July 12, 2019

Court of Appeal reverses ruling in which trial court blamed himself for plaintiffs' failure to introduce financial condition evidence (Tran v. Lam)

The California Court of Appeal commonly reverses punitive damages awards when a plaintiff fails to present meaningful evidence of the defendant's ability to pay.  This unpublished opinion falls into that category, but with an unusual wrinkle.

During trial, plaintiffs' counsel made some effort tried to introduce evidence of the individual defendants' finances, by asking them about their historic earnings.  The trial court sustained  relevance objections to those questions.  Plaintiffs' counsel thereafter made no further efforts to introduce evidence of the defendants' finances.

After the jury ruled for the plaintiffs and awarded punitive damages, the defendants moved to vacate the punitive damage award on the ground that the plaintiffs had failed to introduce any evidence of the defendants' finances.  The trial court agreed the plaintiffs had presented no such evidence, but denied the defense motion because he blamed himself for the lack of evidence. 

The judge explained that he had sustained the defendants' objections on two grounds: (1) the defendants' earnings from fifteen years earlier were too remote in time to be relevant, and (2) the court mistakenly thought that the trial had been bifurcated so that financial condition would be presented only in the second phase of trial.

The court was correct on the first ground.  For punitive damages purposes, only the defendants' finances at the time of trial are relevant.  But the court was wrong on the second ground.  The defendants had not asked for bifurcation. 

The trial court concluded that, because of his own confusion regarding bifurcation, the plaintiffs had not received a full and fair opportunity to present their case regarding the defendants' financial condition.  So the court granted the plaintiffs a new trial on the issue of punitive damages
and denied the defendants' motion for judgment notwithstanding the verdict.

The defendants appealed and the Fourth Appellate District, Division Three, reversed. It found that the trial court did nothing to prevent the plaintiffs from meeting their burden of presenting financial condition evidence.  The court correctly sustained objections to questions that did not seek current financial condition, and the matter never came up again.  Although the court may have believed that the trial was bifurcated, and based on that mistake the court would have sustained objections to other questions about financial condition, the court never explained that to plaintiffs' counsel, who simply failed to ask any further questions on the issue. 

So in the end, the Court of Appeal concluded that the lack of evidence was the plaintiffs' own fault.  The court reversed the order granting a new trial and directed the trial court to enter a new judgment in favor of the defendants on the issue of punitive damages.