Sаmuel L. BRADSHAW and Deborah A. Bradshaw, husband and wife, Plaintiffs-Appellees/Cross-Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant/Cross-Apellee.
No. CV-87-0011-PR.
Supreme Court of Arizona.
May 18, 1988.
Reconsideration Denied July 6, 1988.
758 P.2d 1313 | 157 Ariz. 410
In order to prevail on a malicious prosecution claim, plaintiff must establish that the preceding action was brought without probable cause. As put by
Applying these principles to the facts in this action, we can determine as a matter of law that probable cause for the wrongful death action existed. Two eyewitnesses said that Bradshaw did not have his siren on. Driving at high speed near residential areas without a siren could reasonably be found to be negligent. It would also arguably be in violation of
Bradshaw argues, however, that the probable cause available to Mrs. Ivie cannot be asserted by State Farm when pursuing its own interest of minimizing Bradshaw‘s personal injury recovery. We disagree. The lawyer retained by State Farm to represent Mrs. Ivie owed his primary allegiаnce to the Ivies. Parsons v. Continental National American Group, 113 Ariz. 223, 550 P.2d 94 (1976). To be sure, he was not obligated by the terms of the insurance policy to present affirmative claims on behalf of the insured. Nothing, however, disempowered him from doing so with the consent of his client. That bringing such an action aided State Farm in compromising Bradshaw‘s damage claim is immaterial. It also, of course, eliminated any risk to the Ivie estate. Beyond this, we do not understand the law to be that lawyering tactics available to the insured are somehow unavailable to the insurer. It is not the obligation of the insurer supinely to forego normal lawyering practices, thus increasing its risk and the potential excess risk to the insured, simply because those practices are also advantageous to it.1
The judgment is reversed.
BIRDSALL and LACAGNINA, JJ., concur.
Thur, Dawson & O‘Sullivan by Steven C. Dawson, Calvin C. Thur, Scottsdale, for plaintiffs-appellees/cross-appellants.
FELDMAN, Vice Chief Justice.
Petitioner asks us to review a decision of the court of appeals reversing the trial judgment in an unusual malicious prosecution case.1 We granted review to examine important questions concerning the issue of probable cause.
FACTUAL AND PROCEDURAL SUMMARY
A. The Underlying Action
Many of the essential facts in this case are undisputed. We view the other facts and all inferences in the light most favorable to sustaining the verdict. Curlee v. Morris, 72 Ariz. 125, 127, 231 P.2d 752, 753 (1951).
Shortly after 5:00 p.m. on January 27, 1980, Maricopa County Deputy Sheriff Samuel Bradshaw was rapidly driving east in his patrol car on University Drive in Mesa, Arizona. Because he was respond
William Ivie had been driving north toward the intersection. Ivie apparently did not halt at the intersection stop sign but drove directly into the path of Bradshaw‘s car, which had the right-of-way. Bradshaw swerved and braked, but still rammed broadside into Ivie‘s vehicle. Ivie neither braked nor made any evasive maneuver. Weather conditions were excellent; visibility was unobstructed.
The precise interval between Bradshaw‘s acknowledgment of the dispatcher‘s signal and the accident was not documented, but was probably quite short. The next transmission from Bradshaw‘s vehicle, about one and one-half minutes later, was from a citizen reporting the accident. Bradshaw suffered retrograde amnesia as a result of his injuries and had no recollection of the crash.
Accident experts estimated that Bradshaw‘s speed just prior to impact was from sixty-three to over seventy miles per hour. The posted speed limit for the area was forty-five miles per hour. The police interviewed seven people who had been witnesses to the accident.3 All of the witness
The collision killed Ivie and inflicted severe injuries on Bradshaw. Soon after the accident, Bradshaw and his wife (the Bradshaws) retained an attorney who contacted Ivie‘s insurer, State Farm Mutual Automobile Insurance Company (State Farm). The Bradshaws also filed a perfunctory claim against Ivie‘s estate, apparently to preserve the right to sue the estate in case State Farm refused to settle for the limits of Ivie‘s liability policy. Over the next few months, State Farm claims personnel evidently concluded that their insured was liable for the accident. Reporter‘s Transcript (RT) Jan. 31, 1985, at 89-90, 116-17. They focused their attention on the extent of the damages, estimating the value of the Bradshaws’ claim at from $65,000 to $75,000. The claims specialists were genuinely concerned that the damagеs might exceed the $100,000 policy limit. RT Jan. 31, 1985, at 55-56.
On October 8, 1980, the Bradshaws’ attorney sent a detailed letter to State Farm, offering to settle for the $100,000 policy limits covering Ivie. The letter added that if settlement were not reached and the Bradshaws obtained a judgment in excess of the policy coverage, they would pursue State Farm directly for the excess because “Mr. Ivie‘s estate has indicated a willingness to assign that action to us should litigation be necessary.” The attorney gave State Farm fourteen days to consider this settlement offer. On October 14, 1980, the Bradshaws granted State Farm an additional thirty days to consider the proposal. But rather than negotiate further with the Bradshaws, State Farm decided to persuade Mrs. Ivie, an Iowa resident, to sue the Bradshaws in federal court. There was evidencе that State Farm‘s decision to sue was unrelated to the true merits of Ivie‘s claim. RT Jan. 30, 1985, at 142-43; Jan. 31, 1985, at 14, 27, 37-38.
A State Farm claims adjuster asked Ivie‘s probate attorney for permission to bring a wrongful death action against the Bradshaws in Mrs. Ivie‘s name. Mrs. Ivie‘s attorney apparently did not give consent and requested that the Bradshaws’ claim be settled. State Farm renewed its request, and in an October 22, 1980 letter, Ivie‘s probate attorney responded to State Farm‘s offer:
I explained to Mrs. Ivie that you desired to commence action in her name against Bradshaws ... and wished her permission to do so; that such would be of no expenses whatsoever and of any kind to her; that if a recovery was made on her behalf or the estate, that you would deduct therefrom only the court costs, but nothing else, nor would she be required tо pay legal fees. Mrs. Ivie has consented to the above and you may proceed. She stated that this does not in any way modify her request that the case be settled within the limits of [her] insurance policy, as was stated and mentioned in my letter of October 13th, 1980.
(Emphasis added.)
State Farm filed a complaint against the Bradshaws in Arizona federal district court on November 3, 1980. The Bradshaws answered and counterclaimed for the injuries inflicted by Mr. Ivie. While the complaint was technically brought in the name of Mrs. Ivie and the estate of Mr. Ivie, State Farm had complete control of the litigation and paid all costs, fees and expenses. The parties conducted over twenty-five depositions preparing for trial. By the summer of 1982, the Bradshaws’ “difficult financial situation” and emotional upset over being sued and accused of negligently causing Mr. Ivie‘s death forced them to accept a settlement of $60,000 from State Farm. The parties signed a stipulation and order for dismissal with prejudice, which was granted by the district court on July 22, 1982. Mrs. Ivie had died by the time of the settlement.
On June 30, 1983, the Bradshaws brought this action against State Farm alleging malicious prosecution, abuse of process, intentional infliction of emotional distress, unfair or deceptive insurance acts or practices, and racketeering. State Farm answered and obtained dismissal of the last three counts. The case went to trial on malicious prosecution and abuse of process theories. At the conclusion of the evidence, the trial court granted State Farm‘s motion for a directed verdict on abuse of process but sent the malicious prosеcution count to the jury.
The jury awarded the Bradshaws $40,0004 in compensatory damages and assessed $2,000,000 in punitive damages. State Farm filed motions for a new trial and for judgment notwithstanding the verdict. The trial court ordered a new trial unless the Bradshaws accepted a remittitur of $1,000,000. They accepted the remittitur on May 16, 1985, and the judgment became final.
State Farm appealed, raising the question of probable cause and a number of other substantive, evidentiary and damage issues.5 The Bradshaws cross-appealed claiming the trial court erred in directing a verdict for State Farm on the abuse of process count and in calculating the remittitur.
C. Opinion of the Court of Appeals
The court of appeals focused on State Farm‘s contention that the Bradshaws’ malicious prosecution count should have been dismissed because there was probablе cause for Mrs. Ivie‘s wrongful death lawsuit. The court correctly noted that in order to prove malicious prosecution, a plaintiff must prove that the underlying action was brought without probable cause. Bradshaw v. State Farm Mutual Automobile Insurance Co., 157 Ariz. 410, 411, 758 P.2d 1312, 1313 (Ct.App.1986). Because the existence of probable cause is a matter of law, the court of appeals concluded that it need not defer to the trial court‘s findings. 157 Ariz. at 411, 758 P.2d at 1313, citing Bird v. Rothman, 128 Ariz. 599, 627 P.2d 1097 (App.), cert. denied, 454 U.S. 865, 102 S.Ct. 327, 70 L.Ed.2d 166 (1981). The court of appeals noted that two witnesses to the crash said that Bradshaw did not have his siren on at the time of impact. Because Ivie‘s death claim could therefore have survived a motion for summary judgment, the court believed that as a matter of law there had been probable cause for the institution of the death action. 157 Ariz. at 411, 758 P.2d at 1313. The court of appeals therefore reversed the judgment. We granted the Brаdshaws’ petition for review.
In essence, the Bradshaws have presented four issues6 we must consider. State Farm raised six additional issues not decided by the court of appeals that merit our attention. Because they go to the heart of this case, we turn first to the issues relating to the malicious prosecution elements.
MALICIOUS PROSECUTION ISSUES
There are five elements to a claim for wrongful prosecution of a civil action.
State Farm concedes that as the instigator of the lawsuit, it can be held liable as an initiator, even though the action was filed in Mrs. Ivie‘s name. See
A. Probable Cause
We disagree with the court of appeals’ holding that probable cause exists as a matter of law merely because at the time an action is filed there is some evidence that will withstand a motion for summary judgment. Such a rule, we believe, would be unwise because it would permit people to file actions they believed or even knew to be unfounded simply because they could produce a scintilla of evidence sufficient to withstand a motion for summary judgment. The law has never recognized this as the test for malicious prosecution.7 See
The test for wrongful institution of judicial proceedings in true cases of malicious prosecution (those involving wrongful initiation of criminal proceedings) differs from cases involving wrongful initiation of civil proceedings. See note 1, supra. In the former type of case, probable cause exists only if the prosecutor actually believes that the accused was guilty of the crime. If he does not, “it is immaterial that the facts ... were such that reasonable men might have regarded them as proof of the guilt of the accused.”
[W]hen the proceedings are civil, while the person initiating them cannot have a reasonable belief in the existence of the facts on which the proceedings are based if he knows that the alleged facts are not true and his claim is based on false testimony, it is enough if their existence is not certain but he believes that he can establish their existence to the satisfaction of court and jury.
In using a summary judgment standard, the court of appeals ignored the subjective component of the malicious prosecution test. Even if the facts would withstand a motion for summary judgment, the initiator of a lawsuit could still be liable for malicious prosecution if he did not have the requisite belief in his claim. Thus, the
The facts of this case do not permit a court to rule as a matter оf law that State Farm passed even the subjective part of the test. The evidence showed that Ivie was overwhelmingly at fault for the accident. He pulled directly into Bradshaw‘s path and apparently never even saw the police car. Every witness blamed Ivie for the crash. The police report concluded that Ivie alone was at fault. Of course, these facts were not binding on State Farm. However, the conclusions State Farm‘s own investigators reached were just as damaging. The claims supervisor handling the case concluded that Bradshaw had been driving with the flashing lights and siren operating up to or even at the time of the collision. It was his conclusion that Ivie was liable. When State Farm‘s claims committee reviewed the file, it also decided that Ivie was liable and that the case should be settled. The claims committee and the claims supervisor had only one doubt—whether the case was worth the $100,000 policy limits or should be settled instead for something in the area of $65,000 to $75,000.8 RT Jan. 30, 1985, at 159-61, 163, 171-73; Jan. 31, 1985, at 13, 18.
In addition, there was direct evidence disclosing the true reason that State Farm filed the lawsuit. The idea seems to have emanated from its claims superintendent, Fred Hodek. His articulated purpose in suing the Bradshaws was not to prevail on a claim he believed might prove meritorious but to enable State Farm to get subpoena power and as a “good defensive move.” RT Jan. 30, 1985, at 170-71; Feb. 4, 1985, at 43, 47, 55, 61-62.
Given all these circumstances, we cannot agree with the court of appeals that State Farm had probable cause as a matter of law. If anything, as a matter of law State Farm might have lacked probable cause. This, at least, was the stated opinion of the trial judge.9 In any event, the evidence permitted an inference that the wrongful death case was filed, not because State Farm believed it might be found meritorious, but in order to intimidate the Bradshaws and coerce them into settling their claim for less than policy limits. Thus, there was evidence that the case was initiated by State Farm without the necessary subjective belief in its merits. From the foregoing analysis, we conclude that the court of appeals incorrectly held that probable cause existed as a matter of law. The conflicting evidence required the question to be submitted to the jury.
B. Malice
The malice element in a civil malicious prosecution action does not require proof of intent to injure.
C. Favorable Termination
The wrongful death case was concluded by settlement, rather than judgment. Ivie‘s complaint and the Bradshaws’ counterclaim were dismissed with prejudice. Notwithstanding dismissal of the action, settlement may be a favorable termination. See Frey v. Stoneman, 150 Ariz. 106, 110-11, 722 P.2d 274, 278-79 (1986). The true facts, not the form of disposition, are determinative. Id. In this case, State Farm withdrew Ivie‘s action, paid the Bradshaws $60,000 and stipulated to the dismissal of the wrongful death complaint with prejudice. Under these facts, the jury could conclude that Ivie‘s lawsuit was terminated favorably to the Bradshaws. Id.; see also
D. The Probable Cause Instruction
Whether the facts in a specific case amount to probable cause is a question of law. McClinton v. Rice, 76 Ariz. 358, 367, 265 P.2d 425, 431 (1953). If the operative facts are undisputed, the existence of probable cause is a question of law to be determined solely by the court. If the facts are disputed, the court may instruct the jury hypothetically, telling them what facts will constitute probable cause. McDonald v. Atlantic & Pacific Railroad, 3 Ariz. 96, 98, 21 P. 338 (1889). The court may use either a special verdict form or a hypothetical instruction to provide adequate guidance to the jury. See Hockett v. City of Tucson, 139 Ariz. 317, 320, 678 P.2d 502, 505 (App.1983). See also
In the present case, the trial court did not give the jury adequate instructions on this issue. Basically thе court told the jury that it should use a reasonable person test to determine whether State Farm had probable cause to institute or continue the lawsuit. This instruction was remarkably similar to the jury charge specifically disapproved in Murphy v. Russell, 40 Ariz. 109, 111-13, 9 P.2d 1020, 1021-22 (1932). Like the Murphy instruction, it failed to give proper guidance for the resolution of the factual issues relating to probable cause.
We find, however, that this error was waived. The Bradshaws asked the trial court to find probable cause was lacking and withhold that issue from the jury. The court refused and left the issue to the jury on the “reasonable person” test. State Farm incorrectly argued that the court should find as a matter of law that probable cause existed and direct a verdict, but did not object to the final form of the probable cause instructions actually given to the jury. Mоreover, State Farm did not offer the trial court any acceptable jury instructions covering hypothetical findings.
No party may assign as error the giving or the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection.
The doctrine of fundamental error is sparingly applied in civil cases and may be limited to situations where the instruction deprives a party of a constitutional right. See, e.g., Trojanovich v. Marshall, 95 Ariz. 145, 146, 388 P.2d 149, 150 (1963). In the present case, while the instruction failed to apply law to fact, it did give the jury the basic legal outline of the objective portion of the legal test. The instruction was favorable to State Farm insofar as it deleted the subjective portion of the legal test. In holding State Farm liable, the jury necessarily found that there were no objectively reasonable grounds for the wrongful death suit when it was filed. Under these facts, the instructional mistake did not deprive State Farm of a fair opportunity to conduct its defense. There was no fundamental error.
The probable cause issues did not warrant reversal of the verdict. We turn, then, to the other issues.
EVIDENTIARY AND OTHER ISSUES AFFECTING THE VALIDITY OF THE MALICIOUS PROSECUTION JUDGMENT
A. Testimony on Settlement Negotiations
At the malicious prosecution trial, the court allowed the attorney who had represented the Bradshaws in the accident litigation to testify concerning several conversations with a State Farm adjuster. In these talks, which occurred before State Farm brought the Ivie case against the Bradshaws, State Farm arguably recognized that its insured was indeed liable for Bradshaw‘s injuries. The settlement discussions focused on the amount of Bradshaw‘s medical expenses, with Ivie‘s liability for the accident treated by State Farm as an established fact.
Relying on
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or stаtements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice or a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.
By its terms, the rule does not bar the use of such evidence when offered for a relevant purpose other than proving the validity of the claim or its amount. See Barsema v. Susong, 156 Ariz. 309, 751 P.2d 969 (1988); Readenour v. Marion Power Shovel, 149 Ariz. 442, 719 P.2d 1058 (1986).
In the case before us, the evidence did not relate to compromise negotiations of the case being tried and, thеrefore, was not offered as State Farm‘s admission of liability for malicious prosecution. The negotiations in the accident case were offered as evidence of State Farm‘s knowledge and state of mind with respect to the merits of the wrongful death action filed against the Bradshaws. This was, in turn, related to the determination of probable cause, the main issue in the Bradshaws’ malicious prosecution case against State Farm. From the evidence of the accident case negotiations, the jury in the malicious prosecution case could have inferred that before filing the wrongful death action against the Bradshaws, State Farm in fact
B. Reimbursement for Property Damage
State Farm argues that the trial court abused its discretion by admitting evidence that State Farm had paid Maricopa County for loss of the demolished patrol car. This evidence, too, was offered on the probable cause issue. At trial, State Farm‘s only objection was that the evidence was immaterial. The trial court did not err in overruling that objection. Such general objections are insufficient to preserve a claim of error.
C. Assignment of the Lawsuit
State Farm complains that the trial court erred in allowing the Bradshaws to suggest to the jury that State Farm had improperly and illegally obtained an assignment of the wrongful death claim from Mrs. Ivie. State Farm did admit in court that it was the real plaintiff in the accident case, that it paid the lawyers in that case, covered all expenses and directed the litigаtion. State Farm also admitted that it alone decided to sue the Bradshaws and solicited permission to do so from Mrs. Ivie. When the Bradshaws were unable to produce an actual written assignment from Mrs. Ivie, the trial court refused to instruct the jury on the impropriety of a wrongful death claim assignment. State Farm, for its part, neither moved to strike remarks of the Bradshaws’ counsel nor asked the trial court to instruct the jury to disregard any inference of wrongdoing concerning the alleged assignment. See Readenour, 149 Ariz. at 450-52, 719 P.2d at 1066-68 (review of procedures to secure limiting instruction). State Farm has therefore waived any objection.
D. Failure to Instruct on Duties of Emergency Vehicle Driver
State Farm claims that the trial court improperly failed to instruct the jury on
The trial court concluded that the requested recitation of this lengthy statute would merely confuse the jury. See
PUNITIVE DAMAGES ISSUES
A. Sufficiency of Evidence
State Farm contends that the trial judge erred in submitting the issue of punitive damages to the jury. In a series of recent cases, this court has considered the standards controlling awards of punitive damages. See Volz v. Coleman Co., 155 Ariz. 567, 748 P.2d 1191 (1987); Gurule v. Illinois Mutual Life & Casualty Co., 152 Ariz. 600, 734 P.2d 85 (1987); Filasky v. Preferred Risk Mutual Insurance Co., 152 Ariz. 591, 734 P.2d 76 (1987); Hawkins v. Allstate Insurance Co., 152 Ariz. 490, 733 P.2d 1073, cert. denied, 484 U.S. 874, 108 S.Ct. 212, 98 L.Ed.2d 177 (1987); Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986); Linthicum v. Nationwide Life Insurance Co., 150 Ariz. 326, 723 P.2d 675 (1986). “Something more” is usually required to justify the recovery of punitive
We believe the Rawlings principle applies to malicious prosecution actions. In malicious prosecution, as in bad faith, the tort is based upon the actor‘s grounds or lack of grounds. See, e.g., Sparks v. Republic National Life Insurance Co., 132 Ariz. 529, 537-39, 647 P.2d 1127, 1135-37 (bad faith consists of denying claim without reasonable grounds), cert. denied, 459 U.S. 1070, 103 S.Ct. 490, 74 L.Ed.2d 632 (1982). In both actions, the heart of the tort is acting without probable cause. On the issue of punitive damages, however, the defendant‘s motives are determinative. Rawlings, supra.
Even in a sucсessful malicious prosecution action, the reprehensibility of defendant‘s state of mind may vary. For instance, the initiator of the underlying action may have had a subjective belief in the validity of his claim, but lacked objectively reasonable grounds for that belief. Further, the “malice” required for malicious prosecution is not necessarily an intent to injure but merely an intent outside the legitimate objectives of civil action. See
Thus, in malicious prosecution, as in bad faith, proof of the tort does not automatically justify an award of punitive damages. As in other tort cases, something more is required. Volz, 155 Ariz. at 570, 748 P.2d at 1194. Here, again, we believe that the “something more” can best be characterized as defendant‘s “evil mind.” Rawlings, 151 Ariz. at 162, 726 P.2d at 578. In the punitive damages-bad faith cases referred to above, this court has described the rеquired states of mind. The standards are discussed in Schmidt, Punitive Damages in Arizona: The Reports of Their Death Are Greatly Exaggerated, 29 ARIZ.L.REV. 599, 601-02 (1987). They include:
- Facts showing that defendant intended to cause injury, Hawkins, 152 Ariz. at 497, 733 P.2d at 1080;
- Facts demonstrating that defendant‘s wrongful conduct was motivated by spite or ill will, Linthicum, 150 Ariz. at 330-31, 723 P.2d at 679-80;
- Facts from which the jury can conclude that even though defendant had neither desire nor motive to injure (i.e., neither intent nor spite), he acted to serve his own interests, having reason to know and consciously disregarding a substantial risk that his conduct might significantly injure the rights of others. Gurule, 152 Ariz. at 602, 734 P.2d at 87; Rawlings, 151 Ariz. at 162-63, 726 P.2d at 578-79; Linthicum, 150 Ariz. at 330-31, 723 P.2d at 679-80.
Punitive damages may be assessed even though the injury to the individual plaintiff was “relatively small and innocuous,” so long as the cumulative harm suffered by all victims, plaintiffs and non-plaintiffs, is significant, large or “tremendous.” Volz, 155 Ariz. at 570, 748 P.2d at 1194; Hawkins, 152 Ariz. at 502, 733 P.2d at 1085; Schmidt, supra, 29 ARIZ.L.REV. at 601 n. 18, 609. Of course, the existence of factors constituting an “evil mind” can be inferred from the evidence, including proof that defendant‘s conduct was outrageous in nature. Volz, 155 Ariz. at 570, 748 P.2d at 1194.
Setting aside its motives and viewing its actions in isolation, State Farm‘s conduct in initiating and prosecuting the wrongful death action did not in itself establish spite, malice or ill will toward the Bradshaws. Nor was there evidence that State Farm intended to harm the Bradshaws or had spite, malice or ill will toward the Bradshaws. Under the facts of this case, however, a jury could easily find that State Farm‘s conduct was guided by the “evil mind” described in Rawlings. There was evidence that State Farm acted intentionally, without subjective belief in the merits of the lawsuit it instituted, and that it was aware its action was unfounded and untenable. The evidence thus would support the ultimate inference that State Farm sought its own legitimate objective—settlement for as little as possible—by improper means, knowingly harassing and coercing the Bradshaws through filing an unjustified lawsuit. Thus, the jury could have concluded that State Farm knowingly acted
B. Instructions on Punitive Damages
State Farm argues that the jury was improperly instructed on the punitive damages issue. It is correct. The trial court‘s instruction on punitive damages followed its instruction on compensatory damages. Having instructed on compensatory damages, including damages for “anxiety, worry, fear, mental distress or humiliation,” the court informed the jury that “if you find that defendant has been guilty of malicious prosecution of a legal action as that term has been defined to you then you may assess ... punitive or exemplary damages....” This wording improperly instructed the jury that it might award рunitive damages without the Bradshaws’ proving “something more” egregious than mere commission of the tort.
Had counsel for State Farm timely objected to this instruction at trial, we would reverse the punitive damage award. So far as we can ascertain from the record, however, State Farm did not object to the wording of the instruction. State Farm also failed to submit its own instruction on the subject. It only objected that the evidence was insufficient to prove malice and lack of probable cause as elements of malicious prosecution, and that it was therefore error to allow the entire malicious prosecution issue to go to the jury. This, of course, falls far short of informing the trial judge of the error, if any, in the method of submitting the punitive damage issue. The issue was therefore waived. See
Our reсent cases have also held that the burden of proof on the punitive damages issue is clear and convincing evidence. Linthicum, 150 Ariz. at 332, 723 P.2d at 681. Again, the trial judge‘s instructions on this issue did not conform to the present law. However, we have held that this standard of proof is not retroactive. See Hawkins, 152 Ariz. at 503-05, 733 P.2d at 1086-88. Furthermore, State Farm failed to make any objection or submit any instruction.
We conclude that there was no reversible error in submission of the punitive damage issue or in the jury instructions given on this issue.
C. The Amount of Punitive Damages
The Bradshaws argue that the jury award of $2,000,000 in punitive damages was entirely proper and that the trial judge erred in remitting the damages to $1,000,000. State Farm argues, on the other hand, that the original award was grossly improper and that the trial judge erred in remitting it by only fifty percent.
The evidence on the subject indicated that State Farm‘s recent net annuаl earnings were almost $700,000,000, so that the original amount of $2,000,000 was approximately one day‘s net income and the remitted amount of $1,000,000 was about one-half day‘s income for State Farm. In addition, the evidence showed that among its assets, State Farm had “unassigned” cash of almost five billion dollars. The remitted amount of punitive damages is equal to approximately one twenty-fifth of one percent of State Farm‘s unassigned cash funds. The facts in evidence support the trial judge‘s finding that the amount of the verdict does not demonstrate undue prejudice or passion. See Flieger v. Reeb, 120 Ariz. 31, 35, 583 P.2d 1351, 1355 (App. 1978). Cf. Hawkins, 152 Ariz. at 505-07, 733 P.2d at 1088-90 (Holohan, J., dissenting) (suggesting due process might place limits on punitive damages in certain cases). In our view, the evidence would have sustained the trial judge had he not remitted the punitive damages. State Farm‘s claim that the judge erred in fаiling to reduce it by more than fifty percent is meritless.
The Bradshaws claim, on the other hand, that the trial court erred in remitting the punitive damages and ask us to reinstate
CONCLUSION
Having reviewed each of the contentions raised by the parties, we find no reversible error in the trial court proceedings. We affirm the trial court‘s judgment and vacate the court of appeals’ opinion.
GORDON, C.J., and CAMERON and BROOKS, JJ., concur.
HOLOHAN and MOELLER, JJ., did not participate in the determination of this matter. Pursuant to
JACOBSON, Court of Appeals Judge, specially concurring:
I concur in the disposition of the punitive damages issue solely on the basis that my review of the record shows that no objection was made to the submission of punitive damages to the jury. Thus, the issue of whether the evidence supports the submission to the jury of punitive damages was waived.
Notes
RT Feb. 4, 1985, at 92. The trial court later added:I think as a matter of law I could rule there was not probable cause for the Ivies to bring the lawsuit. Was wishful thinking at best under the evidence in my opinion.
Id. at 93.Just couldn‘t possibly constitute probable cause. I just don‘t see it.