813 N.E.2d 902 | Ohio Ct. App. | 2004
Lead Opinion
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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *791 {¶ 1} John and Jean Blust appeal from the trial court's decision and entry ordering a new trial after they rejected remittitur of a punitive damages award they obtained against Lamar Advertising of Mobile, Inc. ("Lamar").1 In a cross-appeal, *792 Lamar appeals from the trial court's decision and entry overruling its motion for judgment notwithstanding the verdict on the issue of punitive damages.
{¶ 2} The Blusts advance four assignments of error. First, they contend that the trial court erred in ordering a new trial on the basis of excessive punitive damages. Second, they assert that the trial court erred in ordering a new trial on all issues rather than limiting the new trial to punitive damages. Third, they argue that the trial court erred in excluding evidence of the financial worth of Lamar's parent corporation, thereby offsetting and rendering harmless any excessiveness in the punitive damages award. Fourth, they claim that the trial court erred in finding the punitive damages award excessive on state-law grounds not argued by Lamar.
{¶ 3} In its cross-appeal, Lamar advances two assignments of error. First, it contends that the trial court erred in overruling its motions for a directed verdict and judgment notwithstanding the verdict on the issue of punitive damages. Second, it claims that the trial court erred in rejecting its argument that the punitive damages award violated its substantive due process rights under the
{¶ 4} With regard to the Blusts' appeal, we conclude that the trial court did not err in ordering a new trial on the basis of an excessive punitive damages award. Nevertheless, we do believe that the trial court abused its discretion in ordering a retrial of all claims and issues in the case. We find no error, however, in the trial court's exclusion of evidence about the worth of Lamar's parent corporation. Finally, we agree that the trial court erred in finding the punitive damages award excessive on state-law grounds not argued by Lamar. This error was harmless, however, because the award is grossly excessive under the federal constitutional standards argued by Lamar.
{¶ 5} As for Lamar's cross-appeal, we conclude that the trial court did not err in overruling its motions for a directed verdict and judgment notwithstanding the verdict on the issue of punitive damages. We agree, however, that the punitive damages award violated Lamar's substantive due process rights under the
{¶ 7} A Woody's work crew subsequently entered the Blusts' property and cut 34 trees that were growing wild. Of the 34 trees, 17 were more than three inches in diameter. At trial, the parties offered conflicting testimony as to (1) whether Kramer was aware of the fence line or its significance as a boundary marker prior to the cutting, (2) when she discovered that the workers were removing trees owned by the Blusts, (3) whether Kramer ordered the cutting to continue despite knowing that the workers were removing the Blusts' trees, and (4) whether she believed that she had permission to cut trees on the Blusts' side of the property line. After several days of testimony, a jury found Lamar liable in tort for trespassing and removing the trees without permission. The jury awarded compensatory damages of $32,000 and answered "yes" to an interrogatory asking whether the Blusts were entitled to recover punitive damages.
{¶ 8} After hearing additional testimony, the jury awarded the Blusts punitive damages of $2,245,105. The trial court subsequently denied Lamar's motion for judgment notwithstanding the verdict on the punitive damages award but indicated that it would grant a new trial on all issues, including liability, unless the Blusts accepted remittitur of the punitive damages award to $550,316.80, with one-half of that amount going to a nonprofit nature conservancy. The Blusts rejected remittitur, and the trial court ordered a new trial. Thereafter, the Blusts filed this timely appeal, challenging the trial court's determination that the punitive damages verdict was excessive and its decision to grant a new trial on all issues. Lamar responded with a timely cross-appeal, arguing that the punitive damages issue should not have been submitted to the jury and, alternatively, that the jury's punitive damages award was grossly excessive in violation of its federal substantive due process rights.
{¶ 10} Upon review, we find the foregoing argument to be unpersuasive. When a verdict is influenced by passion or prejudice, a trial court must order a new trial. Larrissey v. Norwalk Truck Lines,Inc. (1951),
{¶ 11} In the present case, the trial court found that the jury's punitive damages verdict was "excessive" but not tainted by passion or prejudice. Therefore, the trial court properly directed the Blusts to choose remittitur or a new trial. Contrary to the Blusts' argument, the trial court was not required to declare the punitive damages verdict "manifestly excessive" in order to grant a new trial after their rejection of remittitur. As we recently recognized in Brady, remittitur is appropriate when a damages award is excessive, and a prevailing party's rejection of remittitur compels a trial court to order a new trial. Brady, supra, at ¶ 5. While some decisions do indicate that a new trial or remittitur is appropriate when a verdict is "manifestly excessive," the trial court's omission of the word "manifestly" does not constitute reversible error. In any event, as we will explain more fully, infra, in our analysis of Lamar's cross-appeal, the jury's $2,245,105 punitive damages verdict was manifestly excessive, as it constituted a violation of Lamar's substantive due process rights under the
{¶ 12} In their second assignment of error, the Blusts assert that the trial court erred in ordering a new trial on all issues rather than limiting the new trial to punitive damages. In support, the Blusts note that the only issue tainted by error is the amount of the jury's punitive damages award. Thus, they reason that they should not be required to place in jeopardy their compensatory damages award or the jury's determination that some punitive damages are warranted by undergoing a new trial on those issues.
{¶ 13} Upon review, we find the Blusts' argument to be persuasive. After determining that the jury's punitive damages verdict was excessive, the trial court remitted the award to $550,316.80, with one-half of that amount going to a nonprofit nature conservancy. The trial court then required the Blusts to elect between accepting the remittitur or undergoing a new trial on all issues. After *795 being questioned by the Blusts' counsel about the scope of a new trial, the trial court explained its decision as follows:
{¶ 14} "Well, I — I think in view of the — of the [v]erdict, it is — because the punitive damages issue is so tied into the compensatory issue, I think that the only way to go — how could a [j]ury do punitive damages without knowing all the facts in the case anyway?
{¶ 15} "So, in — in answer to your question, the whole thing would start all again.
{¶ 16} "* * *
{¶ 17} "Basically because of the nature of the law — and this is a long legal type situation, the bottom line to you will be that with the remittitur being rejected, this Court has no alternative but — in my opinion, at least, to — other than to grant a new trial on all the issues."
{¶ 18} Although a trial court is authorized under Civ.R. 59(A) to grant a new trial "on all or part of the issues," we believe the trial court abused its discretion in the present case by ordering the retrial of issues that do not appear to have been tainted by error. The trial court apparently believed that a retrial of all issues was required because the issues of compensatory and punitive damages are related and because a jury would need to rehear much of the evidence. In our view, however, neither rationale justifies ordering the retrial of issues that a jury has resolved in the Blusts' favor without any finding of prejudicial error.
{¶ 19} It is true that compensatory damages are related to punitive damages, at least insofar as compensatory damages are used (along with other criteria) as a yardstick against which to measure a proper punitive damages award. See, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell
(2003),
{¶ 20} In our view, the proper procedure for the Blusts' new trial is set forth in Moskovitz v. Mt. Sinai Med. Ctr. (1994),
{¶ 21} In opposition to the foregoing conclusion, Lamar contends that the Blusts cannot complain about the scope of the new trial because they consented to it. We disagree. The trial court required the Blusts to choose between accepting remittitur of the punitive damages award and undergoing a new trial on all issues. This was not the correct choice. As set forth above, the proper choice was between remittitur of the punitive damages award and a new trial limited to the amount of punitive damages. Because the Blusts were not given the option of choosing a new trial limited to the amount of punitive damages, we cannot agree that they waived any objection to the new trial order.
{¶ 22} We also reject Lamar's reliance on Wilhelm v. Barnes (Aug. 11, 1982), Knox App. No. 82-CA-03, 1982 WL 11275, to support granting a new trial on all issues. In Wilhelm, a jury found that one of the defendants had caused harm to the plaintiffs' residential property and awarded compensatory and punitive damages. The trial court later determined that the compensatory and punitive damages awards were excessive and were given under the influence of passion or prejudice. As a result, the trial court ordered a new trial as to the one defendant who had been found liable. The new trial order was directed toward the amount of damages. Although the Wilhelm opinion is unclear, the new trial order also may have been directed toward the issue of the one defendant's liability for any compensatory and punitive damages, as opposed to just the amount of the awards. Upon review, the Fifth District affirmed the trial court's ruling. *797
{¶ 23} Even if the new trial order in Wilhelm did encompass all issues of liability and damages, however, it is distinguishable from the present case in one significant way. The trial court in Wilhelm found the jury's damages awards to be excessive and given under the influence of passion or prejudice. When passion or prejudice infects a jury's award of damages, a trial court reasonably may infer that the same passion or prejudice likely tainted the finding of liability as well. See, e.g.,Mueller v. Hubbard Milling Co. (C.A.8, 1978),
{¶ 24} Finally, Lamar argues that an appellate court has the power to order retrial only of issues tainted by prejudicial error, whereas a trial court enjoys broad discretion in determining the scope of a retrial. Be that as it may, we believe the trial court abused its discretion in needlessly ordering the retrial of issues that have been decided by a jury and upon which final judgment has been entered without any apparent prejudicial error. Accordingly, we sustain the Blusts' second assignment of error.
{¶ 25} In their third assignment of error, the Blusts contend that the trial court erred in excluding evidence of the financial worth of Lamar's parent corporation, thereby offsetting and rendering harmless any excessiveness in the jury's punitive damages award. In support, the Blusts contend that the jury's $2.245 million punitive damages award is not excessive when viewed in relation to the substantial worth of Lamar's parent corporation, Lamar Advertising Company. The Blusts note, however, that the trial court excluded evidence about the *798 worth of Lamar Advertising Company, limiting them to introducing evidence about the financial condition of subsidiary Lamar Advertising of Mobile, Inc., the appellee and cross-appellant in this case. According to the Blusts, the exclusion of evidence about the parent corporation's financial status was erroneous, and it offset any excessiveness in the jury's punitive damages award. Thus, the Blusts argue that any excess in the punitive damages award is harmless error in light of the trial court's improper exclusion of evidence about the value of Lamar's parent corporation.
{¶ 26} Upon review, we are unpersuaded by the Blusts' argument for at least two reasons. First, as explained more fully in our analysis of Lamar's cross-appeal, we believe the jury's $2.245 million punitive damages award is grossly excessive under federal constitutional standards. This is true even if it is viewed in relation to the financial worth of Lamar's parent corporation. Second, the only specific piece of evidence cited by the Blusts pertaining to the value of Lamar's parent corporation is a "10-K report" to the United States Securities and Exchange Commission. Lamar objected to the introduction of this evidence on the basis that it was not identified or produced by counsel for the Blusts until the morning of the punitive damages phase of trial. The trial court sustained this objection. On appeal, the Blusts argue, without citation to evidence, that Lamar had thwarted their efforts to discover the 10-K report earlier. In excluding the evidence, however, the trial court accepted Lamar's argument that the Blusts could have obtained the document from the S.E.C. long before trial. Having reviewed the trial court's ruling on this issue, we find no abuse of discretion. Accordingly, we overrule the Blusts' third assignment of error.2
{¶ 27} In their fourth assignment of error, the Blusts contend that the trial court erred in finding the punitive damages award excessive on state-law grounds not argued by Lamar. In support, the Blusts insist that Lamar never moved for remittitur or a new trial based on the excessiveness of the punitive damages award under Ohio common law. According to the Blusts, Lamar sought relief solely on the basis that the jury's $2.245 million punitive damages award violated its substantive due process rights under the
{¶ 28} Having reviewed the record, we agree that Lamar never sought remittitur or a new trial based on the punitive damages award violating Ohio common law. Lamar filed a motion for judgment notwithstanding the verdict, a new trial, and remittitur on September 26, 2002. With regard to the size of the punitive damages award, Lamar relied primarily on BMWof N. Am., Inc. v. Gore (1996),
{¶ 29} As we will explain in our analysis of Lamar's second assignment of error on cross-appeal, however, the trial court's error was harmless because the punitive damages award was grossly excessive under the federal constitutional standards argued by Lamar. Although the trial court should not have ordered remittitur or a new trial based on Ohio common law, such relief was required because the award violated Lamar's substantive due process rights. Accordingly, we will overrule the Blusts' fourth assignment of error, which asserts that the trial court should not have ordered remittitur or a new trial. As we will explain more fully, infra, the trial court ordered the appropriate relief. It simply did so for the wrong reason by grounding its decision in state law rather than federal substantive due process.
{¶ 31} Upon review, we find Lamar's first cross-assignment of error to be unpersuasive. "The test to be applied by a trial court in ruling on a motion for judgment notwithstanding the verdict is the same test to be applied on a motion for a directed verdict. The evidence adduced at trial and the facts established by admissions in the pleadings and in the record must be construed most strongly in favor of the party against whom the motion is made, and, where there is substantial evidence to support his side of the case, upon which reasonable minds may reach different conclusions, the motion must be denied. Neither the weight of the evidence nor the credibility of the witnesses is for the court's determination in ruling upon either of the above motions." Posin v.A.B.C. Motor Court Hotel, Inc. (1976),
{¶ 32} In order to recover punitive damages, the Blusts were required to show that Lamar acted with "actual malice." The Ohio Supreme Court has defined actual malice as "(1) that state of mind under which a person's conduct is characterized by hatred, ill will or a spirit of revenge, or (2) a conscious disregard for the rights and safety of other persons that has a great probability of causing substantial harm." Preston v. Murty
(1987),
{¶ 33} Viewing the record in a light most favorable to the Blusts, we find substantial evidence from which reasonable minds could conclude that Lamar employee Melissa Kramer consciously disregarded the Blusts property rights by ordering the cutting of trees on their property. Jim Weber, the landowner who entered into the billboard contract with Lamar, informed Kramer of the approximate location of the property line prior to any cutting and instructed her to follow a farm fence as a guide. After the cutting began, an "Amish-appearing man" arrived at the site and informed the workers that they were cutting trees on the wrong property and that they did not have permission to do so. In addition, the Blusts' tenant farmer, Ted Eby, observed a worker clearing trees from the Blusts' side of the property line. He reported the cutting to John Blust, who stated that he had not given anyone permission to cut his trees. Eby then spoke with a member of the work crew and told him that he was cutting trees on the wrong property. Following that conversation, Eby spoke with Melissa Kramer by telephone. He identified himself as a renter of the ground, which was owned by Mr. Blust. He also conveyed John Blust's message that nobody had permission to remove trees from the Blusts' property. Despite these warnings, the workers were instructed by Kramer to continue removing the trees. Thus, as the trial court observed, a reasonable juror could find that Lamar consciously disregarded the Blusts' property rights.
{¶ 34} A closer question is whether Melissa Kramer was aware that her act of having the Blusts' trees cut had a great probability of causing substantial harm.3 We harbor no doubt that clearing the trees had a great probability of causing some harm. Indeed, removing the trees was absolutely certain to cause harm to the extent that the Blusts lost their trees. The crucial issue on appeal is whether Kramer knew that this loss of the trees had a great probability of resulting in substantial harm to the Blusts, or more specifically, whether reasonable minds could differ on this issue. The trial court informed the jury, in accordance with standard Ohio jury instructions, that the term "substantial" means "major, or real importance, of great significance, not trifling or small."
{¶ 35} As noted above, the "harm" in the present case is obvious. It is the loss of the Blusts' trees. In order to determine whether this harm was "substantial," it is necessary to assign some measure of value to the trees. In the course of proceedings below, the Blusts advanced several arguments concerning the value of the trees to support a finding of substantial harm. They asserted that *802 someday they may wish to divide a portion of their farmland into residential plots and that the absence of the trees would harm the value of the plots. Under this scenario, the Blusts' expert testified that removal of the trees would diminish the fair market value of the property by $51,600 if a portion of it was used for residential purposes. The Blusts also argued that John Blust had a personal interest in three or four walnut trees that had been growing wild in the tree line. Mr. Blust testified that he had hoped someday to harvest the walnut trees for their veneer value. The record contains no evidence, however, what that value may be. The Blusts also presented evidence about the cost to replace the wild trees that had been cut by the work crew. In particular, the Blusts presented testimony that it would cost $40,566.33 to purchase and replant all of the trees or $24,335 to replant 11 of the larger trees. For its part, Lamar presented evidence that the "stump" or firewood value of the timber was $105. Lamar also presented expert testimony that removal of the trees had a "practically imperceptible" effect on the fair market value of the Blusts' property. When questioned further, however, Lamar's expert indicated that removal of the trees may have caused the Blusts' property value to decline by at most one percent, or $3,870.
{¶ 36} After reviewing the foregoing possible measures of the harm to the Blusts, we find that most of them at least arguably could be characterized as "substantial."4 As noted above, however, Melissa Kramer must have been aware that cutting the Blusts' trees had a great probability of causing one or more of these substantial harms. With regard to the alleged loss of property value if the Blusts ever subdivide their farm for residential purposes, the record is devoid of evidence that Kramer was aware of any such intent. The record also contains nothing to indicate that Kramer knew, prior to the removal of the trees, of John Blust's hope one day to sell the walnut trees for their veneer value. Thus, no reasonable trier of fact could find that she knew her actions had a great probability of causing harm to the future residential value of the land or to Mr. Blust's future prospects of marketing veneer.
{¶ 37} Likewise, with regard to the cost of replanting the trees, no reasonable trier of fact could find that Melissa Kramer was aware that cutting the Blusts' trees had a great probability of resulting in harm valued at $40,566.33 to purchase and replant all of the trees or even $24,335 to replant 11 of the larger trees. We reach this conclusion for two reasons. First, photographs reveal that the felled trees comprised a small part of a tree line dividing two farms. Given the location of the trees, which were growing wild near a rural road, Kramer could not have anticipated a great probability of the Blusts', who did not even *803
reside on the property, desiring to replant the trees. Second, replacement cost is not the typical measure of the harm when wild trees are cut. When a party trespasses and cuts trees that are part of a woodland mix and not unique, the ordinary measure of the harm is the difference in the fair market value before and after the cutting. See, e.g., Kapcsos v. Hammond (1983),
{¶ 38} With regard to the fair market value issue, however, we believe reasonable minds can differ as to whether Kramer was aware that her actions had a great probability of causing "substantial harm." In reaching this conclusion, we first note that Lamar's own expert testified that removal of the trees may have reduced the Blusts' property value by as much as $3,870. A reasonable juror could find that a loss of this size qualifies as substantial harm and not a trivial loss. Furthermore, we note that this measure of the harm does not depend on anything that may have been unknown or unforeseeable to Kramer, such as aspirations for future residential development, John Blust's fondness for walnut trees, or even a desire to replant unkept, wild trees. Rather, a decline in the value of one's property as a result of losing trees is the typical measure of the harm, and it is entirely predictable. Although the issue is perhaps a close one, we believe reasonable minds could differ as to whether Kramer was aware her actions had a great probability of causing substantial harm, namely the loss of property value attributable to the removal of the Blusts' trees. In reaching this conclusion, we do not completely discount the fact that a unanimous jury valued the harm in this case at $32,000. Even if Kramer could not anticipate that her actions would result in compensatory damages of that magnitude, a trier of fact could find that she consciously disregarded a great probability of causing fair-market-value harm of $3,870, which is far more than trifling. As a result, we overrule Lamar's first assignment of error.
{¶ 39} In its second cross-assignment of error, Lamar contends the trial court erred in rejecting its argument that the punitive damages award violated its federal substantive due process rights. In support, Lamar argues that the jury's $2.245 million award was grossly excessive under the standards set forth in State Farm v. Campbell,
{¶ 40} Upon review, we agree that the jury's punitive damages award violates Lamar's substantive due process rights. In Campbell, the United States Supreme Court revisited the three guideposts it previously had set forth in BMW of N. Am., Inc. v. Gore,
{¶ 41} The Campbell court reiterated that the "`most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct.'" Id.,
{¶ 42} Application of the foregoing "reprehensibility" factor militates against the jury's $2.245 million punitive damages award. Indeed, the first four factors weigh in favor of Lamar. First, the harm to the Blusts was economic, not physical. Second, Lamar's conduct did not endanger the health or safety of anyone. Third, the record is devoid of evidence that the Blusts are financially vulnerable. Fourth, nothing in the record establishes that Lamar's misconduct was anything other than an isolated incident. The fifth factor weighs in favor of the Blusts, however, because a trier of fact reasonably could find that Lamar's misconduct was the result of intentional malice as opposed to mistake. Although Campbell cautions that the existence of only one of the foregoing factors "may not be sufficient to sustain a punitive damages award," we cannot say that no punitive damages were warranted in the present case. Id.,
{¶ 43} The second guidepost also renders the jury's punitive damages award constitutionally suspect. Although the Campbell court declined to impose a bright-line ratio between compensatory and punitive damages, it observed that "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." Id.,
{¶ 44} In the present case, our analysis of the five "reprehensibility" factors demonstrated that Lamar's conduct, while not admirable, was not exceptionally egregious, insofar as only one of the factors favored the Blusts. Given the nature of the loss in this case, we also believe that the jury's $32,000 compensatory damages award was substantial. As a result, we harbor no doubt that the jury's punitive damages award — which exceeded the $32,000 compensatory damages by a ratio of approximately 70 to 1 — was unreasonable and disproportionate to the harm caused.
{¶ 45} Finally, the third guidepost suggests that the jury's punitive damages award violated Lamar's substantive due process rights. The third guidepost is "the disparity between the punitive damages award and the `civil penalties authorized or imposed in comparable cases.'" Id.
{¶ 46} Having reviewed each of the Gore guideposts, we conclude that the jury's punitive damages award was neither reasonable nor proportionate to the wrong committed. In the language of Campbell, it was "an irrational and arbitrary deprivation of the property" of Lamar in violation of the Due Process *806
Clause of the
Judgment accordingly.
GRADY, J., concurs.
BROGAN, J., dissents.
Dissenting Opinion
{¶ 48} I respectfully dissent from the majority's holding that the trial court properly submitted the punitive damages issue to the jury. In my view, the trial court erred in overruling Lamar's motions for a directed verdict and judgment notwithstanding the verdict on that issue.
{¶ 49} Before submitting the punitive damages issue to the jury, the trial court was required to find that reasonable minds could differ as to (1) whether Lamar employee Melissa Kramer consciously disregarded the Blusts' rights and (2) whether Kramer was aware that her acts had a great probability of causing substantial harm. Preston v. Murty (1987),
{¶ 50} My disagreement with the majority concerns the second requirement. Although I do not condone Lamar's destruction of the Blusts' trees, the record does not contain evidence from which a juror reasonably could find that Kramer was aware her acts had a great probability of causing substantial harm. Kramer ordered the clearing of a small area of scrub brush and trees along a rural road. All of the trees were growing wild in a fence line that separated the Blusts' 75.8-acre farm from another large field. Just seventeen of the trees were of any significant size, and even John Blust really only cared about three or four walnut trees in that grove.
{¶ 51} Viewing the evidence in a light most favorable to the Blusts, I do not believe reasonable minds could find that Kramer knew removing the trees had a great probability of causing substantial harm. Kramer knew nothing of any plan to subdivide the farmland for residential purposes and to use the tree line as a *807 screen, even assuming for present purposes that such a plan existed. Until after the cutting, she also knew nothing about the presence of the walnut trees, or of John Blust's future aspirations to harvest the wood for its unspecified veneer value. Likewise, Kramer could not have anticipated the Blusts' desiring to replant the wild trees on the edge of their farmland. The volunteer trees served no apparent purpose and had no apparent value. In this regard, Lamar presented uncontroverted testimony that trees on the edge of a farm field typically are removed because their branches interfere with crop yields by causing shade, and their roots interfere with plant growth and cultivation. Finally, the record does not support a finding that Kramer knew removing the trees likely would have a negative impact on the Blusts' property value. After reviewing pictures of the scene, I do not believe that a reasonable juror could find any real value in the trees, other than their "stump" value of $105.
{¶ 52} In short, a review of the record reveals no reason for Kramer to suspect that substantial harm would befall the Blusts, neither of whom even resides on the land, if a small portion of the tree line was removed. Because reasonable minds could not differ as to whether Kramer was aware that her conduct had a great probability of causing substantial harm, I believe the trial court erred in overruling Lamar's motions for a directed verdict and judgment notwithstanding the verdict. As a result, I would sustain Lamar's first assignment of error on cross-appeal and overrule all other assignments of error as moot.