Opinion ID: 2137263
Heading Depth: 2
Heading Rank: 1

Heading: SDCL 21-1-4.1 is applicable to claims for punitive damages based upon fraud and deceit.

Text: Dahls contend that SDCL 21-1-4.1 does not apply to punitive damage claims based on oppression, fraud, or intentional conduct, as opposed to the willful, wanton or malicious conduct specifically referred to in the statute. Claims for punitive damages are prohibited in this state unless expressly authorized by statute. SDCL 21-1-4. Dahls' claim against Sittner for punitive damages is authorized by SDCL 21-3-2 which provides, in pertinent part: In any action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, ... the jury, in addition to the actual damage, may give damages for the sake of example, and by way of punishing the defendant. This statute limits punitive damages to cases in which oppression, fraud, or malice is claimed. Groseth Intern. v. Tenneco, Inc., 440 N.W.2d 276, 279 (S.D.1989); Mathews v. Twin City Const. Co., 357 N.W.2d 500 (S.D.1984). See Till v. Bennett, 281 N.W.2d 276, 279 (S.D.1979) (dicta); Stugelmayer v. Ulmer, 260 N.W.2d 236, 240 (S.D.1977) (dicta). See also Hannahs v. Noah, 83 S.D. 296, 303, 158 N.W.2d 678, 682 (1968); Driscoll, Statutory Restrictions on the Discovery and Trial of Punitive and Exemplary Damage Claims in South Dakota, 33 S.D.L.Rev. 247 (1988). Malice is an essential element of a claim for punitive damages, however, malice sufficient to support exemplary damages may be either actual, malice in fact, or presumed, legal malice. Actual malice is a positive state of mind, evidenced by the positive desire and intention to injure another, actuated by hatred or ill-will towards that person. Malice is so defined in Gamble v. Keyes, 43 S.D. 245, 178 N.W. 870, 872 (1920). Presumed, legal malice, on the other hand, is malice which the law infers from or imputes to certain acts. Hannahs, 83 S.D. at 303, 158 N.W.2d at 682; 52 Am.Jur.2d § 2, P 163. Thus, while the person may not act out of hatred or ill-will, malice may nevertheless be imputed if the person acts willfully or wantonly to the injury of the other. Id. In this context, however, we have said: Malice as used in reference to exemplary damages is not simply the doing of an unlawful or injurious act, it implies that the act complained of was conceived in the spirit of mischief or of criminal indifference to civil obligations. Id. 83 S.D. at 303, 158 N.W.2d at 682. In construing SDCL 21-1-4.1 and 21-3-2 together, we equate the willful, wanton language of the former with the presumed, legal malice of the latter and the malicious language of the former with the actual malice of the latter. Dahls next contend that the statute's requirement of a preliminary showing of willful, wanton or malicious conduct imposes a greater burden on plaintiffs claiming punitive damages based on fraud than would otherwise exist absent this statute. Dahls' argument is premised on the mistaken assumption that a punitive damages claim based on fraud does not require as one of its elements a showing that the conduct was willful, wanton, or malicious. As noted above, all punitive damages claims require a showing of either actual or presumed malice. Further, as stated in Northwest Realty Co. v. Colling, 82 S.D. 421, 433, 147 N.W.2d 675, 683 (1967), the essential elements of fraud are: [T]hat a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; that it was made with intent to deceive and for the purpose of inducing the other party to act upon it; and that he [or she] did in fact rely on it and was induced thereby to act to his [or her] injury or damage. (Citations omitted; emphasis added). By definition, then, fraud involves intentional or reckless conduct. The term intentional is synonymous with willful. Hunter v. State, 57 Ala.App. 50, 325 So.2d 917, 921 (1975); Jackson v. Edwards, 144 Fla. 187, 197 So. 833 (1940); Black's Law Dictionary 948 (4th ed.1968). Likewise, reckless is synonymous with wanton. Lipscomb v. News Star World Pub. Corp., 5 So.2d 41, 45 (La.App.1941); Commonwealth v. Welansky, 316 Mass. 383, 55 N.E.2d 902, 910 (1944); Black's Law Dictionary 1435 (4th ed.1968). Thus, SDCL 21-1-4.1 does not impose an additional burden by requiring that a party claiming punitive damages first demonstrate a reasonable basis to believe that there has been willful, wanton or malicious conduct on the part of the party claimed against. Further, SDCL 21-1-4.1 employs the disjunctive form: willful, wanton, or malicious conduct. (Emphasis added). Punitive damage claimants are required only to demonstrate either willful or wanton or malicious conduct. The statute does not require evidence of actual malice before any punitive damages issue can be submitted to the fact finder. The statute may be satisfied by establishing presumed malice (willful, wanton) or actual malice (malicious). See, Yankton Production Credit v. Jensen, 416 N.W.2d 860, 863 (S.D.1987); Hunter v. Hagen, 672 F.Supp. 426, 428 (D.S.D.1987). Therefore, we affirm the trial court on this issue.