Strub v. Stillmunkes Salvage and Trucking, Inc., No. 3-282 / 02-0753.

CourtCourt of Appeals of Iowa
Writing for the CourtVogel
Parties<B>TERRY L. STRUB and DEBORAH STRUB,</B> Appellees, <B>v.</B> <B>STILLMUNKES SALVAGE AND TRUCKING, INC.,</B> Appellant, <B>JAMES GERLACH,</B> Defendant.
Docket NumberNo. 3-282 / 02-0753.
Decision Date25 June 2003

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No. 3-282 / 02-0753.
Court of Appeals of Iowa.
Filed June 25, 2003.

Appeal from the Iowa District Court for Dubuque County, Robert J. Curnan, Judge.

Defendant appeals jury verdict of punitive damages and future medical expenses, and certain jury instructions. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Michael Coyle and Norman Wangberg of Fuerste, Carew, Coyle, Juergens & Sudmeier, P.C., Dubuque, for appellant.

A. John Arenz and Stephen Krumpe of O'Connor & Thomas, P.C., Dubuque, for appellees.

Heard by Sackett, C.J., and Huitink and Vogel, JJ.

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Stillmunkes Salvage and Trucking, Inc. appeals from a jury award of punitive damages and future medical expenses and certain jury instructions. We affirm in part, reverse in part, and remand.

Background Facts. On September 1, 1999, a collision occurred on a rural gravel road between a car driven by Terry Strub (Strub) and a semi tractor-trailer driven by James Gerlach (Gerlach) while employed by Stillmunkes Salvage and Trucking, Inc., (Stillmunkes). Gerlach was following Stillmunkes owner Mark Stillmunkes to a job site on a gravel road. Because conditions were dry, the first semi tractor-trailer was producing dust on the road impairing Gerlach's view. When he saw Strub's car, Gerlach applied the breaks but the vehicles nonetheless collided. Strub's vehicle turned one hundred and eighty degrees in the air and came to rest in the ditch. Strub was taken by ambulance from the scene. Deputy Sheriff Ward arrived on the scene about twenty-five minutes after the accident occurred.

Strub suffered a dislocated and fractured hip, rib contusions, facial fracture, and a herniated disk. Along with taking anti-inflammatory medication, Strub participated in physical therapy and received cortisone injections in his spine.

Gerlach was first hired as a truck driver by Stillmunkes in December 1998. Stillmunkes's insurance carrier covered Gerlach on a probationary status as his driving record raised some concerns. Gerlach had a valid Iowa commercial driver's license but also had numerous citations for speeding, accidents, and

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driving while suspended. Gerlach's most recent citation was a little over two years before this initial hire. Stillmunkes's insurance carrier informed Stillmunkes that should Gerlach receive any new moving violation, the carrier would revoke coverage. In January 1999, within a week of each other, Gerlach hit a cow with a semi tractor-trailer and ran a stop sign. Because of these incidents, insurance as to Gerlach was revoked and he was terminated as a Stillmunkes employee.

About six months later in August 1999, Stillmunkes rehired Gerlach as a driver. Though Mark Stillmunkes testified he called the insurance carrier to ensure Gerlach was included in its policy, at the time of the accident Gerlach was not covered by the insurance carrier. When Gerlach was terminated in January, the carrier excluded Gerlach from all coverage under Stillmunkes's policy. The exclusion had not been lifted when Gerlach was rehired in August. The collision in question occurred two weeks after the second hiring.

Following trial, the jury awarded Strub compensatory damages of $177,491.74, including $35,000 for future medical expenses. The jury further awarded punitive damages of $30,000 finding Stillmunkes's conduct a willful and wanton disregard for the rights or safety of another. Stillmunkes filed a motion for judgment notwithstanding the verdict and for a new trial challenging, inter alia, the award of future medical expenses and punitive damages, as well as several jury instructions. The motions were denied. Stillmunkes appeals.

Scope of Review. We review the denial of a motion for new trial for correction of errors at law. Iowa R. App. P. 6.4; Johnson v. Knoxville Cmty. Sch. Dist., 570 N.W.2d 633, 635 (Iowa 1997). However, if the motion is based on a

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discretionary ground, we review for abuse of discretion. Condon Auto Sales & Serv., Inc. v. Crick, 604 N.W.2d 587, 594 (Iowa 1999). We review a claim that the district court erred in limiting cross-examination for abuse of discretion. State v. Jones, 511 N.W.2d 400, 406 (Iowa Ct. App. 1993) (citation omitted).

Punitive Damages. Stillmunkes claims there was insufficient evidence of reckless hiring to submit the question of punitive damages to the jury. Strub argues there was sufficient evidence from which a reasonable jury could conclude Stillmunkes was reckless to hire Gerlach as a driver and this recklessness was a proximate cause of Strub's injuries.

An award of punitive damages stands only when there is proof of conduct that establishes a "willful and wanton disregard for the rights or safety of another." Iowa Code § 668A.1(1)(a) (1999); Mercer v. Pittway Corp., 616 N.W.2d 602, 617 (Iowa 2000). "Willful and wanton" has been defined as follows:

[T]he actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences.

Mercer, 616 N.W.2d at 617 (citations omitted). The evidence to support an award must be clear, convincing and satisfactory. Iowa Code § 668A.1(1)(a); Mercer, 616 N.W.2d at 617.

"Punitive damages serve `as a form of punishment and to deter others from conduct which is sufficiently egregious to call for the remedy.'" McClure v. Walgreen Co., 613 N.W.2d 225, 230 (Iowa 2000) (quoting Coster v. Crookham, 468 N.W.2d 802, 810 (Iowa 1991)). Negligent conduct, alone, is not sufficient to

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support a claim for punitive damages. Id. at 230-31 (citing Beeman v. Manville Corp. Asbestos Disease Comp. Fund, 496 N.W.2d 247, 256 (Iowa 1993)). Punitive damages are appropriate only when actual or legal malice is established. Id. at 231 (citing Schultz v. Security Nat'l Bank, 583 N.W.2d 886, 888 (Iowa 1998)). "Actual malice is characterized by such factors as personal spite, hatred, or ill will. Legal malice is shown by wrongful conduct committed or continued with a willful or reckless disregard for another's rights." Id. (citing Schultz, 583 N.W.2d at 888) (citation omitted).

Strub points to Stillmunkes's hiring practice, its violation of federal safety regulations, and the industry standard as proof of reckless hiring to support the punitive damages award. Stillmunkes's routine practice to determine whether a person could be insured and thus hired was to call its insurance carrier, inform the carrier of the driver's full name, date of birth, and commercial driver's license number. The insurance carrier would then review the motor vehicle record to determine coverage. At no point would Stillmunkes receive a copy of the motor vehicle record. In accordance with this practice, Stillmunkes did not obtain a copy of Gerlach's motor vehicle record when it hired him either the first or second time.

John Neal, a consultant and plaintiff's expert on heavy bus and truck accidents, testified regarding the commonly-accepted trucking industry standards and practices. Neal stated the industry standard for reviewing a person's driving record is to look at the past six years; however, the federal regulations require

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only three years and allow for a thirty-day period after hiring for an employer to review the employee's driving record. 49 C.F.R. § 391.23 (2000).

Our supreme court addressed the issue of punitive damages with similar underlying facts in ...

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