Opinion ID: 1714221
Heading Depth: 1
Heading Rank: 4

Heading: MIC Life's liability

Text: ¶ 12. MIC Life does not dispute that it owes the $637.99 in unearned premiums, so that is not an issue. What is at issue is whether MIC Life violated Miss. Code Ann. § 83-53-17 (1999), the violation of which was the basis for awarding punitive damages. In order to determine whether a violation occurred, the proper meaning of Miss.Code Ann. § 83-53-17 (1999) must be understood. When interpreting a statute, we must first examine the language of the statute in question. The primary rule of construction is to ascertain the intent of the legislature from the statute as a whole and from the language used therein. Where the statute is plain and unambiguous there is no room for construction ... Clark v. State ex rel. Miss. State Med. Ass'n, 381 So.2d 1046, 1048 (Miss.1980). Pursuant to the rule, we therefore must examine the language of Miss.Code Ann. § 83-53-17(2) (1999), which provides in pertinent part: Each individual policy or group certificate shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly by the insurer to the person entitled therefor; ... The insurer shall pay or cause to be paid to the debtor any refund due pursuant to this subsection within thirty (30) days of the accrual of such refund. (emphasis added). ¶ 13. The Court of Appeals majority read into this statute a requirement that the insured notify the insurer, and thus, MIC Life was delinquent in refunding the money by a mere few months which can be explained away due to a clerical error. In contrast, we agree with the dissent. The statute is clear and unambiguous, and it does not contain a notice requirement. It would have been a simple matter for the Legislature to include a notice provision in the statute had it intended one. MIC Life, as the insurer, was thus bound by statute to refund the unearned premiums within 30 days of termination of the policy, which occurred in 1992. A notice requirement should not be read into the statute, and the Court of Appeals is reversed on this issue. ¶ 14. Furthermore, as the Court of Appeals dissent points out, the insurance contract also contained no requirement that the insured notify the insurer of termination. In the event of termination of this insurance prior to the maturity date, the unearned portion of the insurance charge will be refunded to you or credited toward your indebtedness. ¶ 15. As deftly phrased by Judge Irving's opinion, [f]aced with a statutory duty to refund unearned premiums within thirty (30) days, it was incumbent upon MIC Life to have controls in place to guarantee compliance with its statutory duty. Since the loan was paid off on June 29, 1992, MIC Life had until July 29, 1992, to refund the unearned premium. Under the Court of Appeals holding, MIC Life tried to excuse its tardiness by blaming the delay on a clerical error. However, under the proper interpretation, MIC Life was already over two years delinquent when the clerical error occurred. This is ample evidence to support the imposition of punitive damages, and as the dissent below stated, it is entirely reasonable for the jury to conclude that MIC Life's failure to make the refund until October 1995, represented gross indifference to Hicks's rights. ¶ 16. In rebuttal, MIC Life suggests that a statute of limitations problem arises. It contends, and the Court of Appeals agreed, that our interpretation would require that suit be brought by June 29, 1995 (three years from the date the note was paid off). Hicks's cause of action did not accrue until there had been an actual denial of her claim for a refund, or until the thirty day time limit to pay pursuant to Miss.Code Ann. § 83-53-17(2) (1991) had lapsed. In the present case, MIC Life never notified Hicks of the denial of her claim, and thus her cause of action did not accrue until July 30, 1992. Since there is a three-year statute of limitations and the complaint was filed on July 5, 1995, the suit was timely. Thus, the matter was not barred by the statute of limitations and we affirm, but for different reasons. ¶ 17. While we find that punitive damages are warranted by MIC Life's conduct, we find that the $1 million in punitive damages awarded below is grossly excessive. We review de novo a challenge to the constitutionality of the size of a punitive damages award. See Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 121 S.Ct. 1678, 1683, 149 L.Ed.2d 674 (2001). The imposition of punitive damages under state law is constrained by the Eighth and Fourteenth Amendments, the first proscribing excessive fines and cruel and unusual punishment, the second making grossly excessive punishments unlawful under its Due Process Clause. See id. at 1684. In BMW of N. Am., Inc. v. Gore , the Supreme Court articulated three factors that courts should consider in determining whether an award of punitive damages is constitutionally excessive. Those three factors are: (1) the reprehensibility of the conduct; (2) the ratio of compensatory damages awarded to punitive damages; and (3) a comparison of the punitive damages award with any possible civil or criminal sanction. Gore. 517 U.S. at 580, 116 S.Ct. 1589. ¶ 18. The first factor has been discussed above with a finding that the conduct does warrant some punitive award. The second and perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award, as stated in Gore, is its ratio to the actual harm inflicted on the plaintiffthat is, the ratio of compensatory damages to the punitive damages awarded. Gore, 517 U.S. at 580, 116 S.Ct. 1589. The principle that exemplary damages must bear a `reasonable relationship' to compensatory damages has a long pedigree. Id. (citations omitted). This determination may include consideration of the relationship between the punitive damages award and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred. Id. at 581, 116 S.Ct. 1589 (citing Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21, 111 S.Ct. 1032 1045, 113 L.Ed.2d 1 (1991)). It must be noted that this factor is a consideration of the harm to the victim that would have ensued had the tortious conduct succeeded or continued. Gore, 517 U.S. at 581, 116 S.Ct. 1589 (citing TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443, 460, 113 S.Ct. 2711, 2721, 125 L.Ed.2d 366 (1993)). ¶ 19. The ratio of compensatory damages to punitive damages in Gore was 500:1. Gore, 517 U.S. at 583, 116 S.Ct. 1589. The Supreme Court termed this ratio breathtaking and stated that such a disparate award must surely raise a suspicious judicial eyebrow. Id. The ratio in the present case is 1567:1. If that awarded in Gore was breathtaking, the amount awarded below absolutely boggles the mind. Though the Court in Gore recognized that there is no mathematical bright line, we find that the amount awarded here is absolutely beyond excessive. ¶ 20. In Independent Life & Acc. Ins. Co. v. Peavy, 528 So.2d 1112 (Miss.1988), this Court upheld a punitive damages award approximately 600 times that of the compensatory damages. This is the highest ratio sanctioned by this Court. In Dixie Ins. Co. v. Mooneyhan, 684 So.2d 574, 587 (Miss.1996), this Court found the punitive damages award, which was 1,875 times the actual damage, to be excessive. ¶ 21. Under the third guidepost, Gore mandates that we compare the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct. Gore, 517 U.S. at 583, 116 S.Ct. 1589. Miss.Code Ann. § 83-5-17 (1999) provides a maximum penalty of $5,000 for each offense committed by MIC Life. The maximum penalty that could be awarded against MIC Life for its proven conduct in the case at bar is $5,000. A reviewing court engaged in determining whether an award of punitive damages is excessive should accord substantial deference to legislative judgments concerning appropriate sanctions for the conduct at issue as the sanctions imposed by the legislature are duly considered by the courts to be those the legislature has determined to be necessary to achieve the goal of deterring future misconduct. Gore, 517 U.S. at 583-84, 116 S.Ct. 1589. The sanction imposed in the case sub judice cannot be justified on the ground that it was necessary to deter future misconduct without considering whether less drastic remedies could be expected to achieve that goal. ¶ 22. The constitutional question presented is whether MIC Life had fair notice that it could be punished $1 million for failing to pay a refund of $637.99 to Mrs. Hicks, not some potential, hypothetical aggregate of harm to persons not before this Court and against whom no harm has been proven. We find that MIC Life did not have fair notice of such a punishment. A correct analysis of the Gore factors reveals that the punitive damages award in this case is unconstitutionally excessive.