Opinion ID: 1244024
Heading Depth: 4
Heading Rank: 2

Heading: Punitive Damages Prima Facie Case

Text: Punitive damages are recoverable in insurance bad faith tort actions only if the insured acted with an evil mind in breaching the implied covenant of good faith and fair dealing. Rawlings, 151 Ariz. at 162-63, 726 P.2d at 578-79. The requisite evil mind is found if the insurer intended to injure the insured or consciously pursued a course of conduct knowing that it created a substantial risk of significant harm to the insured. Id. at 162, 726 P.2d at 578. In addition, the requisite evil mind may be inferred if the insured's conduct is sufficiently oppressive, outrageous or intolerable. Id. at 162-63, 726 P.2d at 578-79. To recover punitive damages, the plaintiff must also introduce sufficient evidence to allow the trier-of-fact to calculate a punitive damage award that is reasonable under the circumstances. E.g., Nielson v. Flashberg, 101 Ariz. 335, 341, 419 P.2d 514, 520 (1966). Although a precise laundry list of relevant evidence is impossible, evidence is properly considered by the trier-of-fact in assessing punitive damages if it bears upon the purpose and function of punitive damages. The purpose of punitive damages is not to compensate the plaintiff, but to express society's disapproval of outrageous conduct and to deter such conduct by the defendant and others in the future. See, e.g., Nielson v. Flashberg, 101 Ariz. at 341, 419 P.2d at 520; Acheson v. Shafter, 107 Ariz. 576, 578, 490 P.2d 832, 834 (1971). One category of relevant evidence is the defendant's financial position. See, e.g., Acheson v. Shafter, 107 Ariz. at 578, 490 P.2d at 834 (wealth or financial status of defendant relevant to allow jury to impose an appropriate punishment); Nielson v. Flashberg, 101 Ariz. at 341, 419 P.2d at 520. Obviously, the goals of punishment and deterrence would be circumvented if the financial position of the defendant allowed it to comfortably absorb the award. Another category of relevant evidence is the nature of the defendant's conduct, including the reprehensibility of the conduct and the severity of the harm likely to result, as well as the harm that has occurred, from the defendant's conduct. See Mallor & Roberts, Punitive Damages: Toward a Principled Approach, 31 Hastings L.J. 639, 667 (1980); [7] Owen, Punitive Damages in Products Liability Litigation, 74 Mich.L.Rev. 1257 (1976). The more reprehensible the act and the more severe the resulting harm, the greater the award of punitive damages that is reasonable under the circumstances. The duration of the misconduct, the degree of defendant's awareness of the harm or risk of harm, and any concealment of it are elements to consider in judging the reprehensibility of the defendant's conduct. See Neal v. Farmers Ins. Exchange, 21 Cal.3d 910, 927, 582 P.2d 980, 990, 148 Cal. Rptr. 389, 399 (1978); Chodos v. Ins. Co. of North America, 126 Cal. App.3d 86, 104, 178 Cal. Rptr. 831, 841 (1981); State ex rel. Young v. Crookham, 290 Or. 61, 71, 618 P.2d 1268, 1274 (1980). A third relevant consideration is the profitability of the defendant's conduct. See Cox v. Stolworthy, 94 Idaho 683, 691, 496 P.2d 682, 690 (1972); Wangen v. Ford Motor Co., 97 Wis.2d 260, 304, 294 N.W.2d 437, 460 (1980); Mallor & Roberts, supra, at 667-68. A punitive damage award that disgorges ill-gotten profits serves to deter future similar conduct by eliminating any profit incentive. These factors are presented only as guidelines to the character of evidence that is relevant to assessing punitive damages and should be viewed as neither exhaustive nor exclusive. [8] Furthermore, it is well settled that not all relevant evidence is admissible and whether such evidence is admissible in a particular case depends upon the circumstances of that case. See Rules 402-411. Thus, to establish a prima facie case for the recovery of punitive damages, Hawkins had to prove that an evil mind  either a desire to harm or conscious disregard of the Hawkins' right to a fair valuation of their property loss  motivated Allstate's bad faith conduct. To recover punitive damages Hawkins also had to establish a factual basis from which the jury could assess a sum of punitive damages that would accomplish the goals of punishment and deterrence.