Campbell v. State Farm Mutual Automobile Insurance Co.

2001 UT 89 and Inez Preece B. CAMPBELL

Curtis Plaintiffs, Appellees,

Campbell, Cross-Appellants, AUTOMOBILE FARM MUTUAL

STATE Defendant, COMPANY, INSURANCE Cross-Appellee.

Appellant, and

No. 981564.

Supreme of Utah. Court

Oct. 2001.

Rehearing Denied Dec. Humpherys, Roger

L. Rich P. Christen- sen, Porter, City, Karra J. Salt Lake Lau- Tribe, Chesebro, rence H. Kenneth J. Cam- MA, Barrett, bridge, Logan, W. Scott for plaintiffs. Hanni, Belnap,

Glenn C. Paul M. Stuart H. Schultz, City, Tager, Salt Lake Evan M. Sloane, DC, Washington, Adam C. for defen- dant. Harris,

George City, C. Lake amici Salt Independent National Association of Insur- ers, National Association of Mutual Insur- Companies, ance United Services Automobile Association, Group Farmers of Insurance Companies, Company SAFECO Insurance America.

INTRODUCTION DURHAM, Justice: 24,1989, 1 August plaintiffs On Curtis B. Campbell, and Inez Preece sued State Farm Company Ospital for P.2d filed a cross-claim Insurance Mutual Automobile Campbell wrongful from Mr. for damages arising State Farm’s decision death. Campbell case try third-party against Ospi- automobile accident Id. Mr. cross-claimed defendant, Campbell was tal for which Mr. contribution. Id. accepting offers to settle for the rather than ¶ During discovery, State Farm collected Campbell’s pol- policy insurance limits of Mr. evidence Mr. for blamed favor, plaintiffs’ icy. jury found The At stages throughout accident. various dis- costs, out-of-pocket awarding them $911.25 covery, including as late as a month before compensatory damages, million $2.6 trial, Ospital Slusher and invited State Farm damages. million $145 policy to settle limits of the post-verdict Farm motions chal- filed several policy.2 April Ospital’s On counsel verdict, lenging which trial court stating even sent a Farm letter to State rejected. denying condition of As a Farm limits” “should tender its be- trial, however, for a new Farm’s motion $25,000 cause limit is too low to “[a] risk compensatory remitted the dam- exposure by exposing excess its insured to age million to million and award from $2.6 $1 personal liability.” letter also This stated punitive damage from million award $145 oppose if State Farm continued to set- Campbells also received million. $25 tlement, Ospital separate agree- seek a would judgment attorney the trial court from “may likely ment with Slusher that litigation expenses amount of fees and Campbell’s favorable interests.” [Mr.] $801,582.48. appealed Farm has from However, departed State Farm never from cross- judgment stance, original continuing “no settlement” appealed ruling trial court’s remittitur on reject following made offers com- punitive damages. mencement of trial. BACKGROUND settle, choosing 5 In not to May driving while north On (Noxon) superintendent Noxon Bob divi- Utah, Logan, near Mr. Highway on 89-91 (Brown) superintendent sional Bill Brown re- Campbell unsafely passed a ear driven jected report investigator of State (Slusher).1 Slusher, Robert Slusher (Summers) Ray that stated Summers there at 438-39. This unsafe maneuver forced Campbell’s part. evidence on Mr. of fault car, Ospital, driven Todd southbound particular, Brown ordered Summers to of the road collide veer onto the shoulder portion report change describing his split ear a second later. Id. at with Slusher’s analysis and his the facts the accident Ospital killed Todd at the 439. The accident liability expo- had indicated an “wherein [he] Al- scene and left Slusher disabled. Id. Campbell], Mr. and that there could [for sure though investigation acci- the initial high on it.” Addition- be a settlement value supported differing dent conclusions as to Brown, Bill ally, hearing after from Noxon accident, a who caused the consensus up” “screwed told Summers that Noxon had early investigators reached analysis initial by agreeing with Summers’ Campbell’s pass that Mr. unsafe witnesses regarding Campbell’s fault and demand- Mr. the crash. had caused indeed that return to Noxon letter ed Summers ¶3 1981, indicating approval. his September filed an Noxon had written In Slusher Campbell, Ospital’s Subsequently, Farm discontinued Sum- against action estate State Mr. (the (Ospital), Brooks of mers’ involvement in the case. State Farm and Kenneth owner (Bennett), an Ospital) damages hired attor- the car Todd for Wendell Bennett driven Slusher, ney 777 who had a considerable amount of resulting from the collision. done $25,000 Campbell's policy provided 2. Mr. cov- 1. The as stated herein are drawn from the facts appeal erage person injured up and from the cases of Slusher v. record on for in an accident each 1989), (Utah Ospital, Campbell $50,000 per 777 P.2d coverage acci- to a maximum of Co., v. Mut. Auto. Ins. 840 P.2d 130 State Farm Campbell, dent. 840 P.2d at 133. denied, (Ut.Ct.App.1992), cert. 853 P.2d (Utah 1992). Farm, represent Camp- remaining agreed-upon after for certain obli- work State gations paid. exchange, In were Slusher and bells. Ospital agreed to not seek satisfaction of ¶ 1983, Ospital’s estate did in 6 In June judgment Campbell their from Mr. and to separate agree- fact enter into a settlement anyone checking Campbell’s inform on Mr. $130,000 Ospital had ment Slusher. with judgments person- credit that their not were liability combined insurance.3 Under obligations. al Id. Ospital’s paid agreement, settlement estate ¶ $65,000 Ospitals In dollars and the this court affirmed the 1983 Slusher Campbell. promised prosecuting against to assist Slusher in verdict Mr. Slusher insurer, (Utah 1989). against Ospital, and his claims Mr. 777 P.2d 438-39 paid exchange, damages Farm. In Slusher released State Farm then all of the State action, against Ospital’s Id. policy all claims he had estate. awarded the 1983 both its Campbell’s personal liability. limits and Mr. thereafter, Shortly against the case Mr. thereafter, Shortly Campbells filed this jury Campbell went to trial. The found Mr. against alleging, among action Campbell 100% at fault for the accident and faith, fraud, things, other bad and intentional $135,000 judgment for was entered. Slush- infliction of emotional distress. The trial er, jury 777 P.2d at 439. The also awarded granted summary judgment to State $50,849. Ospital damages in the amount of ground Farm on the that because it had light In numerous of Bennett’s reassurances awarded, ultimately paid all of the Campbell that their to both Mr. and Mrs. there had been no bad faith as a matter of safe, they liability assets were had no court, appealed law. Plaintiffs to this which accident, represent for the that he would transferred the case to the Utah Court of interests, they their and that did not need to remanded, Appeals, which reversed and stat counsel, separate Campbells procure ing although paid Farm State utterly dismayed. expressions To their were debt, Campbells pursue right had the dismay, responded by telling Bennett their claim that there had been bad faith in “[y]ou may put want to previous dealings. Campbell v. State signs your property get things sale Co., Farm Mut. Auto. Ins. moving,” making it clear that Farm did (Utah denied, Ct.App.1992), cert. pay judgment intend to the excess (Utah 1992). Furthermore, against Campbells. post supersedeas remand, Farm declined to bond on 10 On the trial court denied $25,000 appeal policy in excess of their limit. State Farm’s motion to introduce the settle- Campbells immediately acquired agreement other ment into entered Slusher and Ospital original and learned that their Logan, counsel situation before the However, grave. Campbells’ indeed Utah. over the resis- tance, grant the trial court did State Farm’s Slusher, Ospital, In8 late and Mr. phase motion to bifurcate the I trial. agreement entered into an trial, jury was to determine whether (1) Campbell agreed which Mr. that: he Only acted bad faith. Id. if pursue against would a bad faith action II, phase found such bad faith would (2) Farm; Ospital’s attorneys and Slusher’s setting compensatory damages award (3) action; represent him in would addressing faith State Farm’s bad Ospital right Slusher and would have the fraud, Campbells’ claims for intentional inflic- part major relating of all decisions to that distress, tion of emotional dam- (4) action; no settlement of claim ages, occur. State Farm could be made without Slusher’s (5) I, Ospital’s approval; phase 11 In the event found that State monies, Campbell Ospital unreasonably Mr. recovered Farm had acted and in bad and Slusher would receive 90% of the sum faith in its decision to take the case to trial $100,000 $30,000 Ospital's policy provided liability coverage 3. Todd of cov- Brooks maintained erage person injured up for each in an accident Ospital driving. on the car $300,000. Additionally, to a maximum of award) $400,747.78 attorney likelihood of fees there was substantial because $801,582.48. Campbell. litigation expenses, totaling against Mr. judgment an excess faith, finding Notwithstanding this of bad phase II that its AND STANDARDS argued during ISSUES Farm OF to trial was an REVIEW7 to take the case

decision puni- that did not warrant “honest mistake” applicable 13 We list the issues and stan- contrast, Campbells damages. In tive dards of review the order of their treat- deci- that State Farm’s introduced evidence portion opinion. analysis ment in the of this to trial was a result of to take the case sion 1. Did the trial court commit reversible corporate fiscal to meet national scheme permitting error in an award of $25 company payouts on claims goals capping punitive damages million in to stand? to as State This was referred wide. scheme particular, argues In Farm a. Review,” “Performance, Planning million dam- $25 R, prove the existence of policy. PP & To ages is excessive under both award scheme, the trial court allowed Utah and federal law. expert tes- Campbells to introduce extensive practices by timony regarding fraudulent Standard Review: operations. nation-wide Farm in its law, Under Utah seven factors prior phase Although State Farm moved analyzed must be to determine whether evi- II the trial for the exclusion of such punitive damage the amount of a award trial, object to it at and continued to dence is excessive. See Crookston v. Fire Ins. evidence was trial court ruled (Utah 1991) Exck, whether State to determine admissible I). (Crookston have heretofore re We Campbell in the case was Farm’s conduct findings the trial court’s of fact viewed sufficiently egregious intentional and indeed regarding all but the seventh Crookston punitive damages. to warrant clearly I factor under a erroneous stan Pena, evidence, 12 At close of the dard. See State (Utah 1994). Because the seventh Campbells million4 in com- awarded the $2.6 I the trial puni- Crookston factor involves pensatory damages and million $145 facts, application of the law to the several court’s damages. tive made motions, past have in the reviewed post-verdict including motions for correctness, verdict, notwithstanding for a court’s determination for judgment trial, affording at the same time damage of the while new and for remittitur the un some discretion as to Ultimately, the trial court denied all trial court awards. 936-39. Re derlying facts. See id. at judgment Farm’s motions for a not- of State however, Supreme cently, trial. the U.S. withstanding the verdict and for a new However, imposed has a new standard the trial court did order a remitti- Court constitu as a matter of federal damage awards to million review tur $1 punitive damages cases.8 tional law in compensatory damages5 and million $25 Indus., addition, Cooper Leatherman Inc. v. punitive damages.6 In 424, 121 Inc., $400,834.70 S.Ct. Group, Tool 532 U.S. court awarded the (2001), the Su- compensatory damages 149 L.Ed.2d (forty percent of the Joumal, (1999), help- especially J. 8 $1.4 12 Utah Bar 4. The awarded million to Mr. Campbell. ful, appellate practi- $1.2 million to Mrs. all and we recommend it to tioners. $600,000 5. The reduction resulted in an award of $400,000 Campbell. to Mr. to Mrs. 8.Although State Farm indicates in its statement granted initially 6. The trial court challenging puni- that it is of issues section or, alternative, remittitur a new trial. Constitution, damage under the Utah tive award Campbells accepted the remittitur. argument, and not in fact made such an has we do not discuss that issue. that, discussing applicable We stan- note case, Judge dards of review in this we found Bar Norman H. Jackson's article in the Utah 1144 pro- agreement federal due the settlement between

preme held that Court appellate Ospital? to requires federal courts Slusher cess punitive damage awards de novo review challenged they are on constitu-

when Standard Review: Id. at 1682-83. In view grounds. tional applicability of fourteenth amend- a trial We review court’s decision courts, adopt to state ment standards regarding relevancy of evidence un reviewing jury for de novo standard der an abuse of discretion standard. conclusions under the and trial court Bethers, 1286, Bambrough v. 552 P.2d I factors. (Utah 1976) (“The Crookston trial 1290 court deciding given considerable discretion trial court commit reversible 2. Did the whether or not evidence submitted is admitting by “other acts” evi- error relevant.”); Harrison, v. 805 P.2d Rule of Evi- dence violation Utah (Utah (same). 769, 404(b)? Ct.App.1991) dence 5. Did the trial court commit reversible Review: Standard of by ruling error that Mrs. has review a trial court’s decision “[W]e standing pursue a bad faith claim? 404(b) rule to admit evidence under Rules of Evidence under an the Utah Standard Review: of discretion standard. We re abuse to determine whether view the record issue, legal This is and is re admission of other bad acts evidence City viewed correctness. Provo ‘scrupulously examined’ Willden, 455, Corp. v. proper judge ‘in the exercise of that (Utah 1989). Nelson-Waggon v. discretion.’” State 6. Did the trial court commit reversible er, 59, 16, (quot 2000 UT 6 P.3d 1120 allowing error Mrs. Decorso, 57, 18, ing State v. 1999 UT recover for fraud when the evidence omitted). 837) (footnote 993 P.2d support her claim? insufficient 3. Did the court commit reversible Campbells’ by allowing the ex- error

perts testify they because Standard Review: “usurp[ed] jury, the function of the considering challenges When testimony, g[a]ve irrelevant evade[ed] insufficiency verdicts based rules, hearsay and testif[ied] with- evidence, “we view evidence proper out a foundation?” verdict, light supportive of most and assume that the believed those Standard Review: aspects of the evidence which sustain its A trial court’s decision to admit findings judgment.” Billings v. Un expert testimony is reviewed an Co., ion Bankers Ins. 918 P.2d Lainhart, Patey of discretion. v. abuse (Utah 1996) (internal quotation marks ¶31, 1193; 33, 977 P.2d 1999 UT State v. omitted). “If the evidence taken in the (Utah 1993). Larsen, 865 P.2d light sup most favorable verdict Furthermore, a trial court will not be verdict, ports we will affirm.” reversed for an abuse of discretion un Lichfield, Steenblik v. less “there is a reasonable likelihood (Utah 1995). that the verdict have been differ would ent if the trial court had [excluded] 7a. Did the trial commit reversible expert testimony.” Steffensen allowing error both Mr. and Mrs. Mgmt. Corp., Smith’s Campbell to recover for intentional (Utah 1993). infliction emotional distress when sup- 4. Did the trial court commit reversible the evidence was insufficient to port excluding relating error in evidence such claims? the trial peal, arguing that court’s remittitur Review:

Standard of punitive damages amount previ- for of review the standard See required awarded Utah law. under ous issue. application We consider the of both the Utah emotional Are the distress remitted 7b. separately and federal standards below. $600,000 to Mr. awards $400,000 Mrs. exces- and outset, At the note the 15 we sive? guidelines for trial courts contained in Crook- (Utah 1991). I, In ston 817 P.2d 811-12 Review: Standard of award, damages “the upholding punitive there is a whether We consider rea judge trial must make detailed and support the trial “reasonable basis” grounds conclud soned articulation of for I, 817 P.2d court’s decision. Crookston ing light is not the award excessive at 805. facts,” thereby “permitting] the law and the commit the trial court reversible 8. Did appellate more and reasoned review effective attorney to the awarding fees error uphold and to of the decision to the award Campbells? appellate carefully court to enable the more may war consider the various factors that Review: Standard of punitives weight rant and the to be accorded them, adequate attorney giving while deference Whether fees should advantaged judge ap position issue trial legal is a be awarded praise Id. v. the witnesses and evidence.” for correctness. Valcarce review (Utah pursuant Cooper at 811. note that Fitzgerald, P.2d 315 We Inc., Indus., 1998). Group, attorney fees Inc. v. Leatherman Tool amount of The 424, 121 1678, 149 532 U.S. S.Ct. L.Ed.2d is for abuse of discre awarded reviewed (2001), review the factors de novo an award. Id. we now making tion such and do to the trial court. When not defer commit Did the trial court reversible reducing punitive damages, a an award of $400,000 awarding more than error explain action” trial court also “should litigation expenses requiring without for a grounds articulation of because “[t]he Campbells specifically demon- serve salu remittitur ... should the same were reason- strate that such expenses requir appeal” tary purpose on furthered necessary to their claim for able ing grounds trial articulate their courts to compensatory damages? punitive Crook- upholding a award. I, ston 817 P.2d at 811-12. Review: Standard of litiga question of whether The judge in this commend We expenses may be awarded in a bad tion exemplary compliance these with ease his insured an faith action an meticulous, indeed for his guidelines, and law, is which we review insurer one extensive, findings very thorough written The standard of review for correctness. on all issues. of fact and conclusions law expenses as to the amount of greatly judge has This work (U.S.A.) Ong Int’l of discretion. abuse organize a ability to enhanced our review Corp., 11th Inc. v. Ave. lengthy complex record. (Utah Servs., 1993); City Inc. Consumer (Utah 1991). Peters, 234, 240 A. Utah Law ANALYSIS parties agree that 17 Both punitive damages was governing Utah law I. PUNITIVE DAMAGES (Utah I, 817 outlined in Crookston Exch., 1991), v. Fire Ins. argues that the Crookston 14 State Farm (Crookston II). 1993) (Utah P.2d 937 under both Utah damage award is excessive I, the follow- announced cross-ap- the court Crookston federal law. ¶20 awarding puni- Farm, ing According factors to consider when to State this lan- damages: guage punitive damage tive limits awards to three times the amount compensatory of (i) defendant; the relative wealth of the damages, unless the other I Crookston fac- (ii) misconduct; alleged the nature of the justify higher tors a ratio —which in this (iii) the facts and circumstances surround- case, argues they Thus, State Farm do not. (iv) conduct; ing such the effect thereof on State Farm asserts that the trial court erred (v) others; plaintiff and the lives of the the ordering not a new remitting trial or the probability future recurrence of the mis- punitive damage award to an amount within (vi) conduct; relationship par- the 3:1 ratio. Id. (vii) ties; and the amount of actual dam- ¶ Conversely, 21 Campbells argue that ages awarded. placed the trial court emphasis undue on the I, at Crookston 817 P.2d 808. seventh Crookston I factor. Because the support other factors analyzing appropriateness large punitive 18 In dam- award, award, age damage they assert jury’s punitive the trial that the seventh fac- applied tor does not court the seven factors outlined in mandate remittitur. Id. In- stead, higher awards with Crookston I and remitted the award than normal based ratios factor, punitive solely upon compensatory believing damages the seventh are simply damage legal heightened judicial ratio in that ease cause for scrutiny created a Thus, to ensure that although required support limitation. he other factors large re- award, award. Id. judge mittitur of the the trial ob- “may served that million be viewed as $25 ¶ 22 To determine whether the trial court artificially capture in that it does low not erred, we consider all of the Crookston I full amount of harm done to the factors. As discussed the issues and stan- as a result of Farm’s misconduct.” Id. section, dards of review we review the trial ¶at 92. court’s conclusions under the Crookston I pursuant factors to a de novo standard. Coo- appeal, objects 19 State Farm On to both Indus., per U.S. S.Ct. punitive verdict and the remitted L.Ed.2d 674. award, damage citing the following language “punitive damages from I: Crookston awards 1. The Relative Wealth of State Farm beyond damages a 3 to 1 ratio to actual ¶23 The defendant’s wealth is the upheld seldom been and ... where the first factor for consideration. “Punitive dam $100,000, award is in excess of [the we Utah ages ... should be sufficient discourage Supreme have indicated Court] some inclina- defendant], ... anyone similarly [the situ having tion to overturn awards ratios of less ated, repeating from such conduct in the I, than 3 to 1.” Crookston Montoya, future.” Cruz v. Further, State Farm relies on following (Utah 1983), superceded by statute on other elaboration from II: Crookston grounds. To calculate an award sufficient to certainly punitive is [i]t true that punish companies and deter from future precedent Utah, award here is without behavior, egregious some courts have com either as high to the amount or as to the pared punitive amount of punitive damages ratio of to hard com- company’s net example, worth. For the Sev pensatory damages. presumption, Appeals enth Circuit Court of has held that a therefore, is that the award is excessive. typical punitive damage may award be However, ..., presumption this may be percent around one of the defendant’s net if explains why overcome Co., worth. Cash v. Beltmann N. Am. unique case is terms of one of the (7th Cir.1990). F.2d 111 n. 3 Although traditional seven factors or in terms of guidelines helpful reviewing puni are compelling some other factor. awards, damage emphasize tive that in II, (citing Crookston 860 P.2d at pre-established Crook there Utah is no mathemati I, 811). ston 817 P.2d at cal formula for such awards. ¶24 argues ted million in that Utah amount dam- State Farm $25 corporation’s ages represents per- wealth less one have considered courts l/20th awards, (.0457 cent).” per cent mitigate large punitive of State Farm’s wealth only to Moreover, “any appellate jury’s punitive damage it is aware of Utah award percent million upholding presumptively excessive is 0.26 of one $145 decision ground computed by on the State Farm’s wealth punitive exaction court, judgment this happened wealthy.” de to whose factual defendant view, cites proposition, per- to matter we defer. In our fense neither unreasonable, VanDyke centage given Mountain Coin Ma Cruz need Inc., (Utah Distrib., sufficiently punish P.2d 962 Ct. and chine 758 deter State Farm. II, appellate App.1988), (uphold- See Crookston 860 P.2d at 940-41 two cases in which punitive punitive damage ing damage fact courts did in reduce award was 0.5 of worth). percent one award based on the defendant’s wealth. defendant’s net Fur- However, thermore, larger neither of these cases holds that evidence showed that a punitive company damage of a can be considered than normal award the wealth is neces- Farm, sary only mitigate punitive damage to a award. to attract attention State contrary, they company that a officials and from To the indicate fact deter further because, specif- rela bad conduct as the trial court finder should consider defendant’s (1) calculating ically punitive corporate wealth a dam found: State Farm’s tive when award, of, age headquarters and that awards should have had never learned much less punitive relationship upon, damage a proportional the defendant’s acted award of $100 Cruz, 726-27; (2) previous case; at Van- in a and wealth. See million State vice-president Dyke, Regional 758 at Farm’s for Utah tes- 965-66. in system place tified that was no there ¶ Additionally, 25 Farm relies on two State company’s headquarters inform the national cases, Trend Re federal court Continental award, any punitive damage and that he Inc., sources, USA, 634, v. 101 F.3d Inc. OXY in plan report did this case. not award (10th Cir.1996), denied, 520 641 cert. U.S. 1846, 117 137 L.Ed.2d S.Ct. 1049 Nature Farm’s 2. The of State Misconduct (1997), Upjohn Prod. v. and Utah Foam Co. ¶27 (D.Utah 1996). specifically This ana factor Co., F.Supp. lyzes the nature of defendant’s conduct support State These cases likewise do maliciousness, reprehensibility, terms of position. particular, stating Farm’s while wrongfulness. “reprehen It mirrors the jus “cannot alone” defendant’s wealth by the sibility” factor described United award, punitive damage tify large Utah Supreme in BMW North States Court Foam indicates that a defendant’s wealth America, Gore, 559, 116 Inc. Foam, U.S. S.Ct. may be taken into account. Utah (1996). There, (internal 134 L.Ed.2d F.Supp. quotation at 531 marks Supreme omitted). Moreover, Court stated that defendant’s spe Trend Continental important the most “[p]erhaps misconduct is cifically states that “wealth must remain rele a punitive indicium of reasonableness punitive determining damage when vant” 575, 576, 116 damages award.” Id. at S.Ct. Trend, 101 F.3d at 641. awards. Cont’l “trickery target Repeated and deceit” 1589. ¶26 Farm’s wealth is enor State “financially people ed who are vulnerable” at found, evi “[t]he mous. As worthy especially reprehensible surplus indicates that Farm’s dence State Moreover, greater sanctions. Id. “deliber increased from in 1977 billion $2.65 $25 statements, acts affirmative mis ate false in 1995. Its assets increased from billion conduct, im of evidence of concealment billion in 1977 billion $6.3 $54.75 larger proper motive” also warrant awards. average per increase million work an of $4.3 579, 116 Id. at S.Ct. day surplus, per work ing million $9.3 clearly day 28 With these standards ing in assets.... A nearly twenty- mind, the trial court made equal percent to one Farm’s award findings concerning eight pages of The remit- extensive wealth would be million. $547.5 reprehensible example, published conduct. We State Farm an instruc- examples here three from tion attorneys mandating summarize those manual for its them findings egregious personal questions” of State Farm’s most to “ask part investigation malicious behavior. and examination of claimant litigation. order to deter Id. at 34. Several First, repeatedly and de- trial, including Gary witnesses at Fye and liberately deceived and cheated its customers DeLong, Ina practices testified that these PP R See via the & scheme. Court’s Find- had been used them. 34-35. Id. at Regarding ings, Conclusions and Order Puni- Specifically, eighty- record contains an Evidentiary Damages Rulings, tive eight prepared page report decades, Campbell, over at 17-27. For two personal life, regarding DeLong’s including payment monthly caps Farm set by paying information obtained maid hotel individually adjust- rewarded those insurance DeLong overnight disclose whether paid the market who less than value for ers guests in her room. Id. at 35. There Agents changed Id. at claims. 18-19. actually also evidence that State Farm in- files, customers, lied to contents of and com- attorneys structs its and claim superinten- mitted other dishonest and fraudulent acts employ dog dents to “mad defense tactics”— goals. order to meet financial Id. at 17-27. using large the company’s resources “wear to example, For a State Farm official in the opposing attorneys by litiga- out” prolonging underlying Logan lawsuit in instructed the tion, making objections, claiming meritless adjuster report claim to change State documents, privileges, destroying false and Ospital writing Farm’s file was abusing process. and motion Id. law at “speeding pregnant girlfriend.” to visit his 36-37. at Id. 35. There no evidence at was all to ¶ support Ospital that assertion. was together, examples 32 Taken these three speeding, pregnant nor a girl- did he have show that engaged pattern State Farm in a deceit,” only purpose change “trickery statements,” friend. Id. The for the of and “false was to distort the of the assessment value of and other of “acts affirmative misconduct” Ospital’s against targeted “financially claims State Farm’s in- at persons. vulnerable” found, BMW, 575, 576, As the sured. State at U.S. 116 S.Ct. 1589. practices Moreover, Farm’s fraudulent were consistent- strategically State Farm has con- ly persons poor to directed racial or ethnic improper cealed “evidence of [its] motive” — minorities, women, elderly liability, and individuals— shield itself from which fur- was Farm who State would be likely oppos- believed less thered State Farm’s treatment of object legal BMW, or take ing action. Id. at 26-27. witnesses and counsel. 517 U.S. at 116 S.Ct. 1589. Such conduct Second, engaged Farm State delib- malicious, reprehensible, wrong. erate concealment and destruction all doc- profit uments related to this scheme. responds by Id. at 33 State arguing Farm State 31-33. Farm’s own witnesses brief wrong, testified that even if its conduct was routinely all, destroyed torture, that documents were murder, so does not “after involve potential as to avoid their through environment,” disclosure poisoning deliberate discovery requests. at Id. 29-30. Such de- thus cannot warrant millions of dollars in litigation punitive struction even while this occurred damages. Additionally, State Farm pending. Additionally, II, Id. at 30. argues State that under Crookston calcu- willful Farm, policy, keeps corpo- as a matter of no lated justify fraud was not sufficient it, rate records related to lawsuits higher ordinary than punitive ratio of com- shielding having II, thus itself from pensatory to disclose damages. Crookston information related to the number scope at 940. faith bad actions in which it has been that, 34 State Farm fails to while realize involved. Id. at 30. Crookston II held that fraudulent conduct ¶ Third, has systematically puni- State Farm alone justify was insufficient to a large claimants, award, harassed opposing damage intimidated tive it also observed

witnesses, and attorneys. justifies Id. at 33-37. fraud For combined with other factors “conspiracy,” Specifically, without this so-called which Id. 940-41. higher at award. whatever, illegal no elements additional contains II stated that “an Crookston award, punitive wrongdoing Farm’s would have remained justifying the unique factor propor- unpunished, unexamined and and the direct and in its in its dollar amount both Campbells, harm the the indirect harm to compensatory [is] to the hard tion parties, and the harmful company’s ‘calculated and calloused the other effect ... larger community Id. of all those who deal settling valid claims.” attitude’ toward (citation omitted). case, company, had no In this with the would have reme- shows, convinced, dy. The facts and circumstances surround- the evidence pattern ing point engaged widespread State Farm’s misconduct all in a Moreover, goal PP making evidence of its & scheme motivated fraud. profit by any necessary. agree means We R demonstrates scheme planned entirely to avoid with trial court’s conclusion that specifically calculated claims, regardless supports imposition high- of a payment of their this factor full Thus, punitive damages er than normal award. validity. the nature higher imposition of a supports the conduct damage normal award.

than 4. Effect State Farm’s Misconduct on the

Campbells and Others Surrounding and Circumstances 3. Facts ¶37 factor This examines how Farm’s Misconduct people affected as defendant’s conduct other to the cir 35 This factor looks Campbells. larger, well the num conduct, surrounding illegal affected, greater justifi cumstances people ber respect to what the defen particularly with higher punitive damages. cation for motivating his and what was or dant knew ¶ Here, the effect of State Farm’s Bundy Century Equip. See her actions. Campbells the conduct on is well-document (Utah 1984). Co., Discuss particular, for ed. In the lived to point, this the court referred ing trial nearly eighteen months under constant analysis Farm’s conduct previous of State losing everything they had threat of worked speak “those facts for themselves and stated This threat for their whole lives. led type of respect insensitive and with heartache, sleeplessness, and stress in the by Farm.” callous behavior exhibited State family Campbells’ and marriage relation findings, In addition to the trial court’s ships. argues Farm that these Id. State Farm in its brief on note that State refuses relatively impacts, minor and were not were appeal any impropriety to concede error or II, punished as in Crookston as severe those handling ease. the Rath additionally, alleged that the harms suf er, testimony at trial indicated that State Farm cannot fered other State customers way “proud” the it treated the was in ease. be considered this Further, Campbells. Id. Farm as State it is in in this ease serts that fact “victim” Camp- the harm the 139 Even if “conspira target it is the of a secret because as appropriately bells can be characterized Ospital, cy” perpetrated by Campbells, the minimal, the the trial court’s assessment of Slusher, attorneys to this bring and their bad “The harm is minor to target: situation is on recovery faith and to share ob lawsuit aggregate.” the individual but massive the tained. Moreover, that State Farm’s assertion ¶ alleged considering trial erred in harms agreed if we with Farm’s Even State incorrect; customers is agreement between suffered other characterization Slusher, specifically con II allows courts to plaintiffs Ospital we are Crookston conduct on comprehend Farm’s sider the effect of the defendant’s logic. unable to II, In 860 P.2d at 941. parties operates to others. Crookston No behavior those fact, justified high II court and illicit the Crookston excuse State Farm’s dishonest fact punitive damage based on the practices many years, nor award over course fact, company’s fraudulent Campbells. In the insurance its treatment of the practices surprising jury apparently inflicted on countless custom- that the were was not particularly persuaded repentance ers. Id. light genuine,” especially of the fact case, ¶40 present In State Farm’s president that the decide vice did not to send seriously Campbells, affected the conduct such letters until he “was in the office of trial many as well as previously, indicated others. preparing testimony counsel ... his trial particular, corrupt- conduct Farm’s long puni- before decide by forcing engage them to employees ed its damages.” tive jobs. practices or lose their deceptive Moreover, continuing Farm’s illicit short, persuaded, In43 we are as was the disadvantages practice market created court, “[g]iven the absence of credi- companies insurance other honest because that, fact, poli- ble evidence profits. plain- increased As practices these changed, cies have misconduct established, expert tiffs’ witnesses such carried toward during out Utah consumers wrongfully competitive advantages obtained ended, past probabil- two decades has potential pressure compa- other ity of recurrence State Farm’s misconduct tactics, adopt nies similar fraudulent appears extremely high.” Thus, force them out of business. such ac- throughout

tions cause distortions insur- Relationship 6. of the Parties all ultimately ance market hurt consum- analyzes 44 This factor the re ers. Id. Because State Farm’s actions have lationship parties, specifically, between effects, potentially widespread this fac- degree placed of confidence trust supports high punitive damages tor award. greater placed defendant. The the trust defendant, appropriate the more Probability of Future Recurrences imposition large punitive damage award analyzes 41 This factor the likeli for a breach of that A trust. breach of a repeat hood that the defendant will or contin fiduciary relationship supports also a large engaging wrongful high ue in its behavior. A punitive damage award. probability justifies recidivism a higher Exch., In45 Beck v. Farmers Ins. BMW, punitive damage than normal award. fiduciary relationship we noted a that exists In light 517 U.S. at 116 S.Ct. 1589. between insurers and insureds like the decades-long policy State Farm’s of fraudu Campbells because practices lent in its handling and dishonest claims, imagine it is difficult to how such third-party situation, a [i]n the insurer con- ingrained corporate policies of culture can disposition trols the of claims its easily changed. insured, or This quickly would be relinquishes any right who to ne- perpetrator a true even in case where the gotiate essence, on his own behalf.... fully was aware of and remorseful for its itself fiduciary the contract creates a rela- any Farm conduct. State has not exhibited tionship because the trust and reliance Instead, in case. placed self-awareness this in the insurer its insured. The State Farm asserted at trial that its PP R wholly & dependent upon insured is the in- policy in again that, was “obsoleted” 1992 and surer in dealing to see with claims However, Campbells’ 1994. parties, evidence third best insured’s interests policy being that still protected. showed was fol are lowed at the time of trial. Id. (Utah (citations 1985) omit-

¶ ted). challenged Farm the Campbells’ State State duty Because Farm breached its by pointing fiduciary out trial that relationship, evidence at the trial court president regional Farm’s vice for Utah testi- ruled that State Farm’s actions warranted “peace fied sent high punitive that he had mind” damages. letters Brown See Coates, (D.C.Cir.1958) (hold- assuring to customers them that State Farm F.2d protect personal would them against expo- ing punitive damages that particularly are However, sure third-party appropriate duty fiduciary disregard- suits. as the when noted, exploited gain). does not ed “[t]he Court find it for tors], ¶46 that, argues al and no standards formulas Farm exists, relationship it is though fiduciary properly evaluating established for a been imposing multi adequate a large triggers not an basis A a them.” Id. award more penalty. argument Its is that million dollar searching judicial analysis of the situation fiduciary duty is the its breach of because the defendant’s warrants ensure conduct place, first it is liable in tort reason However, punitive if large damages. justi as a be “double-counted” breach cannot punitive support large other six factors large Id. at 86. fication for award. award, damages a judge should not decrease solely the amount because of the ratio of disagree. The show facts that We punitive compensatory damages. Crook Campbells in and relied trusted II, ston protection and For promises of aid. affirmatively promised example, State Farm Second, both I and Crookston Crook- it look out for Campbells that “would rejected establishing II the idea of ston they should not their interests” best punitive specific capping damages, ratio or procure their own counsel because State emphasized guidelines puni- that the Also, Farm take care them. would enough damages need to tive be flexible “they Campbells that Farm convinced the accomplish punishment both the and deter- risk,” absolutely even on the no purposes punitive damages. rent See liable, they they had were found chance II, 941; I, 860 P.2d at Crookston Crookston adequate potential insurance cover support 817 P.2d at 809. In of this reason- The on these liability. relied ing, the Crookston II court noted Campbell actually trans- promises: Inez separate property into ferred some of her predict company sys- that its [i]f could ownership her joint with husband after tematic fraudulent conduct would evade upon there no being accident told that many and on those detection instances judgment. risk to of an excess Mr. discovered, few where it was occasions relationship of trust between State would never result Campbells, and the breach of historically greater than ratios we have trust, punitive damage a substantial warrants carefully upheld, could calculate the award. wrongful ratio of its conduct cost/benefit potential puni- and avoid deterrent Compensatory Dam- 7. Ratio Punitive damages. tive ages II, 860 at 941. Crookston above, the 48 As noted trial court damage jury’s punitive award reduced Finally, II itself Crookston solely from million to million based $25 $145 punitive compen case where the ratio of argues this on factor. this satory higher three to damages was than disproportionate to grossly number is still of the upheld We that award because one. be reduced the harm suffered should willful, malicious, conduct of and fraudulent according to the I ratio. further Crookston company the towards Crook- the insurance similarly situated Utahns. stons and other ¶ Applying 49 the rationale and II, at 941. Since Crookston this of cases to language both Crookston nature, is of a similar we Farm’s conduct case, interpretation. reject we State Farm’s of than three to one greater hold that a ratio First, contrary arguments, to State Farm’s here, trial court permissible is punitive compensatory dam the ratio of remitting long As award. erred ages simply It is one of is not determinative. punitive high the other factors sustain a as considered, of is to be none which factors here, award, damage they do neither than important more or conclusive another. I nor II bars courts I, Crookston Crookston P.2d at 808. Crookston See Crookston punitive damage imposing awards from specifically “No relative I stated that: of the amount com- greater than three times weights assigned have them fac- [the been damages.9 pensatory the BMW test mirrors the second and third I, factors in relating Crookston to the nature foregoing Based review of the surrounding and circumstances defendant’s factors, that, I we seven Crookston hold with misconduct, incorporate we here our earlier analysis exception of the of its seventh analyses factors, of I these Crookston factor, analysis fully court’s cor- conclude for the reasons discussed therein However, roborated our own. con- reprehensibility that the guidepost is met.10 in deciding clude that the trial court erred analyze We “guide- the second and third required that the seventh factor remittitur as posts” separately below. of a matter state law. Disparity Between the Harm B. Law Federal (Ratio) Punitive Award ¶ 53 State Farm asserts that standards set forth in BMW North Amer of 54 The most common of means ica, Gore, Inc. U.S. v. 116 S.Ct. determining punitive damage whether a 1589, 134 (1996),prohibit impos L.Ed.2d 809 award is excessive under federal law is ing punitive large damages amount punitive look at the ratio compensatory awarded this To case. “illuminate ‘the BMW, damages. See U.S. at identify character the standard will However, S.Ct. 1589. when conducting such unconstitutionally puni excessive awards’ of an analysis, “simple no there is mathematical damages,” tive Court BMW stated: formula,” approach,” “categorical or “consti may properly damages Punitive be im- determining tutional line” appropriate an posed legitimate to further a State’s inter- punitive compensatory damage ratio. Id. in punishing ests unlawful conduct and 582, 116 fact, at S.Ct. 1589. deterring repetition_ States neces- compensatory may low damages awards sarily flexibility considerable de- properly support a higher high ratio than punitive termining the level awards, if, compensatory example, they will in different allow classes of particularly egregious act has resulted particular cases and in case.... only a small damages. amount economic Only fairly when an can catego- award be higher may A justified ratio also “grossly rized as excessive” in relation to injury cases in which the is hard to detect these interests it enter does the zone of or the monetary value of noneconomic arbitrariness that violates the Due Pro- might harm have been difficult to deter- cess Clause of Fourteenth Amend- mine. ment. Overall, (citations punitive Id. omitted). the ratio of compen- Id. 116 S.Ct. 1589 satory damages needs to be Supreme reasonable con- Court then identified “[t]hree sidering circumstances. totality of the guideposts” for consideration: the de- “[1] gree reprehensibility [conduct]; ^[2] Id. at 583; see also TXO Prod. Corp. 443, 458-62, Alliance disparity Corp., Res. potential between the harm or U.S. (1993) (up- ... 113 S.Ct. [the] harm suffered 125 L.Ed.2d 366 dam- ages award; ^[3] difference between holding punitive damage award that was 526 remedy punitive damage [the times amount compensatory damage award] and penalties ... imposed award potential authorized because of harm that could comparable 574-575,116 cases.” at Id. S.Ct. occurred had defendant’s fraudulent reprehensibility guidepost worked); 1589. Since the of scheme Pac. Mut. Ins. Co. Life noting It 9. is worth the except that trial court here remitted the at all amount for its mistaken million, twenty-five $25 issued a remittitur to still jury's proper belief that the award exceeded lim- compensatory damages. times the amount of the its as a matter of law under Crookston I. complied Had the trial court with State Farm's factor, interpretation of I the Crookston ratio the factors, 10. Facts relevant other to Crookston I remittitur would to an have been amount three six, may satisfy such as factors four and also the compensatory times the amount of the dam- reprehensibility guidepost. BMW ages apparent million. It is from $3 the trial — findings court’s written that would not have McGill, 1, 23, Eng’g. 113 bustion Inc. v. 111 S.Ct. U.S. Haslip, 499 U.S. 329, 145 (1999). (1991) punitive damage S.Ct. L.Ed.2d 256 State (upholding L.Ed.2d plain- Farm’s reliance on Johansen is unfounded. of was 200 times amount award that case, First, unlike this Johansen did not repre- on out-of-pocket expenses based tiffs punishing company previ a that involve had of hensibility conduct and wealth defen- of punitive damages ously been assessed for its dant). Rather, punitive damage illicit conduct. the above, ¶55 language on the cited Based against mining award issued in Johansen the that this BMW factor the trial court found only punishment company was the first and punitive impose rigid cap on “does not imposed for Id. its misconduct. at 1336. Campbells’ awards” because TXO, case, importantly, to injury is hard de- 58 More State Farm mis- as in “the Johansen, holding of potential large for harm is construes which tect” and proposition larger fact for the Specifically, the court stands that re- substantial. corporations, necessary large are justify high to awards following on the facts lied (1) company that executives should be damage award: nev- punitive imposed punitive aware of sanctions. See id. damage reported previous punitive awards er Specifically, at 1338-39. Johansen states though prior awards headquarters, to even million; judgment Texas included a $100

(2) company deterrence, promoting is an enormous with State Farm economic wealth; (3) actions, may Farm’s wealth of tortfeasor be considered. massive nature, bigger will A is to their clandestine be award needed “attract because of 50,000 large corporation. ... every ... attention” punished at most in one out of unlikely having pay It not ... probability; is cases as a matter of statistical (4) punitive damages make would not the com- policies have affected Farm’s should, however, pany newsletter. It at- of other Utah customers. vast numbers tract the attention whomever is contesting validity not While daily charge corporation’s decisions finding likely punished that it at is be would, doubt, upon heavily ... and no bear 50,000 cases, out of State Farm most one regional managers where failure to local justifications. challenge the other three does regard consequences expected would be objections to Because consider- subject employer their loss. ing wealth and the effects other relative (citations Id. and footnotes omitted and em- argu- identical to its Utah customers are added). phasis punitive damage award against ments I, Many corporations are again incorporate by large “entities under Crookston we by analysis remedies previous powerful of Crookston too to be constrained” reference our Mi- provided “LA”1 “criminal and civil law.” I factors one and four in section Koenig, opinion. Rustad Thomas The Histori- this chael & Damages Continuity Punitive cal ¶ Turning remaining justification Reformers, 42 Reforming the Awards: Tort court, relied on we note (1993). & n.299 Am. U.L.Rev. 1329-30 prior punitive found that a million $100 cases, only protection public’s In many damage against State Farm not award exposure harmful con- to fraudulent reported headquarters. national been corporations powerful is large, duct argues award imposed for miscon- the threat that sanctions not be severe than that case need more sufficiently Id. If such duct severe. will award, citing Engi v. Combustion Johansen unavailable, damage a threat Inc., neering, proposition that “a will serve against large entities not awards large to be punitive award does need punitive purposes. See their deterrent and enough company ‘make newsletter’ II, Crookston ‘not the attention and need attract points out that 60 State Farm of directors’ in order to have deter board 1320, BMW, many held & of lower courts have effect.” 170 F.3d 1338 n. 36 wake rent (11th Cir.1999), punitive of far lower ratios denied sub nom. Com- unconstitutional cert. 1154 award, compensatory damages large they than exist bells given here. warrants a that cases eighteen Farm cites where courts complete

State had to live in of ruin fear financial damage punitive reduced awards after for eighteen over months because of conducting analysis. a Id. at 77-78. BMW Finally, Farm’s refusal to their settle claim. contrast, Campbells cite nine In the other by propagated the harm ex- Farm is punitive damage upholding awards cases prob- treme compared when to the statistical punitive to compensatory the ratio of where ability likely that Farm is re- to be damages the larger is than or same as the 50,000 quired damages pay only once in in this case. ratio Thus, cases. because there are reasonable justifications large punitive damage for the however, agree, 61 All the cases upon specific award based the facts of analyze each must the court facts of ease, the ratio factor in re- BMW does not each case to ensure that the defendant’s acts quire simply the to be be- imp award reduced damage punitive the award warrant punitive cause the ratio to compensatory fact, the BMW made it osed.11 damages high. is punitive damage clear the initial award (500 plain amount in that case times the invalid, damages) automatically was not tiffs 2. Civil or Criminal Penalties Authorized but that it was unconstitutional because of Comparable Cases specific case —i.e. the facts fraud ¶ 63 The determining final factor for deceit,” “trickery perpetrated without punitive whether a award is under excessive regulatory the available criminal and sanc “[c]ompar[e] federal law is punitive minor, comparable for tions misconduct were pen- award the civil or criminal and some of the conduct for which BMW was imposed alties that comparable could be punished being legal in states other than BMW, 583, misconduct.” 517 U.S. at BMW, 582-84, 576-78, at

Alabama. 517 U.S. imprisonment S.Ct. 1589. Possible 572, 116 S.Ct. 1589.12 conduct is a strong indication that con- BMW, excep- 62 Like this ease contains punitive duct high warrants damages. Id. Here, tional facts and circumstances. how- ¶ 64 The trial court found that ever, this factor they support higher a rather than a require “does not punitive punitive reduction of the damage lower award. State Farm’s damage “penalties award” because way fraudulent conduct has been consistent imposed could doing be under Utah twenty years, business for the last law for fraudulent specifically society’s pursued by scheme that has been directed some most groups. vulnerable The likelihood of Farm are enormous.” Specifically, further great, is trial court given misconduct found that State Farm could (1) $10,000 changed fact that it has not forced: pay conduct de- fine act for each previous spite punitive damage §§ million fraud $100 under Utah Code Ann. 31A-26- Moreover, (2) on Camp- seq.; award. the effect 301 et to renounce its business duct, appellate impact 11. The de novo standard plaintiffs, review im- on individual posed by Cooper prin- Industries underscores this compensatory reasonable relation between the ciple. punitive damages, and an amount sufficient punish to stances”); and deter under all the circum analyze each 12. That courts must case's facts to Co., Upjohn Utah Foam Prods. Co. v. appropriateness determine the of the ratio is also (D.Utah F.Supp. 1996) (reducing cases, following demonstrated cited because, punitive damage upon award review of Exch., State Farm: Denesha v. Ins. Fanners trial, punitive damages evidence at "the award (8th Cir.1998) ("As F.3d 504-05 an initial appropriately Up does not reflect the level of matter, compensato- the 24:1 ratio john’s Decidedly, egregious misconduct. no con ry damages unsettling as a matter of due presented justify duct was which would [However,] process.... the nature and extent of upon amount of the award based con clear and support [defendant’s] conduct does not evidence”); Moore, vincing Apache Corp. v. juiy's plaintiff] award ... [and] [the the effect 1997) (Tex.App. award); (noting S.W.2d "the does not warrant” such an EEOC v. (8th Cir.1998) pass ratio that Corp., will constitutional will HBE 135 F.3d muster (reducing punitive depend case”). damage upon award in each "[a]fter facts considering the extent nature and of the miscon- findings it in his eight pages to summarize operations Utah dissolved or have its license motions. 31A-26-213, post-trial §§ 76-3- Ann. Utah Code under 201(2) (3), 76-10-1602(ppp), and 76-10- ¶ argument that Finally, Farm’s State (3) profits 1603.5(6); the illicit disgorge to all practices in as- the Insurance Commission’s scheme, pay a fine of plus gained applicable, rather than the sessing fines are under Utah profits, of those the value twice statutory penalties, contrary is to maximum (4) seq.; §§ et Ann. 76-10-1602 Code clearly BMW court indicated BMW. The acknowledge its officers had that publically punitive compared award to be that was Code under Utah convicted of fraud penalties, been legislatively administra- set Moreover, BMW, § under Utah Ann. 76-3-303. at agency practices. 517 U.S. tive 76-3-303, § Farm’s officers 584, example, Ann. State Code 1589. For the Su- S.Ct. up to examining removed for imprisoned or that it was preme could be Court stated important extremely statutory consider fines” maximum year’s, “[t]he an “the five BMW, Leg- penalty at the Alabama court. 517 U.S. authorized for the BMW civil ation Moreover, stated 584, 116 Id. BMW also islature.” S.Ct. 1589. engaged in “reviewing determin- that find disputes punitive damages these award of is ing Farm whether an “only case is the should accord substantial deference arguing that since this excessive ings, concerning legislative judgments appropri- in the last fifteen against it faith action bad at Id. ate sanctions for conduct issue.” that has de no it years,” there is evidence (internal quotation at 116 S.Ct. profits. gained illicit customers frauded added). emphasis We marks omitted Moreover, if it argues Farm that even correctly the trial court found conclude that permissi punished practices, be its could jus- large punitive damage award was by the fin punishment limited “actual is ble guidepost. this third tifiable under Commission. ing practice” of the Insurance Id. at 83. conclusion, 69 In we hold that the punitive analysis damage of the award court’s unpersuasive for is logic 66 State Farm’s light In was correct. under BMW First, interpreta- an reasons. several law, foregoing analysis of state federal language of contrary runs to the clear tion trial court’s remittitur order vacate the examining indicating the BMW Court awarding jury’s verdict and reinstate penalties that criminal could “the civil or damages. million in $145 misconduct,” not comparable imposed for already issued punishments other II. EVIDENCE OTHER ACTS BMW, 116 S.Ct. U.S. defendant. argues quanti- large Farm 170 State added). (emphasis evidence were admitted ties “other acts” Second, argument that State Farm’s Rules of Evidence be- of the Utah violation contrary is nothing of fraud there no evidence to do with such evidence had cause to the evidence findings handling third-party trial court’s claims supporting find- reviewed those conduct toward general, that we have or State Farm’s particular, how State and therefore ings. It is difficult understand catalogs probative is no evidence Farm argue can there had no value. State Farm illicitly allegedly evidence long acted when list of inadmissible that it committed fraud or the evi- argument of such evidence. on which it bases the record contains volumes process in court was taint- dentiary convinc- was so extensive and The evidence contrast, Campbells argue that twenty- In nearly ed.13 ing that took the trial court non-party argues of the conduct particular, fol- 4. Evidence that the lowing company; evidence not admissible: sister pre- employed property that State Farm relating first-party 5. Evidence 1. Evidence claims; experts; dictable allegations in action engaged class 2. Unsubstantiated in hard that State Farm 6. Evidence lawsuits; tactics; litigation ball cases; first-party 3. Verdicts properly preserve did the not its was admission of evidence related its that, evidentiary objections and if it even policy. policy, PP R This in & initiated had, trial discre- court did exceed its executives, by company’s highest set admitting “other tion in acts” evidence. ceilings payment fixed on the of claims in corporate profits. order increase After ¶ 71 State in We decline Farm’s phase I that Farm established State piecemeal approach vitation to take a to the Campbells’ handled the claim in bad faith analysis admissibility of the of “other them, fiduciary duty and had breached its complex lengthy acts” in evidence this and Farm phase defended itself in II litigation. litigator Just as able must claiming that actions only its were result “theory hopes of the ease” if he or a she lapse of an “honest mistake” or an isolated a of to convince fact finder the merits of a defense, judgment. Based on this action, particular judge it is crucial for a trial request court denied State Farm’s to exclude confronting many so case with issues and all evidence from which the infer could opportunities for mistake to have an overall Campbells that the were the victims of an necessary view of the balance for fairness to extensive, intentional scheme to defraud trial, parties partic the conduct of the policyholders. State Farm’s All of the other ularly this to the and as relates admission categories of challenges evidence State Farm of The exclusion evidence. trial court this being during phase erroneously admitted vision, case had such a and we believe it trial, II practice of the of from office balance achieved and fairness. competitions average paid, to lower claims foremost, f 72 First and court trial discriminatory treatment of insureds granted request, State Farm’s over the race, gender, status, based economic edu- objections, Campbells’ strenuous to take the background, part age, cational and were step bifurcating unusual the trial.14 The parcel policy. of its PP & R imposed stringent evidentiary trial court re- Campbells during phase strictions on the I of context, In74 we conclude that we trial, only so that treatment consider integrated must the evidence in an establishing of the issue in was at analyze fashion and whether the trial court handling their bad faith claim. Id. In in admitting erred the “other acts” evidence post-trial ruling, trial court stated general. challenge State Farm’s purpose it “understood bi- [the] trial court’s admission such evidence is separate order furcation was to the so-called 404(b), controlled Rule Utah of Evidence I) phase’ (phase ‘bad-faith from what the which states: parties phase’ termed the ‘institutional of this crimes, wrongs Evidence other or acts is II).” (phase trial trial court continued: prove not admissible to the character of a prevailed argu- “State Farm in its bifurcation person in order to show action in conformi- largely II, by pointing phase ments out that may, however, ty therewith. It be admis- evidence, covering the institutional would in- purposes, proof sible other such as trial, very lengthy volve a as it deal would motive, intent, opportunity, preparation, corporate policies with State Farm’s plan, knowledge, identity, or absence practices that bifurcation save would —so words, or mistake accident. other evi- substantial resources event that dence offered under this rule is admissible handling.” no claim found bad-faith if is purpose relevant for non-character added.) (Emphasis and meets the requirements of Rules 402 major 73 The other decision that the trial 403. made, argu- on which State Farm’s regarding Thus, ments error the admission of “in deciding whether evidence other largely fail, “other acts” evidence succeed 404(b), is crimes admissible under rule strongly 7. Evidence that State Farm judge actually upholding encour- 14. The trial an settlements; aged first-contact by predecessor Judge earlier bifurcation order showing Evidence dis- Farm John Rokich. criminated on the basis of sex and race. (1) record, Moreover, on our whether such based review must determine trial court non- proper, which indicates that the court made its being offered for evidence (2) 404(b), purpose reviewing under whether after conclusions numerous character rule requirements meets motions in limine made evidence (3) this evidence meets pretrial hearings whether conducting at least ten Decorso, v. of rule 403.” State requirement days, consumed more than fifteen we are ¶57, 20, re- 837. 993 P.2d When 1999 UT scrupulously that the trial court ex- satisfied decisions, of apply “an abuse viewing such we ultimately “other amined the acts” evidence ... the consider] [and standard discretion again, admitted at trial. Once been the whether admission record to determine the greatly assisted our review trial ‘scrupulously bad acts evidence was of other in his findings court’s extended written or- proper ‘in judge trial the examined’ the pretrial Accordingly, ders on the motions. ” her] or discretion.’ [his exercise of we conclude that the trial court did not ex- ¶ 59, 16, Nelson-Waggoner, UT range the of permitted ceed discretion Decorso, at 1999 UT 57 (quoting finding acts” the “other evidence was 837). proper, purpose.15 a noncharaeter offered for Purpose A. Noncharacter Jp02 B. Rule ¶75 part this the first “Under ¶77 rule “other acts” Under proponent the must demonstrate analysis, evidence, evidence, like all must relevant being for actually is offered that the evidence Evid. or it is Utah R. not admissible. purpose, as proper, noncharaeter such (“All evidence is admissible-Evi- relevant [404(b) rule ].” listed in ... specifically those is not relevant not admissi- dence which is Decorso, ¶21, 837. 57 at UT ble.”). having evidence is “evidence Relevant purposes the of noncharacter Although list any any tendency to make the existence 404(b) it is exclu helpful, rule is not found in to consequence fact that is of the determina- N. L. & Ronald sive. See Edward Kimball probable or tion of the action more less (1996). Boyce, Law 4r41 Utah Evidence the probable than it would be without evi- ¶76 II of the trial involved Phase Thus, R. Evid. 401. to be dence.” Utah fraud, Campbells’ intentional the claims admissible, evidence must tend “other acts” distress, punitive and of emotional infliction to prove fact that is material the to some that its Farm’s defense damages, alleged—other than the de- cause action the was uninten mistreatment of engage propensity to in actions fendant’s simply the of an honest result tional Decorso, 1999 UT 57 conformity therewith. context, court In this mistake. ¶ 22, 993 P.2d 837. evidence, Campbells’ which found that ¶78 consideration, the trial was After careful challenges appeal, Farm now on specifically that the “other purposes, in concluded many for noncharaeter offered intent, presently to Farm acts” evidence which State cluding establishing State Farm’s “relevant,” mistake, plan, objects “helpful,” and “of disregard, was absence of reckless conduct, rebutting high probative because such evidence outrageous value” as well necessary to elements the ele establish several Comparing defense. Campbells’ and to rebut State Campbells’ of the claims necessary to establish ments of the record Farm’s defenses. Our review State Farm’s defenses claims and rebut objec trial court’s statement makes clear with the evidence State Farm finds tionable, necessity of the “other acts” regarding trial court was we conclude that the amply supported therein. Nota- evidence is entirely finding correct in evidence concerns of rule 402 purposes. bly, one of the chief for noncharacter was offered any at- entirely conceptu- briefed the issue without clear this case have 15. It is not to us that distinctions, however, under so potential al related to "character” considerations tention to freely case, (without we have 404 translate from the cases rule purposes we assume of this involving an individual’s character decided analysis deciding) be identical. that the should corporation. parties in Both "character" of case, namely present assessing in this the Utah R. Evid. not even whether prior requirements that fact-finders will infer acts evidence satisfies the need ensure present scenario an rule wrong-doing in because past. wrong in the Phase I of considered,

actor has done variety of matters must be conclusively established that State including strength the evidence as faith; wrong-doing acted in bad crime, commission other past crimes, without thus determined reliance similarities the inter- between practices. general issue in deeds elapsed val of time that has between appropriate crimes, evidence, II com- Phase was the nature effi- need pensatory proof, be im- cacy degree alternative posed response wrong-doing. For which will probably the evidence rouse intent, motive, purpose, overmastering hostility. State Farm’s that to for wrong-doing and rationale its was ex- ¶ Reed, UT 68 8 2000 P.3d 1025. relevant, tremely and evidence of its the ruling upon 81 In State Farm’s long-established doing of methods business motions, evidentiary various the trial court were, found, proba- highly as the trial court light in I phase jury found that of the verdict tive. Farm, pattern prac State “the and Surprisingly, 79 in even the face of the high probative tice evidence is of and value findings analysis, trial court’s detailed claims, importance plaintiffs’ to and that seri appeal on State asserts that the “other prejudice plaintiffs ous to would result if such probative had no acts” evidence value. We evidence were excluded. court further troubling. find this assertion State Farm’s probative finds that the is out value not probative acknowledge failure to the value of weighed by danger prejudice the of or unfair piece “other is the acts” evidence of a with its clear, confusion.” The trial court made it inability acknowledge engaged to that it in a however, precluding that it not further wide-spread corporate to scheme defraud its objections specific rule 403 to evi exclude insureds, far-reaching a scheme that had Rather, only objections dence. it found negative on effects both its insureds and specific to “general evidence based on the society in general. Because the trial court wrongful practice pattern issues of evi basis in the for reasonable evidence its improper. dence” would decision, reject assertion, we State Farm’s compelling 82 findWe reasons under rule and conclude that did not 403 uphold to the trial court’s of denial State finding abuse its discretion in evidence of request generally Farm’s exclude all “oth- State Farm’s “other acts” relevant. See patterns er acts” evidence related to its II, (Utah 1993) Crookston above, practices. alleged As discussed the (“[W]e reverse if find an abuse of of wide-ranging effects State Farm’s PP R& discretion, i.e., no reasonable for the basis policy Campbells’ ability were crucial the decision.”) fraud, prove their intentional infliction of distress, punitive damage emotional C. Rule n Analysis claims. State Farm attacks the trial court’s requires Rule that “we evidentiary rulings repeatedly allowing for weigh probative the value of the evidence evidence that was “dissimilar” from the facts potential creating prejudice with the in case; Campbells’ again this once miss- Reed, jurors.” the minds of the State v. underlying purpose es the mark. The rule of 68, ¶29, UT 1025. The rule states: 403 is assure careful of consideration relevant, and, Although may prior evidence be ex- acts the event evidence 404(b) threshold, probative passes cluded if substantially its value is the rule to continue outweighed by danger preju- of poten- unfair to evaluate the of light evidence its dice, issues, misleading tially prejudicial Although confusion of or effect. “simi- jury, larity” language or considerations of undue of Reed and earlier cases delay, time, case, of presenta- particularly apt waste needless this we think of tion cumulative general evidence. that its concerns were accounted (Utah 1993). underlying While reasoning his trial court’s admissibility appears Campbells’ of there to be merit determinations preserve PP R argument Farm’s & that State Farm failed to acts” evidence. State “other exposed Campbells many objections experts’ to an excess policy of testi- accompanying mony, analyze risk los- judgment and the we deem more efficient Thus, challenges cause and effect their assets. the substance State Farm’s ing all words, very important. generally, In other under rule and then un- first became in phase II was: What der rule 703. inquiry relevant Campbells’ harm? Without caused ¶ 85 To rebut Farm’s “honest policy, PP & R evidence defense, Campbells called ex mistake” flowing poli- practices from evidence perts Stephen Gary Fye. Prater and These cy, have been unable to would intimately acquainted men the in were with prove their harm. The the real cause of industry tricacies the insurance with effect link cause and establishment practices particular. State Farm’s Their dependant the “other acts” highly qualifications experts challenged were not doing Farm’s methods evidence testimony Farm. Their focused business. upon explaining policy State Farm’s PP & R ¶83 State Farm also contends demonstrating far-reaching its effects. not here be- time interval factor was met argues State Farm now that much of this the detailed behavior cause some of evidence testimony was without foundation and was However, in inasmuch as there remote time. prejudicial. particular, In State Farm chal tending to affirmative evidence adduced concerning lenges experts’ testimony the the practices ongo- were that State Farm’s show handbook, liability company’s excess its fail (which of trial evidence ing at the time the verdicts, ure to maintain statistics on excess explicitly by the trial court and believed profits improper the it derived from claims jury), the we find that conten- apparently handling, policy its R and the effects of PP & light of tion merit. In these consid- without practices the insurance and related on indus erations, its the trial court did not abuse try general. argues State Farm also that ruling probative the value that discretion impermissibly legal Prater testified to Mr. not out- of the “other acts” evidence was conclusions. weighed any potential prejudice. Rule 702 86 Utah states: III. EXPERT TESTIMONY technical, scientific, specialized or other If knowledge the of fact to will assist trier objects the that tes State Farm the evidence or to determine understand Campbells’ experts timony by the “went far issue, qualified as an fact witness expert of beyond permissible the realm testi skill, experience, expert by knowledge, into mony, crossing instead the line rank education, may testify training, thereto or advocacy,” thus rules 702 and violated opinion in the form of an or otherwise. Con 703 of Utah Rules Evidence. most, that, posed prior that Campbells argue question at must be versely, “[T]he expert is objections any admission of evidence only two of State Farm’s were balance, case, whether, that, will preserved appeal on the evidence be helpful to the finder of fact.” State Lar- trial did not commit reversible (internal (Utah 1993) sen, 1355,1361 courts “It well established that trial 865 P.2d error. is omitted). quotation Helpfulness de- determining the ad marks wide discretion in subject missibility expert pends upon is within testimony.” State v. “whether ¶41, 11, experience average of the Kelley, knowledge or 2000 UT P.3d 546. More Id, However, over, not neces- “[i]t unless “there is likelihood is a reasonable individual.” testimony subject be so sary if that of the the verdict would have been different jurors expert or that the could not tes erudite arcane [excluded] the trial court possibly it without the aid timony,” trial court’s understand we will reverse the Corp., testimony, requirement nor is it a Mgmt. expert decision. v. Smith’s Steffensen comprehension subject beyond the pre- was testifying witness every juror.” ‘helpfulness vailing each Id. “This industry, standards conduct in the implicates Rule 403 consider- legal standard’ also not to standards or rules of law. ations, confusing instance, if the evidence is since or at least one the trial court clari- unfairly prejudicial it will hinder rather jury than fied for role of the court in making.” law, aid decision Edward L. Kim- instructing them on the the limited role Boyce, ball & Ronald N. Evidence experts, Utah Law of the and properly instructed the (1996) (clarifying 7-9 that “Rule 403 is not at the of the end trial. The trial court being applied directly, question so ... is permitting did not abuse discretion in ‘helpfulness,’ probative not whether the testimony value in question. greatly outweighed by preju- is confusion or Finally, objects be Larsen, dice”); see also 1363 n. cause pointed Prater boxes documents 12; Rimmasch, State v. n. courtroom testified that those (Utah 1989). We have reviewed the entire supported documents his conclusion that transcript Fye’s both Prater’s and engaged pattern in a of cheating

testimony. exception argu- With the challenge claims. This governed by conclusions, concerning legal ment we find it rule which states unnecessary particularity to address with particular facts or data in the case specific challenges. upon expert opinion which an bases an or experts’ testimony 87 That the was help- may perceived by inference be those ful is evident. State Farm conceded the expert made known to the at or before the qualifications. Although witness’ the rule hearing. type reasonably If relied does not require the issue which an upon by experts particular field in arcane, expert testifies be the issues raised forming opinions or upon inferences quite in fact difficult ease were for the subject, the facts or data need not be average person experts’ The understand. admissible in evidence. familiarity the industry with insurance in general, particular, and State Farm in This court must has held greatly jury’s aided the understanding expert qualified by “[0]nce the the Moreover, of the issues. our review of the court, may the witness his [or base her] experts’ us that record satisfies the testimo- opinion reports, on writings, observa- ny, given helpfulness, its relevance and its tions not in evidence which were made or any did not raise concerns under rule 403 others, compiled by long they so as are of Thus, sufficient to warrant exclusion. be- type reasonably upon by experts relied experts’ testimony helpful cause the was particular in that par- field. opposing The jury, the trial court not the did abuse its ty may challenge the suitability or reliabili- discretion rule under 702. ty cross-examination, of such on materials challenge but goes weight to be ¶88 We now turn to State Farm’s given testimony, the not to its admissibili- specific challenge under rule which ar ty.” gues usurped that Prater the trial court’s role instructing Lainhart, the by impermissibly Patey 31, ¶ 30, 1999 UT offering legal testifying. conclusions while P.2d 1193 (quoting Clayton, State v. (Utah objections 723, 1982)) Most added). of State Farm’s address Pra (emphasis The testimony ter’s concerning industry policy stan behind the current iteration this dards. In several instances he rule broadening described is aimed at permissible the “duties” and “standards” expert opinion. of behavior or of bases of justification One “ “care” practice driving should dictate the policy expendi this is to lessen ‘the companies insurance In generally. every in ture of producing substantial time in and stance, following objections and sometimes examining authenticating various wit ” Farm, by State very was made clear to the nesses.’ (quoting advisory Id. note of com jury by phrasing the of the question mittee to version federal of rule which is and/or by court, 703). comments from counsel and identical to Utah’s rule trial the initial prior find that Pra- lawsuit rule Applying Utah, liability Logan, to determine in the the documents testimony concerning ter’s underlying agreement Their accident. was documents improper because such not were documents, separate reflected in two both upon type reasonably relied “of a were first, entitled dated June forming particular field experts in Claims,” accepted “Release of Slusher subject.” upon opinions or inferences $65,000 all in return for a release of claims 703; Concept Am. see also R. Evid. Utah against Ospital Ospital’s insurers. The (Utah Lochhead, 751 P.2d Ins. v.Co. preserved expressly release claims Slusher’s expert in (finding that licensed Ct.App.1988) (who against and his insurers were casualty properly claims relied property and release). parties any not event file, adjuster’s since upon his examination agreement, second which we will refer to as usually type of a relied ] “material[ was Agreement, required Ospital Bad Faith field”). experts in his upon by prosecution to “assist in the of his Slusher the nature of 91 Prater described against any party responsible for claim other files, he means which documents his injuries including any damages, said them, and the fact that he had obtained faith against any claim bad insurer of with their con- and was familiar reviewed responsible party.” specifically required It majority of vast tents. He testified party Ospital Logan remain original doc- the documents were (in Ospital had a cross-claim case which copies testi- thereof. He further uments or against in addition to Slusher’s opinions in this his fied that conclusions Campbell) provided for claims part study his trial based were recovery sharing over and above some documents. as determined Slusher’s complains that cross-ex- 92 State Farm Id. case. would amining Prater on these documents Logan phase and in I 94 In the both time than it was allotted have entailed more phase II of the trial at issue in this view, however, time In our extra for trial. appeal, sought admission of the not the issue. Cross-examination agreement in of that evidence. State details in the boxes Prater on documents theory on three all occasions was Farm. for State On relevant task that, required Ospital because settlement duty to locate contrary, State Farm had lawsuit, Ospital original remain in the challeng- to produce critical and documents up” permitted “gang on were to Slusher an testimony to conduct ing Prater’s and liability pro- Campbell in the determination within the known effective cross-examination rely on the cess. State Farm wished to had Farm time constraints. Because State the of “collusion” in agreement evidence documents, of we produced itself most the trial, argue the Logan which it wanted to to (as knew presume judge) the trial that it did severity jury in trial increased the of this It cannot now claim error their contents. assigned percentage to liability the strategy pro- did its own trial not because lawsuit, and original the should therefore in Accordingly, results.16 duce favorable phase I mitigate evidence of bad faith in the court not its find that the trial did abuse support theory of and “innocent mistake” admitting testimony. in Prater’s discretion judge rejected phase in II. The trial precluded use of the

Farm’s rationale and AGREEMENT IV. SETTLEMENT agreement. agree We with the settlement judge. trial ¶ briefly in As described the back- opinion, and record in this case establishes ground portion Slusher of informed, prior to the that State Farm was Ospital agreement entered into a settlement Additionally, trial allot- trial court doubled the amount of time 16. we note that the trial court very request the court would responsive ted. We are confident that trial State Farm’s for addi- to convincingly necessity have done the same had State Farm it claimed the of add- tional time when ing regarding presented these regarding such a need docu- a different as- rebuttal witnesses fact, juncture, pect the ments. of the trial. at that lawsuit, Slusher Logan subsequently that would seek a trial court took the extraordi- nary step of an Ospital executing May with if of affidavit unilateral settlement 1996,containing following the assertions: participate to to refuse continued I day agree- trial 6. ... do not Logan On the be- believe second settlement. Agreement] posed ment Bad Faith [the trial gan, for Slusher told the court counsel any any or risks caused alteration of the that and Farm counsel the terms of the parties’ positions trial at different from included, agreement in addition to release already agree- those created the first Ospital in against of Slusher’s claims return ment Release [the Claims]. of $65,000, “cooperation” payment for a be- 7. my Because of awareness of first Ospital in tween the event of a Slusher trial, agreement during the I was careful faith future bad action State Farm. any signs improper watch collu- immediately Farm’s counsel informed Slusher, improper sion or other conduct at the trial court he feared collusion trial Ospitals or their I counsel at trial. saw no Ospital place between and Slusher blame signs I conduct. also saw no of ef- Campbell. for the accident on The trial Slusher, Ospitals forts or their counsel court declined to admit evidence of settle- together gain to work advantage unfair agreement. ment over and his counsel. trial, Logan verdict in the After finding I The statements made court, Campbell’s trial on motion for a new after the trial the Memorandum decision trial, explained length at its rationale for November, issued in 1983 ... were and liability agreement excluding the release are accurate. from the trial. The court’s memorandum court, appeal Logan 98 This of the specifically Campbell’s decision observed Ospital, verdict in Slusher v. requested counsel had admission of this (Utah 1989), concluded trial agreement and an instruction to the “disclosing erred not the settlement” longer “Ospital Slusher were no an analysis jury. After totality another,” position adversary with one trial, however, at circumstances we held that “facing position that he would where agreement “the disclosure the settlement Ospital Slusher counsel for were collu- would not have had effect on way against Campbell they sion and the outcome trial.” Id. at 445. While our conduct would could affect out- now agreement” reference to “the settlement ar- prejudice Campbell.” come to the This is guably referred Release of Claim exactly argument course State Farm document, nothing separate there is Agreement now raises about the Bad Faith Agreement Bad Faith that would have differ- (the basic terms of which had been disclosed ently parties affected incentives of the liability though the outset trial even probabilities Ospital of collusion between counsel). it was shown court or trial. Slusher at Responding argument, judge to that Thus, prejudicial existence and/or wrote: alleged effect Ospital of collusion between collusion, any pres- As this to Court was and at the Logan effectively Slusher trial was trial, ent and observed the whole observed raised and decided in that case. Further- no attorneys Ospital collusion between more, explicitly State Farm disavowed in fact, and Slusher. Counsel for Slusher phase any rely I this trial of intent to on an questioned all of both witnesses argument target that it been had the of though adversary and Ospital as to his collusion the Logan stipulated in trial. It to position that negligent, Slusher was not the of the exclusion settlement evidence in liability, had no and that he phase didn’t know complain I cannot and now of who liable was but it had to be one or the judge’s ruling regard. in that other defendant or both. II, As phase to the trial court 22,1983 Memorandum Decision November relied on rule 403 of the Utah Rules of ¶ 97 reading Agree- After the Bad Faith agree Evidence to exclude the settlement time, ment, ment in entirety finding “little, for the any, pro- its first the that it had if vineing Farm had an value,” probative it evidence that State “any value and bative outweighed by Campbell. the unfair intent to defraud Mrs. When con- have is far may result and challenges jury to that would on plaintiffs sidering to verdicts based prejudice the issues and danger evidence, of confusion of insufficiency the of the “we view the having conclu- misleading jury.” It been the light supportive the evidence in most of the liability trial and in the sively established verdict, the jury and assume that believed no that there was fact subsequent appeal aspects those of evidence which sustain the Logan the of actual collusion evidence findings judgment.” Billings its and v. Un- trial, agreement between the settlement Co., ion Ins. Bankers P.2d simply no Ospital and relevance Slusher (Utah 1996) (internal omit- quotation marks Campbell against State the claims of to ted). light “If the evidence taken the most Farm, entirely judge cor- and the trial was verdict, supports favorable to the verdict precluding its admission.17 rect Lichfield, we will affirm.” Steenblik (Utah 1995). CLAIM FRAUD MRS. CAMPBELL’S Y. that “To demonstrate argues there was no 101 State support jury and evidence is insufficient to jury to find clear con-

basis Thus, ruling Agreement the Bad admitted Oddly, despite on this Faith was the trial court's evidence, issue, fact the Bad Faith and did in see into informed of Agreement phase objection provisions. II. State Farm's counsel Ex- It came in without as Campbells' following inquiry of during conducted hibit the cross-examination of Paul expert Brinkman, James Crandall: plaintiffs, and its witness for break, I was pertinent jury. Q: ... before the lunch Just terms were read to After through asking you your about awareness subsequent objection by plaintiffs, based on the agreement an in June of documentation of agreement court’s exclusion of the Ospitals, Ospital, and 1983 between Mr. limine, pretrial agreed motion in to suing they got Farm if Mr. Slusher about 41; nevertheless, withdrawal Exhibit an excess verdict. agreement for State Farm referenced the counsel Okay. A: closing argument: you’re Q: And aware that? they again confirm in June So then general of it. A: I have a recollection later, agreement couple of weeks already Q: We this document in evi- 3rd, 1983, Slusher, signed is June where on dence, it’s on June 3rd between agree Ospitals, their counsel Allstate Slusher, Junior, and the estate Todd Robert go- paragraph they’re here in three that down said, says Ospital here and Allstate. And it prosecuting ing assist in claim for bad that, "Ospital attorneys currently re- and the any responsible against faith insurer by Ospital Slusher in the tained shall assist get paragraph parly. you then down And any against par- prosecution claim other of his they going set out how is four responsible damages, ty injuries and for said happen, going when how this is to work. And including against any any claim for bad faith you go paragraph page four two over to you responsible party.” Do see insurer up recovery they splitting talk about excess that? respect general and and half with half A: Yes. punitive damages recovered a bad-faith verdict, Q: So before the case went to which claim. '83, September Ospitals and Slushers Now, gentle- agreement, this is an ladies agreed they go together would and sue contract, jury, guess you I could men of the State Farm for bad faith. it, whereby Ospital and the Slushers call agreed They Under A: certain circumstances. pursue a bad-faith action other, agreed to each which settle between Farm, they pursue with- which couldn’t circumstances, common, and under certain Campbell giving them some kind out Mr. proceed further. they pursue cooperation because law can't aware, is, thing you're important Q: But the it. professor, Ospital as a law Slusher right didn't have a direct to sue Farm. we where the And so what have is situation claim, right. A: That’s Not the bad faith for was shows that even before trial there evidence right. only Camp- it that's Because runs by agreement pursue to a bad-faith action an bells. Campbell parties pursue it who can't without Ospital got Q: So when and Slusher excess you helping them. I submit that they And against Campbell, Mr. needed verdicts out, agreement to no execution that be carried Campbell party bring Mr. to be the pursued was intent to be and there no could lawsuit. added). (Emphasis do that. ever verdict, gladly personal the verdict would if challenging the one must have hired counsel support judg- in he the evidence the ver- had known of risk of an marshal excess that ample and then demonstrate the evidence ment. dict There was evidence that light Campbells working mak- together insufficient when viewed most were in is I, case, ing Camp- to the verdict.” Crookston decisions in the that favorable Mrs. 1991). (Utah Comparing strong Camp- bell had influence on Curtis case, in opening respect State Farm marshals its bell’s decisions with evidence reply appreciated evidence the briefs to the and that had she there denying losing in order court summarizes its was substantial likelihood of case, judgment it Farm’s motions for a notwithstand- she would have insisted that regarding a new trial ing verdict and settled and she would have had a terrific claim, Campbell’s bearing it is clear demanding Mrs. fraud on Curtis’ appeal in ample Farm has done is to case all State be settled. There is evidence po- misrepresentations selected evidence favorable to its that the “argue made in Mrs. inaction, held in Campbells’ presence Id. at 800. As we Crookston sition.” induced her I, begin not to meet the mar- to her Accordingly, does detriment. there is “[t]hat shalling ample carry.” support Farm] burden must [State evidence claim of fraud meet its Campbell. Id. State Farm’s failure to marshall- Mrs. reject ing “grounds burden is attack [its] ¶ 104 We conclude that State has finding.” on the fraud Id. entirely failed to meet its burden of marshall- entirety 103 The of State Farm’s ing challenge evidence on to the find- summary of the is contained in one evidence ing Campbell, of fraud Mrs. contrast, By

paragraph jury, of its brief. jury’s sustain the verdict and court’s the trial having testimony, listened to weeks of trial denial judgment notwithstanding of a having properly been instructed on the verdict and a new trial. fraud, elements found favor of both Furthermore, plaintiffs. Deny its Order The trial limited the Judgment ing Motions NOV judgment $911.25, fraud count on the Fraud, Regarding and New Trial paid attorney which the fees support noted: “The at trial judge evidence original after the verdict and which was each ing of the elements of fraud is exten total pecuniary by plaintiffs. suffered It loss sive, practical and it is not to set forth all of Adjust in doing relied on Turner v. so Gen. However, evidence in this Order. Inc., Bureau, (Utah ment 832 P.2d 62 Ct. following summary highlights some of the denied, (Utah App.1992), cert. 843 P.2d 1042 There the Order four evidence.” follow 1992), may which that a held fraud claim (four-and-a-half paragraphs pages) teen support damages emotional distress because summary detailing the factual fraud evi fraud is an dignitary economic and not a tort. summary para dence. The ends with this disagree holding Id. at 68. We with the graph: Turner, opinion as is our reflected Exch., misrepresentations n. Most of the and Crookston v. Ins. Fire (Utah 1991), also made damages non-disclosures were to Inez we held that where “all Campbell, Camp- upon with the intent Mrs. awarded can be sustained thereon, rely finding would which bell she did. of fraud.” Id. at 798. noteWe misrepresentations scholarly support Even where that there were and easelaw Campbell, appar- apparently made to Mr. for this view that was not consid passed they ent that ered when would be to and Turner decided. Nelson See upon by Campbell. Progressive Corp., relied Mrs. The evi- 867-68 (Alaska 1999) (holding dence also that Mrs. established that emotional dis husband, Curtis, present permitted was' with tress are fraud her under Adams, theory damages); misrepresented when Wendell if Bennett severe Kilduff v. Inc., separate that there was no need to hire 593 A.2d 484-85 Conn. (1991) (“[W]e jurisdictions counsel. Mr. testified that he concur with those ¶ First, Farm damages challenges 109 the recovery of emotional the that allow finding jury’s of intentional infliction of emo- proximate result of and are the natural that claiming the tional distress that evidence was fraud.”); Capital City Mort. v. Osbourne “exceedingly that (D.C.1995) (“We weak” and 1321, 1328 Corp., 667 A.2d they “failed to establish that suffered severe that, misrepre upon proof of intentional hold considering emotional distress.” When sentation, plaintiff may ‘emotional a recover light challenges, “we view the evidence in the proximate that the natural and damages are verdict, supportive most of the and assume (citation conduct.” result’ of defendant’s those aspects that believed of Merritt, omitted)); Damages L. Andrew for judg- findings evidence which sustain its Litigation: in Fraud Emotional Distress Co., Billings ment.” v. Bankers Ins. Union Society, 42 Dignitary Torts in Commercial 1996) (Utah (internal quo- P.2d 467 (“[A]s (1989) 1, 10-12, L.Rev. 23-32 Vand. omitted). marks “If the tak- tation evidence rule, damages distress general emotional light favorable en most to the verdict actions.”). in fraud awarded should be verdict, supports affirm.” will Turner n overturn 106 We therefore Lichfield, v. Steenblik P.2d availability general of holding on the 1995). (Utah damages fraud. distress emotional discussing 110 In statute when the fact I of the view light of Crookston begins limitations to run for claim of of ground may a trial court on a that we sustain of dis the intentional infliction emotional court, Nay Bill relied on see not tress, this court stated: Co., Neeley Excavating v. Constr. & Sons spe- is element of emotional distress [T]he 1984) (citations omitted), (Utah plaintiff Be- each case. cific pecuniary only not we affirm intentional infliction of cause tort of case, Camp- but also Mrs. assessed requires actual emo- emotional distress puni- damages, as general well as bell’s (Second) distress, tional see Restatement of fraud ver- damages, the basis tive 46(1) (1965), § of Torts this element is to dict. subjectively. particularly gauged A be

hardy plaintiff may ac- or calloused never a cause action for inflic- crue intentional OF INFLICTION VI. INTENTIONAL distress, though he even tion emotional EMOTIONAL DISTRESS CLAIMS subjected outrageous she is conduct or on this again, 107 Once issue State expect- person no could that reasonable adequately marshal failed in brief Consequently, is to ed to bear. our task evidence, challenge subject is to re- and its [plaintiff] experienced determine when ... Furthermore, alone. jection ground distress, on that an or- not when severe emotional rejected must be on its merits. it person expe- dinarily sensitive would have suffering.

rienced such of action (footnote To sustain cause Retherford, at 975-76 844 P.2d dis omitted) added). intentional infliction emotional Thus, Camp- (emphasis (i) tress, party the conduct “must show subjectively they must show bells complained outrageous intolerable re- experienced emotional distress severe ac generally it in that offended they themselves garding the situation found decency morality; cepted in, “ordinary person” standards of that an reasonable cause, (ii) intended way. defendant] experienced [the have would disregard negli- likelihood involving acted reckless Farm’s citation to cases distress; (iii) plain causing, [the emotional infliction emotional distress for gent distress; proof objective required emotional proposition suffered severe tiff] (iv) proximately physical consequences conduct that mental or [the defendant’s] show inapposite. Hamicher occurred is See [the] caused emotional distress.” Retherford Comm, States, Ctr., 67, 70- Utah Med. AT & T the Mountain v. Univ. v. (Utah 1992). (Utah 1998); Fuel Inc., Hansen Mountain 970-71 1166 (Utah Co., 970,

Supply by putting 858 P.2d 973-75 sure sign a “For Sale” on their 1993). house; post super- State Farm’s refusal to protect sedeas bond to their home and other Second, argues Farm that the during pendency appeal; assets general damages award each of the personal and the numerous issues that made Campbells excessive. For an award of Campbells, experienced who had each compensatory damages regarding the inten- lives, particu- other traumatic events in their distress, emotional tional infliction of larly by vulnerable to the stress created confronting standard of review State Farm is State Farm’s actions.18 quite high. This court has stated: ... that compensatory While is true soft Furthermore, respect with i.e., damages, pain suffering, and must award, the amount of the we note that the caution, be awarded with “when the deter- trial court did compensa remit the amount of jury mination of the has been submitted to $1,400,000 tory damages from for Curtis scrutiny judgment of the trial $1,200,000 for Inez judge, his action thereon should [or her] be $600,000 $400,000, respectively. It regarded giving solidarity further to the might argued, given subjective stan Foust, judgment.” Elkington v. court, by dard enunciated that the trial (Utah 1980). 37, Or, as we said in court drastically should not have so reduced Cain, Geary v. atP. 69 Utah at jury’s initial Campbells, awards. The doubt, “In case of the deliberate ac- however, do not appeal. raise this issue on prevail. tion of trial court should Oth- pointed above, As out the deferential nature erwise, this court will sooner or later find requires of our uphold jury’s review us to usurping itself the functions of both the verdict that by has been scrutinized a trial jury and the trial court.” Id. These state- court unless there is a clear abuse of discre Elkington Geary ments in are consis- tion. Our post- review of the trial court’s appropriate tent with our statement ruling on this issue reveals no such appellate today. standard review Therefore, abuse. that find the award I, Despite Crookston 817 P.2d at 806. excessive, was not provides and note that it noting in Crookston I that independent an sustaining basis for all of judge’s “statements could been more Campbell’s V, damages. Mrs. See Part su specific,” it adequate support found them I, pra, (“[A]ll and Crookston uphold compensatory its decision dam- damages by jury awarded can be sus award, age support and therefore to its deni- upon fraud.”); tained finding see also al compensatory of a new trial on the issue of Osbourne, 667 A.2d at (holding that damages. Id. plaintiff may recover emotional proximate are natural and result of defen ample ¶ 112 There is evidence in this misrepresentation). dant’s intentional jury record from which could infer that Campbells each of the suffered severe emo VII. MRS. CAMPBELL’S STANDING tional distress. These include: the financial TO SUE BAD FOR FAITH they they ruin that believed faced after the underlying action rendered its 114 In holding view of our that the verdict for more than five times the State verdicts fraud and intentional inflic limit; policy being lawyer told their tion of emotional distress should be sus they dealing expo- tained, could start with their they and that independently support Recently, Shingle- we decided personal Schuurman v. when relationship an intimate fails.” ton, 2001 UT in which we held Id. alleged suffering plaintiff that "the has un- case, however, person In this no reasonable dergone pain suffering in this case [severe expected should be to endure the distress suf- type emotional distress] is not the of distress fered insurer, at the hands of their person expected no reasonable could be they they which were led to believe plaintiff's endure.” Id. at 25. We noted that would lose their home and assets and be unable alleged "indistinguish- retirement, distress in that case enjoy they their for which commonly able from that suffered others worked their entire lives. case, punitive The the joint damages in this see 94. nature of damages awarded all I, questioned. award VI, supra; 817 was never Id. at 811-12. and Crookston Parts V Osbourne, 798; 667 A.2d at we P.2d Furthermore, 116 do not we be Camp- question of Mrs. not address the need prejudiced by lieve that Farm was the to Farm for breach of right sue State bell's instructions, jury which referred dealing. fair good of faith and covenant the Campbells jointly. only by The case cited lengthy dissent’s Notwithstanding the adviso- support the in of dissent this assertion is subject, question the of opinion on ry the Valley Nielsen Hospital, v. Pioneer open standing on these facts remains an (Utah 1992). case, however, 270 That in Utah, awaiting from in attention question plaintiff nothing says volved one and ease. a future The dissent this separating plaintiffs jury about instruc support its of its apparently offers views Rather, tions. the instructions Nielsen damages jury’s verdict on conclusion the separate were erroneous because instructions by having prejudiced the bad was somehow n with contradictory regard were to two alter intermingled the and claim with fraud faith legal presented by plaintiff. nate theories infliction of emotional distress intentional faulty id. The See at 274. instructions were that this notion is en- claims. We conclude required conflicting theories because the two the record tirely inconsistent with standards, jury found could have jury responded This to jury’s verdict below. either theory. defendant liable on See id. Farm, and, in factual conduct of State ease, In no danger, this there was as the view, rightly so. Whether basis our claims, misperception dissent that Mrs. faith,” recovery bore the label of “bad Campbell’s by [ ] claims were “caused “fraud,” or “intentional infliction emotional Campbell.” Farm’s Mr. As actions toward distress,” by it behavior was the same jury previously, clearly stated awarded jury clearly intended to com- Farm that punitive damages based on punish. We not pensate for and to do be- egregious conduct toward both Mr. Mrs. affected in was at all its deci- lieve Campbell. do Just as we not believe legal applied labels by and verdict sion jury’s by and verdict affected decision were Thus, the conduct. even if the dis- describe legal applied to con labels State Farm’s this question, correct in its view on sent were duct, referring to believe that neither do we in its any error would have been harmless in the aggregate damages. on effect damages effect instructions on awarded. addition, agree 115 do In not punitive damages the dissent that “the with Finally, we note that the dis must fail it was awarded award because espoused theory developed and sent has jointly to Mr. and rather than Mrs. not in this case that was requiring reversal separately plaintiff.” dam each Punitive below, parties, by raised or raised briefed “are, nature, by compensate ages, not but That argument in oral before this court. egregious future con punish and deter theory rely on the dissent appears what (Utah I, P.2d Crookston duct.” phase I “faulty terms a verdict” 1991). Therefore, punitive the award of below, plaintiffs. in favor of a verdict both by damages is the defendant’s determined at the time challenged That was not verdict separated be as to appeal. conduct need not in this entry of its nor was raised I, cites plaintiff. dissent Crookston record of the briefs Our review of the (Utah 1991) claim wording for its that the appeal that the this demonstrate damages award should be remanded on never mentioned or relied verdict was I, joint how ground “due to its nature.” Crookston claimed error. It is a well- as ever, proposition. In will reverse a support does not rule that we not established I, argu issue reviewed the of wheth trial court on the basis claims Crookston we below, let not alone those punitive damages were under ments not raised er excessive argued appeal.19 that case. at 793- even the circumstances of Id. duty good

VIII. ATTORNEY FEES breach the faith expanding exposure their caused such a challenge to the trial court’s beyond predictable breach fixed dollar fees, attorney State Farm award raises provided amount coverage policy.” First, arguments. argues two Billings, 918 P.2d at 466. Consequential shifting that fee available under Utah damages in first-party faith bad actions can Second, third-party faith law in bad cases. fees, things attorney awarded for such argues State Farm that even if some award business, a damages flowing loss of home or attorney permissible third-party in fees is bankruptcy, from anguish, pro- and mental cases, by the amount awarded the trial court damages vided such are foreseeable. Id. at grossly inappropriate. We address each Beck, 468; 701 P.2d at 802. argument separately below. ¶ 121 Extending the rationale ad first-party vanced in the bad faith eases to Shifting Third-Party A. Fee in Cases it, third-party faith bad case before trial court attorney concluded that fees attorney 119 Whether fees should be should likewise be recoverable. The trial particular question awarded in a case ais following support offered the of its law reviewed for correctness. Valcarce v. conclusion: (Utah 1998). 305, Fitzgerald, 961 P.2d attorney’s a. An award of fees ... re- Utah, general “The rule and ... the tra- moves some of the incentive for an rule, subject ditional American to certain duty insurer good breach the exceptions, attorney is that fees cannot be dealing. faith and fair prevailing party a recovered unless a encourages statute or contract b. Such an authorizes such an award insurers to reasonably. act award.” Stewart v. Utah Pub. Serv. Comm’n, (Utah 1994). 885 P.2d c. The attorney’s award “actual” fees is here, Campbells argue

Because the do not designed fully compensat- assist below, they nor did that a statute or con- ing the insured for the damages caused tract authorizes them to attorney recover duties, good the breach of faith fees, analysis turn we our to the “certain good whether such faith duties arise exceptions” general rule. first-party from a third-party or a situ- ation. law, plaintiffs may Under Utah re- issue, purposes d. For of this there is no attorney they if cover fees are successful in distinguish reasonable basis to an in- pursuing first-party faith against bad suit damages sured’s incurred a first- Billings their v. insurer. Union Bankers party third-party or context[.] Co., (Utah 1996). Ins. 918 P.2d good e. The duties of arising faith in a Such actions fall within the rule that third-party context fiduciary include damages plaintiffs available to “include both higher duties and are duties than the i.e., general damages, flowing naturally those arising duties under contract theo- breach, consequential from the damages, ry in first-party context. i.e., reasonably those contempla- within the of, (Citations omitted.) tion reasonably by, foreseeable agree Because we with parties at the time the contract was analysis, made.” the trial court’s we affirm its conclu- Exch., Beck v. plaintiffs Farmers Ins. sion that can recover foreseeable (Utah 1985). The rationale attorney they behind allow- if successfully pursue fees ing recovery general of both consequen- third-party against bad faith action their in- tial damages first-party, bad faith Although actions surer. foreseeability of dam- is “to ages remove incentive for generally insurers to test is limited to the eontrac- true, notes, 19. It is of phase course as the dissent I verdict in favor of Mrs. on argued Campbell’s the issue of Mrs. the fraud and intentional infliction of emotional standing basis, to sue for bad faith in Point IV. A of its distress claims on same since those not, however, appellate tort, challenge brief. It did claims were based in not contract. realm, ney pursuing fees use to determine claim. Review we note that its tuai minimum, that, transcript third- discloses at a in the context of tortious Vice-President, Frank justified such State Farm’s Claims faith claims is since party, bad Haynes, that insureds pursuing the contractual knew claims arise because of “claims typically Savage Edu- retained attor- relationship parties.” (Utah 1995) Co., neys contingency fee on basis. Based Ins. cators this, attorney an had no contrac- hold that award of fees (holding employee who relationship employer’s was indeed foreseeable workers’ tual with could State Farm. compensation insurance carrier not sue good for breach the covenant of carrier Attorney B. Amount Fees dealing fair such actions are

faith and since to the Campbells Award upon parties’ contractual relation- predicated ship).20 Farm argues 124 State Campbells in awarding trial court erred Finally, note that the exis we attorney equal compensa fees to 40% of the fiduciary relationship in of a between tence Instead, tory damages award. Farm in context third- and insureds surers awarded, attorney if suggests that the claims, fees recognized faith we party bad which $911.25, any, limited to the amount Beck, should be supports exception general an in paid Campbells attorneys to its to obtain attorney in fees are recoverable rule policy. them under Res benefits due State Farm relies on a 1996 tort actions. requires application olution issue case, of this Bernhard v. Farmers Ins. Colorado previ (Colo.1996), foreseeability test in the Exch., discussed holding that 915 P.2d 1285 words, However, ous other could State section. are such fees not recoverable. reasonably Campbells Farm foresee that the clearly “[ajttorney recognized that Bernhard agree attorney a fee of contingency would in an may action for fees be recoverable compensa 40% the amount recovered for recognized fiduciary duty as a ex breach tory they necessary if found damages ception to the rule.” Id. at 1289 American pursue against hire a claim (citations omitted). counsel Supreme The Colorado however, Farm? Court, concluded that insurers were “true,” fiduciaries, and only “quasi,” and not Camp- hearing 125 At the on the exception. apply We thus declined verdict, a bells’ motion for directed disagree with Bernhard’s view of the rela agreement that such court concluded a fee tionship, contrary posi which is Utah A trial to State Farm. foreseeable do, however, accept its

tion. We assertion a court’s what constitutes conclusion fiduciary obligation of a is a well- that breach attorney fee reviewed reasonable award is exception to the American rule established an discretion. v. Fitz for abuse of Valcarce in precluding attorney gener fees tort eases (Utah 1998). gerald, ally. thus court We conclude that trial ample support trial record for the contains correctly attorney proper held fees to be a Perhaps telling court’s most conclusion. damages element of in this case. present any failure to evidence State Farm’s Thus, issue it could not have foreseen that becomes fee, whether, Campbells contingency at the Farm incur time State issued would specific Campbells, evidence from Vice policy to could combined with up reasonably Haynes contingency if fees of foresee that a claim arose President in insureds against it the would incur attor- to 50% common suits were Smith, coverage,” first-party third-party it is action for 20. In Gibbs M. Inc. v. United States Fideli- Co., (Utah Guaranty plain what ty facts that the action involved & on the 1997), third-party claim. implied we Beck as a this court the same result we described in case, here, claim, by holding, third-party holding despite its scant Thus in that reach in our attorney analysis, proposition are for for the that fees were recoverable a breach stands fees implied good third-party an in bad faith claims covenant of faith and fair awardable insurer, against ruling make dealing. Although the court observed that "a insured might explicit today. be more accurate statement that this is Moreover, Camp- against Farm. tion this court made in Beck v. Farmers (Utah presented through Exchange, several wit- Insurance 701 P.2d 795 bells evidence 1985) claims, first-party between contingency fees like this insurance nesses that one contract, claims, decades, sounding third-party for are have been around well- may brought. on which a tort action It known, likely and are in fact the most form that, fees, argues attorney litigation then like especially attorney arrangement, fee in a expenses may not be awarded as company. faith an insurance bad case a tort action. For the same reasons detailed presented is similar to that Such evidence previous regarding attorney section plaintiffs Billings, where we found that the fees, litigation expenses we conclude that are arrangement contingency fee was foresee- action; type recoverable this limited Therefore, Billings, able. (1) availability their will: decrease incentives finding we affirm the trial court’s that the (2) faith; for encourage insurers to act bad contingency agreement fee was foreseeable (3) reasonably; insurers to act contrib- uphold attorney fees in its award compensation plaintiffs ute to actual compensatory amount of 40% of the total financial cost to them of the breach. The $400,834.70 damages, plus post- 40% of specifically “litigation found that judgment principal interest on amount of expenses by plaintiffs incurred ... [were] compensatory damages.21 Farm, particularly foreseeable to State labored, light of State Farm’s vexatious and IX. LITIGATION EXPENSES defense....”; burdensome “State Farm Finally, argues State Farm that the oppres- knew or should have known that its litigation expenses of trial court’s award was against plaintiffs’ sive defense raised claims ” manifestly According unreasonable. to its extremely costly plaintiffs.... would be to issue, statement of the State Farm chal- policy These observations underscore the lenges legitimacy litiga- of award for supporting reasons our determination that expenses, tion as the actual well amount litigation expenses may be awarded bad awarded the trial court.22 faith insurance cases in which the defen- litigation dant’s largely conduct has been re- legitimacy 127 As to the of an sponsible for them. case, litigation expenses in award of like this, an good- where insurer has breached its 128 Because a challenge to the claims, pay third-party faith duties to we are litigation expenses amount of awarded is sim law, question asked to settle a and there ilar challenge attorney to a to the amount of ruling fore review the trial courts’ for cor fees awarded or the amount of costs awarded 54(d), rectness. State Farm relies on the distine- under Utah Rule of Civil Procedure explicitly reject proposal pay 21. We contingency State Farm's to the full fee in the amount of $911.25, attorney limit the award of fees to compensatory damages of the 40% awarded. Campbells paid amount the to obtain the benefits of their insurance contract with State Farm. Be- respect argument 22. With to State Farm's con- very purpose cause the of a bad faith claim is to cerning legitimacy awarding any expenses, damages namely, recover extra-contractual — requirements State Farm has failed to meet the judgment any compen- amount of excess and Appellate of Utah Rule of Procedure 24. satory damages suffered in connection with the particular, satisfy State Farm has failed to sub- entirely insurer's bad faith—it would be gruent incon- (a)(5) requires section of rule 24 which it to attorney to limit fee awards to those fees "[a] include in its brief statement of the issues incurred to secure the benefits of the insurance review, presented including for for each issue: contract. standard, appellate supporting review with for reject argument We also State Farm's that Mr. added.) authority." (Emphasis Although State Campbell's attorney award of fees should be lim- attorney Farm's issue statement addresses both compensatory ited to of the total amount 4% litigation expenses, fees and agree- awarded. Examination discussing cites a case the standard of review for Slusher, Campbell, Ospi- ment between Mr. and awards, attorney litigation fee not awards for fully tal reveals that Mr. is liable for all expenses, attempt analogize and makes no attorney recovery fees unless there is no or a litigation expenses awards of to awards for attor- recovery attorney that is insufficient to cover the ney fees. litigation expenses. fees and ery Because the recov- sufficient, obligated here is Mr. is agency, collateral issues of e. There were an abuse of discre- under awards review such notice, corpo- knowledge general and (U.S.A.) Inc. v. 11th Ong Int’l tion standard. 1993) proven by (Utah practices rate that had to be 447, 460 P.2d Corp., 850 Ave. evidence, re- extensive circumstantial costs is (“The to award taxable determination litigation expenses. sulting large in the court of the trial discretion the sound within an abuse absent particularly not be disturbed Compensatory damages, and will f. Servs., discretion.”); City Consumer evaluated and damages, soft are best (Utah 1991) Peters, totality in the context of the Inc. assessed (“The of a trial appeal surrounding of review on standard of all of the circumstances attorney patent error fees conduct. wrongful award court’s (internal quota- clear abuse of discretion.” may have been some g. Though there Moreover, omitted)). we note marks tion overlap in the evidence that was neces- awarding appropriate measure plaintiffs’ causes of sary to establish expenses expenses is whether such litigation compensatory damages and action necessary. are reasonable other collat- punitive damages, and the case, the Court finds eral issues litiga determining that the 129 In reasonably all of the costs were were expenses awarded tion justi- necessarily incurred and are necessary, reasonable other than those exclu- fied for reasons findings: following written made the damages. sively related evidence, from which extensive a. The evidentiary hearings and h. In numerous arose, neces- expenses litigation thereto, relating this Court has orders causes plaintiffs’ sary prove each the reasons set forth more detail (i.e. good faith action breach proba- why the extensive evidence duties, infliction of emotion- intentional tive, necessary to the reasonable and fraud) as well as al distress case, adopts the Court plaintiffs’ these defenses to refute State forth in conclusions set findings of action. causes [such orders]. fraud, corporate intentional In cases of b. findings, it is clear that From these distress and infliction of emotional carefully whether considered the trial duties, there faith good breach by were requested costs in latitude considerable needs to be during necessarily incurred reasonably and intent, prove presenting evidence addition, In pursuit this ease. their disregard, of mistake absence reckless or con- present any affidavits failed to Farm scheme, mistake, plan or innocent of- refuting the evidence tradictory evidence conduct, and to ad- outrageous and Finally, the trial Campbells. fered these causes of elements of dress other throughout this present judge himself was thereto action and the defenses trial, good in a complex and was lengthy and in this Farm those raised as plaintiffs’ accuracy of gauge the position to case. trial hold that the therefore evidence. We practice policy and Farm had c. State accepting not its discretion court did abuse ... destroy documents historical Campbells and by the proffered amounts produce very and therefore could litigation ex- awarding amounts those documentation relevant substantial penses. question. Of period in during the time CONCLUSION expenses, much was plaintiffs’ litigation policy practice to this incurred due hold: summary, In we Farm. puni- analyses of the court’s 1. The trial under federal damage award both tive request, the case was d. At State I fac- first six Crookston law and the bifurcated, though plaintiffs re- even I As to Crookston correct. tors was that it would upon grounds sisted reverse, seven, and reinstate we factor expenses. increase exposure million on jury’s any legally award of never had to or became $145 Campbells’ cross-appeal. obligated pay damages of the claim- duty ants. State Farm owed no to her under court did not its discre- 2. The trial abuse policy. Only the insurance her husband Cur- admitting “other acts” evidence tion liable, sued, potentially tis Farm’s claims han- relating to State subject judgment and was rendered dling practices. duty case. State Farm’s extended 3. The trial court did not abuse its discre- to him. admitting testimony tion in Campbells’ expert witnesses. facts, Ignoring these crucial 4. trial court did not abuse its discre- stage court in the second of the bifurcated precluding admission of the tion erroneously this case instructed the Slusher/Ospital agreement. settlement jury already three times that State Farm had been found liable both Mr. and Mrs. support 5. The evidence is sufficient to breaching fiduciary duty its jury’s finding of fraud duty good dealing. faith and fair Campbell. against Mrs. fact, jury prior in the stage of the trial compensatory punitive General extending never rendered a liability verdict may be awarded for fraud. result, Campbell. bad faith to Inez As a support 7. The evidence is sufficient to multiple jury the trial court’s instructions to jury’s finding of intentional inflic- and, contrary misled the against tion of emotional distress both process, right vitiated State Farm’s to a fair Campbell. Mr. and Mrs. plain, trial. This error was tainted compensatory damage 8. The remitted every aspect of the verdict now under re- granted to Mr. awards and Mrs. view,1including Campbell’s independent Mrs. Campbell are not excessive. claims for fraud and intentional infliction of attorney 9. The trial court’s award of fees majority’s emotional attempt distress. The litigation expenses are correct. “indepen- to nevertheless affirm on so-called Therefore, judgment affirm grounds glosses dent” over the fatal flaws respects, except in all for the explicit in judgment the lower court’s punitive trial court’s remittitur of the damage contrary runs to this court’s own well-estab- issue, award. we reverse the trial On lished case law. awarding court and reinstate the verdict damages. million $145 I. INEZ CAMPBELL’S BAD WILKINS, Judge 132 Justice FAITH CLAIM BILLINGS, Judge concur in DAVIS ¶ opinion. Justice DURHAM’S Although majority 136 declines to issue, address the it is clear under Utah law themselves, Having 133 recused Chief Campbell standing Inez never had to Justice HOWE and Justice DURRANT do sue State Farm for bad faith. While this participate Judge not herein. JUDITH M. long recognized has tort claims for an Judge BILLINGS and JAMES Z. DAVIS company’s implied insurance breach of its Appeals from of the Court sat. good covenant dealing, of faith and fair see RUSSON, Justice, Associate Chief Exch., Ammerman v. Farmers Ins. 19 Utah concurring part dissenting part: 261, 266, 576, (1967), 2d 577-78 we Campbell always 134 Inez was never required plaintiffs wishing involved underlying bring lawsuit the action now before to such claims first demonstrate a con- us, nor could she have been. She was not through tractual nexus which their suits accident, driving unanimously the car that caused the she arise. As only held two defendant, years was named as a ago Sperry Sperry, never and she v. “Utah law Campbell's appellate 1. State Farm raises the issue of Mrs. brief. standing point to sue for bad faith in IV.A of its contract, beneficiary of duty simply faith to first an addi- good limits the clearly Consequent- insurance contracts. tional insured. parties to party only a first can sue for breach ly, Importantly, explicitly 138 we have held ¶ 7, 101, P.2d 381. duty.” 1999 UT 990 implied good that the covenant of faith and logical, as is natural as it is This conclusion dealing parties fair does extend to who arise third-party first- and claims for “both merely poli- are beneficiaries of an insurance relationship only contractual because Co., In cy. Savage v. Educators Insurance Ins. parties.” Savage v. Educators of the (Utah 1995), 908 P.2d 862 a school driver bus 1995). Co., 862, (Utah P.2d 866 908 policy who was insured under an Educators purchased by employer her case, sued the insur- Campbell was a In this Curtis company acting allegedly ance bad party contract with State to insurance by resisting compensate to faith her for med- Farm, not. Campbell and his wife Inez was expenses Recognizing ical she had incurred. itself The contract states: duty good dealing that “the fair faith and FARM AUTOMO- STATE MUTUAL covenant, a contractual one that arises is ... BILE INSURANCE COMPANY solely as an incident to contractual obli- insured, Agrees named in with insured,” gations owed an insurer to its hereof, in consid- part made declarations opinion, Justice Zimmerman’s 4-1 from Chief payment premium of the of the eration dissented, flatly Durham re- which Justice upon the in the dec- in reliance statements jected plaintiffs contention that she subject to all the terms larations standing to sue. Id. held: 866. We policy.... Savage has rela- Because no contractual added.) as (Emphasis only person listed Educators, tionship with she has no cause insured” on a “named the declarations against it for of action breach the cove- Campbell. which the contract refers is Curtis dealing. faith good nant of and fair This fact, Campbell only person Mr. is the conclusion is consistent with the commen- on those declarations at all. Conse- listed great majority tators and the of courts Mr. one with quently, was jurisdictions.... other “[a]gree[d] ... in consid- whom State payment premium” Nothing Just as the of the of the Id.2 different here. eration designated District contracted with Edu- provide insurance those Jordan School Savage, policy. policy for a that insured Pat covered Mrs. cators covenant.”); Indeed, jurisdic- overwhelming majority Mut. Eastham v. Nationwide 1131, Co., 843, exactly App.3d does: N.E.2d follow the same rule Utah Ins. 66 Ohio tions (1990) (holding duly good dealing wife did not have "the and fair that a faith bring solely standing of the a bad claim her derives from exists because faith timely liability failing relationship parties.” Austero insurer for contractual automobile Co., son, 511, pay expenses Cal.App.3d 133 Cal. medical of her deceased v. Nat'l Cas. (1976); see, though policy); e.g., under the Rptr. Lowe v. Am. Med. even she insured McClelland, Int’l, ("The (Ala.1986) cause Fire Ins. Co. 105 Nev. 494 So.2d United (1989) ("[A] pay cover tort 197-98 wife's of action for the of bad faith refusal protect only age dependent health person for whose as a under her husband's was created to standing policy give payments been does not her benefit the insurance should have insurance made.”); California, rights for bad Hatchwell v. enforce her husband's contract Blue Shield of 1027, 249, benefits."); Cal.Rptr. Cal.App.3d 253 of health care Vecchiarel 244 faith denial 198 Co., 909, (1988) ("Although eligible 628 Ins. 216 A.D.2d [Mrs. Hatchwell] was li v. Cont’l 892, (1995) (upholding Dependent the dismiss care benefits Subscrib- N.Y.S.2d 893 for health as a policy], spouse's claim where no and as al of a for bad faith [on er Mr. Hatchwell's insurance ‘dependent present); Correa may nexus was see also be termed 'co-insured’ or contractual 915, Co., F.Supp. beneficiary,’ urges, 929 Ass’n Ins. 618 as she this is not sufficient v. Pa. Mfrs. (D.Del.1985) (finding duty good standing faith of contract that the establish sue for breach dealing spouse upon does based of benefits to and fair not extend to and bad faith the denial (citations omitted)); compensation v. insured under a workers' Hatchwell].” Soto someone [Mr. Archer, Co., 420, Transp. Royal Cal.App.3d policy); Ins. 832 S.W.2d Ins. 229 Co. v. Globe 184 192, 403, (1986) ("One (Tex.Ct.App.1992) (disallowing a Cal.Rptr. not a 405 197 who is accompa- party spouse's for bad faith when her husband to the insurance and the suit contract payments good workers' com- nying implied and fair denied benefit from his covenant of faith carrier). may pensation dealing not maintain action for breach an 1174 Campbell purchased repeatedly recovery

in his in- barred for conduct that this case Mr. Farm, policy that policy surance from State very could well be considered condemnable Campbell. Consequently, also insured Mrs. but for which there is no cause of action. by its own terms that it is the contract states See, 1359, e.g., Ogden City, v. Sears 572 P.2d Farm and agreement an between State Cur- (Utah 1977) (holding 1362 there is no Campbell no one else. Had Mrs. tis recovery government making —and action ac party named as a Campbell wished be property cess to one’s difficult and inconven merely rather than as a benefi- the contract ient); Demman, 53, 28 Utah 2d at it, ciary negotiated could have for that she (denying recovery at 1380 for slander to a so, however, right. she did not do Because losing political after a candidate radio station right no under Utah law to sue for she had broadcasted “obnoxious” remarks a caller Savage, 908 P.2d at 866. bad faith. See unquali who asserted the candidate was degree, Durham’s 139 To this Justice felon); Long fied and a N.M. & v.Co. Can any conclusion reached con- assertion that Co., 307, norir-Papanikolas Constr. 9 Utah 2d cerning standing Inez had whether (1959) (affirming “advisory” faith an one to sue for bad judgment recovery for no from defendants nothing hyperbolic pre- constitutes less than plaintiffs pond who had made unusable fish tense. The claim for faith was the crux bad by draining prop business water from their Farm, against of the case and it was erty); Twenty-Second Corp. the Church for this reason that the lower court bifurcat- Latter-Day Oregon Jesus Christ Saints Moreover, place. the trial in the our ed first Co., 238, 255-56, Short Une R.R. 36 Utah Savage precisely decision in addressed (1909) (disallowing 103 P. 249-50 recov Accordingly, any here. no- question issue ery disruption worship services caused question Camp- tion that the of whether Mrs. by operation of a railroad near a church on standing bell had to sue for bad faith is “an Sundays). Consequently, regardless of Jus open can characterized Utah” [one] contrary, tice Durham’s assertion to the recklessly a conclusion that throws all absolutely legal theory does matter what restraint, judicial particularly the name of on, plaintiffs hang their because decisis, to the wind for the sake of stare sufficiently prove failure to all elements of a achieving binding judg- a desired result: a given cause of action makes the difference its, admittedly, ment Farm for injury provides between an for which the law condemnable behavior. legal recourse and one for which no there is however, Importantly, the law has such, remedy majority opin at all. As long recognized causing that not all actions jury ion’s curious admission that the was not injury enjoy E.g., recourse in the courts. “at all affected its decision and verdict Supply, Builder’s Inc. v. Butler Craftsman legal applied labels to describe [State Co., 18, 140, Mfg. 1999 UT P.2d 1194 conduct” in this case under Farm’s] both (“The (Zimmerman, J., concurring) law sim- logic opinion mines the itself and em ply recognize every does not harm suf- phasizes importance of whether Mrs. compensated.”); fered Demman v. should be standing to sue for bad faith. Co., 50, 53, Broadcasting Star Utah 2d if, majority recognizes, For as the (1972) (finding law- disregarded appropriate legal standard instance”); every “in suits cannot be allowed attempt “punish” an State Farm for con (7th Dictionary see also Law Black’s ed. offensive, duct the found that is unrefut- 1999) (“ ‘There are cases which the law will law, passion, ed evidence of error in knowingly wilfully suffer a man to inflict prejudice jury’s part necessitating on the another, upon harm will not him hold — ” See, new trial on the court’s own motion. Salmond, (quoting for it.’ accountable John e.g., (Glanville Bennion v. LeGrand Johnson Constr. Jurisprudence 372-73 L. Williams (Utah Co., 1078,1084 ed.1947))). 1985); ed., 10th Paul v. This rule of damnum Kirkendall, 1, 3, 1 absque injuria applies Utah 2d 671 regardless of how of- (1953); Moreover, inappropriate society fensive or R. P. 59. might find an Utah Civ. be, actor’s majority’s recognition jury conduct to and this court has itself disre- stated, “Based on the trial in this of the bifurcated legal standards applicable garded plaintiffs findings by jury, ... are above great extent helps explain actually case liability judgment defen- granted instruc- court’s erroneous to which ... on Farm’s Farm based State dant State bad Farm had committed that State tion duty good to act in faith of its breach Campbell confused and against Mrs. faith Campbell.” (Emphasis defending Curtis III.A. part jury. See inflamed infra added.) Therefore, explana- with no further to Indeed, majority’s reluctance 141 tion, Farm was court ordered that State had Campbell never recognize that Mrs. Campbell sole- Curtis and Inez hable both only highlights faith standing to sue for bad jury’s findings that ly on the basis when at the trial level created problems duty to Farm had breached its Curtis allowed Mrs. inappropriately court the lower giant leap logic of faith and Campbell. This fact, the trial court’s standing. Campbell liability can arise out of the assumed Campbell did recognize that Mrs. failure jury if it for plaintiff one finds ether for faith claim standing pursue a bad not have another, wholly Utah a result at odds with lawsuit failure to settle the for State See, e.g., Brigham law. procedure and eventually Campbell led against Mr. Ass’n, 292, 298, 24 2d Moon Lake Elec. Utah in the first rendering faulty verdict court’s (1970)(when special verdict P.2d case, erroneously in- then stage of submitted, applies jury court finds facts and stage that jury in the second structing law); Ins. New v. Home Co. Colovos Life already found liable been Farm York, 401, 414, 83 Utah no faith when such Campbell for bad Mrs. (1934) (court judgment on the ver- enters rendered. had ever been verdict dict); (jury 47(q) R. P. declares Utah Civ. verdict). sure, conform this failure to To be TRIAL FAULTY II. THE COURT’S error, rendering the plain to the verdict was ERRONEOUS AND VERDICT requiring our on its face and judgment void INSTRUCTION claim Campbell’s bad faith reversal of Mrs. given the unavoidable bifurcated, appeal especially resulting in case was This — Campbell never had that Mrs. conclusion verdicts. The jury trials with different two in the first standing to sue for bad faith stage first of the bifurcated jury in the place. special verdict form by the was asked judgment was a likelihood of there

whether Moreover, faulty the trial court’s various claimants being entered favor of severely eventually judgment resulted Campbell, and whether State against Curtis stage of jury in the second misleading the unreasonably when had “act[ed] Farm Indeed, in the second trial. the bifurcated claims] to settle various [the chose not erroneously case, the trial court stage of the Camp- Campbell B. for Mr. against Curtis pre- jury that the three times instructed added.) Nev- (Emphasis limit.” policy bell’s Farm liable jury had found State vious stage of the jury in this first er was the though no faith even Campbell bad Inez any question trial asked to answer bifurcated made. had ever been determination such Campbell, and the to Inez pertained instruction, objected to this but Farm ver- accordingly never entered nev- instruction gave the erroneous in her favor.3 dict instance, jury instruction 25 For ertheless. stated: However, jury’s reciting the after jury in previous that a You are instructed only State special that addressed verdict ... has found Camp- this case respect with to Curtis Farm’s actions settling unreasonably [the] in not stage bell, first acted judgment entered above, exposure of and had no good in the accident reason the involved explained there was 3. As stage arising accident. liability trial was from the of the bifurcated for claims first duty reason, questions as to breach as a never asked was not named the same she For duty Campbell. did not owe a underlying Inez Coun- case in Cache defendant her behalf. to settle the case in to Inez ty- driver of the vehicle was not the Inez 1176 distress, Campbell of emotional to against Mr. before infliction and as

claims County verdicts. This means that punitive damages jointly award rendered Cache good its duties of Campbell. Farm breached Mr. and Mrs. Those instructions fiduciary duty dealing fair and its faith and jury’s tainted consideration Mrs. claims Campbells to settle the Campbell’s claims for fraud and intentional policy Campbell -within the limits. Curtis distress, prevent- infliction of emotional thus ing any added.) chance that State Farm would re- Likewise, jury (Emphasis instruc- ceive a fair trial on those issues or on the jury that “State Farm tion 28 informed Moreover, punitive damages. issue of fiduciary duties and duties of its breached fundamentally erroneous instructions altered dealing Campbells,” to the good faith and fair jury’s punitive damages consideration of thus, jury “compen- that the could award in contravention to our decision in Crookston ... caused State Farm’s satory damages (Emphasis Exchange, v. Fire Insurance 817 P.2d 789 of these duties.” add- breaches (Utah 1991). ed.) Indeed, special questions put independently verdict both Even the jury prefaced together, with the statement mis- to the were court’s severe steps regard plain that in this constituted error necessitating appeal especially reversal on previously been determined that has [i]t — occurred, given that such errors not because duty good faith State Farm breached mistakenly the trial court overlooked a mat- dealing Campbells. towards the and fair law, procedure ter of but as result of the added.) noted, however, As (Emphasis this respect court’s own affirmative actions in simply jury statement true. stage in the verdict first of the case and stage first of the trial never found liabili- special jury instructions and verdict form Campbell. ty Inez The trial court’s toward in the second.4 multiple contrary instructions stage misleading trial were second of the jury plain prejudicial and constituted Right A. ato Fair Trial error, jury’s assumption erroneous for the parties All litigation plaintiff 146 Campbell Farm was liable to Inez — defendant alike —are entitled to a fair trial. every aspect permeated faith of the bad Utah, right long In to a fair trial has stage in the second

verdict rendered right presentation included the to “a of the trial. case to the under instructions that clear- III. THE PREJUDICIAL EFFECTS OF ly, concisely accurately state the issues THE TRIAL COURT’S ERROR applicable and the law thereto so that jury will understand its duties.” Hanks v. erroneously 145 Because the trial court Christensen, 8, 12, 564, 11 Utah 2d stage 354 P.2d instructed the the second (1960); also, e.g., Rowley 566 see v. Farm had Graven bifurcated trial been Co., 448, 451, faith, Bros. 26 Campbell & Utah 2d 491 P.2d found liable Mrs. bad 1209, (1971); 1211 stage Strong, Brunson v. 17 judgment from the trial’s second 364, 368, 451, (1966); must be vacated and remanded as to Inez Utah 2d 427, 429, Campbell’s Lloyd, claims for fraud and intentional v. Williams 16 Utah 2d Durham, single paragraph, appar appeal plain 4. in a Justice if the trial court committed error.” State, 249, (Utah 1998); ently exception takes to the entire dissent on the Julian v. 966 P.2d also, Louder,2001 62, ¶ 34, ground parties e.g., failed to raise the "word see Green v. UT (Durham, Helmick, J.); ing” faulty verdict of the trial court's from 29 P.3d 638 State v. 70, 8,¶ (Durham, J.); stage appeal. the case below or on De UT 9 P.3d 164 first Berenda v. assertion, (Utah 1996); specifi spite Langford, this bald State Farm did 914 P.2d 51 n. 1 Salt Ohms, (Utah cally challenge appeal City the trial court’s deter Lake 881 P.2d Germonto, 1994); (Utah standing mination that Mrs. had to sue State v. fact, 1993) (Durham, J.); Brown, argued for bad faith. State v. (Utah 1992) (Durham, J.). "[t]he court below” should not have "concluded 853-54 The trial standing” "solely unequivocally that Mrs. based court’s actions in this case consti error, relationship Campbell.” plain point repeatedly on her marital to Curtis tuted made Moreover, 135, 140, ¶¶ repeatedly throughout supra this court has held that we the dissent. See 143, 144, 145, 149; “may consider issues raised for the first time on infra defendants). Noble, separate (1965); 12 relation to Had the 166, v. Wellman 167 P.2d (1961); 701, 350, 352, specifically jury 702 instructed the 366 P.2d court 2d Utah Livingston, 74 v. Campbell’s Nat’l Bank claims for fraud and inten- Inez Utah (1929). 327, 458-59, 456, P. 327-28 280 infliction of emotional distress were Utah tional however, given ease, the instructions In this by entirely separate lodged from those Cur- anything but jury were by court to Campbell Camp- had it severed Mrs. tis —or “accurate,” Farm conse- and State “clear” Campbell’s upon making suit from Mr. bell’s a fair trial. received quently never appropriate determination the correct and standing for that she had no to sue bad multiple fact, er- In the instructions’ 147 prejudicial of this faith —then the effects Farm had that State roneous statements arguably for would have been avoided. Inez bad statement found liable to been action, possibility to confuse But the court did not take such an possessed faith it was to decide. jury consequence and the issues both the entire verdict and as a award, er- problematically, the court’s Perhaps most and the as to Mrs. jury’s mind jointly “took the roneous statements was rendered as to Mr. and which of whether State by the real issue” Campbell, irreparably from were tainted Mrs. Campbell’s claims for Mrs. was liable under denying right court’s State Farm its to a of emotional intentional infliction fraud and fair trial. ... “emphasizing] situation[ ] by [a] distress Indeed, court’s violation of 148 the lower by the facts or law—that supported”

not right to a fair trial in this case State Farm’s Camp- already to Inez Farm was liable especially flagrant great in view of the is Johnson, Taylor 15 faith. v. for bad bell required trial courts are care with which 382, 342, 349-50, P.2d 387-88 2d 393 Utah juries. process of voir dire exists select (1964). that such previously have held We impar- can ensure “a fair and so that courts party’s right to a fair violates a an effect Am.Jur.2d, Jury jury chosen.” 47 tial [is] contrary trial, nothing militates (1995). Likewise, 189, partiality, § at 871 Likewise, instruc- the court’s here. See id. prejudice, all constitute reasons and bias misperception that Mrs. created the tions may juror upon a trial court excuse which inextricably Campbell’s claims were bound cause, 47(f)(6), and we for Utah R. Civ. P. in, actions by, up and caused “judges trial specifically have held doing, the court Campbell. so toward Mr. ruling err on the side of caution should jury by repeated- impermissibly confused the challenges,” as courts’ discretion for-cause aggre- referring Campbells” to “the ly limited due to the “ease with this area is separating the two than gate, rather dispensed can all issues of bias which respective as re- plaintiffs and their claims replacing question- simple expedient Valley Nielsen v. Pioneer quired law. Cf. neutrality is juror with another whose able (Utah 1992) 270, (holding 274 Hosp., 830 P.2d Saunders, v. open question.” right to a plaintiff had been denied her result, 59, 51, P.2d 951. As a 1999 992 UT gave instructions fair trial when the jury where a con- have further held that she confusing legal the two theories on which intro- evidence not Barron, siders in its deliberations claim); King v. pursuing her trial, required a new trial (Utah 1988) duced at 975, (finding sever- 977 770 P.2d impartiality of ulti- ensure fairness for merging where appropriate ance State ex rel. Road Comm’n in- mate result. See “would plaintiffs legally unrelated claims 102, 103, 114, White, 22 2d v. Utah by forcing jury to error and confusion” vite (1969).5 Similarly, uniformly re- courts 115 different evidence theories consider 495, Constr., Inc., Costello, 255 Mont. 844 F.Supp. v. Omo Brockie 5. Accord. United States v. 61, (1992) (reversing 847, (W.D.Tex.1981) trial court’s (granting 63-64 a new tri- 848-50 grant where experiments not to a new trial juror decision conducted ballistic al where questions physics at issue in jury); researched reported foreman the results to the Frede ju- 355, findings Downs, reported other his Ill.App.3d the case and rors); 57 Ill.Dec. Works, (1981) Washington (remanding Iron a new Arthur v. N.E.2d (1978) (order- Wash.App. referred to case in which the trial a collision public evidence); jurors ing went to the a new trial where boating admitted as handbook not jurors potential upon reporting duty, certainly he or who she quire dismissal here, material to the dis- prior knowledge of facts would have But been excused. it was new trial pute, require a where such the trial court’s own instruction that misled See, e.g., jurors and, thus, not dismissed. Lewis were jury encroached on State 368, Baxley, 260 Ala. rel. So.2d v. State ex right to a fair trial. Farm’s (1954) 790, (affirming trial court’s de- 791-92 Accordingly, majority opinion’s jurors disciplin- six from a cision to dismiss Campbell’s bare assertion Mrs. fraud their animals had ary proceeding because and intentional infliction of emotional distress by the veterinarian under re- treated been “provide[ independent claims an] basis for Commonwealth, view); v. 230 Va. Barker sustaining Campbell’s damages” all of Mrs. (1985) (reversing a 337 S.E.2d support cannot an affirmance of the lower rape, sodomy, and malicious conviction judgment. only court’s Not does Justice juror who knew of defen- wounding because attempt explain Durham fail to how those charges, on the same prior dant’s conviction liability theories of account for the being and was which had been overturned awarded, jury actually judgments but the excused). readjudicated, And in was Campbell rendered to Mrs. on her claims for coverage media is so “extensive” cases where fraud infliction of and intentional emotional precludes party “receiving] a from a that it distress are void initio ab due the court’s trial,” impartial fair we have held that right breach of to a fair State trial. measures, protective must take trial courts venue, change of a allowing such as to ensure Damages B. Punitive See, James, e.g., fair trial. (Utah 1989). fact, even in the Apart problems from the created concerns, countervailing constitutional face denying the lower court’s Farm its tempo- trial courts to issue we have allowed trial, right multiple to a fair erro- court’s restraining restricting during- orders rary jury neous liability instructions to the parties publicity trial so that hold Campbell had found as to been Inez for bad receiving greater chance of a fair trial. See prejudiced faith State Farm further skew- Wilkinson, KUTV, Inc. v. ing required the fundamental considerations (Utah 1984). It is for this same reason that punitive for determining damages. potential jurors judges examine jury 151 The was asked the second any they information length about outside stage of the bifurcated trial to award dam- concerning received the case at may have ages Campbell to both Curtis and Inez they any precon- issue and whether Campbell, doing compen- and in so awarded parties or the sub- ceived notions about satory damages Campbell to Curtis in ject dispute. Upon finding matter Campbell amount of million and to Inez $1.4 exists, judge properly partiality will jury the amount of million. The was $1.2 service, juror just potential excuse that from punitive damages, also asked to award if repeatedly appropriately in- courts any, which it did in the amount of $145 jurors eventually impaneled not to struct the designating portion million but without which anyone or to discuss the case with consider the amount was awarded to Inez any coverage media suit or other portion and which awarded Curtis Jury In- outside evidence. See Model Utah Campbell. (Michie 1993). structions, 1.8 In this Civil punitive 152 In determination of case, however, dam- nullified ages, jury specifically had been instruct- prior impanel it had made to a fair efforts consider, among ed the trial court jury by jury impartial giving itself information, things, other “the effect of defendant’s namely, mis- erroneous Campbells,” on the lives of the already found liable to Mrs. conduct “the been potential relationship parties,” between the for bad faith. Had a “the juror compensatory damages admitted to such an erroneous belief amount of awarded.” concerning"

library "looking telephone book witnesses that had for handbooks” related trial). during yellow pages of the been called “examin[ed] case and parties. analysis by any compliance undertaken given jury instruction This Insur- properly employing in Crookston v. Fire our factors our decision seven with (Utah 1991), Exchange, 817 P.2d 789 punitive damages fundamentally ance will be awarding punitive held that which that, altered when informed as a matter of considering charged with damages must be law, plaintiffs one of the in the case has no ap- in order to determine factors seven standing lodged. to sue for one of the claims fac- of the award. These propriate amount here, Especially Campbell’s where Mrs. “(i) relative wealth of the include tors claim for faith was her assertion of bad (ii) defendant; alleged mis- the nature Farm, fiduciary relationship with it is (in) conduct; circumstances the facts and imperative that we remand the dam- (iv) conduct; the surrounding such effect proceedings. To ages award for further be plaintiff and oth- on the lives the of thereof sure, Campbell’s remaining if even Inez (v) ers; future recurrence probability the claims for fraud and intentional infliction (vi) misconduct; relationship of the the problems emotional distress survived the cre- (vii) amount actual parties; and the the given ated the unfair trial to State Farm Crookston, 817 P.2d at damages awarded.” case, not, they they in this which do neither added). However, because (emphasis legal create nor demonstrate relevant operating the false as- jury under Campbell relationship Mrs. between was liable to Inez sumption that State Farm precise Farm. The effect such a reve- faith, possibly it could not Campbell for bad only jury lation would have had on the falls proper consideration to each of given speculation, pure within the realm of but factors, majority consequently and the these given jury our own mandate that the consid- reinstating dangerous precedent by sets fictional, er, “relationship not a but the actual mil- jury’s original punitive award for $145 parties” determining punitive dam- remanding to the trial court of the lion rather than punitive dam- for further deliberations on ages, requires this too that we remand to the ages. proceedings. further trial court for Indeed, Camp- jury granted Mrs. punitive damages Finally, award damages compensatory million in bell $1.2 jointly to must fail it was awarded because only injury, for her and we can assume Campbell separate- rather than Mr. and Mrs. judge’s jury followed the instructions plaintiff. Even if the trial court ly to each award, punitive partially, at least based its Campbell’s properly severed Inez claims alleged Farm’s misconduct the effect not, husband’s, from her which did See, v. Campbell’s e.g., life. Nielsen on Mrs. to remanded punitive award would have be Valley Hosp., Pioneer joint due to its nature. under Crookston 1992) (“[Jjurors (Utah to follow are sworn entirely Campbell’s claims were inde- Mrs. court_”). given by as the instructions Campbell’s, pendent from but because Mr. court, jury As under- instructed jointly to punitive damages were awarded as to good portion of such misconduct stood plaintiffs, cannot now these know both duty of its include State breach jury intended portion of the award what explained, dealing', fair good faith and but por- Campbell and what owed to Inez be not owe Mrs. State Farm did Camp- owed to Curtis tion it intended be duty jury and no had ever found that State enough Campbell’s Accordingly, Farm had breached it to her. This is Mrs. bell. because require a reassessment itself and intentional infliction claims for fraud level, punitive award at the trial since must remanded while emotional distress be judgment punish rendered to because, as Campbell’s need not —and Mr. inexplicably tied to “misconduct” that State in- inappropriately explained, the Farm did not —and could not —commit. commingle plaintiffs two structed and sixth Crook- of the fourth consideration Moreover, punitive does award punitive damages award factors —the ston appropriate an consideration not reflect factor, remanded for further relationship of must vacated and sixth Crookston’s proceedings.6 2003 UT 2 Utah, Plaintiff STATE of CONCLUSION

IV. Respondent, standing to Campbell had no Inez faith, sue Farm bad LEATHERBURY, K. Defendant Charles Farm was liable never found that State and Petitioner. regard. Her actionable in that her inflic- fraud and intentional claims were for No. 20010424. result, As a distress. tion of emotional multiple instructions that State trial court’s Supreme of Utah. Court Camp- liable to Mrs. found had been both the entire faith tainted bell for bad Feb. and the

verdict as Mrs. Farm in against State be- assessed Accordingly, I Campbell. would

half of Mr.

(1) Campbell’s claim for reverse as to Mrs. (2) faith, and remand for a new vacate

bad Campbell’s claims for fraud and

trial on Mrs. (3) distress,

intentional infliction of emotional liability issue of

affirm on the (4) Campbell, vacate remand Mr. punitive on the issue of dam-

for a new trial Campbell Mr. inasmuch as

ages as to jointly to Mr. rendered both

award was Campbell. and Mrs. ¶¶ Johnson, 17-26, question Contending that Croolcston does not 1999 UT awards, joint punitive damage legitimacy (upholding punitive award because the majority argument opinion assails jury trial court's failure to instruct the to consid- punitive case must be vacated. award in this factors was harm- er all seven Crookston However, majority’s contention must fail for fully jury properly less since the did in fact First, characterizing at least two reasons. factor); (U.S.A.) Ong Int'l Inc. v. 11th assess each solely necessity vacating punitive award (Utah 1993) Corp., Ave. 458-59 nature,” joint "due Justice Durham over- to its (affirming punitive award because the why simplifies stated above for the reasons finding based on the "made detailed seven recognize award Crookston did must fail. While Indeed, ”). factors enunciated in Crookston no- damages policy objectives punitive to in- opinion in her does Justice Durham even where deterrence],” "punish[ment] clude Second, attempt to address this issue. there is specifically held in Crookston that good why "joint punitive reason nature of the purposes for such must be con- awards rendered damages questioned" award was never in Crook- "parameters” well established strained us, neither of ston. Unlike the case now before punitive to some sense of reason- tether parties involved in Crookston ever had their to avoid "excessive awards.” ableness in order standing questioned, to sue nor was the issue parameters Id. include the seven at 808. Those appeal. Consequently, problematic raised above, "must be considered factors listed which party who situation created here—where one puni- [by jury] assessing the amount of punitives every right awarded to sue but Because, added). (emphasis ex- tives.” Id. party given the other the same award should above, plained properly was unable to simply have never been involved in the consider two of those factors in this case due to lawsuit— exist in See 817 P.2d at 794 did not Croolcston. the trial court's instruction that State erroneous (recognizing that both Mr. and Mrs. Crookston Mrs. Farm had been found liable to faith, in their homeowner’s were named as insureds bad vacated award must be id.; policy). Taylor ex rel. remanded. See C.T.

Case Details

Case Name: Campbell v. State Farm Mutual Automobile Insurance Co.

Court Name: Utah Supreme Court

Date Published: Oct 19, 2001

Citation: 65 P.3d 1134

Docket Number: 981564

Court Abbreviation: Utah