Opinion ID: 1218195
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Heading Rank: 1

Heading: considerations governing allowance of punitive awards

Text: The reasons for hesitancy in awarding punitive damages are obvious. First, the plaintiff is fully compensated for injury by compensatory damages. An additional award or fine from the defendant may constitute unjust enrichment. Unlike fines paid into the public treasury for public use, we may assume fines paid to private persons will not be similarly used. Second, civil law is concerned with vindicating rights and compensating persons for harm suffered when those rights are invaded. Criminal law is concerned with punishing wrongdoers. In our tripartite system of government, the Legislature prescribes punishment for criminal conduct. ( People v. Tanner (1979) 24 Cal.3d 514, 519, fn. 3 [156 Cal. Rptr. 450, 596 P.2d 328]; In re Foss (1974) 10 Cal.3d 910, 917 [112 Cal. Rptr. 649, 519 P.2d 1073]; In re Lynch (1972) 8 Cal.3d 410, 414 [105 Cal. Rptr. 217, 503 P.2d 921].) Ordinarily, the Legislature specifies the range of criminal punishment, and it is for trial judges or administrative specialists to determine the appropriate punishment within that range. Punitive damage is awarded in the context of a civil trial. While the Legislature has provided punitive damage may be awarded in certain civil cases, it has not created standards to guide the jury in determining when such awards are justified. Consequently, punitive damage may be awarded at whim ( Brewer v. Second Baptist Church (1948) 32 Cal.2d 791, 800-801 [197 P.2d 713]; Triton Ins. Underwriters Inc. v. National Chiropractic Ins. Co. (1965) 232 Cal. App.2d 829 [43 Cal. Rptr. 504]). Upon deciding to grant punitive damage, little if any guidance is given the jury as to the appropriate size of the award (cf. Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928 [148 Cal. Rptr. 389, 582 P.2d 980]). Moreover, when the defendant's conduct also constitutes a crime for which he has been or will be punished, the punitive award constitutes double punishment  potentially in excess of the maximum punishment specified in the Penal Code and a dubious exception to the prohibition against multiple punishment. (Pen. Code, § 654.) Third, punitive damage trials interfere with policies governing trial procedures. Punishment ordinarily serves as a deterrent to future conduct. As Justice Peters pointed out, if the plaintiff can place punitive damages in issue, it means that the plaintiffs can offer evidence of the financial status of the defendant. This would convert personal injury cases where intoxication or wilful misconduct are involved from the trial of a negligence case into a field day in which the financial standing of the defendant would become a major issue. ( Gombos v. Ashe, supra, 158 Cal. App.2d at p. 528.) In addition, the trier of fact assessing deterrence should be advised whether the compensatory award will come out of the defendant's pocket  thereby reducing his assets  or whether it will be paid by a liability insurer. But Section 1155 of the Evidence Code provides that evidence of insurance is inadmissible to prove negligence or wrongdoing. The obvious purpose of the provision is to prevent the prejudicial use of evidence of liability insurance in an action against an insured. [Citation.] ( Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, 891 [153 Cal. Rptr. 842, 592 P.2d 329].) It is apparent that to permit punitive damages in accident cases will distract the trier of fact from its liability function, interfering with sound policies governing trial procedures. Fourth, although situations do exist where punitive awards have a substantial deterrent effect, others exist in which deterrence is marginal at best. Because restitution only requires a wrongdoer give up his unjustified gains, compensatory damage will not always constitute deterrence. If the conduct while clearly wrongful is not criminal, a punitive award may be necessary to deter. Otherwise persons contemplating the wrongful conduct may feel they are in a no-lose situation, only gaining by the wrongful conduct. ( Ward v. Taggert (1959) 51 Cal.2d 736, 743 [336 P.2d 534]; cf. Chelini v. Nieri (1948) 32 Cal.2d 480, 487 [196 P.2d 915].) On the other hand, deterrent effect of a punitive award may be minimal or marginal where the conduct already constitutes a crime and the criminal statute is regularly and effectively enforced. Deterrence by punitive award is also marginal where wrongful conduct is as likely to result in injury to the wrongdoer as to others. (Franson, Exemplary Damages in Vehicle Accident Cases (1975) 50 State Bar J. 93, 148.) In addition, if application of punitive award depends upon a fortuitous rather than an intended consequence of wrongful conduct, potential wrongdoers will not be deterred. They will simply assume the unintended consequence will not occur. This consideration has particular relevance to the instant case because the majority seek to deter drunk driving by enhancing penalty only when an accident occurs. Drunk drivers not involved in accidents  comprising the vast majority  are not subject to the penalty. In an analogous situation, where it was urged that robbery would be deterred by applying the felony-murder rule to cases where the victim shot and killed one of the robbers, this court rejected today's majority reasoning. An additional penalty for a homicide committed by the victim would deter robbery haphazardly at best. To `prevent stealing, [the law] would do better to hang one thief in every thousand by lot.' (Holmes, The Common Law, p. 58.) ( People v. Washington (1965) 62 Cal.2d 777, 781 [44 Cal. Rptr. 442, 402 P.2d 130].) Similarly, if their mark is deterrence, the majority might consider Holmes' suggestion, applying the enhanced penalty to one drunk driver in every thousand chosen by lot. It is apparent that punitive damage awards will not have a significant deterrent effect in numerous situations. Fifth, the prevalence of liability insurance in our society, requires that any evaluation of punitive damage in accident cases, especially in the context of deterrence, must consider the insurance factor. Under the traditional view, an award of punitive damage nullifies all insurance coverage. An insurer is not liable for loss intentionally caused by the insured, and any contract providing for liability is void as being against public policy. (Ins. Code, § 533; Civ. Code, § 1668; Tomerlin v. Canadian Indemnity Co. (1964) 61 Cal.2d 638, 648 [39 Cal. Rptr. 731, 394 P.2d 571].) [1] When an insured commits an intentional injury, he cannot require his insurer to indemnify him for either punitive or compensatory damage paid under a judgment. ( Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 278-279 [54 Cal. Rptr. 104, 419 P.2d 168]; Abbott v. Western Nat. Indem. Co. (1958) 165 Cal. App.2d 302, 304-305 [331 P.2d 997]; Keeton, Insurance Law (1971) p. 287; Note, Insurance For Punitive Damages: A Reevaluation (1976) 28 Hastings L.J. 431, 447; Note (1961) 49 Cal.L.Rev. 394, 396-397; see Ins. Code, § 533; Note, The Insurer's Duty to Defend Made Absolute: Gray v. Zurich (1967) 14 UCLA L.Rev. 1328, 1332.) Because punitive damage is recoverable only for malicious or other intentional injury (Civ. Code, § 3294), a punitive award traditionally exonerated the insurance company from coverage. (See Note, Insurance for Punitive Damages: A Reevaluation, supra, 28 Hastings L.J. 431, 447; Maxon v. Security Ins. Co. (1963) 214 Cal. App.2d 603, 616 [29 Cal. Rptr. 586]; Quint, A Quick Look at Wilful Misconduct (1965) 40 State Bar J. 481, 486.) This rule was recently followed in City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal. App.3d 31, 36-39 [151 Cal. Rptr. 494], the court concluding that malice imports wilfulness within the meaning of Insurance Code section 533, precluding insurance coverage. Although the case involved insurance company liability for punitive award only, the court relied on the code section which makes no distinction between compensatory and punitive award, and thus the decision encompasses compensatory damages. We denied a hearing on 28 February 1979. The practical significance of the majority's opinion is not that juries may assess punitive damage in accident cases involving drunk driving, but rather the undesirable result that liability insurers will now avoid all coverage in such cases. While a few victims injured by wealthy drunk drivers will receive both compensatory and punitive damages, the many unfortunately injured by drivers without assets will be unable to recover even compensatory damages from insurers. (Quint, A Quick Look at Wilful Misconduct, supra, 40 State Bar J. at p. 486.) Because wary plaintiffs are unlikely to jeopardize carrier coverage for compensatory damage, they will not seek punitive damage unless the defendant is either wealthy or uninsured. [2] For this reason, the deterrent effect as to insured drivers who are not wealthy is further diluted. [3] Sixth, creation of the new punitive award appears contrary to the solicitude for injured wrongdoers reflected by the recent adoption of comparative fault. ( Li v. Yellow Cab Co. (1975) 13 Cal.3d 804 [119 Cal. Rptr. 858, 532 P.2d 1226, 78 A.L.R.3d 393].) A plaintiff guilty of wilful misconduct may not recover any damages against a negligent defendant ( Sissle v. Stefenoni (1979) 88 Cal. App.3d 633, 636 [152 Cal. Rptr. 56]; Paula v. Gagnon (1978) 81 Cal. App.3d 680, 685-686 [146 Cal. Rptr. 702]; Kindt v. Kauffman (1976) 57 Cal. App.3d 845, 853-858 [129 Cal. Rptr. 603] [overruled on other grounds Ewing v. Cloverleaf Bowl (1978) 20 Cal.3d 389, 401, fn. 8, 404, fn. 10 (143 Cal. Rptr. 13)]). Because malice imports wilfulness, intoxicated drivers will be barred from any recovery against negligent defendants. The foregoing six considerations suggest we adhere rigidly to Justice Peters' fundamental principle that punitive damage should be awarded with the greatest caution in accident cases. [4]