Crookston v. Fire Ins. Exchange, 920172

• Decision Date: 07 October 1993
• Docket Number: No. 920172,920172
• Citation: 860 P.2d 937
• Parties: S. Larry CROOKSTON, Randi L. Crookston, and Anna W. Drake, Trustee of the Estate of Spencer Larry Crookston and Randi Lynn Crookston, Plaintiffs and Appellees, v. FIRE INSURANCE EXCHANGE, a California corporation, Defendant and Appellant.
• Court: Utah Supreme Court

Page 937

860 P.2d 937

S. Larry CROOKSTON, Randi L. Crookston, and Anna W. Drake, Trustee of the Estate of Spencer Larry Crookston and Randi Lynn Crookston, Plaintiffs and Appellees, v. FIRE INSURANCE EXCHANGE, a California corporation, Defendant

and Appellant.

No. 920172.

Supreme Court of Utah.

Oct. 7, 1993.

M. Douglas Bayly, L. Rich Humpherys, Salt Lake City, for plaintiffs and appellees.

Philip R. Fishler, Stephen J. Trayner, Salt Lake City, and Frank A. Roybal, Bountiful, for defendant and appellant.

ZIMMERMAN, Justice:

This case is before us for the second time. In the first appeal, Crookston v. Fire Insurance Exchange, 817 P.2d 789, 806 (Utah 1991) (Crookston I ), we affirmed a jury finding of fraud against defendant Fire Insurance Exchange and an award of $815,826 in compensatory damages to plaintiffs Spencer Larry Crookston and Randi Lynn Crookston. However, we also vacated the trial court's denial of a motion by Fire Insurance for a new trial based on its claim that the $4,000,000 punitive damage award was excessive. Id. at 808. We remanded that motion so that the trial court could reconsider the award in light of the principles set forth in Crookston I. On remand, the trial court again denied the motion. Fire Insurance appeals, and we affirm.

The relevant facts are recited at length in Crookston I and will not be repeated here except as necessary.

We first note the standard of review. In considering a trial court's decision to deny a new trial, we reverse only if we find an abuse of discretion, i.e., no reasonable basis for the decision. Id. at 804-05. However, if the trial court has made a determination of law that provides a premise for its denial of a new trial, such a legal decision is reviewed under a correctness standard. See State v. Ramirez, 817 P.2d 774, 781 n. 3 (Utah 1991); State v. Petersen, 810 P.2d 421, 425 (Utah 1991); see also State v. Thurman, 846 P.2d 1256, 1270 n. 11 (Utah 1993).

Fire Insurance makes several arguments attacking the denial of its motion. First, it contends that because Crookston I articulated a new standard for determining the excessiveness of a punitive damage award, we should vacate this award and remand for a redetermination of the amount by a properly instructed jury. ¹ Second, Fire Insurance contends that on remand, the trial court did not properly apply the standards articulated in Crookston I in deciding the motion for a new trial.

Addressing Fire Insurance's first argument, we find no merit to the contention that the trial court should have granted the motion for a new trial so as to allow the jury to reconsider the award after receiving new instructions. Explaining this ruling requires a brief recap of Crookston I's treatment of the law governing the determination of the excessiveness of punitive damage awards and then a consideration of the instructions actually given in the present case.

In assessing the seven-factor balancing approach used to determine punitive damages, ² which our case law approves and which is commonly used across the country, Crookston I found the approach lacking in guidance "for ... a jury fixing the punitive damages, a trial court reviewing a challenge to the amount of such an award, or an appellate court reviewing a trial court's grant or denial of a new trial on grounds of an inadequate or excessive award." 817 P.2d at 808. No relative weights had been assigned to the factors, "and no standards or formulas [had] been established for properly evaluating them when making an award or when reviewing the propensity of a jury award." Id.

Crookston I did note, however, that by looking only at the results of our prior cases, rather than trying to find some consistent underlying analytical model, some guidelines for reviewing the excessiveness of awards could be found: "[T]he results of our prior cases dealing with challenges to damages, taken as a whole, provide patterns that furnish useful guidance...." Id. The patterns of results in those cases demonstrate that "where the punitives are well below $100,000, punitive damage awards beyond a 3 to 1 ratio to actual damages have seldom been upheld and that where the award is in excess of $100,000, we have indicated some inclination to overturn awards having ratios of less than 3 to 1." Id. at 810. Crookston I then used these patterns as a basis for presumptive guidelines to be used by trial courts in ruling on motions for a new trial or motions for remittitur founded on the claim that a punitive damage award is excessive. Id. at 811. Specifically, we said that an award exceeding the patterns of ratios observed in our prior cases raises a presumption that the award is excessive and that a failure by the trial court to reduce the award or order a new trial is an abuse of discretion. Id. To overcome this presumption, the trial court must explain why the case is unique, usually in terms of one of the established seven factors or "some other factor that seems compelling." Id.

With this background in mind, we address Fire Insurance's claim that Crookston I changed the law sufficiently to warrant a new punitive damage determination under new jury instructions. We recognize that the patterns described in Crookston I had not been commented on by an appellate court before the issuance of the Crookston I opinion and that the guidelines Crookston I derived from those patterns had not yet been laid down. However, at the time of trial, those patterns constituted the law in the sense that those cases allowed the prediction of how future cases might be resolved by anyone willing to undertake review of our prior decisions with an eye toward seeing the patterns. See Oliver Wendell Holmes, The Path of the Law, 10 Harv.L.Rev. 457, 460-61 (1896). Therefore, nothing in Crookston I changed the legal force of that prior case law. The "law" that punitive to compensatory ratios of greater than 3 to 1 when the award is less than $100,000 would be viewed skeptically when challenged as excessive and that even lower ratios would be similarly viewed in awards exceeding $100,000 was settled at the time the jury in this case was instructed. See Crookston I, 817 P.2d at 810.

We acknowledge that the jury instructions given by the court below did not explain the ratios that constitute a presumptively excessive punitive damage award. The jury was instructed only on the seven factors to be considered in determining the award. However, the guidelines in Crookston I are primarily for the trial judge, who is called upon to consider the propriety of a punitive damage award on a post-verdict motion. See, e.g., id. at 811 ("In these patterns, we find that guidelines emerge for trial courts faced with challenges to punitive damage awards...."). On its face, Crookston I does not require imparting the same presumptive-ratio guidelines to the jury itself. Moreover, Fire Insurance had the responsibility of proposing any additional jury instructions, but failed to do so. In short, because we find that the jury in Crookston I was sufficiently instructed, we conclude that the trial court properly denied the motion for a new trial.

Fire Insurance's second argument is that the trial court, on remand, did not properly apply the standards set out in Crookston I and that if the holding of that case had been followed, the trial court would have concluded that the award here was excessive. We do not review de novo a trial court's actual or imputed ³ decision denying the motion for a new trial. So long as the trial court applied the correct legal standards, and we find it did in this case, we review the trial court's decision denying the motion only for an abuse of discretion. See Ramirez, 817 P.2d at 781 n. 3; see also Thurman, 846 P.2d at 1270 n. 11.

In mounting its challenge, Fire Insurance relies primarily on the size of the punitive damages awarded and the ratio of the punitive award to compensatory damages. Fire Insurance first notes that a large portion of the actual damages here were "soft" (pain and suffering) rather than "hard" (out-of-pocket costs). Under our cases, soft compensatory damages, "which must be awarded with caution," 817 P.2d at 806, are not to be given equal weight with hard compensatory damages when evaluating the relationship between punitive and compensatory damages. See id. at 811-12 n. 29. Fire Insurance points out that in the instant case, the operative ratio of punitive damages to hard compensatory damages is more than 10 to 1 while the ratio is slightly less than 5 to 1 when taking both hard and soft compensatory damages into account. It argues that no circumstances presented could justify a punitive award that produces a ratio so far outside the range of our past cases.

It is certainly true that the punitive award here is without precedent in Utah, either as to the amount or as to the high ratio of punitive damages to hard compensatory damages. The presumption, therefore, is that the award is excessive. However, as we said earlier, this presumption may be overcome if the trial court explains why the case is unique in terms of one of the traditional...