Opinion ID: 1967510
Heading Depth: 2
Heading Rank: 1

Heading: The Evidence is Sufficient to Support a Finding of Actual Malice

Text: Darcars contends that the Court of Special Appeals erred in holding that the evidence presented in this case was sufficient to support a finding of actual malice by clear and convincing evidence. In Darcars' view, the evidence minimally supports a claim of conversion. Darcars asserts that there was absolutely no evidence that any of its actions were based on any evil motive, intent to injure, or fraud, and that, without more, the jury had to speculate or guess to reach the conclusion that the conversion had been motivated by actual malice. Darcars further takes issue with the Court of Special Appeals' reliance on Darcars' failure to raise defenses of claim of right or honest belief that it was entitled to the $2,500 down-payment, as it posits that such defenses are not necessary to avoid the imposition of punitive damages in a conversion claim. In response to Darcars' arguments, Borzym argues that clear and convincing evidence of actual malice supports his claim for punitive damages. The tort of conversion, according to Borzym, has been committed with actual malice if the evidence shows that the defendant consummated the conversion willfully and with knowledge of the wrong. In Borzym's opinion, Darcars demonstrated knowledge of the wrongfulness of the conversion when its representative refused to return Borzym's belongings and stated, [f]orget about it. Get out of here. Call your attorney. Get lost. Conversion is an intentional tort, consisting of two elements, a physical act combined with a certain state of mind. The physical act can be summarized as any distinct act of ownership or dominion exerted by one person over the personal property of another in denial of his right or inconsistent with it. Allied Investment Corp. v. Jasen, 354 Md. 547, 560, 731 A.2d 957, 963 (1999) (quoting Interstate Ins. Co. v. Logan, 205 Md. 583, 588-89, 109 A.2d 904, 907 (1954)). This act of ownership for conversion can occur either by initially acquiring the property or by retaining it longer than the rightful possessor permits. As we explained in Merchants' Nat'l Bank v. Williams, 110 Md. 334, 351-52, 72 A. 1114, 1117 (1909): Conversion, in the sense of the law of trover, consists either in the appropriation of the property of another, or in its destruction, or in exercising dominion over it in defiance of the owner's rights, or in withholding the possession from him under an adverse claim of title, and all who aid, command, assist, or participate in the commission of such unlawful acts are liable. Later, in Wallace v. Lechman & Johnson, Inc., 354 Md. 622, 732 A.2d 868 (1999), we again discussed the types of acts that may give rise to a claim of conversion: [T]he gist of a conversion is not the acquisition of the property by the wrongdoer, but the wrongful deprivation of a person of property to the possession of which he is entitled. Nor need there exist a forcible dispossession of property to constitute an act of the defendant a conversion. A conversion may consist of a wrongful, tortious or unlawful taking of property from the possession of another by theft, trespass, duress, or fraud and without his consent or approbation, either express or implied. Id. at 633, 732 A.2d at 874 (quoting Saunders v. Mullinix, 195 Md. 235, 240, 72 A.2d 720, 722 (1950)). In this case, the jury found that Darcars' act of retaining Borzym's $2500 down-payment, laptop and music CDs amounted to an unlawful exercise of dominion over that property. Besides the physical act of exerting unlawful control, there is an intent element to the tort of conversion, and a wide range of different states of mind qualify. At a minimum, a defendant liable of conversion must have an intent to exercise a dominion or control over the goods which is in fact inconsistent with the plaintiffs rights. Keys v. Chrysler Credit Corp., 303 Md. 397, 414, 494 A.2d 200, 208 (1985). The defendant may have the requisite intent even though he or she acted in good faith and lacked any consciousness of wrongdoing, as long as there was an intent to exert control over the property. For example, [a] purchaser of stolen goods or an auctioneer who sells them in the utmost good faith becomes a converter, since the auctioneer's acts are an interference with the control of the property. Id. We have said that, when conversion occurs in these circumstances, punitive damages are not appropriate. K & K Management v. Lee, 316 Md. 137, 174-79, 557 A.2d 965, 983-85 (1989) (holding that, although the defendant was liable for conversion, punitive damages were unjustified because of an absence of actual malice); Food Fair Stores, Inc. v. Hevey, 275 Md. 50, 56, 338 A.2d 43, 47 (1975) (reversing an award for punitive damages where the defendant believed that it was entitled to the converted property and, therefore, committed the conversion without any evil or bad intention); Siegman v. Equitable Trust Co., 267 Md. 309, 316, 297 A.2d 758, 761 (1972) (holding that the plaintiff was not entitled to punitive damages because the conversion occurred not out of an evil motive but as a result of the defendant's mistake of law). Conversion, of course, also may occur when the defendant's intent reaches the level of actual malice. See Middle States Holding Co., Inc. v. Thomas, 340 Md. 699, 702, 668 A.2d 5, 7 (1995); K & K Management, 316 Md. at 174-79, 557 A.2d at 983-85; Food Fair Stores, 275 Md. at 56, 338 A.2d at 47; Siegman, 267 Md. at 316, 297 A.2d at 761. We have held that, where a defendant commits a tort with actual malice, a jury may award the plaintiff punitive damages. Montgomery Ward v. Wilson, 339 Md. 701, 736, 664 A.2d 916, 933 (1995); Ellerin v. Fairfax Savings, F.S.B., 337 Md. 216, 241, 652 A.2d 1117, 1129 (1995); Alexander & Alexander, Inc. v. B. Dixon Evander & Assocs., Inc., 336 Md. 635, 652, 650 A.2d 260, 269 (1994); Owens-Illinois v. Zenobia, 325 Md. 420, 463, 601 A.2d 633, 654 (1992). Punitive damages are awarded [based] upon the heinous nature of the defendant's tortious conduct, Zenobia, 325 Md. at 454, 601 A.2d at 649, and they serve the purpose of punishing the particular tortfeasor and deterring conduct similar to that which underlay the tort. Id.; see Philip Morris, Inc. v. Angeletti, 358 Md. 689, 773-74, 752 A.2d 200, 246-47 (2000); Bowden v. Caldor, 350 Md. 4, 22, 710 A.2d 267, 276 (1998); Owens-Corning Fiberglas Corp. v. Garrett, 343 Md. 500, 537-38, 682 A.2d 1143, 1161 (1996). In recent years, the law of punitive damages has undergone significant development. See, e.g., Montgomery Ward, 339 Md. at 736, 664 A.2d at 933; Ellerin, 337 Md. at 241, 652 A.2d at 1129; Alexander & Alexander, 336 Md. at 652, 650 A.2d at 269; Zenobia, 325 Md. at 463, 601 A.2d at 654. The leading case in this effort is Owens-Illinois v. Zenobia , in which Judge Eldridge, writing for the Court, made it clear that a jury may award punitive damages only when a plaintiff has demonstrated by clear and convincing evidence that the defendant acted with actual malice. 325 Md. at 460, 601 A.2d at 652. We have defined the term actual malice as conduct of the defendant characterized by evil motive, intent to injure, ill will, or fraud. Id.; see Bowden, 350 Md. at 23, 710 A.2d at 276; Scott v. Jenkins, 345 Md. 21, 33, 690 A.2d 1000, 1006 (1997); Ellerin, 337 Md. at 228-29, 652 A.2d at 1123. With respect to the clear-and-convincing standard of proof, we regarded it as appropriate in the assessment of punitive damages because of their penal nature and potential for debilitating harm. Zenobia, 325 Md. at 469, 601 A.2d at 657. Our opinions in recent punitive damage cases have examined the intent element of various torts, other than conversion, and defined the type of wrongful motive that may qualify as actual malice. In Zenobia, this Court explained what is meant by actual malice in the context of products liability, emphasizing that negligence alone, no matter how gross, wanton, or outrageous, will not satisfy [the] standard [of actual malice]. 325 Md. at 463, 601 A.2d at 654. Rather, evidence supports a finding of actual malice if it shows by clear and convincing evidence that the defendant made a bad faith decision ... to market a product, knowing of the defect and danger, in conscious or deliberate disregard of the threat to the safety of the consumer. Id. (emphasis added). In Ellerin, the Court considered the availability of punitive damages where the defendant had committed fraud. 337 Md. at 234, 652 A.2d at 1126. We examined whether fraud inherently involves the state of mind and conduct which is ordinarily required for the allowability of punitive damage. Id. at 229, 652 A.2d at 1123. We reemphasized that only evidence of actual malice supports an award of punitive damages: Maryland law has limited the availability of punitive damages to situations in which the defendant's conduct is characterized by knowing and deliberate wrongdoing. Id. at 228, 233, 652 A.2d at 1123, 1125. Because one could commit fraud with only reckless disregard for the truth, we concluded that not all instances of fraud warrant the imposition of punitive damages. Id. at 235, 652 A.2d at 1126. Nevertheless, a plaintiff satisfies the element of actual malice and supports a punitive damage award when the evidence shows that the defendant committed fraud with actual knowledge of falsity, coupled with [an] intent to deceive. Id. at 234, 652 A.2d at 1126. In Montgomery Ward, a case involving the tort of malicious prosecution, we reaffirmed the notion that only evidence of actual malice supports an award of punitive damages. 339 Md. at 735-36, 664 A.2d at 933. We stated that, in a claim of malicious prosecution, punitive damages may be awarded only if there is clear and convincing evidence of the defendant's wrongful or improper motive for instigating the prosecution without probable cause. Id. It was not enough for the plaintiff in that case to present evidence only of a lack of probable cause, because that alone would allow a punitive damage award where there is an inadequacy of investigation. Id. at 735, 664 A.2d at 933. Inadequacy of investigation does not mean that [the defendant's] motive was anything other than bringing a thief to justice, a motive that does not equate to actual malice. Id. Like in the context of products liability, fraud, and malicious prosecution, the availability of punitive damages for the tort of conversion depends on the intent of the tortfeasor. While a plaintiff may obtain a compensatory damage award by proving merely that the defendant, without bad faith, intended to exert unlawful dominion over the plaintiffs property, punitive damages may be awarded only if the defendant demonstrated actual malice in carrying out the conversion. The term actual malice in the context of conversion requires little explanation beyond the definition we have established in our previous cases: consciousness of the wrongdoing or conduct of the defendant characterized by evil motive, intent to injure, ill will, or fraud. Zenobia, 325 Md. at 460, 601 A.2d at 652; see Bowden, 350 Md. at 23, 710 A.2d at 276; Scott, 345 Md. at 33, 690 A.2d at 1006; Montgomery Ward, 339 Md. at 735-36, 664 A.2d at 933; Ellerin, 337 Md. at 228-29, 652 A.2d at 1123. Where the defendant converts property with a consciousness of the wrongfulness of that conversion, he or she possesses the requisite improper motive to justify the imposition of punitive damages. The evidence presented in this case is sufficient to demonstrate that Darcars had an improper motive in converting Borzym's $2,500 cash down-payment, laptop, and music CDs. When Borzym met with Darcars employees to discuss the repossession of the BMW and to inquire about his down-payment, laptop, and CDs, a Darcars representative told him to Forget about it. Get out of here.... [C]all your attorney and get lost. Darcars did not make the BMW available to Borzym to retrieve his belongings, and even after Borzym had left the dealership office, Darcars representatives continued their inappropriate behavior. Outside the office, when Borzym's father learned of his son's troubles and approached Darcars officials, they began sarcastically waving goodbye to the Borzyms, and one Darcars employee cursed out the father and son and accused them of being thieves. Evidence of this conduct provides a sufficient basis for the jury's conclusion that Darcars representatives acted with actual malice in the unlawful retention of Borzym's property. The evidence of Darcars employees pretentiously dismissing Borzym's inquiries about his property, cursing, and then commenting, get lost and call your attorney, suggests malice. That evidence, combined with evidence of the heated exchange between Darcars personnel and Borzym, certainly could lead to the conclusion that the conversion of the property was, in effect, a retaliation for Borzym's failure to resolve the dispute on Darcars' terms. Accordingly, the evidence was sufficient to support the jury's finding of actual malice.