Court Opinion

ID: 9598948
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:13:20.980261+00
Date Added: 2024-06-11T18:01:43.553696
License: Public Domain

Rees, J.:
Concurring.
I concur in the result announced by the majority. However, I feel compelled to express certain observations.
The principles governing the award, amount and appellate *114review of punitive damages enunciated in the majority opinion were approved and reiterated by our Supreme Court less than three months ago in Binyon v. Nesseth, 231 Kan. 381, 386-387, 646 P.2d 1043 (1982). They are not challenged by Case. Further, and quite importantly, Case makes no claim of error in the jury instructions.
Case lodges two arguments attacking the punitive damages judgment. First, it argues that in the absence of the purportedly inadmissible testimony by Wells, the evidence was insufficient to support any punitive damages verdict. I agree with the majority that even if the challenged testimony of Wells was erroneously .admitted, the other evidence was ample to support a punitive damages verdict and that verdict is not established on appeal to be fatally tainted.
Second, Case argues the amount of the punitive damages verdict is excessive. I join the majority in concluding $350,000 shocks our collective conscience. As we should, because a jury decided $350,000 was proper under the circumstances shown by the evidence presented, we have given the question careful and concerned deliberation. For the benefit of those immediately involved, as well as readers of this published opinion, additional discussion of factors considered seems justified.
Relying upon the purpose of punitive damages to be punishment of the defendant and deterrence of like conduct by others, plaintiff argues that because Case’s financial statements admitted as evidence show its net worth at the end of 1979 and 1980 to have been on the order of half-a-billion dollars, $350,000 is not excessive. The gist of this argument is that an award of that magnitude is necessary to call Case’s attention to the error of its ways. However that may be, the same financial statements also reveal Case’s average income from opérations for the years 1978, 1979 and 1980 was on the order of 8.25% of its net sales. In other words, for each dollar of income from operations a bit more than $12 in net sales was required. Thus, a $350,000 punitive damages judgment may be said to represent a loss to Case of all income from operations attributable to $4,240,000 in sales. A $150,000 punitive damages judgment represents a like loss of income from $1,820,000 in sales produced at a cost of $1,670,000. I am satisfied a punitive damages award of the latter magnitude serves the aforementioned purpose.
*115From the time Case began production of the DH-7 trenchers until February 3, 1981, 215 units were manufactured and shipped; 98 of these were sold at retail to customers and users such as plaintiff. Of the 215 unhs, 35 were manufactured by January, 1980, and 180 thereafter. I find the evidence reveals the R-9000 axle shaft was not incorporated as a component part of the DH-7 trenchers manufactured after January, 1980. In contrast to U.S.D. No. 490 v. Celotex Corp., 6 Kan. App. 2d 346, 358, 629 P.2d 196, rev. denied 230 Kan. 819 (1981), the evidence does not show a nationwide course of conduct bounded only by the number of sales of defective DH-7 units that could be generated.
Also in contrast to Celotex, this case does not involve affirmative misrepresentation. In Celotex, there was evidence the defendant made a knowing, continual and nationwide affirmative false representation to the architectural profession and construction industry that the performance of its two-ply roofing system would equal or exceed the performance of four-ply roofing installations. 6 Kan. App. 2d at 349, 356, 358. The case before us is one of misrepresentation by silence.
A DH-7 trencher, a self-propelled machine, has two differential assemblies. Within each differential assembly are two axle shafts. Case had differential assemblies, or kits, in stock. When there was a failure of or within a differential assembly, repair and replacement could be and was accomplished by removal of an entire assembly from the machine and replacement of it with a new kit. The assembled kits were purchased by Case and it in turn either incorporated them in the trenchers as a part of its manufacturing process or furnished them to customers and users as replacements where failures were experienced. The differential assemblies stocked by Case appear to have been of two types; one was a “no spin” differential and the other was a “limited slip” differential. The difference lay in the operational performance characteristics of the differential, not in the torque limits of the axle shafts. Finding nothing to the contrary in the record, I assume R-9000 axle shafts were utilized in both the “no spin” and “limited slip” kits. The reference in the majority opinion to the fact plaintiff and a Price Brothers representative felt they had been lied to has to do with the fact that after a particular attempt by representatives of Case to remedy plaintiff’s problem with his trencher, the machine was left with one “no spin” differential and one “limited slip” *116differential installed rather than two “no spin” or two “limited slip” differentials. There was no “lie” as to the torque load capacity of the R-9000 axle shaft, the product characteristic that is at the heart of this lawsuit.
Plaintiff suffered no personal injury. The defect causing plaintiff’s trencher to be not merchantable did not render the machine dangerous to the physical safety of persons; the machine was simply inoperative when there was an axle failure. There was no risk of serious personal injury.
By their actual damages award, the jury granted plaintiff recovery of his purchase price (approximately $38,000) and compensated him for his incidental and consequential damages (approximately $17,500), all of which were economic in nature. There was no consequential property damage suffered and the evidence reveals no risk of property damage.
Whatever the emotional justification, by January, 1980, plaintiff adopted an intransigent position as to Case and its dealer, Price Brothers, although they continued their efforts to remedy his problem.
The majority comments the jury instructions given were proper. I do not wholly agree. Because the instructions are not challenged, the question is immaterial. Nonetheless, I am concerned with the majority’s seeming approval of a right to recover punitive damages for “gross and wanton conduct” standing alone. I disagree with that proposition. This plaintiff’s right to recover punitive damages lies in the specific finding of the jury that Case was guilty of fraudulent concealment.
In contrast to Kiser v. Gilmore, 2 Kan. App. 2d 683, 692, 697, 587 P.2d 911 (1978), rev. denied 225 Kan. 844 (1979), and U.S.D. No. 490 v. Celotex Corp., 6 Kan. App. 2d at 364, special questions were submitted to the jury. They specifically answered they found Case breached its implied warranty of merchantability and was guilty of fraudulent concealment. This requires affirmance of actual and punitive damages awards.
“Gross and wanton neglect of duty” was not a claim submitted to the jury and it was not a jury finding. The jury’s answer that Case’s conduct amounted to gross and wanton conduct is surplusage in light of the fraudulent concealment finding.