Opinion ID: 1772073
Heading Depth: 3
Heading Rank: 2

Heading: application of principles stated in hodges

Text: The Court in Hodges held that punitive damages may be awarded only if a defendant has acted 1) intentionally, 2) fraudulently, 3) maliciously, or 4) recklessly. [B]ecause punitive damages are to be awarded only in the most egregious of cases, we held that a plaintiff must prove a defendant's wrongful conduct by clear and convincing evidence. Id. In a case in which punitive damages are sought the trial court must, upon motion of the defendant, bifurcate the trial of the case. Hodges, 833 S.W.2d at 901. The court first conducts a hearing on (1) liability for, and the amount of, compensatory damages and (2) liability for punitive damages in accordance with the standards announced above. Id. If the court decides that punitive damages are to be imposed, the court then immediately conducts a second phase of the trial to determine the amount of punitive damages. Id. As we stated in Hodges : During this second phase, the factfinder shall consider, to the extent relevant, at least the following: (1) The defendant's financial affairs, financial condition, and net worth; [8] (2) The nature and reprehensibility of defendant's wrongdoing, for example (A) The impact of defendant's conduct on the plaintiff, or (B) The relationship of defendant to plaintiff; (3) The defendant's awareness of the amount of harm being caused and defendant's motivation in causing the harm; (4) The duration of defendant's misconduct and whether defendant attempted to conceal the conduct; (5) The expense plaintiff has borne in the attempt to recover the losses; (6) Whether defendant profited from the activity, and if defendant did profit, whether the punitive award should be in excess of the profit in order to deter similar future behavior; (7) Whether, and the extent to which, defendant has been subjected to previous punitive damage awards based upon the same wrongful act; (8) Whether, once the misconduct became known to defendant, defendant took remedial action or attempted to make amends by offering a prompt and fair settlement for actual harm caused; and (9) Any other circumstances shown by the evidence that bear on determining the proper amount of the punitive award. Hodges, 833 S.W.2d at 901-02. In applying these factors, the trier of fact must consider that the primary purpose of a punitive award is to deter misconduct, while the purpose of compensatory damages is to make plaintiff whole. Id. at 902. In jury cases the trial judge must review the jury's award of punitive damages and clearly set forth the reasons for decreasing or approving all punitive awards in findings of fact and conclusions of law demonstrating a consideration of all factors on which the jury is instructed. Id. In non-jury trials, such as the pending case, the trial judge's findings of fact and conclusions of law are equally essential. In the absence of sufficient findings of fact and conclusions of law as to each of the relevant Hodges criteria, an appellate court cannot adequately review the trial court's award of punitive damages. With the foregoing principles in mind, we turn to an analysis of the trial court's order of judgment assessing punitive damages against First Tennessee. We begin by noting that the trial court failed to follow the trial procedure established in Hodges . In the first phase of the trial, the court ruled only on First Tennessee's liability for compensatory damages. The court reserved both the issue of liability for punitive damages and the issue of the amount of any such damages for the second phase of the trial. In the second phase of the trial, the court found First Tennessee liable for punitive damages and set the amount of punitive damages at $9,000,000.00. [9] While the trial court failed to follow the trial procedure stated in Hodges , neither party has raised this error as an issue on appeal. We note, however, that for the sake of consistency between jury trials and non-jury trials, the trial procedure should be the same in both types of cases. We next consider the trial court's decision to award punitive damages. We find that the trial court's findings of fact and conclusions of law amply support the imposition of punitive damages. The trial court made extensive findings of fact concerning the reprehensibility of Community First's actions. These findings support the trial court's conclusion that the conduct of Community First was both intentional and fraudulent. These findings of fact and conclusions of law, however, are not sufficient to support the amount of punitive damages assessed by the trial court because the findings and conclusions fail to adequately address all of the relevant factors required by Hodges . Id. In order to clearly demonstrate a consideration of all relevant factors, the court's findings of fact and conclusions of law should explicitly refer to each of the factors listed in Hodges , as well as to any other factors supporting the award of punitive damages. Id. (stating, the factfinder shall consider, to the extent relevant, at least the following. . . [listing the nine factors].) (emphasis added). See Coffey, 929 S.W.2d at 329-30 (quoting the trial court's extensive findings of fact and conclusions of law as to each individual factor listed in Hodges ). The trial court's findings of fact and conclusions of law in the pending case did not address each of the Hodges factors individually and are therefore insufficient. We therefore reverse the award of punitive damages and remand this case to the trial court. On remand, the trial court will apply the factors outlined in Hodges and will make appropriate findings of fact and conclusions of law in arriving at an award of punitive damages. [10]