December 3, 2013

Court of Appeal finds no inconsistency where jury ruled for defense on liability, but ruled for plaintiff on punitive damages (Marini v. Regenesis Power, LLC)

The jurors in this case were awfully confused.  They were asked to decide two theories of liability: false promise and breach of fiduciary duty.  They were instructed that, if they found that the defendant's conduct harmed the plaintiff, they should also decide whether the defendant acted with malice, oppression, or fraud, and therefore is subject to punitive damages. 

The jurors clearly did not understand that instruction, because they ruled in favor of the defendants on the liability issues and then proceeded to answer the punitive damages questions, finding that the defendants acted with malice, oppression, and fraud.  

After the verdict was read, the court reminded the jurors of the instructions, particularly this one: "[i]f you decide that defendants' conduct caused harm, you must decide whether that conduct justifies an award of punitive damages."  The judge asked the jurors to tell the court how they understood that sentence.  The answers did little to explain the odd verdict.  One juror said "it means that if I think the defendant did something that would cause this person to lose money . . . then I will have to award him some punitive damages."

The judge then tried to explain more clearly to the jurors that they should not reach the issue of punitive damages unless they find for the plaintiff on liability:

If you decide that the defendants' conduct caused harm to the plaintiff under either or both of the causes of action, then you can award punitive damages.  But if you did not find any harm under those two causes of action, you cannot award punitive damages . . . the way things stand, I'm going to have to nullify the punitive damages.
Nevertheless, the foreperson told the court after further deliberations that the jury chose not to change the verdict. 

The court then dismissed the jury and entered judgment for the defendant.  The plaintiffs moved for a new trial, arguing that the jury's finding of malice, oppression, or fraud was inconsistent with the defense verdict on liability.  The court denied the motion and the plaintiffs appealed.

The California Court of Appeal (Second Appellate District, Division Three) affirmed.  In this unpublished opinion, the court explained that the verdict was not inconsistent, because the liability issues and the punitive damages issues were distinct.  The malice finding did not conflict with the liability issue--it was merely superfluous.  Accordingly, the court held that the trial court acted properly by effectively striking the punitive damages finding and entering judgment in favor of the defendants.