Torres v. Automobile Club of So. California

• Decision Date: 02 June 1997
• Docket Number: No. S048329,S048329
• Citation: 937 P.2d 290,15 Cal.4th 771,63 Cal.Rptr.2d 859
• Court: California Supreme Court
• Parties: , 16 Cal.4th 89A, 937 P.2d 290, 97 Cal. Daily Op. Serv. 4141 Richard A. TORRES, Sr., Plaintiff and Respondent, v. AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Appellant

Page 859

63 Cal.Rptr.2d 859

15 Cal.4th 771, 16 Cal.4th 89A, 937 P.2d 290,

97 Cal. Daily Op. Serv. 4141

Richard A. TORRES, Sr., Plaintiff and Respondent, v. AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, Defendant and Appellant.

No. S048329.

June 2, 1997.

As Modified on Denial of Rehearing July 16, 1997.

Higgs, Fletcher & Mack, John Morris, Gilbert, Kelly, Crowley & Jennett, Clifford H. Woosley, Los Angeles, Gray, Cary, Ware & Freidenrich, Marcelle E. Mihaila and Kathryn E. Karcher, San Diego, for Defendant and Appellant.

Hugh F. Young, Jr., Harvey M. Grossman, Los Angeles, Kornblum Law Offices, Guy O. Kornblum, San Francisco, William A. Cerillo, John A. Dunning, Horvitz & Levy, Ellis J. Horvitz, Calabasas, Daniel J. Gonzalez and Christina J. Imre, Encino, as Amici Curiae on behalf of Defendant and Appellant.

Thickstun & Stern, Marc O. Stern and Sean Hennessey, San Diego, for Plaintiff and Respondent.

Harvey R. Levine, San Diego, Leonard Sacks, Granada Hills, Douglas Devries, Sacramento, Roland Winkle, Robert Steinberg, Thomas G. Stolpman, Long Beach, William D. Turley, San Diego, Mary E. Alexander, San Francisco, Bruce Broillet, Santa Monica, David Casey, Jr., San Diego, Tony Tanke, Belmont, Leonard Esquina, Sacramento, Steven J. Keifield, David Rosen, Los Angeles, Shernoff, Bidart & Darras, William M. Shernoff, Newport Beach, Sharon J. Arkin, Claremont, Seltzer & Cody, Richard A. Seltzer, Oakland, Quackenbush & Quackenbush and William C. Quackenbush, San Mateo, as Amici Curiae on behalf of Plaintiff and Respondent.

BAXTER, Justice.

Civil Code section 3295, subdivision (d), ¹ provides in pertinent part that a court "shall, on application of any defendant, preclude the admission of evidence of that defendant's profits or financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud in accordance with Section 3294. Evidence of profit and financial condition shall be presented to the same trier of fact that found for the plaintiff and found one or more defendants guilty of malice, oppression, or fraud."

We must decide whether this statutory provision entitles a defendant to a new trial on liability and compensatory damages following the reversal of an award of punitive damages. Application of settled rules of statutory construction leads us to conclude the answer is no.

I. FACTUAL AND PROCEDURAL BACKGROUND

This action represents the third in a series of lawsuits involving plaintiff Richard A. Torres, Sr. (Torres). The underlying history is as follows.

In 1979, Torres and his son, Anthony Torres, sued Fidel Rubalcaba (Rubalcaba) and Jose Ceballos (Ceballos) to recover for injuries they sustained when Ceballos collided with them while driving Rubalcaba's automobile. At the time of the accident, Rubalcaba was insured under a policy with the Automobile Club of Southern California (the Auto Club). The Auto Club provided a defense for Rubalcaba, but refused to represent Ceballos. In his first action, Torres and his son obtained a default judgment against Ceballos for $38,563 and thereafter dismissed the action against Rubalcaba.

In the second lawsuit, Torres and his son sued the Auto Club pursuant to Insurance Code section 11580, subdivision (b)(2), which allows a creditor to bring a direct action against an insurer after obtaining a judgment against the insured. Since the suit was brought on the judgment against Ceballos, Torres and his son were required to allege and prove that Ceballos was covered by the Auto Club's policy. In October 1986, Torres and his son prevailed in the action and were awarded damages in the total amount of $38,000. A month later the Auto Club paid them over $55,000, a sum which included the judgment plus interest.

In December 1986, Torres and his son filed the instant action against the Auto Club for violations of Insurance Code section 790.03. A jury awarded Torres $4,251 in economic damages, representing costs and fees previously incurred and not reimbursed, and $20,000 in noneconomic damages for emotional distress. Torres's son was awarded $10,000 in noneconomic damages for emotional distress but nothing in economic damages. The jury also found the Auto Club guilty of malice, fraud or oppression, and in a subsequent hearing awarded punitive damages in the amount of $1.7 million.

After the trial, the Auto Club filed a motion for judgment notwithstanding the verdict. The trial court granted the motion as to Torres's son, finding no evidence to support a claim of emotional distress. The court denied the balance of the motion, thus affirming the $24,251 judgment in Torres's favor as well as the punitive damages award.

The Auto Club appealed. Although the Auto Club did not challenge the jury's determination on its liability for Insurance Code violations or the award of economic damages to Torres, it argued, among other things, that there was no substantial evidence of severe emotional distress to support the noneconomic damages award and no substantial evidence of malice, oppression or fraud to support the punitive damages award. The Auto Club also contended that the $1.7 million punitive damages award was excessive.

The Court of Appeal reversed. First, the court agreed that Torres had not made a sufficient showing for the recovery of noneconomic damages. Second, it found that the $1.7 million award was excessive in comparison to Torres's actual damages which, after subtracting the emotional distress award, amounted to approximately $4,000. But even though there was no question of error regarding the issue of liability or the amount of economic damages, the court nevertheless remanded the entire cause for a complete retrial. While recognizing that a reversal of only a portion of a judgment ordinarily does not require a full retrial, the court believed that section 3295, subdivision (d) (hereafter, section 3295(d)) did not allow for a retrial of only the amount of punitive damages.

We granted review and directed the parties to address the limited issue of whether, under section 3295(d), a defendant is entitled to a new trial on liability and compensatory damages following the reversal of an award of punitive damages and remand to the court for a new trial on punitive damages.

II. DISCUSSION

It is a firmly established principle of law that "[t]he appellate courts have power to order a retrial on a limited issue, if that issue can be separately tried without such confusion or uncertainty as would amount to a denial of a fair trial." (Brewer v. Second Baptist Church (1948) 32 Cal.2d 791, 801, 197 P.2d 713.) The underlying rationale is easy to discern: to require a complete retrial when an issue could be separately tried without prejudice to the litigants would unnecessarily add to the burden of already overcrowded court calendars and could be unduly harsh on the parties. (See Little v. Superior Court (1961) 55 Cal.2d 642, 645, 12 Cal.Rptr. 481, 361 P.2d 13.)

In Brewer v. Second Baptist Church, supra, 32 Cal.2d 791, 197 P.2d 713, we held it proper to order a retrial limited to punitive damages because such issue is "separate and distinct from that of actual damages, for they are assessed to punish the defendant and not to compensate for any loss suffered by the plaintiff." (32 Cal.2d at p. 801, 197 P.2d 713.) Subsequent to that decision, appellate courts have not hesitated to remand cases for retrial limited to punitive damages. (E.g., Adams v. Murakami (1991) 54 Cal.3d 105, 284 Cal.Rptr. 318, 813 P.2d 1348; Brewer v. Second Baptist Church, supra, 32 Cal.2d 791, 197 P.2d 713; Dumas v. Stocker (1989) 213 Cal.App.3d 1262, 262 Cal.Rptr. 311; Alhino v. Starr (1980) 112 Cal.App.3d 158, 169 Cal.Rptr. 136; Luke v. Mercantile Acceptance Corp. (1952) 111 Cal.App.2d 431, 244 P.2d 764.)

In 1987, the Legislature enacted a comprehensive tort reform package that sought to clarify and reform the law in areas concerning punitive damages, product liability, conflicts in insurance defense, and fee limitations under the Medical Injury Compensation Reform Act. (Stats.1987, ch. 1498, pp. 5777-5782.) As part of the package, ² subdivision (d) was added to section 3295, providing: "The court shall, on application of any defendant, preclude the admission of evidence of that defendant's profits or financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud in accordance with Section 3294. Evidence of profit and financial condition shall be admissible only as to the defendant or defendants found to be liable to the plaintiff and to be guilty of malice, oppression, or fraud. Evidence of profit and financial condition shall be presented to the same trier of fact that found for the plaintiff and found one or more defendants guilty of malice, oppression, or fraud." (§ 3295(d), italics added.)

The question here is whether the last sentence of section 3295(d) entitles a defendant to a new trial on all issues, including liability and compensatory damages, following the reversal of an award of punitive damages. To resolve this issue, we are guided by familiar rules of statutory construction. When construing a statute, we must " 'ascertain the intent of the lawmakers so as to effectuate the purpose of the law.' " (People v. Cruz (1996) 13 Cal.4th 764, 774-775, 55 Cal.Rptr.2d 117, 919 P.2d 731; see City of Huntington Beach v. Board of Administration (1992) 4 Cal.4th 462, 468, 14 Cal.Rptr.2d 514, 841 P.2d 1034). We begin by examining the language of the statute, giving the words their ordinary meaning. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 378, 33 Cal.Rptr.2d 63, 878 P.2d 1275.) "The words, however, must be read in context, considering the nature and purpose of the statutory enactment." (Id. at pp. 378-379, 33 Cal.Rptr.2d 63, 878 P.2d 1275.) In this...