Opinion ID: 2188367
Heading Depth: 1
Heading Rank: 6

Heading: motion for reconsideration denied. []

Text: First they argue that evidence of prior punitive damage awards for the same course of conduct should be admissible to mitigate a punitive damages award. They assert that the potential for multiple awards of punitive damages violates the fundamental fairness guaranteed by the Due Process Clause of the Fourteenth Amendment. We do not agree with the argument that a refusal to allow the jury to consider prior awards of punitive damages violates fundamental fairness. Amici make no distinction between those punitive damages awards that are pending on appeal, those that have been reversed and those that have been paid. If an award of punitive damages has in fact been satisfied, the evidence of the defendant's financial means might in some cases reflect that payment. Furthermore, the admission of prior punitive damage awards would require the trial court to conduct a complicated evidentiary proceedings to determine if the defendant had in fact satisfied the punitive judgment. We decline to impose this onerous burden on the trial court. Second, amici argue that we should impose mandatory bifurcation of the compensatory and punitive damages claims. We note that a trial court may exercise its discretion and bifurcate these issues, pursuant to Maryland Rule 2-503(b). In addition, as frequently occurs in light of Maryland Code (1974, 1989 Repl.Vol.),  10-913(a) of the Courts and Judicial Proceedings Article (precluding evidence of a defendant's financial means until there has been a finding that punitive damages are supportable under the facts), the trial court will instruct the jury on the compensatory claims and on the defendant's potential liability for punitive damages. Then, once the jury has made a finding of liability on the underlying claims and has determined that there should be liability for punitive damages, the trial court will further instruct the jury concerning the calculation of a punitive damages award. This is precisely the procedure that was followed in these cases. If there were two separate damages trials in every case, much of the evidence at the trial solely on the issue of punitive damages would duplicate the evidence admitted at the compensatory damages trial. Many of the same witnesses would have to be recalled to repeat their testimony before the jury. In light of the fact that this duplication would burden both witnesses and jurors as well as waste judicial resources, we believe that mandatory bifurcation is undesirable. McAULIFFE, Judge, concurring. I join in all except Part IV of the Court's opinion. With respect to Part IV, I concur in the result. I agree that we should abandon the arising out of a contract distinction discussed in Part IV A of the Court's opinion and that we should adopt the clear and convincing standard of proof for the award of punitive damages in any case. Moreover, I agree with the specific test adopted by the Court for the availability of punitive damages in a products liability case. I write separately only to point out that although the Court's opinion makes clear that actual knowledge of the defect and deliberate disregard of the consequences will be considered the equivalent of evil motive, intent to defraud, or intent to injure and therefore within the definition of actual malice in products liability cases, Court's opinion at 461, 601 A.2d at 653 it does not state whether an equivalent state of mind will be recognized in other non-intentional torts. The Court's opinion should not, I suggest, be interpreted as excluding that possibility. There is a state of mind that falls just short of an intent to injure, but is sufficiently egregious to be treated as the legal equivalent of an intent to injure for criminal as well as civil purposes. Judge Moylan, writing for the Court of Special Appeals in DeBettencourt v. State, 48 Md. App. 522, 530, 428 A.2d 479, cert. denied, 290 Md. 713 (1981), provides an apt definition: It is ... that the willful doing of a dangerous and reckless act with wanton indifference to the consequences and perils involved, is just as blameworthy, and just as worthy of punishment, when the harmful result ensues, as is the express intent to kill itself. This highly blameworthy state of mind is not one of mere negligence.... It is not merely one even of gross criminal negligence.... It involves rather the deliberate perpetration of a knowingly dangerous act with reckless and wanton unconcern and indifference as to whether anyone is harmed or not. The common law treats such a state of mind as just as blameworthy, just as anti-social and, therefore, just as truly murderous as the specific intents to kill and to harm. More recently, see Robinson v. State, 307 Md. 738, 744-46, 517 A.2d 94 (1986). The Court's test for liability for punitive damages in a products liability case ÔÇö that the defendant had actual knowledge of the defect and proceeded with a conscious or deliberate disregard of the foreseeable harm resulting from the defect ÔÇö is the civil analogue of DeBettencourt 's deliberate perpetration of a knowingly dangerous act with reckless and wanton unconcern and indifference as to whether anyone is harmed or not. The Court thereby acknowledges that a mental state sufficiently egregious to support a conviction of murder is sufficiently egregious to support the imposition of punitive damages. This rationale, defined precisely and shorn of terms which might suggest that a lesser state of mind would suffice, should apply with equal force in all non-intentional tort cases. A person who is actually aware that his action involves a clear and serious danger of substantial harm to the plaintiff or anyone in the plaintiff's class, and who unreasonably takes such action with flagrant indifference as to whether anyone will be harmed or not, should be liable for punitive damages if his conduct causes the foreseeable harm. This type of outrageous conduct, being just short of intentional harm, warrants such a sanction. Although the requisite conduct and state of mind will often include gross negligence, the test would not be met by a showing of gross negligence alone. I assume that the Court does no more than to leave this discussion for another day. ROBERT M. BELL, Judge, concurring and dissenting. As relevant to this opinion, [1] the Court's opinion today effects a significant, if not, revolutionary, change in Maryland law respecting punitive damages. In one fell swoop, we have modified the law of punitive damages in three respects. First, we have abolished the distinction held to exist, for purposes of determining whether punitive damages may be awarded, between torts arising out of contract and those that do not, overruling in the process H & R Block v. Testerman, 275 Md. 36, 338 A.2d 48 (1975) and Wedeman v. City Chevrolet, 278 Md. 524, 366 A.2d 7 (1976). In an even greater step, we have followed the trend and held that a new, higher burden of proof henceforth will apply when a party seeks punitive damages. Thus, we have joined the trend of permitting awards of punitive damages only upon greater proof than usually required in civil cases. We made this change in an effort to insure that punitive damages are properly awarded. Finally, we reformulated the test for determining whether, in a given case, punitive damages may be awarded. A casualty of that formulation is Smith v. Gray Concrete Pipe Co., 267 Md. 149, 297 A.2d 721 (1972), the case in which implied malice was first recognized to be a predicate for the award of punitive damages. Stating the reason a new standard is necessary, the majority notes that, when decided, Smith v. Gray Concrete Pipe Co., supra , was inconsistent with this Court's precedents and did not attempt to analyze how a gross negligence standard promoted the objectives of punitive damages. Furthermore, it says that the Smith standard produced inconsistent results and frustration of the purposes of punitive damages in non-intentional tort cases. The majority asserts that the standard provides little guidance for individuals and companies to enable them to predict behavior that will either trigger or avoid punitive damages liability, and it undermines the deterrent effect of these awards. (footnote omitted) In its place, relying on Davis v. Gordon, 183 Md. 129, 133, 36 A.2d 699, 701 (1944), the Court adopts, in non-intentional tort cases, a standard of actual malice, i.e. evil motive, intent to injure, ill-will, or fraud. Because, however, in the usual products liability case, whether proceeding on negligence or strict liability, the sale of the product, defective by virtue of a failure to warn or otherwise, ordinarily will not involve evil motive, conscious intent to injure any particular person, ill will or fraud, we also adopt a variation on the actual malice theme: actual knowledge of the defect and conscious or deliberate disregard of the consequences. The majority deems that standard to be the equivalent of actual malice. But the first prong of that equivalent, the majority is emphatic, must be strictly limited; it means that nothing less than actual knowledge will suffice. That there is available evidence about which a defendant should have known will not be sufficient to support an award of punitive damages. The most the majority will concede is that, where a willful refusal to know ÔÇö i.e., where a person believes that it is probable that something is a fact, but deliberately shuts his or her eyes or avoids making reasonable inquiry with a conscious purpose to avoid learning the truth, see concurring opinion (Chasanow, J.) in State v. McCallum, 321 Md. 451, 458, 583 A.2d 250, 253 (1991), is proven, the person so refusing will be charged with actual knowledge of the product's defect. Because I share some of the majority's concerns regarding the proliferation of punitive damages claims and their amounts, I join, enthusiastically, with it in adopting two of the changes. I can see no reason for maintaining a distinction, for punitive damages purposes, between torts arising out of a contract and those that do not. Similarly, I believe that requiring proof of punitive damages by clear and convincing evidence is fair and just. Allowing punitive damages to be assessed against a defendant is serious business; it is right that we take steps to insure that it is not viewed lightly. Enhancing the burden of proof to a level commensurate with the seriousness of the matter to be decided is appropriate. I agree with the majority that, because the purpose of punitive damages is, at least in part, to punish, requiring a lower burden of proof for its award is inconsistent with the way we treat other serious cases. I part company with the majority on the question of what is the appropriate standard for determining the cases in which punitive damages are appropriate. While I have no quarrel with requiring that, in some cases, actual malice, characterized as evil motive, intent to injure, ill will, fraud, or, in the case of products liability actions, actual knowledge of the defective nature of the product, coupled with a deliberate disregard of the consequences, be shown, I am opposed to excising from the standard the concept adopted by Smith v. Gray Concrete Pipe Company (267 Md. at 167, 297 A.2d at 731): wanton or reckless disregard for human life, sometimes characterized as gross negligence. That standard, now the old one, is a floor, not a ceiling; it sets a minimum requirement, not a maximum. Therefore, if a defendant acts with actual malice, however, characterized, he or she will be subject to an award of punitive damages under the old standard. On the other hand, by adopting the actual malice standard, the majority does much more than excise a useless phrase, it places outside the scope of punitive damages eligibility numerous deserving cases, differing from cases that remain punitive damages eligible only in the subjective element. That change simply goes too far. The perception is that more claims for punitive damages, involving conduct so diverse that predictability and, therefore, the ability to choose the proper conduct and avoid being culpable, than were justified, were being brought and allowed with the result that the purposes of punitive damages were being undermined. The changes proposed are for the purpose of making the awards more uniform and consistent with the historical bases of punitive damages awards: punishment and deterrence. The purposes of punitive damages are better served, it has been determined, by requiring a more stringent standard for assessing punitive damages and by requiring a greater burden of proof. To be sure, one of the goals of today's decision is to set a higher threshold for punitive damages eligibility. That is accomplished by changing the burden of proof, that clearly will exclude some undeserving cases, no doubt, a large number, even applying the old standard. But, by both changing the burden of proof and the standard, an even greater percentage of deserving cases, heretofore eligible for punitive damages awards, is affected. Indeed, by so doing, not only is the threshold raised, but excluded is an entire category of cases, non-intentional torts, involving, in many instances, injuries of greater severity than in cases that still qualify and, thus, not necessarily those least deserving of an award of punitive damages. And the distinction causing the exclusion is the subjective intent of the defendant. While I can agree, as I have previously indicated, to raising the threshold by raising the level of the proof required, I cannot agree that punitive damages should be awarded only in cases of actual malice, where there is a subjective intent element. In cases where there is no actual malice, the totality of the circumstances may reveal conduct on the part of a defendant that is just as heinous as the conduct motivated by that actual malice and, so, for all intents and purposes is the same. Although not intentional, i.e., willful, conduct, nevertheless, may be outrageousness and extreme in the context in which it occurs, and may produce injuries commensurate with those caused by intentional conduct. In other words, conduct may be so reckless and outrageous as to be the equivalent of intentional conduct. That is precisely what Smith v. Gray Concrete Pipe Co., supra , held and the facts as reported in that case justified that pronouncement. It was because the facts were so egregious that the Court was motivated to opine: We regard a wanton or reckless disregard for the human life in the operation of a motor vehicle, with the known dangers and risks attendant to such conduct, as the legal equivalent of malice. It is a standard which, although stopping short of wilful or intentional injury, contemplates conduct which is of an extraordinary or outrageous character. Yet, it is both a functional and definitive test which, as we have noted, enjoys the virtue of having been frequently applied in this state. And if, as a test, it has been regarded as adequately stringent to serve as a basis for possible imprisonment, then, surely, there appears to be no valid reason for deeming it too liberal for imposing simple sanctions. 267 Md. at 167, 297 A.2d at 731-32. [2] Permitting punitive damages when one acts with actual malice, but not when, given the totality of the circumstances, that same person acts in total disregard for the safety of others has no reasoned basis. Consider the following example. A hot water pipe bursts in a crowded apartment complex quite near an open area upon which young people are playing baseball. A repair team dispatched to make repairs observes young people playing baseball nearby. It also sees that the area of the affected pipe is in easy reach of a baseball hit to the outfield. Nevertheless, they dig a hole, but, being unable to proceed due to the temperature of the water, suspend operations. Although aware of the young people playing in the area, they leave without warning them of the hole or its contents or in any way marking or obstructing the hole. One of the outfielders, having chased and caught a ball hit to the outfield, falls into the hole and is severely injured. Under the new standard, if it could be proved that a member of the repair team harbored ill will toward the outfielder and, in the back of his mind, entertained a hope that the outfielder, or one of the other players, would fall in the unattended hole, then, in addition to compensable damages, the outfielder could recover punitive damages. On the other hand, if none of the members of the repair team knew any of the ball players and, in fact, harbored no evil motive at all, no punitive damages could be recovered, notwithstanding that they acted, given the circumstances, in total disregard of the safety of the ballplayers. I can see no reasoned difference between these scenarios. [3] The state of mind of the individual simply is not so important a factor as to permit recovery in one case and not in the other. I am satisfied that allowing punitive damages for wanton and reckless conduct, the test enunciated in Smith, serves the purposes of punishment and deterrence. Gross negligence, outrageous conduct, etc. cannot be defined in a vacuum. To have meaning, the terms must be viewed in a factual context. The conduct described in the example is not only outrageous and extraordinary, it is the sine qua non of reckless conduct. Such conduct should be punished. And that scenario presents a striking example of the kind of conduct a defendant must not engage in if he or she is to avoid paying punitive damages. The example I have proffered is not the only one that can be posited. There are hundreds of such cases. The long and short of it is that changing the standard for punitive damages will eliminate numbers of cases, in which, heretofore, punitive damages would have been appropriate and those cases now are eliminated not because their facts are not egregious enough to justify such an award but because other, less serious, and perhaps, undeserving, cases may also qualify for such damages. [4] With all due respect, that is not a sufficiently good reason to change the rules of the game. [5] Insulating a defendant from an award of punitive damages except when he or she acts with actual malice, meaning with an evil intent, ill will, with intent to injure, or to defraud, provides a disincentive for that defendant to act reasonably. Since, from the standpoint of a defendant's pocketbook, it makes no difference in the award of damages, whether he or she is negligent or grossly negligent, that is, his or her conduct is extreme to a point just short of being intentional, requiring that defendant to pay compensatory damages for the victims's injuries is not likely to have a deterrent effect; it is not likely to cause him or her to consider, not to mention, change, his or her conduct. Requiring a high threshold before a products liability case becomes punitive damages eligible presents other problems. Where a prerequisite to being assessed punitive damages is actual knowledge, i.e., whether the defendant actually knows about the product's defect, there is the danger that a defendant will avoid knowledge of that defect rather than keep abreast of developments regarding the product; he or she may decide that the less he or she knows about the product, the better off he or she is. That is particularly true given the strictness of the actual knowledge test the Court has formulated. Notwithstanding the characterization by the majority of the standard applicable to products liability cases as involving actual malice, even a cursory review of the standard adopted indicates that that simply is not the case. Requiring actual knowledge of the product's defect is but one prong of the test. The other prong, that there be a conscious or deliberate disregard of the foreseeable harm resulting from the defect presents a different situation altogether. That concept is reminiscent of implied malice and, more to the point, like gross negligence requires definition on a case by case basis. It goes without saying that when an issue is a question for the factfinder, different factfinders will invariably reach different results from the same, or similar, evidence. Consequently, when different factfinders are presented with the same, or similar, evidence, we can anticipate that different results are likely to be reached. Thus, although couched in terms of a unitary standard, what we really have adopted is a two-prong standard, one applicable to non-intentional torts and the other, containing an aspect quite similar to the standard we have just discarded, applicable to products liability cases. If we can tolerate case by case judicial definition of the requisite conduct in products liability cases, I can see no reason why we cannot continue to do so in non-intentional tort cases. After all, it is the application of the test, not its formulation, that is critical. Perhaps we should busy ourselves in developing more effective review mechanisms rather than attempting to redefine the conduct that will support punitive damages.