citing
United States v. Young, 470 U.S. 1, 10 (1985)) and Brokenbrough v. State, 522 A.2d 851, 863
(Del. 1987) (observing that in the criminal decisions “Hooks, Bailey, and Hughes, we have held
that the trial judge must control the conduct of the court's officers and the trial judge should act at
times even without an objection”)).
48
41 A.3d 372 (Del. 2012).
49
Baker, 906 A.2d at 151.
50
Kirkley, 41 A.3d at 377.
51
Holtzman, 1998 WL 666722, at *9 (citing Brokenbrough, 522 A.2d at 861).
52
Baker, 906 A.2d at 148 (citing Kurzmann v. State, 903 A.2d 702 (Del.2006)).
53
Trump, 753 A.2d at 967 (quoting Brokenbrough, 522 A.2d at 855).
54
Id.
15
instruction. In support, AmGuard relies primarily upon two Delaware Supreme
Court civil decisions: Deangelis v. Harrison55 and Delaware Olds, Inc. v. Dixon.56
In contrast to the case at hand, the challenging party in the Deangelis case
requested a curative instruction immediately following summations.57 The trial
court denied the requested instruction. On appeal, the Delaware Supreme Court held
that
[i]n the civil arena . . . [a]ny effort to mislead the jury or appeal to its
bias or prejudice is inappropriate and, where objection is made, the trial
court is obliged to act firmly with curative instructions.58
Likewise, in the Dixon decision, the challenging party lodged a timely
objection to a plaintiff’s golden rule violation and requested a curative instruction.59
As in the Deangelis matter, the trial judge declined the request for an instruction.60
Neither case stands for the proposition that the Court should have disregarded
AmGuard’s decision to not object and intervened sua sponte. AmGuard cites no
civil authority supporting a new trial on this basis.61
55
628 A.2d 77 (Del. 1993).
56
367 A.2d 178 (Del. 1976).
57
Deangelis, 628 A.2d at 79.
58
Id. at 80 (emphasis added).
59
Dixon, 367 A.2d at 179.
60
Id.; Deangelis, 628 A.2d at 79.
61
Although AmGuard did not cite the Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 551 (Del.
2006) decision, the Court has considered it. With regard to a conscience of the community type
argument, the Delaware Supreme Court observed in dicta that a trial judge in a civil case should
intervene sua sponte in the retrial, if plaintiff’s counsel repeated similar arguments. When
providing this observation, the Court cited a criminal prosecutorial misconduct case for that
premise. See Brokenbrough, 522 A.2d at 863 (where the Supreme Court observed that the case
“[o]nce again, [called upon us] to consider a criminal appeal in which it is alleged that the
prosecutor’s improper and prejudicial statements to a jury denied the defendant his right to a fair
and impartial trial”). The Supreme Court limited its direction in the Sears case to the upcoming
retrial at issue. Sears, Roebuck & Co., 893 A.2d at 551.
16
3. Given the evidence at trial, the jury’s $500,000 punitive damages
award shocks the conscience of the Court; it was likely the product of
passion or prejudice.
For the reasons discussed herein, the size of the jury’s punitive damages award
disregarded the great weight of the evidence to such a degree that it shocks the
conscience of the Court. As a result, a new trial is necessary. Given that finding,
the Court must determine what issues should be retried. To do so, the Court must
determine the likely reason for the excessive verdict. Here, the Estate’s closing
argument, in the aggregate, likely inflamed the jury to the extent that its verdict was
a result of passion or prejudice. Because it was so inflammatory, the new trial in
this case must include the issues of liability and damages. It follows that remittitur
is inappropriate.
a. Based upon the trial evidence, the award was grossly excessive.
AmGuard seeks a new trial or remittitur because of the size of the award. It
urges the Court to focus its inquiry on the ratio approach applied in the Delucia v.
Great Stuff, Inc decision.62 There, the Superior Court focused on the proportion
between compensatory and punitive damages.63 In granting remittitur, it relied
significantly upon the United States Supreme Court’s reasoning in the State Farm
Auto. Ins. Co. v. Campbell64 decision. In the Delucia decision, the Superior Court
observed that punitive damages should be generally limited to “double, treble, or
quadruple damages to deter and punish.” 65 There, the Court upheld a three to one
ratio and expressed skepticism that a ratio of four to one would be constitutional.66
Nevertheless, no Delaware decision cited by the parties or known to the Court,
62
2015 WL 5157127, at *4 (Del. Super. Apr. 10, 2015).
63
Id.
64
538 U.S. 408 (2003).
65
Delucia, 2015 WL 5157127, at *4 (citing Campbell, 538 U.S. at 425).
66
Id.
17
including the Delucia decision, have identified a fixed standard for what proportion
is excessive.67
Rather, more Delaware Courts have used the guideposts delineated in BMW
of North America, Inc. v. Gore68 as the framework to evaluate a punitive damage
award, post-trial.69 In Gore, the United States Supreme Court identified three such
guideposts. They included:
(1) the degree of reprehensibility of the defendant’s misconduct; (2) the
disparity between the actual or potential harm suffered by the plaintiff
and the punitive damages award; and (3) the difference between the
punitive damages awarded by the jury and the civil penalties authorized
or imposed in comparable cases.70
When applying these guide posts to this trial’s evidence, the jury’s $500,000 punitive
damages award was excessive to the point that it shocks the Court’s conscience and
sense of justice.
The Court begins by examining the first guidepost. In Gore, the Supreme
Court wrote that “the most important indicium of the reasonableness of a punitive
damages award is the degree of reprehensibility of the defendant’s conduct.”71 In
evaluating the defendant’s conduct, it held that a reviewing court may consider
whether:
67
See Barba v. Boston Scientific Corp., 2015 WL 6336151, at *13–14 (Del. Super. Oct. 9, 2015)
(using the jury’s initial 3:1 ratio when reducing both the compensatory and punitive damages
award, but not setting any fixed standard); see also Jones v. Delaware Cmty. Corp. for Individual
Dignity, 2004 WL 2827924, at *2 (Del. Super. Apr. 29, 2004) (declining to adjust or overturn the
jury’s award for punitive damages because the “award of punitive damages [] slightly less than ten
times the compensatory damages” did not shock the court’s conscience”), aff'd sub nom. Delaware
Cmty. Corp. v. Jones, 871 A.2d 1127 (Del. 2005).
68
517 U.S. 559 (1996).
69
See In re Servino v. Med. Ctr. of Delaware, 1997 WL 528263, at *3 (Del. Super. Aug. 1, 1997)
(summarizing the Gore guideposts used when “analyzing the propriety of a punitive damages
award”). See also Williams v. Manning, 2009 WL 960670, at *12–14 (Del. Super. Mar. 13, 2009)
(utilizing the Gore guideposts when granting remittitur).
70
Campbell, 538 U.S. at 418 (summarizing Gore’s guideposts).
71
Gore, 517 U.S. at 575.
18
the harm caused was physical as opposed to economic; the tortious
conduct evinced an indifference to or a reckless disregard of the health
or safety of others; the target of the conduct had financial vulnerability;
the conduct involved repeated actions or was an isolated incident; and
the harm was the result of intentional malice, trickery, or deceit, or mere
accident.72
The degree of reprehensibility in this case weighs against such a large award.
For the reasons addressed in the Court’s summary judgment and trial decisions, a
reasonable jury could have found that AmGuard’s actions were taken in bad faith
and that they rose to the level of recklessly disregarding Mr. Krieger’s rights.
Recklessness, however, is the least egregious state of mind justifying a potential
punitive damages award.73 Punitive damages are available in situations including
intentional harm of another,74 willful or wanton actions,75 and those taken with actual
malice.76 The states of mind that justify punitive damages are no different in the
insurance context than in any other.77 At both the summary judgment stage and at
the prayer conference, the Estate conceded that AmGuard’s actions were not taken
with malice or intent to cause harm.78 Reckless disregard of Mr. Krieger’s rights
72
Campbell, 538 U.S. at 419.
73
Powell, 2019 WL 4509165, at *3.
74
Jardel Co., Inc. v. Hughes, 523 A.2d 518, 529 (Del. 1987) (summarizing punitive damages
history).
75
Id. at 530 (explaining “willfulness and wantonness involve an awareness, either actual or
constructive, of one’s conduct and a realization of its probable consequences,” but that the
Supreme Court preferred the term “reckless indifference” to the term wanton because of its extinct
statutory roots).
76
Id. at 529 (citing Gannett Co., Inc. v. Re, 496 A.2d 553, 559 (Del. 1985)).
77
Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254, 264 (Del. 1995); see also Jardel, 523
A.2d at 529 (“explaining that “[t]he penal aspect and public policy considerations which justify
the imposition of punitive damages require that they be imposed only after a close examination of
whether the defendant's conduct is ‘outrageous,’ because of ‘evil motive’ or ‘reckless indifference
to the rights of others’”) (emphasis added).
78
See Trial Transcript, Vol. D, at D130:1–4 (providing, by the Estate, that “[w]e have never said
a word to suggest that they acted maliciously either on summary judgment or at trial. It’s never
been a contention of ours. It isn’t a contention of ours now.”).
19
was the sole basis for the jury’s instruction regarding punitive damages.79
Recklessness is the least reprehensible state of mind on the spectrum.
Furthermore, with regard to the Gore factors that bear on reprehensibility, the
harm in this case included economic damage caused by a delay in payment. The
trial record contained no evidence that AmGuard threatened Mr. Krieger’s health or
safety. Nor does the trial record contain evidence that AmGuard targeted him
because of his financial vulnerability. Moreover, although the Estate presented
evidence of a prior incident of similar conduct, that evidence included only one prior
incident of potential bad faith. Finally, the Estate did not pursue, nor did the
evidence demonstrate, any malice, trickery, or deceit on AmGuard’s part.
Considering these factors in the context of an unjustified delay that lasted less than
three months, together with the fact that AmGuard’s ultimately payed Mr. Krieger
the benefits due, AmGuard’s reprehensibility did not justify a $500,000 punitive
damages award.
The second guidepost requires the Court to examine the disparity between the
punitive damages award and the compensatory damages award. Courts should
review the two to determine whether there is a reasonable relationship between
them.80 When doing so, courts have consistently rejected the notion that a simple
mathematical formula sets a constitutionally permissible line.81 In its Campbell
79
See id. at D130:12–14 (explaining, by the plaintiff, “[w]e’ve only alleged reckless indifference.
It’s the only issue on the table. It’s all we ever argued, all we’re going to argue.”). See also Trial
Transcript, Vol. E, at E112:19–113:8 (instructing the jury that “[t]he Estate may be entitled to the
recovery of punitive damages in a bad faith action if the insurer’s breach is particularly egregious.
If you find that AmGuard’s breach of the insurance policy was done with reckless indifference to
Mr. Krieger, you may impose punitive damages. Reckless Conduct Defined. Reckless conduct
reflects a knowing disregard of a substantial and unjustifiable risk. It amounts to an "I don’t care"
attitude. Recklessness occurs when a person, with no intent to cause harm, performs an act so
unreasonable that he or she knows, or should know, that harm will probably result.”).
80
TXO Prod. Corp. v. All. Res. Corp., 509 U.S. 443, 460 (1993).
81
Gore, 517 U.S. at 582.
20
decision, the Supreme Court recognized that the amount of the compensatory
damages award permits ratio fluctuation.82 Namely, where compensatory damages
are higher, the ratio may be lower, and vice versa. This permits leeway, based upon
the circumstances of each case, to address the reasonableness of the relationship.83
Such leeway, however, does not eliminate the need to consider this guidepost.
AmGuard understandably attacks the verdict because of its disparity. Here,
the interest due as a result of AmGuard’s unreasonable delay totaled just $28.22.
The jury awarded punitive damages in the amount of $500,000. That results in a
ratio of over 17,000:1. Courts have considered far less to be excessive. Even when
considering the potential harm to Mr. Krieger, such as if he never received the $7,300
delayed payment, the ratio from potential harm to punitive damages is grossly
disproportionate. This guidepost also weighs strongly against such a large award.
Finally, the Court must consider the third guidepost: the disparity between the
punitive damages award and civil or criminal penalties authorized for similar
misconduct. With this guidepost, courts “accord substantial deference to legislative
judgments concerning appropriate sanctions for the conduct at issue.”84
The parties take different approaches. AmGuard seeks to analogize the
penalty provided in 19 Del. C. § 1103(b). That provision sets the statutory penalty
for like transgressions. There, when an employer does not pay an employee’s wages
that are due, it is liable to the employee for “liquidated damages in the amount of 10
percent of the unpaid wages for each day . . . upon which such failure continues after
the day upon which payment is required or in an amount equal to the unpaid wages,
82
Campbell, 538 U.S. at 425
83
See id. (discussing ratios of awards and stating “[t]he precise award in any case, of course, must
be based upon the facts and circumstances of the defendant’s conduct and the harm to the
plaintiff”).
84
Gore, 517 U.S. at 583 (quoting Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc.,
492 U.S. 257, 301 (1989) (O’Connor, J., concurring, in part, and dissenting, in part)).
21
whichever is smaller.”85 Using this guidance, AmGuard suggests that an appropriate
penalty should not exceed $7,300.86
The Estate references a criminal statute, 11 Del. C. § 840. That statute defines
criminal conduct to include that in which a person alters retail sales receipts or UPC
labels with an intent to cheat or defraud.87 If more than fifteen illegitimate receipts
or sales labels are involved, the crime becomes a Class F Felony.88 If the defendant
is an organization, it would be subject to an enhanced financial penalty of $500,000
for that felony. In this regard, the Estate suggests that AmGuard’s conduct—a
reckless disregard when investigating and making payment—should be compared to
a felony that requires proof of an intentional mens rea.
AmGuard’s suggested benchmark is the more apt. Namely, the civil penalty
relied upon by AmGuard addresses similar conduct. To compare a reckless failure
to pay workers’ compensation benefits to an intentionally fraudulent felony is
inappropriate. As a result, the third guidepost also weighs strongly against such a
large award.
As a final matter, the Estate emphasizes AmGuard’s financial strength.
Evidence at trial demonstrated that AmGuard received an A.M. Best financial
strength rating of A plus or superior.89 The A.M. Best rating also categorized
AmGuard as a company financially sized between $500 million to $750 million.90
The wealth of the defendant is an important additional factor for the trier of fact to
consider.91 In this regard, the Estate correctly emphasizes that punitive damages are
85
19 Del. C. § 1103(b).
86
Def. AmGuard Mot. for Remittitur Reply Br., at 9 ¶ 17.
87
11 Del. C. § 840A(a).
88
Id. at § 840A(b).
89
Pl. Resp. to Def. AmGuard’s Mot. for Remittitur, Ex. B, at 18:17–19:4.
90
Id. at 19:5–16.
91
See Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 22 (1991) (including a defendant’s wealth as
a factor to consider regarding the amount of punitive damages).
22
intended to punish a bad actor and deter others like it from engaging in similar
misconduct.92 In the insurance context, achieving the goal of deterrence may require
a larger punitive damages award where wealthy insurance companies are involved.93
Too small of a deterrent may remove a fear of meaningful repercussions. As a
result, a finding of reckless conduct, taken with an “I don’t care attitude” by a
company of AmGuard’s size may warrant a significantly upward departure from a
single digit ratio.
Greater latitude in such cases, however, cannot justify a punitive damages
award that is so disproportionate given this evidentiary record. After considering
Gore’s guideposts and the evidence at trial, the jury’s award was against the great
weight of the evidence and shocks the Court’s conscience. Accordingly, a new trial
is necessary. To determine the scope of the retrial, the Court must next address the
likely reason for the jury’s excessive award.
b. The Estate’s closing argument likely inflamed the jury and caused it to
return a verdict based upon passion or prejudice.
The Estate’s closing argument raises two separate issues. As previously
discussed, AmGuard’s failure to object to it at trial bars the direct relief it seeks.
Rather, a new trial is necessary because of the grossly excessive verdict that was
against the great weight of the evidence. AmGuard’s arguments regarding the
Estate’s inflammatory closing argument remain relevant, however, for another
aspect of the Court’s analysis: the scope of the new trial.
With regard to the Estate’s closing argument, punitive damages were at issue.
In a case involving punitive damages, greater latitude in argument is appropriate.
Such argument may include a request to “send a message,” and to punish a defendant
92
Jardel, 523 A.2d at 527.
93
Haslip, 499 U.S. at 22.
23
significantly enough to deter future conduct. There also may be more of an appeal
to “the conscience of the community” than would be appropriate, for instance, in a
negligence case. The Court is mindful of that reality.
There was no evidence presented at trial, however, that justified shouting
during summation that AmGuard’s employees were “filth” or that AmGuard was
seeking to treat the jurors as though they were “bumbling fools.”94 Nor did
AmGuard’s financial condition warrant the Estate’s argument that “[AmGuard]
lights their cigars with [the amount of] money [at issue here].”95
Furthermore, the Estate’s counsel sought to invoke the conscience of the
community in an inappropriate manner by telling the jury that he was not going to
personally thank them during his closing. Rather, he told them he would wait until
he learned of their verdict to do so.96 He also urged them to have the moral courage
to return a large verdict and be “a great jury for the people you love, for your
neighbors, for your friends, and for your community.”97 He further argued to the
jury that they were surrounded by powerful, rich corporations, and that they would
have more power when rendering their verdict than they would ever have again in
their lives. Finally, he implored the jury, while crying, to return a large award and
to “have faith and faith shall be given.”98
While AmGuard’s choice to not object gives it no direct remedy for these
closing remarks in a civil case, in totality, they likely inflamed the jury. There was
no evidence presented at trial to justify so large of an award. After searching the
trial record, the Court finds that the Estate’s arguments were not based upon the
94
Trial Transcript, Vol. E, at E16:15.
95
Id. at E46:23–E47:1.
96
Id. at E4:21–6:3.
97
Id. at E46:20–22.
98
Id. at E103:11.
24
evidence and inflamed the jury. Accordingly, after considering these arguments in
their aggregate, the jury likely based its verdict upon passion or prejudice.
c. Because the jury likely based its verdict upon passion or prejudice, a
retrial of the issues of liability and damages is necessary.
Rule 59(a) permits the Court to grant a retrial “as to all or any of . . . the issues
in an action.” AmGuard argues for remittitur, which by definition involves, as an
alternative, a retrial regarding the issue of damages only. At least one Delaware
Superior Court decision held that verdicts induced by passion or prejudice warrant
remittitur.99 The better view, however, is one that conditions remittitur upon the
Court’s confidence that the jury fairly considered the issue of liability. 100
Wright
& Miller’s analysis of Federal Rule of Civil Procedure 59 provides that:
[o]ne limitation on the use of remittitur remains. It is not proper to use
it if the verdict was the result of passion and prejudice, since prejudice
may have infected the decision of the jury on liability, as well as on
damages. In those instances a complete new trial is required.101
Multiple federal authorities persuasively track this analysis. They distinguish the
reasons for granting a new trial and recognize that if the reason was likely the jury’s
passion or prejudice, a court must assume that such motivation infected the jury’s
99
See Barba, 2015 WL 6336151, at *9 (observing incorrectly that remittitur is required only when
the award of damages is so excessive that it must have been based on passion, prejudice or
misconduct, rather than an objective consideration of the evidence presented at trial).
100
See Burns v. Delaware Coca-Cola Bottling Co., 224 A.2d 255, 259 (Del. Super. Nov. 10, 1966)
(explaining an entirely new trial was not warranted as to liability and damages because “[t]he
issues in the case were distinct and the jury was instructed clearly to consider damages only after
it was determined that the plaintiff was entitled to recover. The whole thrust of the defendant’s
case was on the liability question and there is no reason to believe that the defendant did not receive
a fair hearing as to that question. Rule 59, which permits partial new trials, was intended to prevent
the retrial of any issue already properly decided and to limit any new trial only to those issues
which were incorrectly decided”).
101
11 Charles Alan Wright et al., Federal Practice and Procedure § 2815.
25
finding regarding liability.102 This principle is consistent with Delaware case law’s
“inexorably intertwined” standard for determining which issues should be retried.
Namely, Delaware law requires courts to consider whether previously tried claims
are so inexorably intertwined that all—and not part—of the claims should be
retried.103
Because the jury’s verdict likely resulted from passion or prejudice caused by
the Estate’s summation, it likely impacted the jury’s liability finding. As a result,
the Court cannot make the required finding that the issues of liability and damages
were distinctly considered. Under these circumstances, they were inexorably
intertwined and a new trial limited to damages only would be improper.
IV. CONCLUSION
Because AmGuard failed to renew its motion for judgment as a matter of law
at the close of all the evidence, it is precluded under Superior Court Civil Rule 50(b)
from renewing that motion now. As a result, its Motion for Judgment as a Matter of
Law must be DENIED. However, because the punitive damages award shocks the
Court’s conscience, AmGuard’s Motion for a New Trial must be GRANTED.
Furthermore, because the Estate’s closing argument likely prejudiced the jury’s
102
See Thorne v. Welk Inv., Inc., 197 F.3d 1205, 1210 (8th Cir. 1999) (finding that “[w]hen a
punitive damage award is the result of passion and prejudice, a new trial is usually required and
remittitur is an inappropriate remedy . . . Remittitur is often inadequate in this situation because
the passion and prejudice may have affected the jury’s decision on the question of liability, as well
as damages”); Malandris v. Merrill Lynch, Pierce, Feener & Smith Inc., 703 F.2d 1152, 1168 (10th
Cir. 1981) (explaining that where “the court determines that the jury’s verdict was the result of
passion or prejudice, . . . the court must unconditionally order a new trial and cannot give the
plaintiff the option to accept a lesser amount”).
103
See Amisial v. Scott, 2018 WL 3409915, at *2 (Del. Super. July 12, 2018) (explaining that
Delaware case law repeatedly references an “inexorably intertwined” standard for determining
whether part or all of the previously tried issues should be retried); Parisi v. State Farm Mut. Auto.
Ins. Co., 2010 WL 4139289, at *2 (Del. Super. Oct. 18, 2010) (requiring both the derivative and
primary claims of a case to be retried); Smith v. Lawson, 2006 WL 258310, at *8 (Del. Super. Jan.
23, 2006) (granting a new trial only as to damages where there was no showing that liability was
“inexorably intertwined” with damages).
26
liability determination in addition to its damages award, remittitur is inappropriate.
The scope of the new trial will include liability and damages.
IT IS SO ORDERED.
/s/Jeffrey J Clark
Judge
JJC:jb
Via File & Serve Xpress
27