Darcars Motors of Silver Spring v. Borzym

• Decision Date: 30 January 2003
• Docket Number: No. 1513,1513
• Parties: DARCARS MOTORS OF SILVER SPRING, INC., v. Marcin BORZYM.
• Court: Court of Special Appeals of Maryland

818 A.2d 1159

150 Md. App. 18

DARCARS MOTORS OF SILVER SPRING, INC., v. Marcin BORZYM.

No. 1513, Sept. Term, 2001.

Court of Special Appeals of Maryland.

January 30, 2003.

Reconsideration Denied April 10, 2003.

Brent M. Ahalt (John P. Lynch and McNamee, Hosea, Jernigan, Kim Greenan & Walker, P.A., on the brief), Greenbelt, for appellant.

Lloyd J. Eisenberg (Lloyd J. Eisenberg & Associates, P.A., on the brief, Silver Spring, for appellee.

KENNEY, ADKINS, and CHARLES E. MOYLAN, Jr. (retired, specially assigned), JJ. MOYLAN, Judge.

This appeal deals with a number of different aspects of the propriety of awarding punitive damages in a case involving the tort of conversion.

The appellee and cross-appellant, Marcin Borzym, brought suit against the appellant and cross-appellee, Darcars Motors of Silver Spring, Inc. ("Darcars") in the Circuit Court for Montgomery County. The case was tried by a jury, presided over by Judge Paul A. McGuckian, on April 2 and 3, 2001. The jury returned a verdict in favor of Borzym, awarding him compensatory damages in the amount of $4,300 on the count charging conversion. No challenge is herein being made to that verdict or that award.

With respect to the conversion, however, the jury also found that Darcars had acted with sufficient malice to warrant an award of punitive damages. After hearing additional testimony, the jury awarded punitive damages against Darcars in the amount of $100,000. Judge McGuckian subsequently granted Darcars's Motion for Judgment Notwithstanding the Verdict and/or Motion for Remittitur and reduced the amount of the punitive damage award to $25,000.

All of the issues before us, both on appeal and cross-appeal, concern the award of punitive damages. On appeal, Darcars claims

1. that the evidence was not legally sufficient to support the necessary finding of actual malice;

2. that Borzym's complaint did not adequately plead a claim for punitive damages; and

3. that the evidence of Darcars's financial condition was not legally sufficient to support the final award of $25,000 in punitive damages.

On his cross-appeal, Borzym claims that Judge McGuckian abused his discretion in reducing the punitive damages award from $100,000 to $25,000.

Factual Background

The evidence permitted factual findings that on Friday evening, March 31, 2000, Borzym decided to purchase a 1999 BMW323i from Darcars for $26,000. He met with the finance manager of Darcars to negotiate and iron out multitudinous details surrounding the purchase. As is so frequently true, "the devil is in the details." Borzym filled out and signed that evening the following documents: 1) a credit application, 2) a purchase order, 3) a retail installment contract, 4) a supplementary agreement to a conditional sales contract, 5) an application for certificate of title, and 6) an agreement to provide accidental physical damage insurance. Borzym also gave to Darcars a cash deposit of $2,500.

Borzym was not permitted to take the BMW with him that evening, however, because he did not have the necessary information about the State Farm insurance policy that he claimed covered him. On Saturday morning, he returned to Darcars and provided the policy information to the finance manager. He then left the dealership with the BMW. On Sunday, Borzym returned to Darcars and, without incident, picked up copies of the paperwork he had previously signed.

By Monday morning, however, controversy began to develop between Borzym and Darcars about the accuracy of some of the information furnished by him, particularly information concerning his insurance coverage. In a series of telephone calls over the next several days, Darcars insisted that Borzym come into the dealership immediately and provide accurate insurance information. Borzym kept postponing his return to the dealership, allegedly because his schedule did not permit it.

On Thursday, April 6, the BMW was repossessed for Darcars by a repossession company. Prior to the repossession, Borzym had placed in the trunk of the BMW 1) his laptop computer, valued at $1,500; and 2) a CD collection, valued at $300. Neither was returned to him. Nor did Darcars return to Borzym his $2,500 down payment. The non-return of those items was the basis for the verdict of unlawful conversion and the award to Borzym in the amount of $4,300. We reiterate that Darcars does not now challenge the legitimacy of that verdict.

The Requirement and Definition of Actual Malice

It is well-settled Maryland law that an award of punitive damages is only permitted in a tort case if the plaintiff has proved that the tortfeasor acted with actual malice. As Judge Digges stated for the Court of Appeals in Siegman v. Equitable Trust Co., 267 Md. 309, 313-14, 297 A.2d 758 (1972):

In a tort case where punitive damages are permitted, in order to obtain such an award a plaintiff must prove actual malice.

See also Battista v. Savings Bank of Baltimore, 67 Md.App. 257, 274, 507 A.2d 203 (1986); Miller Building Supply, Inc. v. Rosen, 305 Md. 341, 348, 503 A.2d 1344 (1986); D.C. Transit System v. Brooks, 264 Md. 578, 287 A.2d 251 (1972); Daugherty v. Kessler, 264 Md. 281, 286 A.2d 95 (1972); Associates Discount v. Hillary, 262 Md. 570, 278 A.2d 592 (1971); St. Paul at Chase v. Mfrs. Life Insur., 262 Md. 192, 278 A.2d 12 (1971); Damazo v. Wahby, 259 Md. 627, 270 A.2d 814 (1970).

The social policy that is implemented by an award of punitive or exemplary damages was first explained by the Court of Appeals in 1884 in Phila., Wilm., & Balto. Railroad Co. v. Hoeflich, 62 Md. 300, 307 (1884):

[T]o entitle one to [punitive] damages there must be an element of fraud, or malice, or evil intent, or oppression entering into and forming part of the wrongful act. It is in such cases as these that exemplary or punitive damages are awarded as a punishment for the evil motive or intent with which the act is done, and as an example or warning to others.

(Emphasis supplied) (Quoted with approval in Davis v. Gordon, 183 Md. 129, 133, 36 A.2d 699 (1944); Owens-Illinois v. Zenobia, 325 Md. 420, 455, 601 A.2d 633 (1992); Ellerin v. Fairfax Savings, 337 Md. 216, 227, 652 A.2d 1117 (1995)).

What has come to be the standard definition of actual malice in Maryland was that articulated by Judge Digges in Drug Fair v. Smith, 263 Md. 341, 352, 283 A.2d 392 (1971):

Actual or express malice may be characterized as the performance of an unlawful act, intentionally or wantonly, without legal justification or excuse but with an evil or rancorous motive influenced by hate; the purpose being to deliberately and wilfully injure the plaintiff.

See also Schaefer v. Miller, 322 Md. 297, 300, 587 A.2d 491 (1991); Henderson v. Maryland National Bank, 278 Md. 514, 519, 366 A.2d 1 (1976); Siegman v. Equitable Trust Co., 267 Md. 309, 314, 297 A.2d 758 (1972); Battista v. Savings Bank of Baltimore, 67 Md.App. 257, 274, 507 A.2d 203 (1986). In Ellerin v. Fairfax Savings, 337 Md. 216, 228, 652 A.2d 1117 (1995), the Court of Appeals added the observation that, "with regard to most types of tort actions, Maryland law has limited the availability of punitive damages to situations in which the defendant's conduct is characterized by knowing and deliberate wrongdoing."

The Difference Between "Implied Malice" As a Rejected Standard and Implying "Malice" As a Legitimate Evidentiary Modality

The very necessity of modifying the noun "malice" with the adjective "actual" strongly suggests that there is or recently has been a definitional problem in describing the predicate for a punitive damages award. Over the twenty year period from Smith v. Gray Concrete Pipe Co., 267 Md. 149, 297 A.2d 721 (1972) through Owens-Illinois v. Zenobia, 325 Md. 420, 601 A.2d 633 (1992), Maryland was plagued with two different forms of malice that could, under varying circumstances, support a punitive damages award. To distinguish the two, we necessarily resorted to modifiers. The traditional malice that we have described above, which was Maryland's exclusive form of malice prior to 1972 and which is Maryland's exclusive form of malice today, we labeled "actual malice." The other, or "non-actual" malice, emanating from the Smith v. Gray Concrete Pipe Co. case, we called "implied malice."

As Montgomery Ward v. Wilson, 339 Md. 701, 728 n. 5, 664 A.2d 916 (1995) explained, "implied malice" was defined as "gross negligence involving wanton or reckless disregard" of the rights of others. Scott v. Jenkins, 345 Md. 21, 29 n. 3, 690 A.2d 1000 (1997), further defined it as "non-intentional conduct so reckless or wanton as to be `grossly negligent.'" "Implied malice" did not require a "wilful or intentional injury" but "contemplate[d] conduct which [was] of an extraordinary or outrageous character." Id. at 30, 690 A.2d 1000. During that twenty year period, a number of Maryland cases employed, at least for non-intentional torts, that alternative standard of malice. H. & R. Block v. Testerman, 275 Md. 36, 338 A.2d 48 (1975); Wedeman v. City Chevrolet, 278 Md. 524, 366 A.2d 7 (1976); Nast v. Lockett, 312 Md. 343, 539 A.2d 1113 (1988).

After much criticism of "implied malice" as an alternative substantive standard for awarding punitive damages, the imminent demise of that alternative and lesser standard was foretold by the concurring opinion of Judges Eldridge, Cole, and Chasanow in Schaefer v. Miller, 322 Md. 297, 312-32, 587 A.2d 491 (1991). The actual death knell for "implied malice" as a substantive standard finally sounded in Owens-Illinois v. Zenobia, 325 Md. at 450-60, 601 A.2d 633, in 1992, at least so far as non-intentional torts were concerned. Adams v. Coates, 331 Md. 1, 13, 626 A.2d 36 (1993), administered the coup de grace to "implied malice" by insisting upon the "actual malice" standard for non-intentional and intentional torts alike.

The history of the rise and fall of "implied malice" as a substantive standard for punitive damages awards was deftly traced by Judge Karwacki...