Hawkins v. Allstate Insurance

comparing er than the facts and the de- 733 P.2d 1073 fendant in homicide cases which the Randy Cynthia Jack HAWKINS penalty imposed precludes death a Hawkins, wife, husband and true proportionality disagree. review. We Plaintiffs-Appellants, purpose conducting Our in proportionali- a ty review is to ensure that the death sen- disproportionate tence is not excessive or penalty imposed to the in similar cases. COMPANY, ALLSTATE INSURANCE LaGrand,

See State v. (Walter), at foreign corporation, I Does P.2d 563. This purpose can be accom- V, through Defendant-Appellee. plished by examining cases which we affirmed or reversed a defendant’s life sen- No. CV-86-0010-PR. tence or affirmed or reversed a defendant’s death hold,' Supreme sentence. We decline to Court of howev- Arizona. er, that a “true” proportionality review re- Feb. 1987. quires particular examination of types of As Amended March 1987.

cases. All that required is an examina- tion of “similar” cases. April Reconsideration Denied appellant argues

Finally, that failure to

require sentencing judge to find that

aggravating outweigh circumstances miti-

gating beyond any circumstances reason- penalty

able doubt renders the death stat-

ute in violation of the Fifth and Fourteenth

Amendments U.S. Constitution and

corresponding provisions of the Arizona

Constitution. Defense counsel concedes previously

that this issue has been raised Therefore, rejected by this court. we say anything

decline at this time to more

on the issue.

CONCLUSION

Appellant’s convictions and sentences are

affirmed. (Retired), Hays D.H.

Jack James Cameron, Holohan,

Duke William A.

JJ., concur.

FELDMAN, Justice, Vice Chief concur-

ring.

I and in the concur the decision court’s pertaining

analysis, except portion involving pe- aggravating circumstance gain. Ariz. at

cuniary portion of the respect to that

1072. With expressed

opinion, join I the views in footnote Gordon

Chief Justice at 1072.

Thur, Dawson & O’Sullivan Calvin C. Thur, Scottsdale, plaintiffs-appellants. Lerch, by Mark I. Harrison & P.C. Harri- Christian, Phoenix, son, Douglas L. for de- fendant-appellee Compa- Allstate Insurance ny-

GORDON, Chief Justice. Blue value optional Book car and its equipment minus the car’s deductions (Hawkins) Cynthia pe Jack and Hawkins immediately prior condition to the loss. this court to titioned review a decision of represent Such deductions amounts needed appeals reversing court the trial bring average the car to retail condition grant judgment court’s of a motion for and include deductions for the condition of notwithstanding the verdict favor All car, paint, Company (Allstate) bumpers, state exterior Insurance and af tires, firming grant glass, the trial court’s upholstery, up. and clean motion for a trial. new Hawkins v. All adjusters perform then a “market verifica- state Company, Insurance No. CA-CIV by asking tion” three four local dealer- (Ariz.Ct.App. Aug. 13, 1985). filed ships to estimate the insured car’s worth granted to review determine the admis by checking selling and sometimes the sibility past of an insurer’s practices claims price similar cars advertised local car policies and quantum and to examine the of magazines. range the From re- values proof necessary to sustain an sulting procedure, from this ad- Allstate’s damages. Rule Ariz.R.Civ. justers specific determine a dollar amount App.P., 17A supplemental A.R.S. In its value, apparently relying as the actual cash brief, questioned Allstate the constitution heavily most on the low estimates received ality of the manner which dam dealerships. from local ages imposed. jurisdiction We have case, In the Hawkins' Schwenk deter- pursuant 5(3) to Ariz. Const. art. and § mined that the Blue Book value the A.R.S. 12-120.24. § $6,545. Hawkins’ car was not Schwenk did examine the car and failed to consider I. FACTS many of the accessories on the car. insured In July purchased the Hawkins a figure, From this Schwenk deducted $35 a Carlo, new Chevrolet Monte loaded with fee, clean-up guide which resulted in a book options, $8,000. for approximately Five $6,510. value of Four dealer estimates of Carlo, purchasing months after the Monte ranged the value of a similar car Cynthia Hawkins was involved an auto- $6,150 $6,300. to These estimates were mobile virtually accident that demolished description based on Schwenk’s of the car the car. and did all options not reflect on the The Hawkins were insured Allstate insured car. The actual cash value record- poli- under a standard liability automobile $6,165 ined the Hawkins’ claim file was cy. policy provi- That included a collision accompanied by following and was ex- limiting sion liability Allstate’s to either planation: paying the actual cash car value replacements, have Dealers similar replacing time the loss or to the car miles; equipment say but more one like with quality.' one like kind and $6,200. this worth Deduction for recon- reported The Hawkins accident $6,165. ditioning. ACV day happened, it December few days, 1979. Within a Allstate classi- first Schwenk contacted the Hawkins car fied the as a “total after deter- loss” December one week after the mining that the actual cash value of car time, accident. At that re- Hawkins repair was less than the estimated cost. provide quested that Allstate them with a The Hawkins’ claim was transferred to a car, replacement sum mon- rather than a adjuster, total loss Paul Schwenk. ey equal cash actual value their car. Schwenk them to look “totalled” sent According witnesses, ac- Allstate’s four Carlos at a local similar Monte tual cash value of car is its market value. value, dealership. Schwenk would not let To determine actual cash guide they Hawkins have the car selected be- adjusters total loss first establish a by calculating high book value retail more than Allstate $300 cause was Instead, at least willing pay.1 replacement $161.45 Schwenk selected vehicle was other cars and insisted that the one of the insured car. less than that of the Hawkins take it. Hawkins refused fraud The Hawkins sued Allstate for and car selected had few because the Schwenk trial, At three former Allstate bad faith. options their insured car had and employees testified about Allstate’s claims comparable quality gas in either was not procedures practices. None had mileage. experience Hawkins’ claim. direct with the rejected the car days Four after Schwenk addition, supervisor his Schwenk and replacement, selected as a the Hawkins testified. pay told the Hawkins he would Schwenk judge The trial directed a verdict favor $4,500 they them in cash unless took the of Allstate on the fraud count" but sub- refused, car he The Hawkins had selected. jury mitted the bad faith claim the $8,000 explaining they paid had over liability compensatory consider for both and could for their car five months earlier punitive damages. awarded $4,500. purchase comparable car for $15,000 compensatory dam- the Hawkins Later, conversation, during the same ages million $3.5 threatened to deliver a check for Schwenk $5,000. All- subsequently granted The trial court judgment motion for notwithstand- state’s Hawkins, desperate By December the ground ing verdict on the that the the $6,471, car, accepted a a check for for presented evidence at trial was insufficient dealership, payable to Hawkins and a local alternative, the In the to sustain verdict. purchase to the car Schwenk had selected. granted motion for the trial court Allstate’s approximately week since the It had been a grounds. The court of a new trial on five car, Hawkins viewed the and when Jack car, appeals held that the trial court erred in again he pick up Hawkins went to the comparable entering judgment notwithstanding not and the realized the cars were dealership to tell verdict, called from the grant Schwenk but affirmed the of a new After a him he did not want the car. 1) testimony two of a trial for reasons: and assurances lengthy, heated discussion im- adjuster Allstate claims was former replacement car that Schwenk admitted, 2) amount of the properly and brought up insured car’s would be to the justified award was holidays, after the Jack Hawkins standards Hawkins, op. slip the evidence.2 reluctantly gave check to the dealer. replacement power car lacked win- dows, got larger engine had a and worse II. ADMISSIBILITY OF INSURER’S (not gas mileage, facto- had dealer-installed PRACTICES PAST CLAIMS control, ry-installed) cruise and lacked sev- trial, During Hawkins called three for- styling original features of the car. eral testify employees mer Allstate about addi- holidays, After the Allstate sent an handling procedures for total Allstate’s power to the Hawkins to install tional $125 on objection loss claims. Over windows, the Hawkins were unable but relevancy, each testified grounds All- the work for less than get $600. done method of determin- concerning Allstate’s adjust- refused to make other state (the loss of an insured’s ing the amount Although and the file. no ments closed gen- property) value of the actual cash replacement vehicle’s actual han- policies regarding claims company eral presented, value was Allstate con- cash dling. appeal price ceded on that the list appeal from abandoned their conflicting 2. The Hawkins whether the car the

1. The evidence Haw- $300 more than the actu- on the fraud count. Hawkins selected was verdict the directed kins, $300 of their insured car or more slip op. al cash value at 4. remaining one of the three cars. than representative, eluding One former claims Pat for tire wear. He also amounts Paterno, testified about Allstate’s claims explanation testified as to Allstate’s practices in the Phoenix office at time making deductions: processed. claim Al- Hawkins was Q given as explanation Was an [to] though did she not work on Hawkins why you should deduc- make various claim, Paterno testified that as a claims tions? representative Allstate instructed her to Yes, A it was. automatically make certain deductions in Q explanation given? What was determining a Spe- car’s actual cash value. cifically, adjusters she testified that were Basically, particularly A that to deduct instructed an extra tire $5 property damage terms collision always wear cleaning to deduct a $85 claim, the owner of the was vehicle fee, regardless of the car’s cleanliness. going concerned whether or not he was supervisors explained She testified that her back, get his vehicle how he soon that a deduction “wouldn’t mean much $5 get repaired could forth. so claimant, every an insured or but $5 Therefore, perhaps object he would not claim company.” would mean a lot to the to some of these small deductions. And representative, Another former claims you’d at a be able settle claim Mauritz, Jan employed by was Allstate in cheaper fre- rate. The statement was Tacoma, Washington from 1978 to 1981. quently you made that could save one Paterno, Like Mauritz testified that he was claims, you dollar on a million save would automatically instructed to make certain company as much as a dol- million deductions, fee, including cleaning va- lars. luing a “total loss.” He testified he expla- Boettcher testified that he heard this instructed offer insured the low- nation at an from instructors Allstate re- est value a claim because the insured school, gional he claims which attended for get probably would take order it to his approximately weeks from re- quickly. car fixed He also testified that gional supervisors, claims and from his lo- adjusters’ “severity Allstate used the rat- manager cal assistant in the Phoenix office. ing,” paid a ratio total dollars out in Boettcher testified that both local claims, claims over number to evalu- regional adjusters’ performance supervisors’ general ate claims promotion potential. opined policy Mauritz claims- was to settle claims for as low an handling practices policies possible. he to which amount as He also testified testified throughout were followed depart- about the function of the claims company merely and not Tacoma during employment: general ment his “In office they promulgated because were terms, it say perhaps I’d was not to settle corporate through policy literature and as it to com- claims as much was save the In opinion, practices statements. his these pany money, because this would increase “may may chiseling, lead to what one call profits.” their substantially calculated offers fair below value____” reasons, Among other trial granted court Allstate’s motion for a new The employee third former Allstate deciding it erred in trial after had admit testified, Boettcher, employed William was ting testimony of the former Allstate by Allstate as a examiner in Phoenix claims explain employees. The trial court did not years before error, perceived only summarily but Hawkins’ claim. He testified that he was testimony that the of the three concluded automatically instructed take certain de- claims, property damage ductions in- should not have been admitted.3 witnesses judges reasoning opportunity objec- appellate 3. We take to articulate their so voice our appeal conclusory rulings they tion to courts can determine on whether such because urge impair appellate ruling review. trial was erroneous. effective appeals grant testimony erroneously The court of affirmed the that Boettcher’s was trial, testimony of a new but held that the admitted because it was irrelevant.6 only employees, one of the former Wil- A. Relevance Boettcher, liam erroneously admitted. appellate court reasoned that Boettch- Rules Evidence testimony er’s was inadmissible under Rule Relevant evidence is defined as 404(b), Evid., Ariz. Rules of 17A A.R.S.4 having any tendency “evidence to make the bepause deny Allstate did not its acts nor consequence existence of fact that is of they claim were unintentional and because to the determination the action more practices the evidence was irrelevant as the probable probable or less than it would be sufficiently Boettcher described were not without the evidence.” Rule 401. Rele experience similar to the Hawkins’ to be vancy is not an inherent characteristic of pattern admissible to establish a of bad evidence; instead, proffered it is the rela support punitive damages faith to award. tionship proffered between the evidence light procedural history, of this sought proved. and the fact to be See M. issue we address is whether the trial Livermore, 163; supra, Udall & J. testimony court’s admission of Boettcher’s 11401[03], Weinstein’s Evidence at 401-17 justified granting was an error that All- (1986). Essentially, relevancy two-part is a state’s motion for new trial. First, only test. evidence is relevant if it fact; consequential relates to a power grant a new trial is undisputed directed to an issue is irrele largely discretion, within the trial court’s particular vant. What is at issue in a case power but this King not unlimited. pleadings is determined from the and the Court, Superior Livermore, substantive law. M. Udall & J. appears clear “[I]f 161; Evidence, supra, at Weinstein’s su ly record from the that there was no error Second, pra, at 401-17 to -19. rele presented in the matters in the motion vant, only probabili evidence need alter the trial, it is an new abuse discretion existence, ty, prove disprove of a grant the court to a new trial.” Helena consequential fact. M. Udall & J. Liver- Ranches, Cowry Chem. Co. v. Bros. more, 162; Evidence, supra, at Weinstein’s (App. 11401[06], All supra at 401-33 to -36. 1980). liability state’s for both the tort of bad punitive damages faith and was at issue party urge A cannot in a motion for Therefore, during the trial. evidence that new trial erroneously that evidence was prima tends to facie case of bad establish proper objection, stating admitted unless a punitive damages faith or entitlement to specific ground objection, the of the relevant. offered, made at the time the evidence was unless the error is fundamental. M. Udall a. Bad Faith—Prima Facie Case Livermore, Evidence, & J. Arizona Law of (2d 12, 1982); recently at 14 ed. We clarified that tort re see Helena Chem. § 453, 913; if covery 126 Ariz. at 616 P.2d at Rule for bad faith is allowed an insurer trial, implied 103. At objected intentionally to Boettch breaches the covenant grounds dealing in testimony only good er’s of relevan faith and fair the insur cy.5 disagree by denying the insured the appeals with the court of ance contract Evidence, A.R.S., precise objection 4. 6. was that the testi- Rules of 17A will be _" throughout referred to as mony “Rule was “irrelevant and immaterial.’’ Mod- opinion. concepts capture evidence both in ern rules of Livermore, "relevance.” M. Udall & J. the term motions, pre-trial objected 5. In Allstate also 81, 160; supra at Rule 401. § qualifications expert, Boettcher's as an but his testimony expert opinion was not offered as evidence.

497 520; security protection calamity 576, that Shafter, v. 107 Ariz. Acheson 578, 832, (1971). object relationship. is the of the insurance 490 P.2d 834 149, Rawlings Apodaca, v. 726 category of relevant evidence One (1986). prima P.2d 565 establish a facie To See, position. is the defendant’s financial faith, prove case of bad Hawkins had to 578, Shafter, v. 107 Ariz. at e.g., Acheson intentionally, that Allstate acted inad- (wealth 490 at 834 financial status P.2d or vertently mistakenly, or and that Allstate of defendant relevant to allow to im unfairly dishonestly or Haw- dealt with the pose appropriate punishment); Nielson give equal kins’ claim or failed fair and 341, Flashberg, 101 Ariz. at 419 P.2d at consideration to the Hawkins’ interests. Obviously, goals punishment 520. the at at 576. Id. P.2d and deterrence would circumvented if position the financial of the defendant al Damages—Prima b. Punitive Case Facie comfortably the lowed it to absorb award. damages are Punitive recoverable category Another of relevant tort only insurance bad faith actions is the nature of defendant’s insured acted with an “evil mind” conduct, including reprehensibility breaching good implied covenant of severity and the of the harm conduct dealing. faith and fair Rawlings, 151 result, likely the harm as well as 162-63, requi at P.2d 578-79. The occurred, has from the defendant’s con site evil mind is if the found insurer intend Roberts, duct. Mallor & Punitive See injure pur ed the insured or consciously Principled Damages: Ap- Toward a sued course of conduct knowing that it (1980);7 proach, Hastings L.J. created a risk significant substantial Owen, Damages Punitive in Products Li- harm the insured. Id. at Litigation, 74 ability Mich.L.Rev. 1257 addition, 578. In requisite mind evil (1976). reprehensible The more the act and may be inferred if insured’s conduct harm, resulting the more severe the sufficiently “oppressive, outrageous or in greater the award of tolerable.” Id. at 726 P.2d at 578- is reasonable under the circumstances. misconduct, degree of the duration the harm defendant’s awareness of punitive damages, To recover harm, risk of concealment of it are plaintiff must also introduce sufficient repre- judging elements consider evidence to calcu allow trier-of-fact to conduct. hensibility defendant’s punitive damage late a rea that is Exchange, 21 Cal.3d Neal v. Farmers Ins. E.g., sonable under the circumstances. 980, 990, Cal.Rptr. Flashberg, Nielson v. (1978); Chodos v. Co. of pre Although a America, Cal.App.3d North laundry cise list of relevant evidence is 831, (1981); 841 ex Cal.Rptr. 178 State rel. impossible, properly is considered 61, 71, Crookham, 290 Or. 618 Young v. assessing the by punitive trier-of-fact 1268, P.2d 1274 damages upon purpose it bears the pur third is function of A relevant consideration compen profitability of the defendant’s conduct. pose is not to 683, 691, plaintiff, society’s Idaho express Stolworthy, sate the to v. 94 but See Cox 682, (1972); disapproval outrageous Wangen 690 v. Ford conduct and Co., 294 by such 97 Wis.2d N.W.2d deter conduct the defendant Motor Roberts, See, (1980); supra, in the v. Mallor e.g., others future. Nielson 460 & damage punitive A award that Flashberg, 101 Ariz. at at 667-68. P.2d Although ly under Arizona’s judge, considered the trier-of-fact 7. the authors advocate that the jury, damages. punitive imposing punitive not ages, dam- procedure assess sum of appropriate- the evidence discussed here is damages and recovery punitive to deter case for disgorges ill-gotten profits serves eliminating damages. conduct punitive future similar We to assess a sum profit incentive. willing is the defendant note that unless mind,” its “evil take the stand and admit only as presented factors are These pu- prove entitlement to plaintiff must guidelines of evidence that to the character evi- damages damages with circumstantial assessing punitive nitive relevant Thus, exhaustive in- be viewed as neither the defendant and should dence. whether Furthermore, it is well set- nor exclusive.8 plaintiff consciously injure tended is admis- not all relevant evidence tled that rights may be disregarded plaintiff’s is admissi- sible and whether such evidence unfair suggested by pattern of similar depends upon the particular in a case ble Ins. v. practices. & Acc. Co. Colonial Life Rules of that case. See circumstances 785, 792, Court, 31 Superior Cal.3d 402-411. (1982); Cal.Rptr. Thus, prima facie case for to establish a v. American United Moore recovery punitive damages, Hawkins 610, 624-25, Cal.Rptr. Cal.App.8d mind—either a prove that an evil had (1984); Apoda- Rawlings 886-87 see v. disregard of desire to harm or conscious ca, 726 P.2d at 578-79 151 Ariz. at right to a fair valuation of the Hawkins’ inferred from (improper may motives property Allstate’s their loss—motivated outrageous or intol- sufficiently oppressive, punitive To recover bad faith conduct. conduct). erable had to establish a Hawkins also from which the could factual basis disagree with the court of damages that assess a sum of practices about which appeals that accomplish goals punishment would sim lacked sufficient Boettcher testified and deterrence. experience and the to the Hawkins’ ilarity constitute adjusters’ testimony to other Present Case Application employ pattern. All three former such a testimony is relevant Boettcher’s routine, automatic policy described a ees liability for the tort of both to Allstate’s deductions, validity, in regardless of their Dun faith and bad tes Boettcher’s valuing an insured’s loss. Inc., Tucson, lap Jimmy GMC of did not de he timony is different because (App.1983) cleaning fee deduction specific scribe (evidence past deceptive practices sales Paterno and by Mauritz and testified to practices are cur relevant to whether those actual cash value calcula included in the rently to issue of dam used and car. This difference of the Hawkins’ tions liability for ages). Regarding purpose for which the immaterial to the faith, testimony is relevant Boettcher’s bad testimo offered. Boettcher’s evidence was intentionally. to whether Allstate acted that Allstate en offered to show ny was similar acts alters previous, Evidence of conduct, course gaged in a conscious question probability that the conduct policy, which corporate firmly grounded unintentional; frequently more in other occurs, and countless probable it is inten denied Hawkins the more act Thus, testimony prop their made cash value of Boettcher’s the actual tional. sureds clean probable $35 more that the invalid offered to es was not erty. The evidence estimating the deduction used in ing fee regarding conduct any particular tablish of loss was not actual cash value Hawkins’ testimony was claim. This Hawkins’ inadvertently made. mistakenly nor its motive or explain Allstate’s to offered dealing the Haw with mind when state of testimony importantly, Boettcher’s More insureds. and other prima a facie kins to establish is relevant both assessing We ex- penses suggest that courts and commentators 8. Some this case. factor in press no view on this plaintiffs litigation jury ex- consider the testimony ing Boettcher’s precluded asserting proper also is different a Therefore, pro objection because he appeal). described Allstate’s claims we hold policies cedures and years before the that the court if trial abused its discretion argues granted Hawkins claim. Allstate this time a new trial because Boettcher’s span testimony robs the evidence its of relevance. inadmissible character evi- was disagree. goes We Remoteness time to dence. weight evidence, of not its admissi However, if even the issue was 404, 418, bility. Jeffers, State v. properly preserved, the evidence was not denied, cert. 464 U.S. pursuant to inadmissible Rule- 404. Sub 104 S.Ct. 78 L.Ed.2d 174 (b) permits of section evidence “other above, requires only As noted a relevance crimes, wrongs purpose or acts” is to rationally modicum of probative force. motive, party’s show a intent or absence significant a span may While time reduce precisely mistake or accident. These evidence, probative force it does not purposes for which Boettcher’s testimo eliminate it. ny was admitted. ante at See Clearly, testimony Boettcher’s concern- disagree 733 P.2d at We 1081-1082. with ing practices past Allstate’s claims also 404(b) appeals the court that Rule “is was relevant assessing appropriate to inapplicable.” Rawlings See at sum of tes- Boettcher’s interpret at timony presents direct du- evidence of the court’s mean statement that because ration Allstate’s misconduct and estab- Allstate deny allege did not its acts nor lishes evidentiary facts from which the unintentional, they that were the deliber could the reprehensibility determine All- ateness of Allstate’s conduct was not at

state’s conduct. See ante 152 Ariz. at testimony issue and Boettcher’s was irrele 497-498, 733 P.2d at 1080-1081. vant because it was not to a directed fact consequence to the determination of the testimony Because we find Boettcher’s ignores reasoning case. This that Boettch relevant both issue bad faith testimony is er’s relevant and admissible damages, we hold that the trial prove improper pur motives granted court abused its if it discretion a poses punitive damages. Furthermore, new trial testimony because Boettcher’s proof necessary of intentional conduct is not was relevant. prima

establish a facie case of the tort of B. Character Evidence stipulation faith. Absent bad claim, to this element of the Hawkins was disagree We also with the court of required put on such to survive a appeals justified that a new trial be Also, directed verdict. when Allstate did cause testimony Boettcher’s was errone defense, present position its it took the that ously admitted in violation Rule 404. innocent, practices claims its were cost-sav object did Because Allstate to Boettch ing prevent measures taken to over testimony impermissible er’s as character payment Certainly, of claims. Boettcher’s evidence, preserved this error was not as testimony was admissible rebut this con an issue for Allstate’s motion for a new tention. Livermore, M. supra trial. Udall & J. 18; Grant Arizona Public Ser § Prejudice C. Unfair vice (1982)(objection argues grant irrele evidence is Allstate also vant, specifying why, ing erroneously without how or does a new trial based on admit appeal evidence, not raise issue on court properly where ted trial exer have would been relevant under cised its to exclude discretion Boettcher’s any possible circumstance); 1 testimony probative Weinstein’s because the force of (if 11103[02], substantially outweighed Evidence to -24 103-23 the evidence was general overruled, objection object- party danger prejudice. of unfair

500 routinely a policy $35 to deduct urges objection porate that its Allstate Rule 403. value of a necessarily from the estimated cleaning as irrelevant fee to the evidence grounds vehicle, of unfair deal- objection an as Allstate’s embodied loss as well total support in argument Hawkins, This finds prejudice. concluded that but ings with the Mfg. Pak-Mor case law. See Jones v. our punitive award the amount 823 proof no there was improper because was relevancy looks whether (question of its by Allstate from profits made of probative value and whether evidence lacks slip op. at 16 improper deductions. outweighed by danger of probativeness (“Where damages are based on punitive — U.S. -, denied, prejudice), cert. prof- wrongful corporate policies which But see 88 L.Ed.2d S.Ct. oriented, must supporting evidence it 11103[02],at 103-23 Evidence Weinstein’s speculation.”). informed go beyond far prejudice or pertaining to undue (objections only found the refer- appeals The court of evidence must be impermissible character of total loss either the number ence to not raised specifically and are stated the amount adjusted by Allstate or claims and immaterial” “incompetent, irrelevant by Hawkins’ counsel profits of illicit was Edwards, Eng Inc. v. New objection); Jay adjuster Schwenk suggested he when Distributor, Inc., 708 F.2d Toyota land improperly deducted $35 Allstate Cir.1983) objec (1st (only stated claims, 100,000 loss Allstate from total relevancy and court refused was tion gain million.9 would $3.5 denied, effect), cert. prejudicial consider appeals appears to have The court of 231. 78 L.Ed.2d 104 S.Ct. 464 U.S. proof to requirement new of carved out a posture However, misperceives the Neither damage award. support punitive a The issue is not case on review. of this parties, nor our appeals, of the court exer trial court could have whether authority research reveals Boettcher’s discretion to exclude cised its necessary for an ill-gotten gains is prejudicial, but unfairly as testimony damages. See Moore punitive award an admitting testimony whether Co., 150 Cal. American United Because a new trial. justified error that (1984) ($2.5 Cal.Rptr. 878 App.3d admission legal error we discern no com for insurance punitive million award that the testimony, we hold Boettcher’s upheld evidence pany’s faith without bad by ordering its discretion trial court abused deceptive company’s profits on this basis. a new trial practices); v. Ins. Co. Chodos claims DAMAGE AWARD III. PUNITIVE America, Cal.App.3d North ($200,000 punitive Cal.Rptr. 831 entry appeals reversed the The court of light of insurer’s wealth upheld verdict, notwithstanding the judgment acts, proof of of its without and nature established holding that Hawkins had appraisal from insurer’s derived profits prima facie case Indeed, Allstate admits that practices). However, grant the court affirmed required present not “[appellants were because, alia, inter “the amount trial new an award profits to obtain of illicit evidence justi- damages award was Supple damages.” Appellee’s Slip op. at 16. fied the evidence.” at 34. mental Brief of Allstate’s cor- court considered $3,500,000; those, was, that amounts My question each one of "Q. counsel] [Hawkins’ every loss $35 off on total it? this decision to take doesn’t cleanup really quite important figure say that far. you car I can’t so. A. If standpoint; company’s isn’t decision from the total loss Q. has one million If Allstate States, that true? every year if we in the United claims so, say yes. I would mathematically, A. Q. amount to figure [Schwenk] it would it out fact, figure out we could decision; As a matter of right? isn’t that a 35 million 100,000 mathematically. total If Allstate has Yes." A. they every year, $35 off on take loss claims

501 (“The argues applied is the Allstate that once Hawkins “in- test to be whether ... the tentionally specter outrageously released of illicit as to ‘verdict is so excessive profits” punitive damages, blush, suggest, passion preju- to solicit Haw- at first or present speculative ”)). kins more must than alone dice.’ The amount of the award proof profits. suggests of prove jury such is evidence to the not sufficient punitive damage that the million $3.5 passion prejudice. acted or Nienstedt with than 357, 876, award “bears more a casual resem- Wetzel, 348, Ariz. 651 P.2d v. 133 to the amount counsel blance” Hawkins’ hypothetically suggested Allstate would categories evi previously outlined of gain improperly deducting from from $35 sum punitive dence relevant to assess a of 100,000 loss claims. at total See ante n. 8. 497-498, damages, see at ante 733 P.2d effect, Allstate contends Hawkins did equally applicable at to de producing not meet its burden of evidence sup termine sufficient whether evidence that establishes a reasonable basis from A ports plaintiff the million award. is $3.5 which the could estimate required put every not on of award, damage punitive agree We that a factor, any single prerequi nor is factor a otherwise, or must be based on more than recovery site to See However, speculation conjecture. mere or 357, Wetzel, 133 Ariz. at 651 Nienstedt v. disagree punitive damage that we the. (evidence P.2d at 885 of defendant’s wealth in case the of specula- award result required damages). not to recover justified by

tion or not the evidence. Rather, plaintiff produce the must evidence may so that the amount awarded not be

Arguably, only if it the were regard said “so unreasonable appropriate which to determine an award, as to circumstances show influence hypothetical suggestion passion prejudice.” or Nielson Flash of a v. profitability defendant’s conduct would 341, at berg, result in 419 P.2d at 520. merely specu- an award based However, ample lation. evidence was puni We find the amount of presented in this case from the jury which damages against tive awarded Allstate is could assess an amount of dam- so neither excessive nor unreasonable ages accomplish goal that would the dual light as to circumstances show punishment and deterrence. First, of passion prejudice. influence or punitive damage

We vest the with trier-of-fact dis million award is $3.5 disproportionate cretion to award an amount not to Allstate’s financial that, judgment, punish position. its will It is axiomatic that the wealthier defendant, example wrongdoing greater the defendant and serve as an punitive damages necessary deter future similar misconduct. Once ex award of ercised, punish this discretion should not be him. Aetna dis Maxwell v. 205, 219, 348, turbed unless the P.2d 362 award the result of 693 however, passion prejudice. (App.1984). recognize, or Nielson v. Flash 341, berg, financially Ariz. kill de 101 419 P.2d at 520. must award passion appropriate prejudice test of fendant. Id. Allstate’s 1981Annual State or billion, reported manifestly is whether verdict is “so ment total assets $8.6 unfair, billion, unassigned (surplus) outrageous $2.4 unreasonable and as to funds net million. The $346.7 shock the conscience the court.” Ache income jury’s represents approximately Zlh Shafter, son v. P.2d at Candy days’ net income V25of of total as (citing Young & Tobacco v. 1% Co. court, others, as This as well has Montoya, 91 Ariz. sets. (1962)); punitive damage represent upheld v. awards Linsenmeyer accord Han cock, Ariz.App. ing greater percentage of defendant’s (1985) against claims (quoting 18 Ariz. wealth of excessiveness. Wry v. Dial Shafter, 107 Ariz. App. Acheson 502 (1971) (award Co., 637, representing Cal.App.3d P.2d 832 150 Ins. at 197 5% Life upheld);

net Dodge City 895, worth accord Mo Cal.Rptr. deceptive practic 24, Ariz.App. tors 16 Rogers, v. company policy. es were established (1971)(award representing 853 2 weeks’ + We hold Allstate’s upheld);10 net income and net worth 4% wealth, reprehensibility and duration of Co., Moore v. American Ins. United Life conduct, potential its and the effect on in- 610, Cal.App.3d Cal.Rptr. 150 197 878 sup- numerable claimants is sufficient to (award (1984) representing 3.4 weeks of port punitive damage million $3.5 defendant’s income and of net assets 3.2% award. Co., upheld); 18 Wetherbee v. United Ins. 678, Cal.App.3d Cal.Rptr. IV. CONSTITUTIONAL CHALLENGE (1971)(award equal to one week’s after-tax argument After oral and after our order earnings upheld). Egan v. Mutual Cf. granting Petition for Co., Hawkins’ Review Omaha Ins. Cal.3d therein,” Cal.Rptr. (1979) (award May “on the issues set forth filed 620 P.2d 141 2, 1986,11 represented granted request reversed where it more than we income), (filed supplemental May seven months of net cert. denied file briefs. Order dismissed, appeal 28, 1986). 445 U.S. Allstate stated that the follow- (1980); S.Ct. 63 L.Ed.2d 597 Merlo v. ing supplemental reasons necessitated Co., Standard and Acc. Ins. 59 Cal. briefing: App.3d Cal.Rptr. (punitive years A. It has been more than three constituting nearly one-third de parties the issues on since the briefed aside). fendant’s net worth set appeal. Second, punitive damages amount Significant developments B. in Arizo- outrageous light is not or excessive relating punitive damages na have law particular conduct. nature of Allstate’s filing appellate occurred since the general, reprehensible the de- the more briefs. fendant’s conduct and the more serious the arguments oral were heard C. Since occur, likely larger appro- harm grant- petition for review was before 497- priate punishment. See ante ed, presumably the entire record was un- jury The 733 P.2d at 1080-1081. arguments available at the time of rationally could concluded that All- have supplemental reference to the record is highly reprehensible state’s conduct was appropriate. necessary and insureds. and resulted harm countless Questions by the court at oral ar- D. reasonably could have concluded jury suggest that clarification of cer- gument engaged deceptive claims that Allstate evidentiary may facts be nec- tain critical practices spanning up years whereby to 18 essary. advantage Allstate took of its insureds’ Supplemental for Leave File Motion to. claims at lesser predicaments to settle Argument Additional Oral Briefs and For small, deducting relatively in- amounts (filed 16, 1986). May from each total loss claim nocuous amounts “B”, of reason Allstate In its discussion saving. guise of cost under recent Arizona Court of pointed to three particularly found this conduct could have Appeals relating to cases reprehensible average insured because requested this court allow and also “that prosecute unlikely to discover or would briefing federal constitu- misconduct, on the v. American additional this see Moore argument accepting before 11. We heard oral The net worth and income amounts are not this case raised review to determine whether reported forth in the decision but are con- set previ presented other cases two issues ously accepted Maricopa Superior the record. See tained in Rawlings Apodaca, for review: C-222384; Appellee’s No. brief in Court Case (1986); Linthicum v. 726 P.2d 565 CA-CIV 1457. Nationwide Life Allstate, power exercise that implications of the manner in which we decline to tional punitive damage imposed in award was this case. Admittedly, under Arizona law.” Id. at 5. orderly administration re- Efficient and hoped opportu- afforded an “be quires point in time at which it is too some sys- nity to seek relief in the federal court appeal. issues on late to raise new punitive damages amount tem note Allstate did not raise its constitu- that ultimately against appellee.” assessed were pleadings, post-trial in the arguments tional argued in ultimately 5-6. Allstate Id. at (or motions, cross- appeals, petition, court of punitive Brief that dam- Supplemental its review, for petition) response petition for ages penalty, are a criminal which entitle a review, argument. at oral Allstate first civil defendant to the same constitutional concerns after the voiced its constitutional protections (e.g., as a criminal defendant by by court set issues for review this were doubt, proof beyond protec- a reasonable granting petition for review. our order against jeopardy, privilege tion double light procedural history, In of this we be- self-incrimination, against and conviction promote appellate it does not sound lieve Arizona) and, by jury in a unanimous in the belatedly practice to consider issues so alternative, procedural process due re- urged. allowing supplemental Our order quires convincing proof clear and of entitle- briefing anticipated parties would ad- punitive damages. ment to accepted dress the issues for review and acknowledges that the premised parties’ up- on the need to was question constitutionality of the of years filed three earlier. date its briefs damage trial, awards was not raised at but hold that consideration of a constitu- We argues properly may this issue for on tional issue raised the first time appeal raised for the first time on because appeal discretionary is with this court. general public it involves issues “of a na involving This is not a case denial of a ture, affecting the interests of the state at right fundamental constitutional in a crimi- large.” Appellee’s Supplemental Brief at nal trial nor contentions which affect the (citing Town South Tucson v. Board of court, jurisdiction of the and we do not feel Supervisors, 52 Ariz. of compelled to exercise our discretion. (1938)). agree that issues of Our decision to decline consideration of “general significance” statewide are an ex constitutionality of the manner general ception appel to the rule that an punitive damages imposed were is which late court will not consider issues not by adoption our recent of the bolstered in the trial E.g., raised court. Barrio v. All- convincing proof clear and standard of Hosp. Magma Cop Manuel Div. San for state seeks. Linthicum v. Nationwide per 692 P.2d 280 Co., However, general excep this rule and its (recovery punitive dam- procedure, tion are rules of not matters of convincing ages “only upon clear and evi- jurisdiction, purpose established for the mind”). evil Our deci- dence of defendant’s orderly administration and the attainment stringent require sion to a more standard justice. Town Tucson v. South damages than for proof for 582-83, Supervisors, 52 Ariz. at Board of compensatory damages grounded was “Whether this court should constitutional, considerations. policy, not question here for the first review a raised (higher 723 P.2d at 680-81 Id. at depends upon time the facts and circum necessary preserve de- proof burden by particular stances disclosed record. prevent oppressiveness effect and terrent undoubtedly power, It has the but ordinari punitive damages). loosely-assessed ly question not exercise it. The is one will administration, power.” not of Id. AND OF CLEAR V. RETROACTIVITY (quoting Cappon O’Day, 165 Wis. PROOF BURDEN OF CONVINCING Thus, 491,162 (1917)). while N.W. Here, instructed that agree power to we that this court has the damages in its discre- the constitutional issues raised could consider (3d preponderance tion if evidence mick on Evidence ed. § 1984). established conduct Allstate that war- reported Our research reveals no ranted such Because we decline foreshadowing Arizona decisions the clear consider whether and convinc- indeed, change; none even broaches the ing proof constitutionally burden of re- subject higher proof of a burden of quired, question we must address is convincing whether the clear and burden of factor, Regarding purpose retroac- announced in application tive the new clear and con- retroactively applies Linthicum to the dis- vincing proof standard burden of would not pute judice. sub purpose adversely “affect behind the Arizona, opinion pre a civil new rule.” See Chevron Chemical v.Co. sumed operate retroactively, as well as Superior Court, 131 641 P.2d prospectively, unless otherwise stated. (restating at 1280 Chevron Oil Co. v. Hu- 520, 513, Brannigan v. 136 Ariz. Raybuck, factor). important ’s An pur- son second 213, (1983) (citing 667 P.2d 220 Chevron pose stringent proof of the more burden of Court, Superior Chemical Co. v. 131 Ariz. punitive damages is to are assure that 431, 435, 1275, (1982)). 1279 To higher properly The of awarded. burden presumption overcome this of retroactive proof underscores application, Arizona utilizes the three extraordinary are remedy, an to be as- by factors set forth the United States Su egregious only sessed in “the most preme Huson, Court in Oil Co. v. Chevron 332, Linthicum, 150 cases.” Ariz. at 97, 92 S.Ct. U.S. at 681. The effect the Linthicum 296, 305-06, (1971): L.Ed.2d rule trier of impose is to allow the fact to (1) Whether the decision establishes a punitive damages only where he is con- legal principle by new either overrul- higher degree vinced to of probability ing precedent clear and reliable or possessed requisite that the defendant deciding issue whose an resolution Applying evil mind. this new rule retroac- foreshadowed; clearly was not tively obviously impair pur- would (2) rule; however, application pose Whether neither retroactive will of the would operation significantly

further or retard application retroactive further rule, considering prior its history, purpose. practice provides its Current sev- effect; purpose and and to assure eral avenues of review that an punitive justified: award of application Whether retroactive will plaintiff a motion get past must for a di- produce inequitable substantial re- verdict, rected must exercise its sults. punitive damages, discretion to award Raybuck, Brannigan See v. 136 Ariz. at post-trial subject verdict is motions and 520, 220; 667 P.2d at Chevron Chemical judgment and the judge, review the trial Court, 436, Superior Co. v. All subject appeal. proce- of these 1280; Peagler 641 P.2d at v. Phoenix assure designed dures are Inc., Newspapers, not the result justified award is and (1977). These factors are jury’s passion prejudice. or reliance, pur- sometimes to as the referred factors, pose, inequity respectively. strongly also neither inequity factor prospective-only appli- favors nor disfavors strongly pro The reliance favors factor change cation of the law. This factor is spective-only application. Linthicum an reliance closely related to the factor and principle nounced a new of law that over hardship result- injustice focuses on the precedent. ruled clear and reliable Proof application of the ing from retroactive new preponderance the evidence is the Newspapers, rule. v. Phoenix proof Peagler See traditional measure for most civil P.2d at 1220. Retro- Jones, 114 Ariz. at cases. Schwalbach v. new (1925); application Cleary, 232 P. E. of ihe burden McCor active case, litigation in proof force further this we are faced with a would announcing situated, judicial decision an unforeshad similarly and other lawsuits departure owed from clear and reliable parties prepared have where po are concerned with the precedent. We upon their cases in reliance clear presented system from judicial tential on the burden adequate protection and with precedent litigation further where claims have been against improper litigation or settle disposed by prior damages. Requiring plaintiffs retry Hadley, 128 ment. See Harmann higher proof under a burden of cases 380, 382 N.W.2d Wis.2d passage im- where the of time will have circumstances, we Under these paired considerably ability their to discover proof shall be hold that the new burden of prove certainly their case evidence and application. After given only prospective hand, injustice. works an On the other September the date Linthicum plaintiffs are not entitled to dam- mandated, damages are recov and, right; theoretical- ages as a matter of convincing only upon clear and evi erable ly, they fully compensated for their mind. dence of a defendant’s evil injury by compensatory damage actual apply shall not burden new then, Arguably applica- retroactive award. judgment upon a verdict or based where only hardship goes tion creates a minor proof by preponderance a of the evidence assuring properly step one further has been entered and where there is no punitive damages. awarded require new trial other than reason to a proof. application application Whether retroactive is of the new burden of Co., single pro Wangen if v. Ford Motor 97 Wis.2d inappropriate a factor favors See 437, (1980). 294 N.W.2d spective application, or all factors whether Cf. (Me. Raymond, 494 A.2d 1353 Tuttle v. prospective application, must favor is un 1985) given (higher proof standard of retro clear. Brannigan Raybuck, See v. application prior active where case law (“[E]ven Ariz. at 667 P.2d at 221 gave notice of intent to reexamine burden three-part test of v. Hu Chevron Oil Co. proof). of interpreted liberally, pro so that the son

ponent prospective application of is not re appeals The the court of decision of elements,____”); quired satisfy all three compensatory vacated. The verdict for and Court, Superior Chemical Co. v. Chevron and mat- is affirmed 131 Ariz. at 641 P.2d at 1280-81 ter is remanded for reinstatement of the (decision given application retroactive August original judgment dated satisfied); all three factors were where FELDMAN, V.C.J., and BRUCE Inc., 114 Peagler Newspapers, v. Phoenix Tern., Pro of MEYERSON J. Court (looked only One, concur. Appeals, Division inequitable lack of results to substantial application proper). conclude retroactive CAMERON, J., himself recused Note, generally Confusion in Federal participate in the determination did not Application Test in Courts: of the Chevron matter, this and BRUCE (cid:127) Decisions, Retroactive-Prospective Tern., MEYERSON, Pro J. Court However, U.Ill.L.Rev. 117. we need not One, place sat in his Appeals, Division applying precise establish a formula for and stead. holding judicial these factors. Whether a HAYS, J., participated in the given only prospective application is will be of this matter but determination question policy. v. a See Lemieux Su filed. opinion retired before Court,

perior 132 Ariz. 644 P.2d 1300 HOLOHAN, Justice, dissenting. (United does not States Constitution damages has concept retrospective-prospective decision The restrict controver- courts). subject of considerable been the of state among legal sy scholars. Punitive dam- imposed mum fine which could have been states; ages are not allowed some in upon the if it defendant had been convicted others, restrictive rules have been devel- 13-803(A)(1) felony. of a See A.R.S. § oped damages. to control such The entire (Supp.1986). The amount of the award in concept punitive damages has been sub- penal this ease is a clear illustration jected to attack from some sources. RE- court, damages. nature of such how- (SECOND) STATEMENT OF TORTS 908 ever, § declines to consider the constitutional (1965). f comment This court in Rawlings concerning issues raised the defendant Apodaca, 151 Ariz. 726 P.2d 565 procedures assessing puni- the current (1986), and Linthicum v. Nationwide damages. tive I believe that this case (1986), 723 P.2d 675 presents right opportunity for the court justifying narrowed field of conduct constitutionality pro- to consider the of our punitive damages adopted higher determining puni- cedures in assessing justify standard of imposition damages. tive These reforms Two notable law review articles discuss a should not be viewed as the end of the number of the arising constitutional issues concept reexamination of the procedure from the employed by current number of in determining states and as- The action the court this case in Wheeler, sessing punitive damages. declining apply the Linthicum standard Constitutional Reforming Case Puni- proof retroactively appear justi- does not Procedures, Damages tive 69 VA.L.REV. reliance, pur- fied. The three factors of (1983); Grass, The Penal Dimensions pose and inequity, adopted in Chevron Damages, Punitive HASTINGS Court, Superior Chemical Co. v. L.Q. Essentially, CONST. (1982), 641 P.2d 1275 for the retroac- agree authors tive-prospective analysis, weigh heavily for penal in require process nature and a due application retroactive of the Linthicum procedure greater required than that for only rule. Reliance on the old rule is the matters civil but not as strict as that re- prospective application. factor which favors quired for criminal matters. The authors purpose The of the new rule to avoid loose- juries usually given note that are no stan- ly punitive assessed damage favors retro- guide dards in assessing them the application. Finally, active the factor of punitive damages. They amount of inequity plaintiffs does not favor the be- purpose punitive damages told that the particular right puni- cause there is no punish is to the defendant and to deter damages—they tive are a windfall. Puni- purpose others. This is also the of the damages discretionary tive are a matter law, criminal law. Unlike the criminal jury, the punitive with and a retrial of the however, there are no defined limits to the damage plain- deprive issue does not punishment punitive in the instance of dam- right compensatory tiffs their dam- ages. jury’s virtually The discretion is un- ages—which only damages they are the except limited save and for the occasional right had a to recover. finding by appellate court unfair, manifestly award was unreasonable my

From review of the Chevron factors outrageous so as to shock conscience weigh I conclude that in they favor of the of the con- appellate court. authors usual rule civil cases of appli- retroactive unguided clude that such broad discretion cation. I therefore dissent from the deci- process requirements not meet due does sion of the court. of what is in fact a for assessment There is also another matter which de- penalty. criminal compensatory serves comment. The dam- $15,000, requirements age award in this case least three minimum is but the At puni- punitive damage suggested necessary as for award is million have been $3.5 damage procedures pro- to meet due which three and one-half times the maxi- tive requirement—bi- (1) meeting for another procedure should be nism cess standards: Arizona already place. compensation portion furcated trial—is bifurcated 42(b), A.R.S. case; (2) right puni- proof of the Rule of Civil Procedure of the any damages separate should be clear and con- trials of claims permits tive evidence; damages vincing punitive the maximum could issue. A claim for damages separated for should be from the other amount should be Wheeler, supra. separately established law. tried after issues in the case and prevailed on the issues plaintiff has Supreme Court has The United States jury damages. The same compensatory proce directly addressed the issue of phase of the case the first which heard assessing punitive process due dural phase dealing with the second could hear That court has noted that damages issue. protects litigants process due clause civil seek recourse in the courts either as who controversy only matter of real property hoping protect defendants their limits process requires that whether due plaintiffs attempting griev or as to redress may placed on the maximum amount which ances. Brush Logan v. Zimmerman punitive damages. There be awarded for 422, 102 455 U.S. S.Ct. 71 L.Ed.2d arguments appear strong for the to be (1982). another occasion it has ob On process requires such position that due jurisdictions served that in most dis penal na- maximum limits because cretion over the awarded is limit amounts event, ture of general only by ed rule that considered and re- the issue should be Consequently, not be excessive. solved. wholly juries assess raised in this The constitutional issues bearing neces unpredictable amounts no disappear. counsel case will not Other sary relation to actual harm caused. will, problem perhaps, make faced with the Juries remain free to use their discretion record, ultimately this court a better but selectively punish punish. or not Gertz present- decide the issues. This case must Welch, Inc., v. Robert 418 U.S. opportunity ed the for this court to resolve S.Ct. L.Ed.2d 789 Last challenges constitutionality of to the year in Aetna Insurance Co. v. La awarding puni- procedure for the Arizona —voie, -, 1580, 89 U.S. 106 S.Ct. court damages. The decision of the tive (1986), acknowledged L.Ed.2d 823 the court speculation. the matter doubt leaves challenges constitutionality the lack of standards for the award important raised issues

which, appropriate setting, must however, was, The case decided

resolved. made it unneces on another basis which challenge sary for the court to resolve the Arizona, Appellee, STATE to the award accomplished by de- purpose can be No important issues

laying a decision on the RIVERA, Appellant. Aurelio Calderon challenge by the defendant’s raised No. 6673. present procedure constitutionality of our Arizona, Supreme Court of awarding punitive En Banc. adopted the this court Linthicum higher to establish a standard 4, 1987. March damages. This action claim for meeting part way towards brings us process suggested due standards damages. The mecha-

assessing punitive

Case Details

Case Name: Hawkins v. Allstate Insurance

Court Name: Arizona Supreme Court

Date Published: Mar 4, 1987

Citation: 733 P.2d 1073

Docket Number: CV-86-0010-PR

Court Abbreviation: Ariz.