Brown v. Maxey

STEINMETZ, J.

(dissenting). Even though the complaint states Louis Maxey’s conduct in failing to provide a safe place constituted outrageous conduct, the verdict asked whether Maxey was negligent and whether his negligence was causal. The jury answered both questions “yes.” Question seven asked whether Maxey ratified, authorized or approved the acts and the failure to act of the employees of Apollo Village which the jury found to be negligence in its answer to question one. The jury answered that question “yes” also. Then, without a verdict tie-up between a finding of wanton and malicious behavior of Maxey or his agents, the jury was taken to verdict question eight where it was asked what sum of money the jury set as punitive damages and the jury answered “200,000.”

The majority gives an unsatisfactory explanation in order to affirm this defective verdict. The court does no more than speculate as to what the jury’s answers would have been to unasked questions regarding wanton and malicious conduct. The theory in the case was a strong negligence issue and the verdict never converted to anything different except to ask the punitive damage question. That is not enough to infer the jury’s answers to unasked questions.

The court states at p. 433 of the opinion: “Punitive damages may be awarded if the plaintiff proves by clear and convincing evidence that the defendant’s conduct was willful or wanton, in a reckless disregard of rights or interests. Wangen, 97 Wis. 2d at 300.” The jury was not asked whether it was proven that the defendant’s conduct was willful or wanton except by implication of the punitive damage question. There is no way of knowing whether this jury applied the clear and convincing evidence burden to questions not asked on the verdict as to Maxey’s conduct. The court may not use its judgment of the evidence to answer questions not asked of the jury.

The proof necessary for willful or wanton conduct in reckless disregard of others’ rights or interests is by clear and convincing evidence. This jury was instructed the proof as to negligence was a preponderance of the evidence and that is the standard it applied to questions one and two.

In the citation from Professors Ghiardi and Kircher, Punitive Damages Law and Practice, ch. 5, sec. 5.01 at 8-9 (1984), the quote states: “The first type is that in which the defendant desires to cause the harm sustained by the plaintiff, or believes that the harm is substantially certain to follow his condúct.” (Emphasis added.) That conduct of desire or belief is similar to a knowledgeable attitude and being so callous as to not caring at all if something happens as a result of conduct. The cite continues:

“With the second type of conduct the defendant knows, or should have reason to know, not only that his conduct creates an unreasonable risk of harm, but also that there is a strong probability, although not a substantial certainty, that the harm will result but, nevertheless, he proceeds with his conduct in reckless or conscious disregard of the consequences.” (Emphasis added.)

The cite finishes: “Neither form of conduct, therefore, involves mere inadvertence or what, in the traditional tort sense, would be called ordinary negligence.” The distinction in the forms of conduct described in this article makes it clear that the conduct necessary for punitive damages clearly does not flow from the negligent conduct and therefore direct questions should be asked on the verdict regarding outrageous conduct. For a certainty of knowing what the jury is deciding, the verdict should be stated in terms of wanton, willful, reckless conduct before a punitive damage question is asked.

The dangerous statement intertwining negligence and intentional conduct is at p. 434 of the opinion: “In the case at hand, which involves the underlying cause of action for negligence, it is clear that the plaintiff need not prove the element of intent as a prerequisite to recover punitive damages.” The court then cites Wangen, 97 Wis. 2d at 267, which stands for the principle that more than negligence is required. Wangen stated at 275: “Punitive damages do not rise from negligence. . . . Only where there is proof of malice or willful, wanton, reckless disregard of plaintiff’s rights can punitive damages be considered.” In the next paragraph at 434 of the slip opinion, the court states: “ [W] e focus on the defendant’s knowledge and state of mind at the time of the fire.” That sounds like the conscious, deliberate knowledgeable state of Maxey’s mind is the key and that comes closer to intentional acts than it does of the acts that a reasonable person under the same circumstance would not commit or would be ordinarily negligent. The conduct at least is entitled to be decided by the higher burden of proof and not only by implication.

At p. 437 of the opinion, the court concludes: “[I]t is reasonable to conclude that Maxey proceeded with a reckless and conscious disregard of the grave consequences involved with such conduct.” (Emphasis added.) That conclusion has to be drawn by implication from the punitive damage answer.

Wanton, willful, conscious, reckless conduct is not negligent action. It falls short of being intentional but probably is closer to intentional than negligent action. The courts recognize the distinction by applying the middle burden of proof of “clear and convincing” to find such conduct present. It is not enough to only apply that burden of proof to the damage question.

I would affirm the court of appeals and remand for a new trial so that appropriate preliminary questions are asked on the verdict regarding outrageous conduct before the punitive damage question is asked and answered.

The insurance industry should have been alerted by Cieslewicz v. Mutual Service Cas. Ins. Co., 84 Wis. 2d 91, 95, 267 N.W.2d 595 (1978), to govern its policy language to directly exclude punitive damages from coverage. From page 95 to 101 that case deals with whether the language “legally obligated to pay as damages because of bodily injury” should also apply to punitive damages as well as triple statutory damages. The punitive damage application to the policy language was left open in Cieslewicz. The policy in Cieslewicz also covered damages “caused by an occurrence.” Is it any wonder the argument that punitive damages do not represent payment for an occurrence was not accepted in this case. The insurance industry is advised by the majority opinion here that special policy language can exclude coverage for punitive damages and that appears to be a present statement of public policy by the court.¹ Insurance companies are also advised by the majority opinion that higher premiums can be charged if punitive damages are covered.

I do not understand the rationale of the majority in declaring public policy does not prohibit insurance coverage for willful behavior as long as a premium is collected for it. This appears to me to give license to violent, conscious, wanton, outrageous behavior as long as you can afford to pay for it in advance. The reasoning of the court at p. 447 is unacceptable to me. The court states: “For example, as a consequence of the punitive damage award, defendant Maxey’s insurance premiums may rise, he may find himself unable to obtain insurance coverage, the punitive damage award may exceed coverage, and his reputation in the community may be injured.” None of those negative reasons lends any integrity to declaring that public policy approves of insurance coverage for wanton, willful malicious conduct. All society will now pay higher premiums for persons who come close to intentional reprehensible conduct and those who can afford high premiums for punitive damage coverage can be licensed to avoid what until now has controlled their conduct and that is they can avoid personal financial loss. I do not and cannot join this misguided reasoning as to what public policy allows.

The policy justifications for punitive damages are generally considered to be: punish the wrongdoer and specifically deter him and generally deter others from engaging in similar conduct. See 16 A.L.R. 4th sec. 3. To these policies the majority pays only lip service. There are few things so simple as the real effect which necessarily follows the imposition of the monetary liability of the punitive damages award. It is almost universally accepted that money talks. By tailoring the amount of punitive damages to the relative wealth of the individual, every wrongdoer is more or less equally affected by the sanction. The majority vitiates the primary effect of that award and substitutes it with secondary and reactive consequences claiming no compromise is made. The majority opines the wrongdoer’s insurance premiums may rise, or worse, he may become uninsurable, and lastly, it speculates his reputation may be injured. Until now, courts and society in general have been satisfied that this pocketbook punishment by itself deters the wrongdoer and others from engaging in similar conduct and punishes the wrongdoer with direct financial liability.

I would affirm the court of appeals.

1 At page 447 the court states: “State Farm had the option oí excluding liability for punitive damages. It failed to do so and has presumably collected premiums whch it believed to be sufficient consideration for such coverage.”