Opinion ID: 2600489
Heading Depth: 3
Heading Rank: 3

Heading: Pederson's Motion for a Directed Verdict on the Issue of Punitive Damages.

Text: At the close of Barnes's case, Pederson moved for a directed verdict on the issue of punitive damages. The superior court denied the motion in part and permitted the jury to determine whether Pederson was liable for punitive damages after November 12, 1998. [35] The jury subsequently awarded Barnes $37,500 in punitive damages against Pederson, an amount which the court included in its final judgment. Pederson argues that because there was no clear and convincing evidence that his conduct was reckless rather than negligent, the court should have granted his motion for a directed verdict instead of presenting the issue of punitive damages to the jury. [36] We review the decision to submit a punitive damages determination to the jury for abuse of discretion. [37] More generally, when reviewing a superior court's decision to deny a motion for a directed verdict, we will `determine whether the evidence, when viewed in the light most favorable to the non-moving party, is such that reasonable [persons] could not differ in their judgment.' [38] In order for a jury to make an award of punitive damages, AS 09.17.020(b) requires there to be clear and convincing evidence of either outrageousness, which includes acts done with malice or bad motives, [39] or reckless indifference to the interest of another person. [40] At trial, Barnes stipulated that Pederson did not have malice, and the superior court concluded that there was no evidence that Pederson had any ill or hostile or bad motives. We therefore need to determine whether Pederson was recklessly indifferent to Barnes's interests. A review of the record leads us to conclude that there is no evidence that Pederson acted with reckless indifference to Barnes's rights. Viewing the evidence in the light most favorable to Barnes, there is no indication that Pederson had actual knowledge of Aiken's wrongdoing. Nor is there evidence that Pederson attempted to avoid knowledge of Aiken's misconduct. Instead, when Pederson first received the therapist's accusations, he conducted a partial investigation by discussing the accusations with both Aiken and Parks. He even tried to contact the therapist. Pederson did fail to appreciate the significance of certain warning signs of Aiken's misconduct, such as the high rates of return from the purported investments. Yet even Barnes's expert witness who testified that Pederson had committed malpractice never characterized Pederson's behavior as reckless. When Pederson did eventually learn of Aiken's misconduct, he promptly reported it to the court. Barnes argues that Pederson was reckless when he failed to acquire and inspect a copy of the accounting that Aiken submitted to the court on March 31, 1998. Barnes further argues that Pederson was recklessly indifferent to her interests when he, in his report to the court, indicated that no SBS funds had been paid, even though at the time he wrote the report he had a document in his file indicating that the funds had been paid. Pederson testified that despite the document in his file, he did not believe that Barnes had received the SBS funds. Aiken had explained to Pederson that the SBS check had not cleared and that he had chosen instead to defer the payment. According to the Restatement (Second) of Torts, [p]unitive damages are not awarded for mere inadvertence, mistake, errors of judgment and the like, which constitute ordinary negligence [but are restricted to] conduct involving some element of outrage similar to that usually found in crime. [41] While in retrospect it appears foolish for Pederson to have believed Aiken and to have allowed Aiken to submit any documents to the court on his own, we cannot conclude that Pederson's actions contained the element of outrageousness or recklessness necessary to justify an award of punitive damages. Given the absence of evidence that Pederson acted with reckless indifference to Barnes's interests, we conclude that the denial of Pederson's motion for a directed verdict on the issue of punitive damages was an abuse of discretion.