Opinion ID: 1659361
Heading Depth: 2
Heading Rank: 3

Heading: Financial Impact of the Verdict

Text: Regarding the defendants' financial positions, the trial court made the following findings: Defendants each have $1,000,000 in liability insurance with Mutual Assurance for a total of $2 million in insurance. Dr. Schulte has $438,600 in personal assets (excluding the $245,000 in debt on his two houses) and earned $127,158 in adjusted gross income in 1988, $174,330 in adjusted gross income in 1989, $354,877 in adjusted gross income in 1990, $395,627 in adjusted gross income in 1991, and $377,173 in adjusted gross income in 1992. Pulmonary Associates of Mobile had a net Stockholders' Equity of $147,003.06 at the end of its fiscal year on September 30, 1992, had physical assets which cost $597,059 and had a net book value of $159,650.02 on September 30, 1993, and had accounts receivable of `approximately a couple of a million dollars,' which have an historic collectability factor of 68%. Since the time its last financial statements were created, Pulmonary Associates purchased a computer system which cost in excess of $80,000.... There are four equal shareholders in the group, Drs. Schulte, McAtee, Saucier and Gottlieb. For the fiscal year ending September 30, 1992, Pulmonary Associates' gross collections were $3,802,616. (Citations omitted.) Based on these figures, the trial court predicted that Dr. Schulte and PAM would be able to  survive the verdict ... by applying existing assets and a part of future income. (Emphasis added.) The defendants dispute this prediction, contending that the imposition of the $4,500,000 verdict would destroy their practice. Brief of Appellees/Cross Appellants, at 43. The defendants' contention merits careful consideration. The $2.5 million remaining of the verdict after deduction of $2 million, the aggregate amount of insurance carried by the defendants, would entirely obliterate PAM's accounts receivables for nearly two full years [68% of $2 million (collection rate) equals $1,360,000 (accounts receivable for one year), minus $2.5 million equals -$1,140,000]. The sum of the remainder of the defendants' aggregate assets also compares unfavorably to the portion of the verdict exceeding the amount of insurance. Regardless of whether the defendants could, as the trial court predicted, survive the verdict, the execution of a judgment on the full amount of the award would impose a crushing burden on the defendants' practice. To accomplish its purpose, the amount of a punitive damages award should be enough to punish the defendant and vindicate the public's right to be free of the kind of conduct of which the jury has found the defendant guilty, but [it] should not be so much as would financially destroy him.  Fuller v. Preferred Risk Life Ins. Co., 577 So.2d 878, 885 (Ala.1991) (emphasis added). The verdict awarded in this case would come perilously close to financially destroying the defendants. In summary, consideration of all the factors relevant in a Hammond/ Green Oil analysis compels the conclusion that this punitive damages verdict was excessive and must be reduced by $2,000,000. Consequently, the ruling of the trial court at issue in Case Number 1930362 is reversed. As to Case Number 1930459, the judgment is affirmed, conditioned upon Smith's acceptance within 28 days of a remittitur of $2,000,000, resulting in a judgment for Smith in the amount of $2,500,000. [6] 1930362REVERSED. 1930459AFFIRMED CONDITIONALLY. SHORES and INGRAM, JJ., concur. KENNEDY, J., concurs specially. ALMON, J., concurs in part and concurs in the result in part. COOK, J., concurs except as to Part I.B. BUTTS, J., concurs in the result. MADDOX and HOUSTON, JJ., dissent.