Opinion ID: 1852240
Heading Depth: 1
Heading Rank: 3

Heading: The Punitive Damages Verdict

Text: Third, the July 28, 2000, per curiam opinion neglects to conduct the appropriate assessment of the remittitur under the analysis set forth in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) ( BMW I ), Green Oil Co. v. Hornsby, 539 So.2d 218 (Ala.1989), and Hammond v. City of Gadsden, 493 So.2d 1374 (Ala.1986). The amount of the remittitur appears to be especially egregious in light of the statutory punitive-damages cap that has since been passed by the Alabama Legislature. The Weatherlys' entire case is premised upon an allegation that Mr. Weimorts falsely told them that potential buyers, the Stallworths, had been approved for a loan. Essentially, the conduct the trial court found so reprehensible was Weimorts's passing along to the sellers, the Weatherlys, information from a mortgage lender. Weimorts testified that at the time of the closing on the Steep Creek house, Heidi Ogleson of American Mortgage had told Weimorts that the Stallworths' loan should close by October 15, 1995. Weimorts testified that he was acting under the assumption that the Stallworths' loan approval was imminent. Section 6-11-20(a), Ala.Code 1975, provides that [p]unitive damages may not be awarded in any civil action unless it is proven by clear and convincing evidence that the defendant consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff. Clear and convincing evidence is defined as [e]vidence that, when weighed against evidence in opposition, will produce in the mind of the trier of fact a firm conviction as to each essential element of the claim and a high probability as to the correctness of the conclusion. § 6-11-20(b)(4). Proof by clear and convincing evidence requires a level of proof greater than a preponderance of the evidence or the substantial weight of the evidence, but less than beyond a reasonable doubt. § 6-11-20(b)(4). Fraud is defined as [a]n intentional misrepresentation, deceit, or concealment of a material fact the concealing party had a duty to disclose, which was gross, oppressive, or malicious and committed with the intention on the part of the defendant of thereby depriving a person or entity of property or legal rights or otherwise causing injury. § 6-11-20(b)(1). No evidence was presented indicating that Weimorts's alleged misrepresentation or concealment was gross, oppressive, or malicious or that it was committed with the intention to injure the Weatherlys. The evidence presented by the Weatherlys indicating that Weimorts had deliberately engaged in fraud consisted of the testimony of the Weatherlys to the effect that Weimorts had told them that the Stallworths had been approved for a mortgage loan. The evidence in opposition indicates that Weimorts relied on the representation of the mortgage lender to the effect that the Stallworths would be approved for a loan and that the closing could occur on October 15. The Weatherlys' evidence cannot produce a firm conviction that Weimorts consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the [Weatherlys]. § 6-11-20(a). Had this Court properly analyzed the facts in this case under the appropriate BMW, Green Oil, and Hammond standards, it should have been clear that the punitive-damages award is excessive. The July 28, 2000, per curiam opinion does not address each factor individually; therefore, I must point out some deficiencies in the trial court's order.
In BMW I, the United States Supreme Court stated: Perhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct. 517 U.S. at 575, 116 S.Ct. 1589. It further stated: That conduct is sufficiently reprehensible to give rise to tort liability, and even a modest award of exemplary damages, does not establish the high degree of culpability that warrants a substantial punitive damages award. 517 U.S. at 580, 116 S.Ct. 1589. In evaluating the reprehensibility of the defendants' conduct in the Weatherlys' case, the trial court made the following assessments, which I consider to be legally insufficient to support the punitive-damages award. First, the trial court stated: Defendants persist in denying any wrongdoing. They admit they have taken no remedial action to prevent such occurrences in the future. I can understand, under the particular facts in this case, the defendants' arguing that they had done nothing wrong. Therefore, the trial court should not have used this argument as support for a finding of reprehensibility. Second, the trial court stated: This Court notes that additionally, the Defendants had an early opportunity to remedy this problem as reasonable settlement offers were made by representatives for the plaintiffs prior to the institution of litigation. In my opinion, the defendants have the right to defend their actions in a court of law. They cannot be punished for refusing to settle a claim they believe has no merit. The defendants certainly should not be punished to the extent of a $750,000 punitive-damages award for exercising their constitutional right to a trial by jury. Whether a defendant has refused a settlement offer has no place whatsoever in an analysis of whether the defendant's conduct was so reprehensible as to support an award of punitive damages. The trial court's statement suggests that resort to the judicial process comes at the price of judicial retribution. Suddenly, the reprehensibility of the defendants' conduct is enhanced. Additionally, persistence in denying wrongdoing is not a proper indicator of the degree of reprehensibility of the conduct under scrutiny.
The evidence presented at trial indicated that the Weatherlys suffered economic damage of no more than $25,000. The jury returned a verdict of $250,000, based primarily on the mental anguish suffered by the Weatherlys. I think it is important to note that the $750,000 punitive-damages award upheld by the July 28, 2000, per curiam opinion is 30 times the economic damage suffered by the plaintiffs. I would also note that there was no expert testimony to support the claims that the aggravation of Mrs. Weatherly's Tourette's syndrome or Mr. Weatherly's depression were caused by stress resulting from the realestate transaction.
The trial court did not address this issue in its order. The gross commission on the purchase of the Steep Creek house was $3,850. Of that amount, Weimorts received 70% and Ballard received 30%. The $750,000 punitive-damages award is almost 195 times greater than the total gross commission earned by the defendants. Even with a substantial reduction, the punitive-damages amount would obliterate any profit the defendants derived from this transaction.
The trial court did not consider the financial position of the defendant based on its net worth, as BMW of North America, Inc. v. Gore, 701 So.2d 507 (Ala.1997) ( BMW I ), contemplates. Instead, the trial court stated that the defendants' insurance would cover up to $1,900,000 of the award, and perhaps a greater amount. The trial court also stated that the defendants insist that the corporate Defendant has a negative net worth based on the unaudited financial reports but also noted that the corporate Defendant has income of over $3 million for each of the last three years. The trial court refused to consider Ballard's net worth in assessing the financial position of the defendants. In 1999, the Alabama Legislature amended § 6-11-21, Ala.Code 1975, by enacting Act No. 99-358, Ala. Acts 1999. That Code section places a statutory cap on punitive damages. Although the statute is not applicable to the present case, which was filed before August 6, 1999, the effective date of Act No. 99-358, it is a persuasive indicator that the punitive damages awarded in this case are excessive. The Legislature has spoken as to how courts should make a fair punitive-damages award, and this Court should not ignore its guidance. If the statute were applicable to this case, then, based on § 6-11-21(b) and (c), Ballard would fit within the definition of small business and the punitive damages would be capped at $50,000. The vast difference between the $50,000 cap of § 6-11-21 and the $750,000 awarded in this case surely indicates excessiveness. After the closing of the Woodbridge home did not occur as planned, Weimorts continued to work to secure a lender for the Stallworths, so that the Weatherlys could sell the Woodbridge house. Ironically, the Stallworths were initially approved for a mortgage by the Marble Mortgage Company in November 1995, but that company decided to withdraw from doing business in Alabama because it believed the legal climate here was unfavorable. The result of this case will be that even more businesses will want to withdraw from doing business in Alabama. Any mistake by a realtor who hopes a buyer will obtain financing and who relies on a financing company for such a prediction will be fair game in Alabama for any plaintiff who wants to be a millionaire.