Opinion ID: 1757194
Heading Depth: 1
Heading Rank: 3

Heading: The Alleged Inconsistency in the Jury Verdict

Text: Although we have reversed the judgments in favor of Vanche, Janelle Smith, Christina Smith, and Duffee, based on the limitations defense, the judgment in favor of Green is not affected by that reversal. Thus, we must consider whether the jury could properly award Green $0 in compensatory damages and $200,000 in punitive damages. A similar issue could arise as to the other plaintiffs on retrial of their claims. Relying on O.K. Bonding Co. v. Milton, 579 So.2d 602 (Ala.1991), and other opinions from this Court, Winsett and Life of Georgia argue that this Court should reverse the judgment against them or remit the punitive damages award to $0. They say that under Alabama law, punitive damages cannot be awarded unless the jury has found that the plaintiff was injured or damaged, and they note that in this case the jury awarded each of the plaintiffs $0 in compensatory damages and $200,000 in punitive damages. The defendants point out that in O.K. Bonding this Court reversed an award of punitive damages and entered a judgment for the defendant, where the jury had awarded no nominal or compensatory damages, and the present defendants say the rule of that case must be followed here. Winsett and Life of Georgia note other opinions from this Court, such as Caterpillar, Inc. v. Hightower, 605 So.2d 1193 (Ala.1992), and First Bank of Boaz v. Fielder, 590 So.2d 893 (Ala.1991), wherein this Court has affirmed judgments awarding punitive damages even though nominal or compensatory damages had not been awarded. However, the defendants categorize those cases as exceptional and say that in each of them it was clear that the plaintiff had been injured or damaged. They contend that in this present case it is clear the plaintiffs were not damaged or injured and that these plaintiffs therefore cannot be awarded punitive damages. Finally, the defendants say that in light of the United States Supreme Court's opinion in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), which requires, as a matter of constitutional law, a reasonable relationship between punitive and compensatory damages, even the exceptional cases may no longer be viable. In response, the plaintiffs argue that O.K. Bonding has been all but overruled by this Court, citing Garrett v. City of Auburn, 623 So.2d 1033 (Ala.1993); Caterpillar, supra; Shoals Ford, Inc. v. McKinney, 605 So.2d 1197 (Ala.1992); and First Bank of Boaz, supra. In each of those cases, this Court affirmed a judgment based on a jury's award of punitive damages, even though the jury had not awarded compensatory damages. They argue that under Alabama law, as expressed by these cases, an award of compensatory damages is not necessary for a jury to award punitive damages, if the plaintiff produced substantial evidence of an injury, as well as substantial evidence of the misconduct supporting the award of punitive damages. The plaintiffs say that this is a unique case where the only significant monetary damage they suffered is the tax liability, which Life of Georgia countered by establishing the trust fund for the payment of any taxes the plaintiffs may have incurred. They say that Life of Georgia argued to the jury that the plaintiffs' paychecks were not reduced, because the pre-tax payroll deductions for the insurance premiums were roughly equivalent to the taxes that the plaintiffs otherwise would have paid and that Life of Georgia pounded home to the jury that the trust it established prevented the plaintiffs from suffering damage, resulting in the jury's $0 compensatory damages award. The plaintiffs say that Life of Georgia's creating the $400,000 trust is an admission that the plaintiffs were injured and an admission of liability. They argue that to follow Life of Georgia's logic regarding the relationship of compensatory and punitive damages would be analogous to allowing a thief to go unpunished if he returned the stolen property when caught. In sum, the plaintiffs argue that they presented substantial evidence that they incurred monetary damage in the form of a tax liability and substantial evidence that they incurred mental anguish related to that tax liability, and they argue that that damage and injury are sufficient to support an award of punitive damages even though the jury failed to award any dollar amount of compensatory damages. We are squarely faced, at least as to the plaintiff Green, with the question whether a jury can award punitive damages without awarding compensatory damages. The answer to that question turns on an analysis of the role of nominal damages in fraud cases in Alabama. This Court, although sharply divided, has issued a series of opinions upholding punitive damages awards in instances where the jury did not award compensatory damages, based upon the Court's determination that in those cases nominal damage could be inferred from the evidence presented at trial. In an earlier time, before courts began to have constitutional concerns over the relationship between amounts awarded as compensatory damages and the amounts awarded as punitive damages, verdicts were most often, if not always, general. Where a defendant attached a general verdict expressing a single dollar amount for the award to the plaintiff, the Court often was asked to uphold the verdict on a recognition that at least some nominal amount of the general verdict was appropriately referable to the plaintiff's having shown a right to at least nominal damages and, therefore, that the excess over nominal damages could properly be upheld as punitive damages. See Super Valu Stores, Inc. v. Peterson, 506 So.2d 317 (Ala. 1987) (upholding a general verdict for an amount obviously in excess of nominal damages where the jury heard evidence that the plaintiff had suffered injury from the defendant's misrepresentation by retiring from his job to take an employment opportunity that never came to fruition); Oates v. Glover, 228 Ala. 656, 154 So. 786 (1934) (upholding a general verdict for an amount obviously in excess of nominal damages where the jury heard evidence tending to show some actual damage to the plaintiff in the sale of a new automobile represented as one of a model still in production, although in fact production had been discontinued). In 1987, the legislature introduced the requirement that in a tort case, other than a wrongful-death case, the fact-finder itemize past damages, future damages, and punitive damages. See Ala.Code 1975, § 6-11-1. Since then, cases dealing with verdicts from which more can be deciphered than previously was decipherable from the old general verdict form have produced a series of divided opinions. The first notable case is The Booth, Inc. v. Miles, 567 So.2d 1206 (Ala.1990), where, after a co-defendant had been dismissed on a pro tanto settlement, the jury returned a verdict against the remaining defendant, stating: It is our intention to assess total damages for the Plaintiff and against the Defendant at $50,000.00. 567 So.2d at 1207. On appeal, the defendant argued that the verdict against it was inconsistent because the jury wrote $0 in the space provided on the form for compensatory damages. [2] This Court affirmed the judgment based on the jury verdict, noting the confusing nature of the trial judge's jury instruction on how to treat the pro tanto settlement, and stating that we do not require a specific award of actual [compensatory] damages in order to support an award of punitive damages when there is sufficient evidence of actual damage. Id. at 1208. The next case in the sequence is O.K. Bonding Co. v. Milton, 579 So.2d 602 (Ala. 1991), where a judgment was entered on a verdict of $0 in nominal or compensatory damages and $15,000 in punitive damages. This Court reversed the judgment, citing Mid-State Homes, Inc. v. Johnson, 294 Ala. 59, 311 So.2d 312 (1975), and stating, It is settled that punitive damages cannot be awarded unless the jury also awards nominal or compensatory damages. 579 So.2d at 604. In Mid-State Homes, this Court had affirmed a judgment based on a general verdict (awarding an amount that was implicitly divisible into a $715 restitutionary award and an $11,785 punitive award) and recognized the rule that an award of at least nominal damages was necessary to support an award of punitive damages. Then, in First Bank of Boaz v. Fielder, 590 So.2d 893 (Ala.1991), the jury awarded $0 compensatory damages on a suppression count, yet awarded the plaintiff punitive damages. This Court upheld the punitive damages award, citing the rule that a non-compensable violation of a legally protected right that would support only an award of nominal damages, in recognition of the tort, was sufficient to satisfy the injury element of a fraud claim. This Court stated that it had never required an award of nominal damages as a prerequisite to an award of punitive damages, and it refused to require such an award. Then the Court specifically held that an award of compensatory damages or nominal damages was not a prerequisite to an award of punitive damages. However, this Court later candidly acknowledged that when it wrote its opinion in First Bank of Boaz it was unaware of the previously published opinion in O.K. Bonding. See Shoals Ford, Inc. v. McKinney, 605 So.2d 1197, 1199 (Ala. 1992). In Caterpillar, Inc. v. Hightower, 605 So.2d 1193 (Ala.1992), the stage was set for a collision between O.K. Bonding and First Bank of Boaz. In Caterpillar, the jury verdict form stated that the entire award of $250,000 was punitive. This Court upheld the judgment entered on the jury's award, citing First Bank of Boaz for the rule that an award of compensatory damages was not necessary for a jury to award punitive damages. However, the majority's effort in Caterpillar to distinguish O.K. Bonding was strongly challenged in a dissenting opinion. Next in this line of cases is Shoals Ford, Inc. v. McKinney, 605 So.2d 1197 (Ala.1992), where a plurality of the Court affirmed an award of only punitive damages on the ground that the record supported a finding of injury, at least nominally. 605 So.2d at 1199. One Justice's concurrence found O.K. Bonding and First Bank of Boaz irreconcilable and suggested that O.K. Bonding be overruled. Two dissenting opinions also found the two cases irreconcilable, but maintained that O.K. Bonding stated the better rule of law. Each of the two dissenting opinions mentioned that § 6-11-1 required specificity in verdicts. 605 So.2d at 1202, 1204. After Shoals Ford, the Court decided Garrett v. City of Auburn, 623 So.2d 1033 (Ala. 1993). In Garrett, it followed the rule of law established by First Bank of Boaz and Caterpillar, without citing O.K. Bonding. Because it is not unreasonable for these present plaintiffs to argue that O.K. Bonding has been impliedly overruled, we believe a clarification in the law of damages is essential. We now recognize that Justice Almon's dissent in Shoals Ford accurately stated the issue when he pointed out that only since we have seen verdicts expressed more specifically than as a generic lump sum have we had problems. In earlier cases upholding punitive damages awards where there was a lump sum verdict, the Court had quite correctly parsed the record to see if a portion of the generic dollar verdict was fairly referable to nominal damages. However, we believe that this practice of combing the record on appeal for evidence of an injury to the plaintiff can no longer be applied to verdicts that separate compensatory and punitive damages or simply label the award solely as punitive damages. In this era following BMW of North America, Inc. v. Gore, supra, we recognize that closer scrutiny of the relationship between compensatory damages and punitive damages is necessary, and we recognize that causes of action have accrued since the effective date of § 6-11-1, which contains a requirement of specificity in verdicts, a requirement that may still apply to some extent even after Clark v. Container Corp. of America, Inc., 589 So.2d 184 (Ala.1991). Moreover, we recognize the mandate for due process and for the administration of justice without sale, denial, or delay, as secured to litigants by Art. I, § 13, Alabama Constitution of 1901. We now require, therefore, that a jury's verdict specifically award either compensatory damages or nominal damages in order for an award of punitive damages to be upheld. Thus, we overrule First Bank of Boaz, Caterpillar, Shoals Ford, and Garrett, to the extent those opinions conflict with this rule of law. A factor behind the result in the First Bank of Boaz line of cases was concern over the inequity of a defendant's avoiding liability for punitive damages in instances where: (1) the failure of the jury to award nominal damages did not necessarily indicate the absence of a right to recover nominal damages; (2) the plaintiff was made whole by a pro tanto settlement; or (3) the plaintiff otherwise was fully compensated for conduct for which the defendant was liable, but no nominal damages were awarded. Where there is a pro tanto settlement, the invasion of legal right with injury, for which the defendant would have been liable but for the settlement, should support an award of nominal damages. See Pihakis v. Cottrell, 286 Ala. 579, 243 So.2d 685 (1971) (holding that the defendant's tender of relief to the plaintiff did not defeat the plaintiff's claim for nominal damages and, therefore, that a general verdict obviously including punitive damages could be upheld). It is clear that a liable defendant should not be entitled to more favorable treatment just because another party has acted to made the plaintiff whole. The rule of Pihakis should apply to recognize a plaintiff's right to recover nominal damages and, thus, punitive damages, where the source of the plaintiff's being made whole is a co-defendant's pro tanto settlement or any other source of compensation for injury for which the defendant is liable. Under this rule, the jury's verdict must include a monetary award of compensatory damages or, where appropriate, an award of nominal damages only. If compensatory damages have been eliminated by reason of payments or other rights created for the plaintiff subsequent to the injury or harm under circumstances making the defendant liable, thereby making an award of nominal damages appropriate, the jury verdict should indicate the jury's finding that the plaintiff is entitled to nominal damages, pursuant to proper instructions from the trial court. In instances where punitive damages also are awarded, a court can consider, in any post-verdict analysis of the relationship between the compensatory damages award and the punitive damages award, the total amount of compensatory damages for which the defendant could have been liable but for the plaintiff's having been made whole, regardless of how the plaintiff was made whole. Where the award of nominal damages constitutes the full measure of compensation for which the defendant is, or could have been, liable, an award of punitive damages based on the award of nominal damages must withstand scrutiny under the constitutional protections available to a defendant. Questions as to (1) whether punitive damages for reprehensible conduct in the invasion of a legal right constituting nominal damage only must bear some relationship to an analogous criminal penalty, if available, (2) whether the cost of litigation could justify resort to a multiple of the criminal sanction as the standard in a proper case, or (3) whether perceived inadequacies in the amount of such penalties is a matter for redress by the legislature or the basis for a court to disregard the penalties as a useful standard, must all await determination in a case where the question is fully addressed by the parties. The rule announced today will require that the jury be properly charged on the issue of nominal damages in a case where only such damages are appropriate, and it will require that the form of verdict provide the jury with the opportunity to answer an interrogatory in a manner such as in the example set forth below: