Case Title: Smith v. States General Life Ins. Co.

Citation: 592 So. 2d 1021

Docket Number: 1901511, 1901888

State: alabama

Court: Alabama Supreme Court

Date: 1992-01-17T00:00:00Z

Document:
592 So. 2d 1021 (1992)
Martin B. SMITH
v.
STATES GENERAL LIFE INSURANCE COMPANY, et al.
Ex parte Martin B. SMITH.
(In re Martin B. SMITH v. STATES GENERAL LIFE INSURANCE COMPANY, et al.)
1901511, 1901888.

Supreme Court of Alabama.
January 17, 1992.
*1022 Fred W. Killion, Jr. and William M. Watts III of Reams, Philips, Killion, Brooks, Schell, Gaston & Hudson, P.C., Mobile, for appellant.
Thomas M. Galloway, Jr. of Collins, Galloway & Smith, Mobile, for appellees.
Shirley M. Justice and Steven L. Nicholas of Sirote & Permutt, P.C., Mobile, for intervenor American Heart Ass'n, Alabama Affiliate, Inc.
PER CURIAM.
This appeal presents a question of first impression regarding whether a trial court has the authority to allocate a portion of a punitive damages award to an entity other than the plaintiff. It also presents the question whether the trial court erred in setting punitive damages at the full amount assessed by the jury.
In this case, a jury awarded Martin B. Smith $600 in compensatory damages and $250,000 in punitive damages against Freddie White, The Barton Agency, and States General Life Insurance Company. The trial court denied the defendants' motions for a J.N.O.V. or, in the alternative, a new trial, and, relying on Justice Shores's special concurrence in Fuller v. Preferred Risk Life Ins. Co., 577 So. 2d 878 (Ala. 1991), allocated one-half ($125,000) of the punitive damages award to the Alabama affiliate of the American Heart Association. In its order denying the defendants' post-trial motions, the trial court reviewed the factors set forth in Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), and explained its reasons for giving the American Heart Association one-half of the punitive damages award. We consider it appropriate, due to the anomalous nature of this case, to set forth that order in its entirety:
We begin by noting that the record shows no evidence that the jury's verdict was prompted by any improper motive, such as bias, passion, prejudice, or corruption, or that the award of punitive damages deprived the defendants of their property without due process of law. Thus, the trial court's judgment is affirmed insofar as it awards the $250,000 in punitive damages assessed by the jury. Our focus, therefore, narrows to whether the allocation of half of that punitive damages award to an entity other than the plaintiff was appropriate. While Justice Shores, in her special concurrence in Fuller v. Preferred Risk Life Ins. Co., supra (Houston and Steagall, JJ., concurring in Justice Shores's separate opinion), advocated allowing the judiciary to make such an allocation, the majority in Fuller stated:
577 So. 2d  at 884. The United States Supreme Court stated in Barry v. Edmunds, 116 U.S. 550, 565, 6 S. Ct. 501, 509, 29 L. Ed. 729 (1886), that "nothing is better settled than that, in such cases as the present [trespass], and other actions for torts where no precise rule of law fixes the recoverable damages, it is the peculiar function of the jury to determine the amount by their verdict."
The amount of punitive damages awarded may be remitted or a new trial granted only upon a finding that the verdict is flawed. See Hammond v. City of Gadsden, 493 So. 2d  at 1376. Here, there was no such finding. The trial court entered a judgment on the jury's verdict and specifically held that it was not flawed; in essence, viewed from the plaintiff's perspective, the trial court's judgment effected a remittitur. Absent a finding that the verdict was constitutionally infirm, the trial court lacked the authority to reduce Smith's punitive damages award. That portion of the trial court's judgment awarding half of the punitive damages to an entity other than the plaintiff is, therefore, reversed.
Because of our disposition of the appeal, we consider the issues raised by the alternative petition for the writ of mandamus to be moot.
1901511AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
1901888DISMISSED AS MOOT.
HORNSBY, C.J., and MADDOX, ADAMS and INGRAM, JJ., concur.
ALMON, J., concurs in the result.
SHORES, HOUSTON and STEAGALL, JJ., concur in part and dissent in part.
SHORES, Justice (concurring in part and dissenting in part).
I agree with the position taken by Justice Steagall. I would not hold that portions of punitive damages awards not going to the plaintiff may be paid only into the State's general fund, although I agree with Justice Steagall that such an allocation is appropriate in this case. I have recently stated[2] my opinion that courts have the inherent authority to allocate punitive damages awards and that such authority is not limited to an allocation to the general fund. I quote from the paper in which those views appear:
STEAGALL, Justice (concurring in part and dissenting in part).
I concur in the opinion insofar as it affirms the award of $250,000 in punitive damages. I dissent, however, as to that portion of the opinion stating that a court cannot allocate a portion of a punitive damages award to an entity other than the plaintiff.
I joined in Justice Shores's special concurrence in Fuller v. Preferred Risk Life Ins. Co., 577 So. 2d 878 (Ala.1991), because *1029 I agree that the trial court has the authority to allocate a portion of a punitive damages award to an entity other than the plaintiff. In this case, however, I think that public policy considerations would be best served by allocating to the State's general fund any portion of the punitive damages award not allocated to the plaintiff.
HOUSTON, J., concurs.
[1]  See Ridout's-Brown Service, Inc. v. Holloway, 397 So. 2d 125, 127-28 (Ala.1981) (Jones, J., concurring).
[2]  Justice Janie L. Shores, "A Suggestion for Limited Tort Reform: Allocation of Punitive Damage Awards to Eliminate Windfalls" (1992) (unpublished LL.M. thesis, University of Virginia School of Law).
[3]  "Many law and economics scholars believe that efficient solutions to legal problems are generated by the courts, not by the legislature. See, e.g., R. Posner, Economic Analysis of Law, 404 (1977) (`Although the correlation is far from perfect, judge-made rules tend to be efficiency promoting while those made by legislatures tend to be efficiency reducing')."
[4]  "Eisenberg & Yeazell, The Ordinary and the Extraordinary in Institutional Litigation, 93 Harv.L.Rev. 465 (1980)."
[5]  "Chayes, The Role of the Judge in Public Law Litigation, 89 Harv.L.Rev. 1281 (1976)."
[6]  "E.g. Allstate Ins. Co. v. A.M. Pugh Assoc., Inc., 604 F. Supp. 85 (M.D.Pa.1984); Hanover Ins. Co. v. Hayward, 464 A.2d 156 (Me.1983)."
[7]  "Board of Regents v. Roth, 408 U.S. 564 [92 S. Ct. 2701, 33 L. Ed. 2d 548] (1972)."
[8]  "Erhardt v. Leonard, 104 Idaho 197, 657 P.2d 494 (1983)."
[9]  "Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986); Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989); approved as constitutional, Pacific Mutual Life Insurance Co. v. Haslip, ___ U.S. ___, 111 S. Ct. 1032 [113 L. Ed. 2d 1] (1991)."
[10]  "Haddock, McChesney & Spiegel, An Ordinary Economic Rationale for Extraordinary Legal Sanction, 78 Calif.L.Rev. 1, (1990)."
[11]  "Green Oil Co. v. Hornsby, id."
[12]  "Miller v. Cudahy Co., 592 F. Supp. 976 (D.C.Kan.1985). The U.S. Court of Appeals for the 10th Circuit upheld the punitive award in Miller v. Cudahy Co., 858 F.2d 1449 (10th Cir. 1988), cert. denied, Cudahy Co. v. Miller, [492] U.S. [926], 109 S. Ct. 3265 [106 L. Ed. 2d 610] (1989)."