Michael W. McGuane, Esq. |
McGuane & Haranzo
Robert P. Fitzsimmons, Esq.
Fitzsimmons Law Offices
Wheeling, West Virginia
Attorneys for Appellee
Johnny M. Knisely, II, Esq.|
Thomas R. Goodwin, Esq.
Goodwin & Goodwin
Charleston, West Virginia
Attorneys for Appellant
The Opinion of the Court was delivered PER CURIAM.
JUSTICE McGRAW dissents and reserves the right to file a dissenting opinion.
In this case a jury was incorrectly instructed that it had no discretion with
respect to an award of punitive damages; consequently the jury's verdict on punitive damages
must be vacated and the case remanded for a new trial on that issue.
Mr. Kocher became an Oxford policyholder when he purchased a used truck on April 28, 1999. Mr. Kocher financed the truck purchase with a loan in the amount of $11,563.20. The dealership where Mr. Kocher purchased and financed the truck sold Mr. Kocher a credit life and disability insurance policy that was issued by Oxford, the dealership acting as Oxford's agent.
Mr. Kocher paid an up-front premium of more than $700.00 for the insurance. The insurance policy provided that in the event Mr. Kocher became disabled, Oxford would make the monthly truck payments until Mr. Kocher was no longer disabled. The policy also provided dismemberment coverage that would pay off the entire loan balance - if Mr. Kocher suffered, inter alia, the loss of his foot at or above the ankle joint.
On May 11, 1999, Mr. Kocher suffered a severe injury to his right foot from a tractor accident. After several unsuccessful surgeries over a period of months - surgeries that amounted to progressive amputations - on February 14, 2000, Mr. Kocher's right leg was finally amputated above his ankle, but below his knee.
Shortly after the accident, Mr. Kocher notified Oxford of his injury, seeking benefits under the Oxford policy. Mr. Kocher asserts that Oxford repeatedly, improperly, and unreasonably failed to comply with its duties under the policy, thus breaching Oxford's statutory, contractual, and common-law duties to Mr. Kocher as a policyholder. Oxford denies these assertions. On July 15, 2000, Mr. Kocher filed suit against Oxford, making claims for breach of contract, statutory unfair claims settlement practices, and breach of the implied covenant of good faith and fair dealing.
The lawsuit progressed in the pre-trial discovery phase. According to detailed findings of fact later made by the circuit court, Oxford engaged in substantial litigation misconduct during the pre-trial period - including failure to comply with discovery requests; giving false information about other claims filed against Oxford in West Virginia; and improper deposition conduct. The trial court found that Oxford's litigation misconduct was a continuing pattern of misconduct, and not isolated occurrences. Our review indicates that the court's findings were well-grounded in the record.
In addition, the circuit court found that Oxford had engaged in a particular instance of extreme litigation misconduct. On or about February 6, 2002, Oxford's Senior Vice President, Larry Goodyear, the company's second-in-command, traveled from the company's office in Arizona to West Virginia, via Pittsburgh, for Mr. Goodyear's deposition. (The trial of the case was set for March of 2002.) In connection with that trip, Mr. Goodyear's secretary in Arizona called Mr. Kocher's home and pretended to be a Federal Express employee who was seeking directions to deliver a package to Mr. Kocher. Using this ruse, the secretary obtained driving directions to Mr. Kocher's house, and relayed those directions to Mr. Goodyear, who paid a visit to Mr. Kocher at Mr. Kocher's home near St. Mary's, West Virginia - and then drove to Huntington, West Virginia, to Mr. Goodyear's attorney's office.
Mr. Goodyear has an undergraduate college degree in psychology and human behavior and a master's degree in business administration. Before visiting Mr. Kocher, Mr. Goodyear advised both Oxford's President and CEO, and Oxford's Compliance Director, of Mr. Goodyear's intention to visit Mr. Kocher. They made no objection. Oxford's Director of Operations had previously attended the deposition of Mr. Kocher, where Oxford's counsel had tried to raise the question of settlement directly with Mr. Kocher, and had been told by Mr. Kocher's counsel that all settlement discussions were to be with Mr. Kocher's counsel.
Neither Mr. Goodyear nor anyone else from Oxford called Mr. Kocher to let him know that Mr. Goodyear was coming. Nor did Mr. Goodyear advise his counsel in West Virginia or Mr. Kocher's counsel of Mr. Goodyear's intended visit.
Mr. Goodyear arrived unannounced at Mr. Kocher's home, and was invited in. Mr. Kocher was not aware of any impropriety in the visit.
According to Mr. Goodyear, he talked to Mr. Kocher about a lot of stuff. We talked about his accident . . . about trucks a bit . . . fishing . . . my dad had an injury similar to Mr. Kocher's . . . I apologized for how Oxford had treated him [and] as I was leaving Mr. Kocher's house, I made a comment to him, 'Well, can we do anything for you?' He told me, 'No, I've already got counsel and lawyers.'
According to Mr. Kocher, Mr. Goodyear characterized Oxford as a mom-and- pop insurance company, and asked Mr. Kocher, I don't suppose there's anything I can do here tonight to resolve this matter, or has it went too far with your attorneys? Mr. Kocher replied I'm not going to say nothing. (See footnote 1)
Shortly thereafter, Mr. Kocher's counsel learned of Mr. Goodyear's visit, and sought to obtain more facts about the visit. In a deposition, Mr. Goodyear denied that anyone at Oxford had called Mr. Kocher or had represented themselves as a Federal Express employee in order to obtain directions to Mr. Kocher's house. Mr. Goodyear said that his secretary had obtained directions to Mr. Kocher's home through an Internet site that can in some circumstances give driving directions to particular addresses. However, the record suggests that the particular Internet site did not provide directions to rural route addresses like Mr. Kocher's; and also that its directions do not give information such as look for a mailbox that has no name on it.
Soon after Mr. Goodyear gave his deposition, Oxford advised the court that Mr. Goodyear's testimony had been erroneous, and that a phone call had been made by Mr. Goodyear's secretary to the Kocher home to obtain driving directions. At trial Mr. Goodyear claimed that at the time of his visit and at the time he gave his deposition, he had no knowledge of such a call. When the trial court ordered Oxford to produce the secretary who Mr. Goodyear said had made the call, Oxford did not do so, saying that she had resigned. Mr. Goodyear also testified at trial that while he was driving to Mr. Kocher's home, he was in communication via a cell phone with his secretary, who was directing him where to turn, etc., to get to the Kocher home, using the directions that she had obtained from the phone call. (See footnote 2)
When the circuit judge, in early March of 2002, took up a motion by Mr. Kocher for sanctions based on Oxford's litigation misconduct - including Mr. Goodyear's visit to Mr. Kocher's house - the judge stated that in 31 years of legal experience, he had never seen such egregious act of misconduct by a party to a lawsuit. As a sanction for the misconduct, the judge struck Oxford's defenses and granted judgment to Mr. Kocher against Oxford for liability to Mr. Kocher, and allowed the case to be tried to the jury only on the issue of the actual and punitive damages due to Mr. Kocher.
A damages-only trial was subsequently held, in which substantial testimony and evidence was presented by Mr. Kocher and by Oxford, from which the jury could decide what actual damages they should award to Mr. Kocher, and from which they could consider the issue of punitive damages.
On the issue of punitive damages, the court instructed the jury - over Oxford's objection - that [i]t will . . . be your duty to assess punitive damages. (Emphasis added.) Oxford's counsel proffered an instruction telling the jury that it was not required to award any punitive damages; the trial court refused to give this instruction. Oxford pointedly but unsuccessfully objected to the trial court's removal of the element of jury discretion from the jury's instructions with respect to an award of punitive damages.
On March 22, 2002, the jury returned a verdict awarding Mr. Kocher $5,012,039.60 in compensatory damages and $34,000,000.00 in punitive damages. Oxford made a motion for a new trial, and the circuit court entered a lengthy order - with findings of fact, conclusions of law, and citations to the record - denying the motion. Oxford appealed that denial to this Court.
Having reviewed all of the grounds asserted in Oxford's Petition for Appeal
and the extensive record presented by the parties, this Court granted an appeal to Oxford
solely on the issue of the jury's punitive damages award; our decision does not affect or
disturb other portions of the jury's verdict.
The specific issue in the instant case is the propriety of the trial court's requiring the jury to award punitive damages against Oxford. This issue, in a similar situation, was recently addressed in the case of Humana Health Insurance Company of Florida v. Chipps, 802 So.2d 492 (Fla. 2001).
In that case,
Humana's liability for compensatory damages on all claims, and for punitive damages under the fraud in the inducement and unfair claims practices counts, was determined by the trial court's striking Humana's pleading as a sanction for discovery violations, and entering a default judgment.
802 So.2d at 494.
In Humana,the trial court, after entering the default judgment as a sanction, instructed the jury that all of the factors in the standard jury instruction on punitive damages had been established as a matter of law, and that the plaintiffs were entitled to receive both compensatory and punitive damages as a matter of law. The Humana trial court did not instruct the jury that the jury had the discretion to decline to assess punitive damages.
Upon review, the Humana appellate court vacated the jury's punitive damage
award, concluding that the trial court's instructions erroneously interfered with the jury's
discretion. The appellate court directed the lower court's attention to a standard Florida jury
instruction telling the jury that the jury shall, if it finds maliciousness, etc. in the defendant's
conduct, determine the amount of punitive damages, if any . . . (emphasis added); and
further that the jury may in your discretion decline to assess punitive damages. 802 So.2d
at 496 n.6.
In an analogous case from this Court, Coury v. Tsapis, 172 W.Va. 103, 304 S.E.2d 7 (1983), we ruled that a default judgment was properly entered against a defendant _ including on a count seeking punitive damages _ but that the defendant was nevertheless entitled in a damages trial to contest an award of punitive damages. This is consistent with our longstanding law that
[i]t is . . . reversible error . . . to peremptorily charge the jury that
they shall or should find exemplary damages, such damages
being wholly within the discretion of the jury.
Syllabus Point 7, Greer v. Arrington, 72 W.Va. 693, 79 S.E. 720 (1913) (emphasis in original). The jury is at perfect liberty, no matter how wanton or reckless the defendant has been, to refuse punitive damages[.] Pendleton v. Norfolk & Western Railway, 82 W.Va. 270, 279, 95 S.E. 941, 944 (1918). It is erroneous to state or imply to the jury that the jury does not have such a discretion and liberty. Id.