Finstad v. WR Grace & Co.

• Decision Date: 22 August 2000
• Docket Number: No. 99-444.,99-444.
• Parties: Kenneth R. FINSTAD and Edith L. Finstad, husband and wife, Plaintiffs, Respondents, and Cross-Appellants, v. W.R. GRACE & CO.-Conn., a Connecticut corporation, and DOES I-IV, Defendants, Appellants, and Cross-Respondents.
• Court: Montana Supreme Court

8 P.3d 778

2000 MT 228

301 Mont. 240

Kenneth R. FINSTAD and Edith L. Finstad, husband and wife, Plaintiffs, Respondents, and Cross-Appellants, v. W.R. GRACE & CO.-Conn., a Connecticut corporation, and DOES I-IV, Defendants, Appellants, and Cross-Respondents.

No. 99-444.

Supreme Court of Montana.

Argued March 21, 2000.

Submitted April 27, 2000.

Decided August 22, 2000.

Gary L. Graham and David C. Berkoff, Garlington, Lohn & Robinson, Missoula, Montana, For Appellants.

Allan M. McGarvey (argued), Jon L. Heberling, Roger M. Sullivan, McGarvey, Heberling, Sullivan & McGarvey, Kalispell, Montana, For Respondents.

Sean Hinchey (argued), Bottomly Law Offices, Kalispell, Montana Jennifer Hendricks, Meloy & Morrison, Helena, Montana, For Amicus (Montana Trial Lawyers Association).

Justice JIM REGNIER delivered the Opinion of the Court.

¶ 1 Kenneth R. Finstad and Edith L. Finstad, husband and wife (Finstads), filed suit against W.R. Grace & Co.-Conn. (W.R.Grace) in the Nineteenth Judicial District Court, Lincoln County. A jury trial resulted in a verdict in favor of the Finstads, awarding $400,000 in compensatory damages and determining that an award of punitive damages was warranted. Immediately thereafter, the District Court conducted a mini-trial regarding the award of punitive damages. At the conclusion of the punitive damage mini-trial, the jury, by a vote of eight to four, awarded the Finstads punitive damages in the amount of $83,000. After reviewing the jury's punitive damage award, the District Court entered findings of fact, conclusions of law, and an order affirming the award. W.R. Grace appeals from the final judgment entered in favor of the Finstads and the Finstads cross-appeal. We affirm in part, reverse in part, and remand for a new trial on the amount of punitive damages.

¶ 2 W.R. Grace presents the following issues on appeal ¶ 3 1. Whether the District Court erred when it declared § 27-1-221(6), MCA, unconstitutional?

¶ 4 2. Whether the District Court erred when it denied W.R. Grace's motion to dismiss the Finstads' claim for punitive damages based on the theory of collateral estoppel by virtual representation?

¶ 5 The Finstads raise the following issues on cross-appeal:

¶ 6 1. Whether the District Court erred when it allowed the jury to be advised that the Finstads would be the recipients of the punitive damage award?

¶ 7 2. Whether the District Court erred when it allowed W.R. Grace to present evidence of other asbestos litigation involving W.R. Grace as well as fictional average amounts for each pending claim during the punitive damage mini-trial?

BACKGROUND

¶ 8 Kenneth Finstad was employed by W.R. Grace at its vermiculite mining and milling operation in Lincoln County, Montana, from 1965 to 1967. During his employment with W.R. Grace, Mr. Finstad was exposed to dust containing tremolite asbestos. Mr. Finstad was subsequently diagnosed with asbestosis in September 1998.

¶ 9 On October 2, 1998, the Finstads filed a personal injury action against W.R. Grace seeking compensatory and punitive damages. W.R. Grace filed a motion to dismiss the claim for punitive damages on the basis that the issue of punitive damages had already been decided in two previous cases involving W.R. Grace and was barred under the doctrine of collateral estoppel by virtual representation. After the motion had been fully briefed by the parties, the District Court issued an order denying dismissal of the Finstads' claim for punitive damages.

¶ 10 The parties conducted discovery and filed several motions in limine. After the motions in limine had been fully briefed by the parties, the District Court issued an order granting the Finstads' motion regarding the constitutional right to a jury verdict by a majority of two-thirds in a civil case. In doing so, the District Court declared § 27-1-221(6), MCA, to be unconstitutional.

¶ 11 A jury trial was commenced on May 3, 1999, resulting in verdicts awarding the Finstads compensatory and punitive damages. Judgment was entered on the verdicts from which W.R. Grace appeals and the Finstads cross-appeal. During appellate mediation pursuant to Rule 54, M.R.App.P., the parties settled the issues concerning compensatory damages, preserving the issues pertaining to punitive damages for appeal.

ISSUE 1

¶ 12 Whether the District Court erred when it declared § 27-1-221(6), MCA, unconstitutional?

¶ 13 "A legislative enactment is presumed to be constitutional and will be upheld on review except when proven to be unconstitutional beyond a reasonable doubt." State v. Lilburn (1994), 265 Mont. 258, 262, 875 P.2d 1036, 1039. We have also previously held that "the burden of demonstrating an alleged constitutional infirmity in a legislative enactment rests upon the party raising the challenge." State v. Lorash (1989), 238 Mont. 345, 347, 777 P.2d 884, 886.

¶ 14 The Finstads allege that the portion of § 27-1-221(6), MCA, which states that an award of punitive damages must be unanimous as to liability and amount, violates Article II, Section 26 of the Montana Constitution guaranteeing the right to a trial by jury in all civil cases and a verdict by a two-thirds majority. In response, W.R. Grace asserts that there is no constitutional right to punitive damages in Montana and that this Court has upheld legislative enactments limiting and even eliminating punitive damages. W.R. Grace also claims that before a jury can reach the issue of punitive damages, the verdict by a two-thirds majority is satisfied upon its determination of the issue of compensatory damages.

¶ 15 The District Court concluded, as a matter of law, that the framers of the Montana Constitution intended that in all civil actions two-thirds of the jury may render a verdict and a verdict so rendered shall have the same force and effect as if it were unanimous. The District Court also concluded that punitive damage claims are civil actions. The court went on to rule that the unanimous verdict provision of § 27-1-221(6), MCA, directly contradicted the plain language of Article II, Section 26 of the Montana Constitution, that the provision was unconstitutional beyond a reasonable doubt, and that it was thus void ab initio.

¶ 16 We have previously stated:

In interpreting a constitutional provision, the intent of the framers of the constitutional provision controls its meaning. The intent of the framers should be determined from the plain meaning of the words used. If that is possible, no other means of interpretation are proper.

Woirhaye v. Montana Fourth Judicial Dist. Court, 1998 MT 320, ¶ 15, 292 Mont. 185, ¶ 15, 972 P.2d 800, ¶ 15 (citations omitted). Article II, Section 26 of the Montana Constitution provides:

Trial by jury. The right of trial by jury is secured to all and shall remain inviolate.... In all civil actions, two-thirds of the jury may render a verdict, and a verdict so rendered shall have the same force and effect as if all had concurred therein. In all criminal actions, the verdict shall be unanimous.

(Emphasis added.) The plain language of Article II, Section 26 clearly and unambiguously provides that in all civil actions two-thirds of the jury may render a verdict that has the same force and effect as if the entire jury had concurred in the decision.

¶ 17 The portion of § 27-1-221(6), MCA, at issue was added in 1997 and states: "An award of punitive damages must be unanimous as to liability and amount." To determine whether this portion of § 27-1-221(6), MCA, conflicts with Article II, Section 26 of the Montana Constitution, we must decide if the District Court was correct in concluding that claims for punitive damages are civil actions.

¶ 18 "A civil action is prosecuted by one party against another for the enforcement or protection of a right or the redress or prevention of a wrong." Section 27-1-103(2), MCA. Here, the Finstads brought suit against W.R. Grace for redress of a wrong and sought punitive damages to punish and deter W.R. Grace from committing similar wrongful conduct. Thus, the Finstads' action, which includes their claim for punitive damages, fits within the statutory definition of a civil action.

¶ 19 W.R. Grace argues that since an award of punitive damages is only permitted after a showing of actual damages, if the jury reaches the issue of punitive damages, it must have already satisfied the constitutional guarantee by rendering at least a two-thirds verdict on the issue of liability. It is on this basis that W.R. Grace believes the legislature may restrict punitive damage awards by requiring a unanimous decision of the trier of fact. We disagree.

¶ 20 It is true that we have previously held that a party must present evidence of actual damages to support an award of punitive damages. See Harris v. American Gen. Life Ins. Co. (1983), 202 Mont. 393, 400-01, 658 P.2d 1089, 1092-93

. However, as such, punitive damages are merely a component of recovery of the underlying civil cause of action. See 22 Am.Jur.2d Damages § 741 (1988).

¶ 21 In addition, under Montana law punitive damages serve two purposes: (1) to set an example, and (2) to punish the wrongdoer. See § 27-1-220(1), MCA; see also Tillett v. Lippert (1996), 275 Mont. 1, 8, 909 P.2d 1158, 1162

. Punitive damages are not imposed as a substitute for criminal punishment, but rather as enlarged damages for a civil wrong. They are a type of private fine or civil penalty inflicted to deter similar conduct in the future. See 22 Am.Jur.2d Damages § 736 (1988); see also Gertz v. Robert Welch, Inc. (1974), 418 U.S. 323, 350, 94 S.Ct. 2997, 3012, 41 L.Ed.2d 789. Consequently, we concur in the District Court's determination that punitive damages are civil actions.

¶ 22 As a result, the portion of § 27-1-221(6), MCA, requiring an award of punitive damages to be unanimous as to liability and amount directly conflicts with Article II, Section 26 of the Montana Constitution. Accordingly, we conclude that the District Court did not err...