Opinion ID: 1617003
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Heading: Should Trial Court Have Submitted to the Jury the Issue of Punitive Damages?

Text: In their exceptions to instructions and in their post-trial motions, both Honeywell and ITT asserted there was no evidence to justify submitting the issue of punitive damages to the jury. The issue was submitted, and the jury fixed an award of $150,000 in favor of Appliance Center against both defendants. As we shall discuss below, trial court later allowed ITT full indemnity, including this amount, against Honeywell. Our basic rules relating to punitive or exemplary damages were summarized in Feeney v. Scott County, 290 N.W.2d 885, 892 (Iowa 1980): Exemplary damages are not awarded as a matter of right; rather, their allowance rests with the fact finder. Young v. City of Des Moines, 262 N.W.2d 612, 620 (Iowa 1978). Their award depends upon whether under the facts in a particular case such [an] award is appropriate in order to punish an offending party or discourage others from similar wrongful conduct. Meyer v. Nottger, 241 N.W.2d 911, 922 (Iowa 1976). This determination depends upon the existence of maliceeither actual or legal malice. [L]egal malice ... may be established by showing wrongful or illegal conduct committed or continued with a willful or reckless disregard of another's rights. McCarthy v. J.P. Cullen & Son Corp., 199 N.W.2d 362, 369 (Iowa 1972). A decision that provides guidance in determining the issue before us is Claude v. Weaver Construction Co., 261 Iowa 1225, 1232, 158 N.W.2d 139, 144 (1968), where we quoted approvingly the following from Newman v. Nelson, 350 F.2d 602, 604-05 (10th Cir.1965): [T]he mere commission of a nuisance justifying an award of actual damages would be insufficient to justify the assessment of punitive damages as a penalty. In other words, to be liable for actual damages one need only create or commit a nuisance, but to be punished for it he must create and persistently maintain it with a reckless disregard for the rights of others. See generally Annot., 31 A.L.R.3d 1346 (1970). In many controversies involving punitive damages, the fighting issue is the existence of legal malice. See, e.g., Kimmel v. Iowa Realty Co., 339 N.W.2d 374, 382-84 (Iowa 1983); Westway Trading Corp. v. River Terminal Corp., 314 N.W.2d 398, 404 (Iowa 1982); Holcomb v. Hoffschneider, 297 N.W.2d 210, 213-15 (Iowa 1980); White v. Citizens National Bank, 262 N.W.2d 812, 817 (Iowa 1978). Such a case was Claude, 261 Iowa at 1235, 158 N.W.2d at 146, where we wrote: Viewed in a light most favorable to plaintiffs, it is to us evident some substantial evidence was presented disclosing defendant knowingly and intentionally, without just cause, persisted in the maintenance of a private nuisance despite repeated protests and complaints of its harmful consequences, thereby disclosing such willful disregard for plaintiffs' rights as to create a jury issue relative to punitive damages. Honeywell argues Appliance Center did not introduce substantial evidence of legal malice with respect to it. It points to its prompt efforts to obviate the radiation leakage from the computer, and its ultimate correction of the problem through expensive alterations and additions. These efforts, it claims, effectively negated the element of malice necessary for a punitive damage claim, citing White, 262 N.W.2d at 817. Honeywell further argues it had no legal right to turn off the computer as did ITT and Crowell of Central Travel. Appliance Center, on the other hand, asserts there was evidence from which the jury could find that after a brief flurry of trying to correct the problem inexpensively, Honeywell decided it had spent too much money and informed Pearson that if he did not like the situation he could move. Only after threat of a lawsuit, Appliance Center argues, did Honeywell again make an effort in October of 1980. Calls from Pearson went unanswered. Little or no attention was paid to the radiation leakage during 1981 and only when trial approached did Honeywell spend the time and money to resolve the problem in May 1982. Appliance Center relies on Claude, 261 Iowa at 1235, 158 N.W.2d at 146, where we wrote: Defendant generally contends manifestation of solicitude, use of modern equipment, and efforts to eliminate or reduce offensive dust and smoke bar plaintiffs' right to recover punitive damages. This is to us a novel but nonpersuasive approach. Stated otherwise, we do not believe full play of the facts allows defendant to hide behind any such ineffective barricade. That which an offending party says or professes may be important, but is quickly obliterated by counterprevailing conduct of such nature as to disclose the declarations made were in fact meaningless. In a case such as that here presented, it is actual conduct which controls, not statements of interest, sympathy, or concern. Under the record made in this trial, we cannot say trial court erred in submitting the punitive damage claim against Honeywell to the jury. We do not reach the same decision, however, with respect to ITT. The record made here does not disclose substantial evidence that it was guilty of legal malicea showing of wrongful or illegal conduct committed or continued with a willful or reckless disregard of another's rights. McCarthy, 199 N.W.2d at 369. ITT argues its only role was taking legal title to the computer from Honeywell and leasing it to Central Travel. When it received Pearson's complaint from its lessee it relayed it to Honeywell. Thereafter, Honeywell was undertaking the necessary adjustments and alterations. ITT points out that at no time did Appliance Center contact ITT directly. Although ITT's representative telephoned Pearson, the latter did not ask ITT to check back or to supervise the ongoing efforts of Honeywell. Appliance Center argues ITT had a part in maintaining the nuisance despite Pearson's complaints, thereby disclosing a willful disregard for the Center's rights. Terms of the lease agreement between Central Travel and ITT were never disclosed. There is little proof of ITT's knowledge of the extent of Pearson's problem or of Honeywell's allegedly dilatory efforts to correct it. Although we do not necessarily agree with trial court's findings in its ruling on ITT's cross-claim for indemnity, we think it is significant that it found [t]he claims ... made against ITT by plaintiff... were not ... based on alleged independent wrongful conduct of ITT against plaintiff [but] resulted solely from ITT's relationship with [and] reliance upon Honeywell. This finding is difficult to square with trial court's submission of the punitive damage issue against ITT to the jury. For the guidance it may offer on retrial, we hold on this record a jury issue was generated on Honeywell's liability for punitive damages, but not on ITT's.