Talbert v. Farmers Ins. Exchange

LANDAU, J.

Plaintiff appeals a judgment in his favor for fraud. He assigns error to the trial court’s allowance of defendants’ motion for a directed verdict as to his prayer for punitive damages. Defendants move to dismiss the appeal on the ground that plaintiff already has executed a satisfaction of judgment on the fraud claim and therefore is precluded from putting that judgment at risk in this appeal. Defendants also cross-appeal, arguing that the trial court should have granted a directed verdict on the fraud claim. We dismiss the appeal and affirm on the cross-appeal.

The facts relevant to the disposition of the case are not in dispute. Plaintiff was an insurance agent who worked for defendants in Bend. He initiated this action for fraud against defendants, alleging that defendants induced him to give up his lucrative agency in Bend and to move to Madras by means of false representations concerning the manner in which his compensation would be calculated. He included in his complaint a prayer for punitive damages. At trial, however, the court allowed a motion for a directed verdict as to the prayer for punitive damages. In its instructions to the jury on the fraud claim, the trial court informed the jury that either reckless or intentional fraud would suffice. The jury returned a general verdict for plaintiff, which did not specify defendants’ level of fault.

Plaintiff appeals, assigning error to the trial court’s dismissal of the prayer for punitive damages. While the appeal was pending, defendants paid plaintiffs fraud damages, and plaintiff executed a satisfaction of judgment on the fraud claim. Defendants now move to dismiss the appeal on the ground that plaintiff can obtain no relief on appeal, because plaintiffs only remedy is a retrial, and that remedy is precluded by his acceptance of the benefits of the judgment. Plaintiff argues that his acceptance of the benefits of the fraud judgment is irrelevant, because he is entitled to a new trial on punitive damages alone. According to plaintiff, as long as the evidence was sufficient to support a fraud verdict on any ground, it is appropriate to remand for a new trial on punitive damages alone. Defendants rejoin that whether a new trial on punitive damages alone is permissible depends on the nature of the jury’s verdict on the underlying claim of fraud. In this case, they argue, a retrial on punitive damages alone is not appropriate because it cannot be determined that the jury verdict on the fraud claim was of the sort that would support punitive damages. In view of the potential for inconsistent verdicts, defendants conclude, the only appropriate remedy would be a retrial on the case as a whole, a remedy that is no longer available to plaintiff.

As a general rule, prejudicial trial court error requires a remand for a retrial on all factual issues. As the Supreme Court explained in Maxwell v. Port. Terminal RR. Co., 253 Or 573, 577, 456 P2d 484 (1969):

“[E]vidence of fault can influence the jury’s measurement of damages; and the kind and degree of injuries may influence some jurors in their evaluation of the evidence on liability. Whatever logical problems these elements of lawyer folklore may suggest, we believe that neither side in this type of case should be encouraged to manipulate errors in one trial to gain tactical advantage in a new trial before a new jury. Accordingly, we hold that the new trial in a personal-injury case ordinarily should be a new trial on all contested factual issues, regardless of the ability of the parties on appeal to pinpoint error so as to show that the error, if any, may have affected only one issue. There will, of course, be exceptional cases in which the trial court, in the exercise of judicial discretion, properly will limit the issues for a new trial. But the standard to be applied in the exercise of this discretion is reasonable certainty that the issue or issues to be eliminated from the second trial are no longer viable issues in the case and that their removal will not prejudice the right of either party to the kind of jury trial to which he would have been entitled but for the error or errors necessitating the new trial.”

(Citation omitted.) The court referred to “two party personal injury cases,” in Maxwell. But its general rule has been invoked in other tort cases, as well. See, e.g., Wolf v. Nordstrom, 291 Or 828, 836, 637 P2d 1280 (1981). Thus, under Maxwell, the question is whether, in light of the underpinnings of the general rule, this is an exceptional case.

We conclude that this is not an exceptional case. Remanding this case for a retrial on punitive damages alone creates the potential for inconsistent verdicts. From the manner in which the jury was instructed, and from the fact that the jury returned only a general verdict, it is entirely possible that it could have determined that defendants engaged in reckless conduct only. Were that the case, it would be inappropriate — indeed, it would be error — to permit a jury to award punitive damages. See, e.g., Donald H. Hartvig, Inc. v. Clackamas Town Center, 101 Or App 79, 84, 789 P2d 679, rev den 310 Or 393 (1990).

Plaintiff insists that Maxwell simply is no longer good law. According to plaintiff, subsequent cases identifying various exceptions to the general rule described in Maxwell effectively have swallowed the rule. In particular, plaintiff relies on four decisions: Weiss v. Northwest Accept. Corp., 274 Or 343, 546 P2d 1065 (1976); Wolf, 291 Or at 836; McGregor v. Barton Sand & Gravel, Inc., 62 Or App 24, 660 P2d 175 (1983); and Wells v. Marleau, 79 Or App 784,720 P2d 409, rev den 302 Or 159 (1986). Plaintiff, however, reads too much into those cases. To begin with, Maxwell has never been overruled; to the contrary, it continues to be cited as stating the general rule. See, e.g., Baker v. English, 324 Or 585, 589 n 5, 932 P2d 57 (1997). Moreover, in none of the decisions on which plaintiff relies did a remand on the issue of punitive damages create the potential for inconsistent verdicts, as it would in this case.

Weiss, for example, was decided before the Supreme Court first held that reckless conduct alone cannot support an award of punitive damages. 274 Or at 352. In Wolf, the Supreme Court held that the trial court erred in instructing the jury on punitive damages and remanded for retrial on punitive damages alone. 291 Or at 836. There was no question whether the underlying tort of false imprisonment was sufficient to support a punitive damages verdict — the tort requires intentional conduct. Hiber v. Creditors Collection Service, 154 Or App 408, 413, 961 P2d 898, rev den 327 Or 621 (1998). Thus, the decision is plainly distinguishable.

McGregor presented the same situation. This court found that the jury had been erroneously instructed on the issue of punitive damages, and there was no question whether the underlying claims — trespass and ultrahazardous activity — were sufficient to support a punitive damages award. 62 Or App at 28. In Wells, this court similarly concluded that the trial court erred in removing from the jury’s consideration a request for punitive damages claim arising out of a claim of intentional fraud. In both cases, this court remanded for a retrial on punitive damages alone. In both cases, there was no risk of inconsistent verdicts.

We therefore reject plaintiffs contention that Maxwell is no longer good law and that the potential for inconsistent verdicts poses no impediment to remanding this case for a retrial on the issue of punitive damages alone.

The dissent suggests a slightly different approach. It acknowledges that a retrial on the entire case is precluded by plaintiffs execution of a satisfaction of judgment. It also acknowledges the possibility of inconsistent verdicts in the event of a remand on punitive damages only. Winding its way between the Scylla and Charybdis of those twin difficulties, the dissent suggests that we should simply remand with special instructions first to determine whether the fraud that defendants committed was intentional and only if so to determine also whether to award punitive damages.

We do not gainsay our authority to do as the dissent suggests. See, e.g., State v. Boots, 315 Or 572, 848 P2d 76 (1993) (authorizing retrial to determine limited issue of whether aggravating elements had been proven). We do question the wisdom of doing so. Such a remand, in effect, would give plaintiff two bites at the proverbial apple. As we have noted, the jury could well have determined that defendants engaged in merely reckless conduct. The dissent’s remedy would give plaintiff one more chance to prove that defendants’ conduct was not merely reckless, but intentional — and without putting the fraud verdict itself at risk. That strikes us as precisely the sort of tactical advantage that the court in Maxwell cautioned against.

The dissent insists that, despite that consequence, it is the “only just result,” because to do otherwise is to “punish” plaintiff for the trial court’s error. According to the dissent, it is defendants’ failure to ask for a special verdict form that created the possibility of inconsistent verdicts: “[H]ad defendants then raised,” the dissent complains, “the concern that the jury instructions did not ask the jury to specify intentional versus reckless fraud, the trial court could have remedied that ambiguity by submitting a jury instruction requesting such specification.” 166 Or App at 609. We respectfully disagree.

Defendants moved for, and obtained, a directed verdict on the punitive damages claim at the close of plaintiffs case. That means that, by the time the fraud claim was submitted to the jury, plaintiff already had lost the punitive damages claim. By the time the jury was instructed on the fraud claim, therefore, defendants had no interest in insuring that the jury’s verdict specified intentional, as opposed to merely reckless, fraud. Because punitive damages were already out of the case, it no longer mattered to them. It mattered very much to plaintiff, or at least it should have. Plaintiff would have been in the position of having to create a record demonstrating error and prejudice for an appeal of the trial court’s decision on the punitive damages claim. Thus, it was incumbent upon plaintiff — not defendants — to get the jury to specify whether its verdict was based on intentional fraud, so that very problem could be avoided. See generally Building Structures, Inc. v. Young, 328 Or 100, 110, 968 P2d 1287 (1998) (appellant waived objection to defective verdict by failing to object when jury was still present and trial court could have cured the defect).

We therefore conclude that it would be inappropriate to provide plaintiff with the opportunity to retry his case at no risk. Assuming for the sake of argument that the trial court erred in allowing the directed verdict motion on the prayer for punitive damages, the only appropriate remedy would be to retry the entire case. That remedy is not available to plaintiff in this case, because he already has received the benefit of the judgment in the underlying claim. When an appellant accepts the benefits of the very judgment he puts at risk by appealing, the remedy is dismissal of the appeal. Schlect v. Bliss, 271 Or 304, 309, 532 P2d 1 (1975); Mask and Mask, 143 Or App 377, 380, 923 P2d 1304 (1996).

There remains defendants’ cross-appeal. Defendants argue that the trial court erred in failing to enter a directed verdict on the fraud claim. We may reverse the denial of a directed verdict motion only if there is a complete absence of proof on one or more elements of a plaintiffs claim. Rock v. Francis, 133 Or App 80, 84, 889 P2d 1337 (1995). After carefully reviewing the record at trial, we cannot say that there is such a complete absence of evidence on any of the elements of plaintiffs fraud claim.

Appeal dismissed; affirmed on cross-appeal.