Opinion ID: 1405600
Heading Depth: 1
Heading Rank: 10

Heading: The punitive damages assessments are excessive as a matter of law.

Text: At the conclusion of trial, the jury assessed $7,500,000.00 in punitive damages against Allianz and $500,000.00 against Wohlers. On appeal, Allianz and Wohlers argue that the jury's assessment of $8,000,000.00 in punitive damages was excessive. Although we conclude that substantial evidence exists to support the jury's finding of fraud and bad faith necessary to justify an assessment of punitive damages, the respective punitive damage amounts assessed against both Allianz and Wohlers are excessive as a matter of state law. [7] NRS 42.005 provides that punitive damages may be awarded in an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice, express or implied. When a prevailing plaintiff's compensatory damages exceeds $100,000.00, punitive damages are capped by statute to three times the amount of the compensatory damages. See NRS 42.005(1)(a). When the plaintiff recovers less than $100,000.00 in compensatory damages, punitive damages must be limited to a maximum of $300,000.00. See NRS 42.005(1)(b). Significantly, the foregoing statutory caps on punitive damages do not apply to [a]n insurer who acts in bad faith regarding its obligations to provide insurance coverage. NRS 42.005(2)(b). In Guaranty National Insurance Co. v. Potter, 112 Nev. 199, 208, 912 P.2d 267, 273 (1996), we reiterated the following standard for reviewing the excessiveness of a punitive damages award: Punitive damages are legally excessive when the amount of damages awarded is clearly disproportionate to the degree of blameworthiness and harmfulness inherent in the oppressive, fraudulent or malicious misconduct of the tortfeasor under the circumstances of a given case. If the awarding jury or judge assesses more in punitive damages than is reasonably necessary and fairly deserved in order to punish the offender and deter others from similar conduct, then the award must be set aside as excessive. (quoting Ace Truck & Equipment Rentals, Inc. v. Kahn, 103 Nev. 503, 509, 746 P.2d 132, 136-37 (1987)). In determining whether a punitive damages award is excessive pursuant to this standard, we will consider a variety of factors including the financial position of the defendant, culpability and blameworthiness of the tortfeasor, vulnerability and injury suffered by the offended party, the extent to which the punished conduct offends the public's sense of justice and propriety, and the means which are judged necessary to deter future misconduct of this kind. Id. at 208, 912 P.2d at 273-74 (quoting Ace Truck & Equipment Rentals, Inc. v. Kahn, 103 Nev. 503, 510, 746 P.2d 132, 137 (1987)). Based on the standard we reiterated in Guaranty National Insurance Co., we conclude that the jury's respective punitive damage assessments against Allianz and Wohlers are excessive as a matter of law. From the facts of this case, we conclude that these awards are clearly disproportionate to the degree of reprehensibility of Allianz's and Wohlers's conduct. Evidence presented at trial indicated that Allianz attempted to settle the case by offering to pay the full amount of Bartgis' claim and all of her attorney's fees after learning of her dispute over the ancillary charges limitation provision. Additionally, Allianz and Wohlers presented evidence indicating that of the small percentage of claimants who were affected by the ancillary charges limitation provision, numerous claims were resolved in favor of the policyholders at the completion of Allianz's internal appeals process. Moreover, although the jury heard evidence attesting to Allianz's and Wohlers's fraudulent conduct and bad faith, the assessment against Wohlers is nearly twenty-one percent of that company's net worth. [7] While the facts of this case demonstrate that Wohlers engaged in fraudulent misrepresentation and bad faith conduct, we conclude that this assessment exceeds the deterrent effect intended by an award of punitive damages. In similar fashion, the facts presented at trial demonstrated that Allianz had engaged in fraudulent misrepresentation and bad faith conduct. However, while the assessment against Allianz amounts to merely two and one-half percent of that company's $300,000,000.00 net worth, we conclude that Allianz's conduct in this case does not justify a punitive damage assessment that is approximately thirty times greater than Bartgis' award of $275,000.00 in compensatory damages. Based on the foregoing, we conclude that the jury's punitive damage assessments against Allianz and Wohlers are excessive and disproportionate to their degree of blameworthiness. The respective punitive damage awards assessed by the jury in this case exceed the punishment and deterrent effect intended by an award of punitive damages. Accordingly, the jury's punitive damage assessment against Allianz is reduced from $7,500,000.00 to $3,750,000.00, and the punitive damage assessment against Wohlers is reduced from $500,000.00 to $150,000.00.