Brown v. Maxey

• Decision Date: 24 June 1985
• Docket Number: No. 83-2325,83-2325
• Citation: 369 N.W.2d 677,124 Wis.2d 426
• Parties: , 54 USLW 2032 J.T. BROWN, Plaintiff-Respondent-Petitioner, v. Louis MAXEY, d/b/a Apollo Village, and State Farm Fire and Casualty Company, Defendants-Appellants. *
• Court: Wisconsin Supreme Court

Page 677

369 N.W.2d 677

124 Wis.2d 426, 54 USLW 2032

J.T. BROWN, Plaintiff-Respondent-Petitioner, v. Louis MAXEY, d/b/a Apollo Village, and State Farm Fire and Casualty Company, Defendants-Appellants.

^*

No. 83-2325.

Supreme Court of Wisconsin.

Argued May 28, 1985.

Decided June 24, 1985.

Michael J. Donovan, Milwaukee (argued), for plaintiff-respondent-petitioner; Charles J. Hausmann and Hausmann, McNally & Hupy, S.C., Milwaukee, on brief.

Richard H. Schulz, Milwaukee (argued), for defendants-appellants; Schulz & Schapekahm, S.C., Milwaukee, on brief.

CECI, Justice.

This is a review of an unpublished decision of the court of appeals filed on October 25, 1984, 121 Wis.2d 696, 359 N.W.2d 180, affirming in part and reversing in part a judgment and order of the circuit court for Milwaukee county, David V. Jennings, Jr., circuit judge. The court of appeals affirmed the jury's award for compensatory damages but reversed the award of $200,000 in punitive damages. After reviewing the history of punitive damages in Wisconsin, the court of appeals held that punitive damages are not allowable as a matter of law because this cause of action is based upon negligence. The plaintiff seeks review of the portion of the court of appeals' decision reversing the punitive damage award. The defendants did not seek review of the court of appeals' determinations adverse to them.

Contrary to the court of appeals' decision, we hold that as a matter of law, punitive damages are available in negligence actions when "outrageous" conduct on the part of the tortfeasor has been proven by clear and convincing evidence and that in this case, the jury's award for punitive damages is supported by substantial credible evidence. Additionally, the policy of insurance issued to defendant Maxey does provide coverage for the punitive damage award against him. In so finding, we reverse the decision of the court of appeals.

This action arises out of a July 20, 1980, fire in the Apollo Village apartment complex (Apollo) in Milwaukee, Wisconsin. The plaintiff, J.T. Brown, was at the time a 46-year-old, disabled tenant, living in a third-floor apartment in one of the twelve three-story apartment buildings in the complex. Apollo Village, owned by defendant, Dr. Louis Maxey (Maxey), was a low income housing project built in 1970. The United States Department of Housing and Urban Development (HUD) guaranteed the construction mortgage for Apollo Village and, in addition, provided rent subsidies for low income, elderly, or disabled tenants of Apollo. Consequently, 188 of the 243 available rental units were subsidized by the HUD program.

As a result of a fire that was started in the hallway in front of Brown's door, Brown suffered second-degree burns to his upper back and neck area, which left him with terrible scars. Brown commenced this suit against Maxey and his insurer, State Farm Fire and Casualty Company (State Farm), alleging that Maxey was negligent in his management of Apollo Village and that Maxey's failure to provide a safe place for the tenants of Apollo constituted outrageous conduct which entitled Brown to punitive damages. The jury found that Maxey's negligence was ninety percent causal of the plaintiff's injuries and that Brown's contributory negligence was ten percent causal of his injuries. The jury awarded Brown $22,500 for past pain, suffering and disability; $25,000 for future pain, suffering and disability; and $500 for future medical expenses. The past medical expenses were stipulated as $4,185. Additionally, the jury awarded $200,000 in punitive damages.

The two issues before this court are whether punitive damages are available in this case and, if so, whether the policy of insurance issued by State Farm to Maxey provides coverage for the punitive damage award.

A.

The court of appeals, relying on Entzminger v. Ford Motor Co., 47 Wis.2d 751, 177 N.W.2d 899 (1970), and Wangen v. Ford Motor Co., 97 Wis.2d 260, 294 N.W.2d 437 (1980), concluded "that punitive damages are not recoverable in a case of negligence" because historically, punitive damages have only been allowed in cases involving personal torts. In Entzminger, a breach of contract case, this court held,

"Punitive damages are not allowed for a mere breach of contract, ... or for all torts or for crimes but generally for those personal torts, which are malicious, outrageous or a wanton disregard of personal rights which require the added sanction of a punitive damage to deter others from committing acts against human dignity.... The type of cases allowing punitive damages has been cases of assault and battery, slander and libel, seduction, malicious prosecution, breach of promise, and the like." Id. 47 Wis.2d at 757-58, 177 N.W.2d 899 (citations and footnotes omitted).

Additionally, in Wangen, a products liability case, we stated, "Punitive damages do not rise from negligence." 97 Wis.2d at 275, 294 N.W.2d 437.

The issue of whether punitive damages are recoverable in negligence actions is a question of law.

"It is well settled that we review questions of law de novo without being bound by the decision of the trial court or the court of appeals." Quinn v. Town of Dodgeville, 122 Wis.2d 570, 577, 364 N.W.2d 149 (1985).

In reversing the court of appeals, we hold that the availability of a punitive damage award is not dependent upon the classification of the underlying cause of action, but, rather, upon proof of the requisite "outrageous" ¹ conduct. We stress that punitive damages are in the nature of a remedy and should not be confused with the concept of a cause of action.

"Whether compensatory damages, special damages, or punitive damages are sought as a matter of remedy or relief is immaterial to the cause of action itself." Wussow v. Commercial Mechanisms, Inc., 97 Wis.2d 136, 146, 293 N.W.2d 897 (1980).

In Wangen, 97 Wis.2d 260, 294 N.W.2d 437, this court decided the issue of whether punitive damages are recoverable in products liability actions which are grounded in negligence or strict liability. We held,

"This court has rested its analysis of punitive damages not on the classification of the underlying tort justifying compensatory damages but on the nature of the wrongdoer's conduct. Although the usual aggravating circumstances required for the recovery of punitive damages are often found as substantive elements of the tort itself, this court has said a claim for punitive damages may be supported by proof of aggravating circumstances beyond those supporting compensatory damages.

Punitive damages rest on allegations which, if proved, demonstrate a particular kind of conduct on the part of the wrongdoer, which has variously been characterized in our cases as malicious conduct or willful or wanton conduct in reckless disregard of rights or interests." Id. at 266-67, 294 N.W.2d 437 (footnotes omitted).

In a negligence case, if the plaintiff proves only those elements constituting the cause of action, punitive damages are not available. In fact, the vast majority of negligence cases do not give rise to the remedy of punitive damages. ² However, the mere fact that the cause of action is based upon negligent conduct does not preclude a punitive damage award if the plaintiff proves the necessary aggravating circumstances beyond ordinary negligence. In such cases, punitive damages are appropriate to punish and deter the wrongdoer, just as they are in cases involving personal torts or products liability.

Punitive damages may be awarded if the plaintiff proves by clear and convincing evidence that the defendant's conduct was willful or wanton, in a reckless disregard of rights or interests. Wangen, 97 Wis.2d at 300, 294 N.W.2d 437. Defendants argue that there was no credible evidence adduced at trial from which the jury could reasonably conclude that the plaintiff met his burden of proof. An award of punitive damages will be upheld by this court if there is any evidence from which the jury could have reasonably concluded that the plaintiff met his burden of proving that the defendant's conduct was "outrageous." On review, "it is the duty of an appellate court to construe the evidence most favorably to the jury verdict...." Durham v. Pekrul, 104 Wis.2d 339, 349, 311 N.W.2d 615 (1981).

"It is not necessary for this court to conclude that, had it been the jury, it would have so held [that the defendant's conduct was outrageous]. Rather, the question is whether a reasonable jury, acting reasonably, could have so found." Id. at 348, 311 N.W.2d 615.

Before we review the sufficiency of evidence in the case, a brief review of the conduct necessary to impose punitive damages will be beneficial. Professors Ghiardi and Kircher explain that conduct justifying punitive damages is generally of two distinct types.

"The first type is that in which the defendant desires to cause the harm sustained by the plaintiff, or believes that the harm is substantially certain to follow his conduct. With the second type of conduct the defendant knows, or should have reason to know, not only that his conduct creates an unreasonable risk of harm, but also that there is a strong probability, although not a substantial certainty, that the harm will result but, nevertheless, he proceeds with his conduct in reckless or conscious disregard of the consequences. Neither form of conduct, therefore, involves mere inadvertence or what, in the traditional tort sense, would be called ordinary negligence." J. Ghiardi and J. Kircher, Punitive Damages Law and Practice, ch. 5, section 5.01 at 8-9 (1984) (footnotes omitted); cited with approval in Lundin v Shimanski, --- Wis.2d ---, ---, n. 17, 368 N.W.2d 676 (1985).

In the case at hand, which involves the underlying cause of action for negligence, it is clear that the plaintiff need not prove the element of intent as a prerequisite to recover punitive damages.

"This court has not required proof of an intentional desire to injure, vex or annoy, or...