Missouri Pacific R. Co. v. Arkansas Sheriff's Boys' Ranch

• Decision Date: 05 July 1983
• Docket Number: No. 82-201,82-201
• Citation: 655 S.W.2d 389,280 Ark. 53
• Parties: MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. ARKANSAS SHERIFF'S BOYS' RANCH et al., Appellees.
• Court: Arkansas Supreme Court

Page 389

655 S.W.2d 389

280 Ark. 53

MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. ARKANSAS SHERIFF'S BOYS' RANCH et al., Appellees.

No. 82-201.

Supreme Court of Arkansas.

July 5, 1983.

Rehearing Denied Sept. 19, 1983.

Friday, Eldredge & Clark by Herschel H. Friday and J. Phillip Malcom, Little Rock, for appellant.

Tom Allen and Harkey, Walmsley, Belew & Blankenship, Batesville, for appellees.

DUDLEY, Justice.

Sixteen appellee landowners filed four separate complaints against appellant, Missouri Pacific Railroad Company, and 29 of its employees. The appellees alleged they were entitled to recover compensatory and punitive damages for losses suffered as a result of fires caused by the negligent maintenance of both the right-of-way and the rolling stock of the appellant railroad and by the deliberate and intentional acts of the employees in throwing fuzes or flares into combustible materials. Over appellant's objection, the four separate lawsuits were consolidated for trial.

Immediately prior to the trial the appellees nonsuited their punitive damage claims against each of the 29 employees but retained their punitive damage claim against the appellant railroad. During the trial a witness, who was not a party to these lawsuits, was allowed to testify that during settlement negotiations of a different claim an agent of the railroad stated that, in order to save money, the railroad has a policy of settling claims for fire damages rather than expending money to prevent the fires. The jury returned an award for compensatory damages totalling $6,100 for the four cases and an award for punitive damages totalling $800,000, or $200,000 for the appellees in each of the four cases. We reverse. Jurisdiction is in this Court pursuant to Rule 29(1)(o ).

The appellant raises four points on appeal: two concern procedure prior to trial, one arises from an evidentiary ruling at trial, and one relates to the sufficiency of the evidence.

We first address appellant's two assigned points of error concerning procedure. Appellant contends that the trial court committed procedural error in consolidating the four lawsuits for trial. We agree.

ARCP Rule 42(a) provides:

Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delays.

An order of consolidation is a matter of discretion with the trial judge, and we will not reverse such an order except for abuse of that discretion.

The parties and facts in the four cases are as follows:

(1) One plaintiff sought compensatory and punitive damages against only the railroad for losses due to numerous fires alleged to have occurred over the past three years.

(2) Two different plaintiffs sought compensatory and punitive damages against the appellant and its train crew of 12 men for losses on their 270 acres of land due to fires on July 29, 1980 and August 27, 1980.

(3) Two different plaintiff property owners sought compensatory and punitive damages against appellant and its 15-man train crew, two of whom were also in the crew in case number (2), for losses on their ten acres which occurred on August 29, 1980 and April 10, 1981.

(4) Nine different property owners sought compensation and punitive damages against appellant and its 16-man crew, five of whom were also crew members in case number (2) and two of whom were crew members in case number (3), for losses on their 417 acres of land, which occurred on April 20, 1980.

Prior to making his decision the trial court heard arguments from the attorneys at a pretrial conference. The court anticipated that the proof would show that all the complaints arose along a six mile stretch of right-of-way. The trial judge anticipated that the main thrust of the lawsuits would be for punitive damages and that all plaintiffs would attempt to prove that the appellant had found it less expensive to pay damage claims than to control vegetation on the right-of-way along this six mile stretch.

In analyzing the issue, we have divided the cases into their component parts--compensatory damages and punitive damages. It is the consolidation of claims for punitive damages which causes us to reverse. First, we note that the consolidation complies literally with Rule 42(a) if the language therein is taken literally, as there were common issues of fact and law in the claims for punitive damages. The consolidation also saved judicial time, and we are fully aware that, upon retrial, each plaintiff will have to call nearly all of the same witnesses to establish the occurrence of most of the fires, that notice was given to the appellant, the condition of the right-of-way and rolling stock, and company policy. Even so, ordering the consolidation amounted to an abuse of discretion because of the resulting prejudice.

The consolidation of four cases placed undue emphasis on the need to penalize the tortfeasor. One of the objectives of punitive damages is to deter the tortfeasor from again engaging in similar conduct. Holmes v. Hollingsworth, 234 Ark. 347, 352 S.W.2d 96 (1961). Therefore, the measure of punitive damages is unlike the measure of compensatory damages because punitive damages may validly amount to a windfall for a plaintiff. Ray Dodge, Inc. v. Moore, 251 Ark. 1036, 479 S.W.2d 518 (1972). However, a jury is more likely to spread a large verdict among a large number of plaintiffs than it would be to give one plaintiff the same large verdict. The windfall concept must not be expanded to this extent. It is in this manner that consolidation resulted in substantial prejudice to the appellant. Therefore, we conclude that the order of consolidation was an abuse of discretion and reverse on that issue.

Since the case must be retried, we discuss the other points which are raised on this appeal and will likely arise again upon retrial.

Appellant argues that the trial court committed error in first allowing the appellees to nonsuit their claims for punitive damages against the 29 employees and then allowing appellees to proceed on their claim for punitive damages against the railroad alone. Appellant relies on our case of Curtis v. Partain, 272 Ark. 400, 614 S.W.2d 671 (1981). We find no merit in the argument and, upon retrial, appellees should be allowed to proceed as they did at the first trial.

In the case of Dunaway v. Troutt, 232 Ark. 615, 339 S.W.2d 613 (1960), the plaintiff brought a libel action against three parties. At trial, evidence of the financial worth of two of the defendants was introduced but there was no showing as to the third. The jury returned verdicts for compensatory and punitive damages against all three defendants. We reversed, holding that when a plaintiff sues more than one defendant he waives his right to punitive damages even though they are otherwise assessable. The case was an anomaly. Most jurisdictions at that time held that joint tortfeasors could be jointly and severally liable for punitive damages and it was only the evidence of the wealth of one or more of the joint tortfeasors which was inadmissible. See Giror, Torts--Assessment of Punitive Damages Against Joint-Tortfeasors, 15 Ark.L.Rev. 208 (1961).

Dunaway was then specifically overruled in Life & Casualty Ins. Co. of Tennessee v. Padgett, 241 Ark. 353, 407 S.W.2d 728 (1966). There the plaintiff sued both a principal and an agent for compensatory and punitive damages. At trial, the multi-million dollar financial worth of the principal was admitted along with proof of the $1,000 net worth of the agent. The jury returned a verdict for compensatory damages and $35,000 punitive damages against both defendants. In overruling Dunaway, we held that joint tortfeasors could be jointly and severally liable for punitive damages. We then reversed the case only on the basis that the proof of financial worth of two or more defendants is unfair in an action for punitive damages. We stated:

Padgett's attorney argues that regardless of the rule in the case of independent tortfeasors proof of financial worth should be allowed when the defendants are employer and employee. That argument is not sound. The reason for the rule--that one defendant should not be punished on the basis of another defendant's wealth--applies just as well to employers and employees as to others not standing in that relation. Hence the rule, as one might expect, is applied in master-servant cases. Chicago City Ry. Co. v. Henry, 62 Ill. 142 (1871); Dawes v. Starrett, 336 Mo. 897, 82 S.W.2d 43 (1935); McAllister v. Kimberly-Clark Co., 169 Wis. 473, 173 N.W. 216 (1919).

We have not changed our general rule that joint tortfeasors may be jointly and severally liable for punitive damages.

In Curtis v. Partain, 272 Ark. 400, 614 S.W.2d 671 (1981), the plaintiff brought a tort action against four parties who were the officers, directors and stockholders of a corporation. All four were alleged to have committed the same actionable wrongs. The prayer of the complaint was for compensatory and punitive damages against all four defendants. Prior to trial, the plaintiff sought to require each of the four defendants to produce documentation of his individual net worth. One defendant, Curtis, refused on the basis of our reasoning announced in Life & Casualty Ins. Co. of Tennessee v. Padgett, supra. The plaintiff then nonsuited three of the defendants from the claim for punitive damages, leaving only Curtis as a defendant in the punitive damage segment of the case. In Curtis we extended the philosophy of Padgett. We decided that, where there are two or more defendants who are alleged to have committed virtually identical wrongs, it would be unfair to allow the plaintiff to seek compensatory damages from all of them but punitive damages from...