Case Title: United Ins. Co. v. Murphy

Citation: 

Docket Number: 

State: arkansas

Court: Arkansas Supreme Court

Date: 1998-02-12T00:00:00Z

Document:
UNITED INSURANCE COMPANY OF AMERICA and 
Mark Burcham v. Ann MURPHY

97-234                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 12, 1998


1.   Torts -- defamation -- presumed damages -- genesis of doctrine. -- Under
     the common law, defamation per se encompassed false statements
     that the plaintiff was guilty of a crime, afflicted with a
     loathsome disease, as well as false statements prejudicing the
     plaintiff's ability to engage in his or her profession; in
     such cases, the plaintiff could recover compensatory damages
     without proof of actual damage to reputation; damages were
     presumed from the nature of the defamation, as defamatory
     statements per se were considered injurious and sufficient to
     support an award of special damages; where the statements were
     not actionable as defamation per se, the tort was considered
     defamation per quod and required a showing of special damages.

2.   Torts -- defamation -- presumed damages -- historical modification of
     doctrine. -- The United States Supreme Court has held that, in
     cases involving media defendants, recovery of presumed or
     punitive damages would not be allowed absent a showing of
     knowledge of falsity or reckless disregard of the truth on the
     part of the publisher; absent malice, a private plaintiff was
     limited to recovering damages for actual injury, which
     included impairment of reputation and standing in the
     community, personal humiliation, and mental anguish and
     suffering; in a case involving a private plaintiff and a media
     defendant, the Arkansas Supreme Court adopted the requirement
     that, to recover damages in a defamation case, a private
     plaintiff must prove reputational injury; subsequently, the
     United States Supreme Court held that permitting recovery of
     presumed and punitive damages absent a showing of "actual
     malice" would not violate the First Amendment when the
     defamatory statements did not involve matters of public
     concern.

3.   Torts -- defamation -- presumed damages -- inequities created by doctrine.
     -- By allowing presumed damages for certain words that fit
     within the per se categories but precluding actual damages for
     other words without additional proof of damages, the common-
     law presumed-damages rule creates unjustifiable inequities for
     plaintiffs and defendants alike.

4.   Torts -- defamation -- presumed damages -- doctrine abolished --
     reputational injury must be proved in all cases. -- Prospectively
     abolishing the doctrine of presumed damages, the supreme court
     held that a plaintiff in a defamation case must prove
     reputational injury in order to recover damages and overruled
     all prior inconsistent decisions.

5.   Damages -- review of alleged excessive award. -- When an award of
     damages is alleged on appeal to be excessive, the supreme
     court reviews the proof and all reasonable inferences most
     favorably to the appellee and determines whether the verdict
     is so great as to shock its conscience or to demonstrate
     passion or prejudice on the part of the jury.

6.   Damages -- remittitur -- when appropriate. -- Remittitur is
     appropriate when the compensatory damages awarded cannot be
     sustained by the evidence.

7.   Damages -- remittitur appropriate -- compensatory-damages award could not
     be sustained by evidence. -- The supreme court agreed with the
     trial court that, while appellee's evidence of actual damages
     supported an award of $600,000, the jury's award of $3,000,000
     in compensatory damages could not be sustained by the
     evidence.  

8.   Damages -- punitive damages -- review of award. -- When reviewing such
     an award of punitive damages, the supreme court considers the
     extent and enormity of the wrong, the intent of the party
     committing the wrong, all the circumstances, and the financial
     and social condition and standing of the erring party.  

9.   Damages -- punitive damages -- purpose of. -- Punitive damages are to
     be a penalty for conduct that is malicious or done with the
     deliberate intent to injure another.
10.  Damages -- punitive damages -- appellants' acts done with deliberate intent
     to injure appellee -- award did not shock conscience. -- Where, in
     light of the evidence, the jury could have concluded that
     appellants displayed a conscious indifference for appellee and
     that their acts were done with the deliberate intent to injure
     her, the supreme court concluded that the amount of punitive
     damages did not shock its conscience.

11.  Appeal & error -- constitutional argument not made below -- waived on
     appeal. -- Where appellants' constitutional argument that their
     due process rights were violated because they did not receive
     fair notice that they could be subject to such a severe
     penalty was not made at trial, it was waived on appeal.

12.  Appeal & error -- failure to proffer instruction precludes review. --
     Appellants' failure to proffer or to abstract an instruction
     containing what they saw as a correct statement of the law on
     the proper burden of proof on the issue of falsity precluded
     the supreme court from considering the argument on appeal.

13.  Evidence -- hearsay argument rejected -- statement offered to prove fact
     that it was said. -- The supreme court declined to overrule a
     decision in which a hearsay argument was rejected on the basis
     that the statement in question was offered not to prove the
     truth of what was said but to prove the fact that it was said.

     Appeal from Crittenden Circuit Court; John Fogleman, Judge;
affirmed.
     Butler, Hicky & Long, by: Fletcher Long, Jr.; and Williams &
Anderson, by: Leon Holmes and Jeanne L. Seewald, for appellants.
     Daggett, Van Dover, Donovan & Perry, PLLC, by: Jesse B.
Daggett, Joe R. Perry, and J. Shane Baker, for appellee.

     W.H. "Dub" Arnold, Chief Justice.
     This is a defamation case.  The appellants, United Insurance
Company of America and Mark Burcham, appeal a judgment of the
Crittenden County Circuit Court imposing an award of $600,000 in
compensatory damages and $2,000,000 in punitive damages to appellee
Ann Murphy for her slander claim.  On appeal, the appellants
contend that the trial court erred in instructing the jury that
damages could be presumed and that they had the burden of proving
that the alleged defamatory statements were true.  They further
maintain that the damage award is excessive and that the trial
court improperly allowed hearsay evidence at trial.  The appellee
cross-appeals the trial courtþs remittitur of the juryþs award of
$3,000,000 in compensatory damages.   While we are persuaded by
appellantsþ argument that the doctrine of presumed damages should
be abolished, we conclude that fairness dictates a prospective
application of our holding.   We find no merit in the partiesþ
remaining arguments and affirm the trial courtþs judgment.      
     The appellee was employed by United as a sales representative
in home solicitation sales. As an insurance agent, she sold and
collected premiums for debit insurance to Arkansas customers in
Lee, St. Francis, and Woodruff Counties.  From October 1991 until
her termination from the company on January 12, 1992, she was under
the supervision of Burcham.  In early 1992, Burcham began handling
her accounts.  During this time, he allegedly made defamatory
statements to customers that appellee had stolen their premium
payments.
     The appellee filed a defamation complaint against the
appellants seeking both compensatory and punitive damages for
Burchamþs statements.   At trial, she offered her testimony along
with testimony of her former customers. At the close of appelleeþs
case in chief, the trial court directed a verdict on special
damages.  The case was submitted to the jury on a claim of slander
per se with an instruction that placed the burden on the appellants
to prove that the alleged slanderous statements were true.  The
trial court further instructed the jury that damages could be
presumed in a slander per se action.  The jury returned a verdict
for the appellee, awarding $3,000,000 in compensatory damages and
$2,000,000 in punitive damages, and the trial court entered a
judgment accordingly.  Thereafter, appellants filed a motion for
judgment notwithstanding the verdict, or, alternatively, for new
trial or remittitur.  Following a hearing, the trial court entered
an order remitting the compensatory damages award to $600,000, but
denying appellantsþ remaining motions. 

1. Presumed damages
     One of the appellantsþ primary contentions on appeal is that
the trial court erred in instructing the jury with regard to
presumed damages.  The instruction at issue provided as follows:
               However, you are instructed that there is a
          concept that the law calls slander per se.  In such
          cases, a person slandered is entitled to compensatory
          damages as a matter of law, and such plaintiff is not
          required to introduce evidence of actual damages in
          order to recover compensatory damages.  Therefore, if
          you find that Mark Burcham falsely accused Ann Murphy
          with being involved in criminal activity or which
          injured Ann Murphy in her trade, business, or
          profession, then Ann Murphy is not required to
          introduce evidence of actual damages in order to
          recover compensatory damages.  

Specifically, the appellants ask that we follow the course of
several other jurisdictions and abolish the doctrine of presumed
damages in defamation cases.  See e.g., Taylor v. Chapman,