Opinion ID: 1131067
Heading Depth: 1
Heading Rank: 4

Heading: sufficiency of the compensatory and punitive damage awards

Text: Defendants raise several points of error concerning the award of both compensatory and punitive damages. We begin by addressing the compensatory damage award. Defendants claim that the jury's findings of conversion and breach of fiduciary duty are unsupported by the evidence and that the $512,098 conversion award is equally unsupported. We note that defendants did not marshal the evidence supporting the jury's verdict on those two counts and instead argued selected evidence favorable to their position. Because of this failure, we reject defendants' attack on the conversion and breach of fiduciary duty findings. [39] Moreover, because both claims were dismissed by the trial court after the fraud verdict was returned, no damages were actually awarded for either claim, and the issue is therefore moot. Next, defendants attack the trial court's determination that plaintiffs are entitled to a reasonable rate of return on money invested to operate the Mausoleum from the time the redemption agreement was signed until the time of trial. [40] Defendants claim that plaintiffs' rate of return evidence was speculative and that no legal basis exists to allow such a recovery in a rescission action. At trial, plaintiffs elected the remedy of rescission. The goal of rescission is to restore the status quo that existed prior to the parties' agreement. [41] The status quo rule is not a technical rule, but rather it is equitable, and requires practicality in adjusting the rights of the parties. How this is to be accomplished, or indeed whether it can, is a matter which is within the discretion of the trial court under the facts as found to exist by the trier of fact. [42] The trial court therefore has discretion to fashion an adequate and reasonable remedy so that an aggrieved party is adequately compensated for its loss, so long as that remedy is not duplicative. [43] Generally, a court will allow recovery for lost profit or other related consequential damages in a fraud action, [44] provided that such damages can be proven with reasonable certainty and are a reasonably foreseeable consequence of the defendant's act. [45] This court has also affirmed a judgment allowing rescission as well as recovery for monetary and punitive damages in a fraud action. [46] Hence, allowing recovery for monetary damages as well as ordering rescission of the agreements were permissible. Moreover, plaintiffs presented uncontroverted expert testimony concerning the rate of return they would have received if the money had been invested elsewhere. The damages were presented with reasonable certainty, were not duplicative, and were reasonably foreseeable in light of defendants' acts. The trial court undoubtedly determined that allowing recovery for a reasonable rate of return on the money used to operate the Mausoleum was necessary to restore the parties to the status quo. We find no abuse of discretion in making such a determination in this case. After the verdict was rendered by the jury, defendants filed a motion for new trial or remittitur under Utah Rule of Civil Procedure 59. That motion was denied. Defendants claim two points of error in the trial court's refusal to grant a new trial or reduce the punitive damage award: (1) Malice was not sufficiently shown, and (2) the award exceeds the proper punitive-to-compensatory-damages ratio. We address each point in turn. The general rule governing the grant of a new trial is that the trial court must find at least one of the seven grounds listed in rule 59 to be met. [47] Moreover, it is well settled that, as a general matter, the trial court has broad discretion to grant or deny a motion for a new trial or for remittitur. [48] In reviewing the trial court's ultimate decision to grant or deny a new trial, we will reverse only if there is no reasonable basis for the decision. [49] Defendants' assertion that there is insufficient evidence of malice [50] to support the punitive damage award is contradicted by the record. First, the jury found intentional fraud. Second, the trial court, in passing on defendants' motion for a new trial, concluded that there was substantial evidence to support the jury's determination that defendants acted with reckless disregard of plaintiffs' rights. Based on the record, we conclude that the trial court reasonably determined that defendants acted with the requisite mental state for an award of punitive damages. Our decision in Crookston also provides guidelines for determining whether the punitive damage award is excessive under Utah Rule of Civil Procedure 59(a)(5). [51] There, we set forth seven factors the fact finder must consider in assessing the amount of punitives to award. [52] We also discussed the general rule governing the acceptable ratio for punitive to actual damages. Where the punitive damages are below $100,000, we have upheld ratios of 3 to 1 punitive to actual damages. [53] However, punitive damage awards that exceed $100,000 are more heavily scrutinized than smaller awards, and the acceptable ratio tends to be lower in these cases. [54] If the award exceeds the ratios set by our past pattern of decision, the trial court does not necessarily have to reduce the award. If such an award is upheld, however, the trial judge must make a detailed and reasoned articulation of the grounds for concluding that the award is not excessive in light of the law and the facts. The judge's articulation should generally be couched in terms of one or more of the seven factors we earlier listed as proper considerations in determining the amount of punitive damages, unless some other factor seems compelling to the trial court. [55] Defendants claim that the punitive award exceeds the proper ratio because the only amount that should enter into the equation is the $447,034 the jury returned against Garner individually for fraud, not the entire $2,405,022 assessed jointly and severally against Garner and his corporation. When $447,034 is compared with the punitive award of $1,800,000, the ratio of punitive to actual damages exceeds 4 to 1. The jury did return fraud damages against Garner individually. However, the trial court declared in its judgment and decree that the fraud award against Garner individually is enforceable only to the extent that it ensures recovery by Ong International of the rescission and consequential damages as determined by the jury. Thus, the correct damage award to consider in the equation is the total damage award of $2,405,022, not the $447,034 recoverable only if the award against Garner and his corporation cannot be collected. As the trial court found, the correct ratio of punitive to actual damages in this case is approximately 1 to 1½. That ratio is well within the acceptable range set forth in Crookston. [56] Moreover, the trial court also made a detailed finding based on the seven factors enunciated in Crookston. That finding, as well as the permissible ratio of punitive to actual damages, lends ample support for the award, and we therefore affirm it.