Opinion ID: 2512331
Heading Depth: 3
Heading Rank: 5

Heading: Seeking Punitive Damages Through An IIED Claim

Text: In certain cases, a plaintiff aggrieved by the defendant's assertion of malicious defenses is entitled to recover compensatory and punitive damages through an IIED claim. Cf. Lee v. Aiu, 85 Hawai`i 19, 34, 936 P.2d 655, 670 (1997) (affirming the jury's award of punitive damages where it was reasonable for the jury to have found the defendant liable for IIED). An award of punitive damages may serve to punish a defendant for `aggravated or outrageous misconduct' and to deter that defendant from similar conduct in the future. Lee, 85 Hawai`i at 34, 936 P.2d at 670; see also Zanakis-Pico v. Cutter Dodge, Inc., 98 Hawai`i 309, 331 n. 4, 47 P.3d 1222, 1244 n. 4 (2002) (nominal damages may be the basis of an award of punitive damages in intentional torts, because the jury may award nominal damages to acknowledge that the cause of action was established and punitive damages to punish the wrongdoer for violating the rights of the victim (quoting Sanchez v. Clayton, 117 N.M. 761, 877 P.2d 567, 573 (1994))). This court has stated that a plaintiff may assert an IIED claim by establishing (1) that the conduct allegedly causing the harm was intentional or reckless; (2) that the conduct was outrageous; and (3) that the conduct caused (4) extreme emotional distress to another. Brooks v. Dana Nance & Co., 113 Hawai`i 406, 415, 153 P.3d 1091, 1100 (2007) (quoting Hac, 102 Hawai`i 92, 95, 73 P.3d 46, 49 (2003)). The tort of IIED is well-accepted. See id. ; Restatement  46; Prosser and Keeton on Torts,  12, at 54-66. Still, this tort provides no clear definition of the prohibited [outrageous] conduct. Daniel Givelber, The Right To Minimum Social Decency And the Limits of Evenhandedness: Intentional Infliction of Emotional Distress by Outrageous Conduct, 82 Colum. L.Rev. 42, 51 (1982). The Restatement simply informs us that a defendant's conduct satisfies the element where the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, `Outrageous!' Restatement  46 comment d. Our understanding of this tort is thus guided by the Restatement's other comments: actors are not liable for mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. Id. ; see also Prosser and Keeton on Torts,  12, at 59. An actor is also not liable where the conduct is privileged,ÔÇöwhen he has done no more than to insist upon his legal rights in a permissible way, even though he is well aware that such insistence is certain to cause emotional distress. Restatement  46 comment g (emphasis added). A plaintiff may, however, state a claim for IIED because of his or her relationship with the defendant. The extreme and outrageous character of the conduct may arise from an abuse by the actor of a position, or a relation with the other, which gives him actual or apparent authority over the other, or power to affect his interests. Restatement  46 comment e. In this sense extreme `bullying tactics' and other `high pressure' methods of insurance adjusters seeking to force compromises or settlements may satisfy the conduct element. Eckenrode v. Life of America Ins. Co., 470 F.2d 1, 4 (7th Cir.1972) (citing Restatement  46 comment e) (Insurer's alleged bad faith refusal to make payment on the policy, coupled with its deliberate use of `economic coercion' ( i.e., by delaying and refusing payment it increased plaintiff's financial distress thereby coercing her to compromise and settle) to force a settlement, clearly rises to the level of `outrageous conduct' to a person of `ordinary sensibilities.'); Prosser and Keeton on Torts,  12, at 62 (noting that plaintiffs may assert an IIED claim to hold parties liable for engaging in outrageous bullying tactics intending to force a settlement); see also Frishett v. State Farm Mutual Auto. Ins. Co., 3 Mich.App. 688, 143 N.W.2d 612 (1966). [22] In fact, cases involving parties inappropriately resolving their liability disputes actually helped define and develop IIED: One of the most prominent lines of cases in the evolution of IIED arose from the development of the modern credit and insurance industries. Specifically, the pressure tactics of humiliating debtors into repayment and intimidating claimants into accepting low compensation for insured losses became a fertile source of abusive behavior that had no home in the community of recognized torts. Some collection cases involved conduct readily assignable to established tort categories like defamation and assault, but in others the courts either lacked these options or chose to identify the infliction of emotional distress as the predicate for recovery. It has been suggested that the courts in these cases were especially willing to compensate plaintiffs for purely emotional injuries because the abusive treatment was a deliberate and premeditated element of a commercial strategy. The claims adjustment cases presented courts with the compelling scenario of a powerful insurance company bullying a physically infirm and/or financially vulnerable victim. In recent years, the existence of a special relationship, particularly one of authority or economic dependence, between the plaintiff and defendant often has been an important factor in rendering liability for IIED. Russell Fraker, Reformulating Outrage: A Critical Analysis of the Problematic Tort of IIED, 61 Vand. L.Rev. 983, 990-91 (2008) (footnotes omitted). In the same way, a plaintiff may assert a claim for IIED for suffering from the defendant's conduct during a prior lawsuit. A party is not liable for merely insist[ing] upon his legal rights in a permissible way, Restatement  46 comment g, but it may be liable for its conduct in the prior litigation that is not justifiable. In other words, the elements of IIEDÔÇöthough narrower and more refined than that of the tort of malicious defenseÔÇödo not preclude a successful plaintiff from seeking damages for suffering from a third party's conduct in a previous lawsuit. To illustrate, in this case, we are concluding that Young stated a claim for IIED based upon, among other things, the Defendants' conduct during the litigation. See infra. We are holding that reasonable people could differ as to whether the Defendants acted without just cause or excuse and beyond all bounds of decency in [this case]. See id. As part of Allstate's litigation tactics, Allstate offered Young merely $5,000 to settle her claims, then raised its offer to $5,300, even though it was aware that its insured was liable for the accident and that her medical expenses from the accident exceeded this offer. Additionally, we believe that the complaint plainly alleged [the first, third, and fourth element of IIED] by averring that the Defendants' intentional conduct caused Young to experience severe anxiety, worry, fear, and mental and emotional distress. See also Fletcher v. W. Nat'l Life Ins. Co., 10 Cal.App.3d 376, 89 Cal.Rptr. 78 (1970) (affirming the $250,000 judgment against the defendants, an insurance company and its claims supervisor, where defendants refused to make payments under the insured's policy and acted for the purpose of causing the plaintiff to settle a nonexistent dispute). Consistent with the tort of IIED, a defendant should be held liable for a subsequent lawsuit if he or she engaged in outrageous conduct, causing the plaintiff distress. We believe it is more appropriate to sanction other, less offensive litigation conduct within the same, underlying lawsuit, or, where it is necessary, to offer relief based on the well-established tort of IIED. See Restatement  46 comment d (noting that actors are not liable for mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities). In our view, Hawaii's existing rules, statutes, and tort law offer appropriate remedies for the plaintiff's injuries. In light of the plethora of remedies available to plaintiffs when defendants' litigation tactics are brought in bad faith, and because we should not chill the defendants' right to conduct a vigorous defense, we decline to adopt the tort of malicious defense. [23]