Opinion ID: 2507460
Heading Depth: 2
Heading Rank: 3

Heading: The district court properly denied Appellants' motion to amend their complaint to assert a claim for punitive damages.

Text: Appellants argue the district court applied the wrong legal standard when it denied their motion to amend the complaint to add a prayer for punitive damages. We affirm the district court's denial of the motion to amend. Appellants argue a party does not need to show both a bad state of mind and an extreme deviation from reasonable conduct as separate elements to support adding a plea for punitive damages. Appellants also argue the district court failed to weigh circumstantial evidence regarding North Pacific's fraudulent intent and it failed to consider the insurance policy as relevant, despite the fact the policy provides that North Pacific will pay its share of expenses, costs, and fees when it is paid out of a recovery made by the insured. Finally, Appellants argue punitive damages are supported by North Pacific's oppressive conduct in the marketplace, the gross disparity of bargaining power between North Pacific and Jennings, and a breach of the fiduciary duty North Pacific owed Jennings. The district court applied the correct legal standard when it ruled on Appellants' claim for punitive damages. A court shall allow the motion to amend the pleadings if, after weighing the evidence presented, the court concludes that the moving party has established at such hearing a reasonable likelihood of proving facts at trial sufficient to support an award of punitive damages. I.C. § 6-1604. Punitive damages are not favored in the law and should be awarded in only the most unusual and compelling circumstances. Manning v. Twin Falls Clinic & Hosp., 122 Idaho 47, 52, 830 P.2d 1185, 1190 (1992). Idaho Code § 6-1604 provides in pertinent part: [i]n any action seeking recovery of punitive damages, the claimant must prove, by clear and convincing evidence, oppressive, fraudulent, malicious or outrageous conduct by the party against whom the claim for punitive damages is asserted. The issue of punitive damages revolves around whether the plaintiff is able to establish the requisite `intersection of two factors: a bad act and a bad state of mind.' Myers v. Workmen's Auto Ins. Co., 140 Idaho 495, 503, 95 P.3d 977, 985 (2004) (citing Linscott v. Rainier Natl. Life Ins. Co., 100 Idaho 854, 858, 606 P.2d 958, 962 (1980)). The action required to support an award of punitive damages is that the defendant acted in a manner that was `an extreme deviation from reasonable standards of conduct, and that the act was performed by the defendant with an understanding of or disregard for its likely consequences.' Id. at 502, 95 P.3d at 984 (citing Cheney v. Palos Verdes Inv. Corp., 104 Idaho 897, 905, 665 P.2d 661, 669 (1983)). The mental state required to support an award of punitive damages is `an extremely harmful state of mind, whether that be termed malice, oppression, fraud or gross negligence; malice, oppression, wantonness; or simply deliberate or willful.' Id. Therefore, to support an award of punitive damages, Appellants must prove North Pacific's actions towards Jennings constituted an extreme deviation from standards of reasonable conduct, which was done with knowledge of the likely consequences and an extremely harmful state of mind. A district court's determination that a plaintiff is not entitled to amend the complaint to claim punitive damages is reviewed for abuse of discretion. Weaver v. Stafford, 134 Idaho 691, 700, 8 P.3d 1234, 1243 (2000). The abuse of discretion inquiry examines (1) whether the trial judge correctly perceived the issue as one of discretion; (2) whether the trial judge acted within the outer boundaries of his discretion and consistently with the legal standards applicable to the specific choices available to him; and (3) whether the trial judge reached his decision through an exercise of reason. Sun Valley Shopping Ctr. v. Idaho Power, 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991). The district court did not abuse its discretion when it denied Appellants motion to amend their complaint to add a claim for punitive damages. The district court stated: [w]hether or not to allow the amendment pursuant to I.C. 6-1604 is a matter of discretion for the trial court. Thus, the district court perceived the issue as discretionary. The boundaries of the district court's decision were well-defined; it could either grant or deny the motion. The decision to deny the motion to amend was thus within the boundaries of its discretion. The only remaining issue is whether the district court's decision was the product of reason. In reaching its decision, the district court properly focused on North Pacific's conduct. The district court observed that North Pacific had rejected Appellants' offer to pursue its subrogation claim, that North Pacific was unaware of the mediation and that North Pacific was unaware of Farm Bureau's insistence on settling its subrogation claim. The district court rejected Appellants' claim of fraud based upon North Pacific's representation that it was actively pursuing its own subrogation interest, noting that there was simply no action on the part of North Pacific that led to Appellants' decision to settle with Farm Bureau. The district court's decision was clearly the product of the exercise of reason. For that reason, we affirm the district court's denial of Appellants' motion to amend the complaint to add a claim for punitive damages.