John D. LEIDHOLT, Petitioner, v. The DISTRICT COURT IN AND FOR the CITY AND COUNTY OF DENVER and the Honorable James C. Flanigan, Respondents.
No. 80SA330.
Supreme Court of Colorado.
Nov. 24, 1980.
There was nothing in the court‘s order of February 7 which was unfair. Indeed, given the apparent degree of hostility between the parties, the motion would have been improperly denied.
Petitioners were scrupulous in their efforts to find alternative counsel, and conscientiously assisted Sterling and the trial court in this process after the motion to withdraw was granted. Even after February 7, 1980, Sterling had sufficient time and opportunity before her trial date to secure representation but, for a variety of reasons which do not concern us on this appeal, was unable to do so. The trial court was rightfully concerned that Sterling‘s lack of legal representation might prejudice her ability to litigate case 79CV828. But Sterling had and continues to have primary responsibility for solving this problem. By the time the trial court reversed its ruling to permit withdrawal at the hearing on July 7, 1980, nothing in the dealings between Sterling and the petitioner had improved and, if anything, their mutual lack of confidence and mistrust had deepened. The court, therefore, abused its discretion in ordering petitioners to reenter a relationship which had already been properly severed.
Our rule to show cause is made absolute.
LEE, J., does not participate.
Plaut & Lipstein, Professional Corporation, Frank Plaut, John D. Beckman, Lakewood, for respondents.
ERICKSON, Justice.
In this original proceeding, the defendant seeks to prohibit the district court from enforcing an order that he disclose his assets, income, and net worth in a medical malpractice action where the plaintiff has asserted a claim for punitive damages. We issued a rule to show cause. We now make that rule absolute and remand to the district court with directions.
Pursuant to
“26. List specifically and in detail, for each year beginning January 1, 1975 and continuing to date, your gross income as shown on your federal income tax return, and identify the amount of your income
in each year which constitute compensation from your practice as a physician and surgeon. “27. List, specifically and in detail, your assets, liabilities and net worth, both as of August 30, 1976 and as of the present date.”
The defendant filed a motion for a protective order which was denied, and the trial court ordered the defendant to answer the interrogatories. The interrogatories are predicated on the complaint which asserts a claim for punitive damages. The complaint charged that the defendant, in performing a laminectomy on the plaintiff, failed to remove a surgical sponge from the surgery site. The claim for punitive damages centers on the alleged failure of the defendant to notify the plaintiff of the presence of the sponge after the surgery was completed and the presence of the sponge was discovered in post-operative x-rays.
It is too plain for cavil that the interrogatories in issue would not be relevant if punitive damages were not in issue. It has long been established as a principle of tort law that in suits involving the assessment of compensatory damages, evidence of a defendant‘s financial status is inadmissible. See Barnes v. Sand Mountain Electric Co-op, 40 Ala.App. 88, 108 So.2d 378 (1958); Packard v. Moore, 9 Cal.2d 571, 71 P.2d 922 (1937); Baggett v. Davis, 124 Fla. 701, 169 So. 372 (1936); Laidlaw v. Sage, 158 N.Y. 73, 52 N.E. 679 (1899); 1 Jones on Evidence, §§ 4.48, 49 (6th ed. 1972). However, in determining whether punitive damages should be awarded to a plaintiff, the financial condition of the defendant is a proper factor to be considered. Miller v. Carnation Company, 39 Colo.App. 1, 564 P.2d 127 (1977); McAllister v. McAllister, 72 Colo. 28, 209 P. 788 (1922); Courvoisier v. Raymond, 23 Colo. 113, 47 P. 284 (1896). The purpose of punitive damages is not to compensate an injured plaintiff, but to punish the defendant and to deter others from similar conduct in the future.1 See Beebe v. Pierce, 185 Colo. 34, 521 P.2d 1263 (1974). Therefore, in determining the amount which should be awarded as punitive damages, the severity of the defendant‘s wrong, as well as the extent of the defendant‘s assets, must be considered to ensure that the award will punish the defendant. See Note, The Use of Evidence of Wealth in Assessing Punitive Damages in New York; Rupert v. Sellers, 44 Albany L.Rev. 422 (1980).
“Parties may obtain discovery regarding any matter, not privileged which is relevant to the subject matter involved in the pending action. . . . It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.”
See also, Lucas v. District Court, 140 Colo. 510, 345 P.2d 1064 (1959).
Because this rule permits broad discovery, it has often been interpreted to mean that more is better. However, disproportionate discovery may increase the cost of litigation, harass the opponent, and tend to delay a fair and just determination of the legal issues. We have utilized a balancing test to resolve other discovery issues, and believe that such a test is appropriate in this case. Curtis, Inc. v. District Court, 186 Colo. 226, 526 P.2d 1335 (1974). The need for discovery must be balanced by weighing the defendant‘s right to privacy and protection from harassment by an intrusion into his financial affairs, against the
Procedurally, the question is in what manner and at what stage of the proceedings should evidence of a defendant‘s financial worth be discoverable? We hold that prima facie proof of a triable issue on liability for punitive damages is necessary to discover information relating to the defendant‘s financial status.3 The trial judge should grant the plaintiff some leeway in establishing his prima facie case. The existence of a triable issue on punitive damages may be established through discovery, by evidentiary means, or by an offer of proof. This procedure protects the defendant from an unwarranted invasion of privacy and harassment where the plaintiff has merely asserted a claim for punitive damages. It also comports with the broad right of discovery granted by
The discovery issue may be presented to the court, as it was in this case, when interrogatories are submitted by the plaintiff pursuant to
Rules 26 to 37,
The extent of discovery, however, even after a prima facie case is made, is not unlimited. Specific questions requesting detailed information regarding the defendant‘s financial status may constitute unnecessary harassment. Cobb v. Superior Court, supra; Gierman v. Toman, supra. Consequently, the permissible scope of discovery should include only material evidence of the defendant‘s financial worth, and should be
Accordingly, the rule to show cause is made absolute, and the case is remanded for further proceedings not inconsistent with the directions contained in this opinion.
LEE, DUBOFSKY and LOHR, JJ., dissent.
LOHR, Justice, dissenting:
The majority holds that, where punitive damages are sought to be recovered from a defendant, discovery with respect to that defendant‘s financial worth must be deferred until the plaintiff establishes a prima facie case of entitlement to such damages. I respectfully dissent.
I share the concerns expressed by the majority that discovery is sometimes unnecessarily burdensome and costly and can be used as an instrument for harassment. On the other hand, the procedure mandated by the majority will slow the progress of the case, require two sets of interrogatories or depositions instead of one in some cases, and defer the discovery of financial information which may be relevant to settlement. The determination of whether the plaintiff has established a prima facie case will introduce a mini-trial into the pretrial procedure. A determination that no prima facie case has been established would preclude discovery of financial information. In the event that a prima facie case were later established at trial, the plaintiff would be irreparably disadvantaged in presentation of her case for punitive damages.
In the past we have rejected the argument that a prima facie case must be established before allowing extensive discovery of business and financial information by production of documents under Rule 34,
A trial court has broad discretion to issue protective orders to address the very concerns which prompt the majority to prohibit discovery of financial information before a prima facie case of liability for punitive damages has been established.
“(c) Protective Orders. Upon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court in which the action is pending or alternatively, on matters relating to a deposition, the court in the district where the deposition is to be taken may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: (1) That the discovery not be had; (2) that the discovery may be had only on specified terms and conditions, including a designation of the time or place; (3) that the discovery may be had only by a method of discovery other than that selected by the party seeking discovery; (4) that certain matters not be inquired into, or that the scope of the discovery be limited to certain matters; (5) that discovery be conducted with no one present except persons designated by the court; (6) that a deposition after being sealed be opened only by order of the court; (7) that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way; (8) that the parties simultaneously file specified documents or information enclosed in sealed envelopes to be opened as directed by the court.”
Under this authority a trial court can devise procedures appropriate to each individual
Should a trial court abuse its discretion in granting or denying protective orders, we can review the matter in advance of trial to ensure full observance of the rules of civil procedure, if the damage to the petitioner could not be cured by appeal from the final judgment. Chicago Cutlery Co. v. District Court, 194 Colo. 10, 568 P.2d 464 (1977); Curtis, Inc. v. District Court, supra. In appropriate cases where no adequate remedy exists we can review the trial court‘s action on applications for protective orders even where error could be corrected on appeal. Cameron v. District Court, 193 Colo. 286, 565 P.2d 925 (1977). Utilization of the extensive and flexible authority of the trial courts under
Under the rules, the burden to show good cause for a protective order is upon the party seeking such an order.
While we have recognized broad discretion in the trial courts to resolve discovery disputes, e. g., Chicago Cutlery Co. v. District Court, supra, our cases reflect neither insensitivity to those legitimate interests for which protective orders are authorized nor unwillingness to review abuses of discretion by a trial court and to fashion orders to provide appropriate protection. See Cameron v. District Court, supra; Curtis, Inc. v. District Court, supra.
In the instant case the trial court granted discovery of the requested financial information but required that the information be kept confidential by counsel for the plaintiff. Disclosure to the plaintiff herself was prohibited. In my opinion, this order recognized and gave weight to the competing interests of the parties and struck a balance of those interests at a point within the range of the trial court‘s discretion.
The financial information required by the interrogatories consisted of gross income, income from medical practice, assets, liabilities, and net worth. I agree with the majority that there are limits to the degree of financial detail appropriate for discovery relevant to a claim for punitive damages. However, in the absence of a showing that the information requested would be sensitive, or extensive and burdensome to produce, because of the defendant‘s own business and financial situation, I cannot conclude that the requested information exceeds appropriate limits.
I would discharge the rule.
LEE and DUBOFSKY, JJ., join me in this dissent.