Opinion ID: 1834360
Heading Depth: 1
Heading Rank: 7

Heading: Whether the trial court properly submitted the issue of punitive damages to the jury.

Text: On April 10, 1992, the trial court held an evidentiary hearing on punitive damages under SDCL 21-1-4.1. The trial court issued Findings of Fact and Conclusions of Law and concluded that, based on clear and convincing evidence, there was a reasonable basis to believe that State Farm was guilty of willful, wanton or malicious conduct as required by SDCL 21-1-4.1. [8] Isaac was allowed to proceed with discovery. Under SDCL 21-1-4.1, the trial court applies a clear and convincing evidence standard to determine, before any such claim may be submitted to discovery or to the jury, whether there is a reasonable basis to believe there has been [] willful, wanton, or malicious conduct on the part of the party claimed against. This statute merely requires clear and convincing evidence to show a reasonable basis. Flockhart v. Wyant, 467 N.W.2d 473, 475 (S.D.1991). Thus, the proponents' burden is a preliminary, lower-order quantum of proof than must be established at trial. Such proof is a prima facie case for punitive damages. Vreugdenhil v. First Bank of S.D., 467 N.W.2d 756 (S.D.1991). Case v. Murdock, 488 N.W.2d 885, 891 (S.D. 1992). Malice is an essential element of a claim for punitive damages, however, malice sufficient to support exemplary damages may be either actual, malice in fact, or presumed, legal malice. Actual malice is a positive state of mind, evidenced by the positive desire and intention to injure another, actuated by hatred or ill-will towards that person. Malice is so defined in Gamble v. Keyes, 43 S.D. 245, 178 N.W. 870, 872 (1920). Presumed, legal malice, on the other hand, is malice which the law infers from or imputes to certain acts. Hannahs v. Noah, 83 S.D. 296, 303, 158 N.W.2d 678, 682 (1968); 52 Am.Jur.2d § 2, P 163. Thus, while the person may not act out of hatred or ill-will, malice may nevertheless be imputed if the person acts willfully or wantonly to the injury of the other. In this context, however, we have said: Malice as used in reference to exemplary damages is not simply the doing of an unlawful or injurious act, it implies that the act complained of was conceived in the spirit of mischief or of criminal indifference to civil obligations. Dahl v. Sittner, 474 N.W.2d 897, 900 (S.D. 1991) (citing Hannahs, 83 S.D. at 303, 158 N.W.2d at 682). A claim for presumed malice can be shown by demonstrating a disregard for the rights of others. Case, 488 N.W.2d at 891 (citing Flockhart, 467 N.W.2d at 475). State Farm claims the trial court erred in denying its Motion to Dismiss the punitive damage claim because there was no evidence of actual or presumed malice. The trial court's determination that there was a reasonable basis to submit the issue of punitive damages to the jury will not be disturbed absent a showing that the trial court's findings of fact are clearly erroneous. Case, 488 N.W.2d at 891 (citation omitted). There is evidence supporting the trial court's position that State Farm acted in reckless disregard of the rights of Isaac. Included in the actions taken by State Farm evidencing this reckless disregard is the fact that when State Farm did offer their policy limits of $100,000, the offer was conditioned on a release by Isaac of any bad faith claim that she may have with respect to State Farm's handling of the claim. Clear and convincing evidence existed to form a reasonable basis to present the issue of punitive damages to the jury. The trial court was not clearly erroneous. [9] Id.