Case of the Day – Monday, May 14, 2018

MILLION DOLLAR BABY

I’ll tell you where the real money is in litigation. It’s not the guy who walks into the lawyer’s office with a tale of woe at the hands of some big, faceless, loaded corporation. It’s not the guy who was busted for pot, and he bonded out on Friday but they didn’t release him until Monday.

It’s here: if I had a nickel for every would-be client who ever asked me to take a case on contingent fee, because they were sure to get beaucoup bucks in the end with an outraged jury handed them millions in punitive damages for a fender-bender, or a sharp-tongued government clerk, or a badly-written newspaper story, or whatever the injury du jour might be. Total up my nickels, and I ought to be sitting on the veranda of my Caribbean beachfront mansion writing this right now.

Few would-be litigants really appreciate that punitive damages, also called exemplary damages, are damages awarded by a jury to punish a defendant for some terrible conduct, because, after all, it’s a civil action, and you can’t throw the malefactors in jail. But contrary to legend, punitive damages have to be tied to some actual harm.

In today’s case, some junior leasing agent for a billboard company got too enthusiastic in clearing the view for the billboard, and when the dust settled, some of the trees that had been felled belonged to the neighbor of the guy who had leased space for the billboard (now there’s someone who should be locked up). The leasing agent was sloppy, careless even, perhaps – dare we say? – reckless.

The jury found that the neighbors were harmed in an amount of about $32,000. But it added to that figure an eye-popping $2 million in punitive damages. That was too much for the trial judge, who tried to get the farmer to accept a remittitur, that is, settle for a paltry $550,000. The farmer wouldn’t do it, so the court ordered a new trial. The farmer appealed.

All of $32,000 in damage, and a cool half mil on top of it? Farmer Blust was the living embodiment of the aphorism, “Pigs get fat, but hogs get slaughtered.”

Blust v. Lamar Advertising Company, 157 Ohio App.3d 787 (Ct.App. Montgomery Co., 2004). A Lamar leasing agent signed up Jim Weber in September 1998, leasing a small piece of Jim’s farmland near the property line between his farm and the Blust farm for a billboard. The two farms were separated by an old wire fence that was largely concealed amid dense brush, vines, and trees. Because Lamar planned to erect its billboard near the tree line and  undergrowth separating the two farms, it hired Woody’s Tree Medics to remove some of the trees and vegetation from Jim’s property.

A Woody’s work crew entered the Blust property and cut down 34 trees, 17 of which were more than three inches in diameter. At trial, a jury found Lamar liable in tort for trespassing and removing the trees without permission, and awarded the Blusts compensatory damages of $32,000 and punitive damages of $2.2 million. The trial court denied Lamar’s motion for judgment notwithstanding the verdict on the punitive damages award but indicated that it would grant a new trial on all issues, including liability, unless the Blusts accepted remittitur, that is, a reduction, of the punitive damages award to $550,000.00, with half of that amount going to a nonprofit nature conservancy. The Blusts rejected remittitur, and the trial court ordered a new trial.

The Blusts appealed, challenging the trial court’s holding that the punitive damages verdict was excessive and its decision to grant a new trial on all issues. 

Held: The Court held that the Blusts were entitled to punitive damages, but the award was excessive. Thus, the trial court did not err in ordering a new trial, limited how much should be awarded in punitives.

In order to recover punitive damages, the Blusts had to show that Lamar acted with “actual malice.” Actual malice, the Court said, is a state of mind under which a person’s conduct is characterized either by ill will or by such a conscious disregard for the rights and safety of other persons that its conduct is very likely to cause substantial harm.

The Blusts argued that Lamar’s act of directing their trees to be cut constituted a conscious disregard for their rights that had a great probability of causing them substantial harm. The Court agreed, finding substantial evidence in the record that Lamar’s agent consciously disregarded the Blusts’ property rights by ordering the cutting of trees on their property. Jim Weber told Lamar’s agent about where the property line fell, and told her to follow the farm fence as a guide. After the cutting began, a friend of the Blusts appeared at the site to tell the Woody’s crew that it was cutting trees on the wrong property. The Blusts’ tenant farmer, Ted Eby, saw workers clearing trees from the Blusts’ property, and he  spoke to Woody’s crew and the agent, and told them they were cutting the Blusts’ trees.

Despite all of these warnings, the agent told Woody’s workers to keep the saws humming. A reasonable juror, the appeals court said, could find that Lamar consciously disregarded the Blusts’ property rights.

A closer question, the Court observed, is whether Lamar’s agent was aware that having the Blusts’ trees cut carried with it a great probability of causing substantial harm. “We harbor no doubt,” the Court said, “that clearing the trees had a great probability of causing some harm. Indeed, removing the trees was absolutely certain to cause harm to the extent that the Blusts lost their trees. The crucial issue on appeal is whether the agent knew that this loss of the trees had a great probability of resulting in substantial harm to the Blusts, or more specifically, whether reasonable minds could differ on this issue.”

The Court said “substantial” means “major, or real importance, of great significance, not trifling or small.” Here, the “harm” was obvious: it was the loss of the Blusts’ trees. But in order to determine whether this harm was “substantial,” it was necessary to assign some measure of value to the trees. The Blusts said that someday, they might divide a portion of the farmland into residential plots, and the absence of trees would harm the value of the plots. The Blusts’ expert testified that the trees’ loss would diminish the fair market value of the subdivided property by $51,600.

The Blusts also argued that they hoped to sell the wood from three wild walnut trees someday for veneer. What’s more, the Blusts presented testimony that it would cost $40,566 to purchase and replant all of the trees or $24,335 to replant 11 of the larger trees. Lamar argued, on the other hand, that the stumpage or firewood value of the timber was only $105. Lamar also presented expert testimony that removal of the trees may have caused the Blusts’ property value to decline by at most one percent, or $3,870.

The Court held that most of the measures of damage could be characterized as “substantial.” But the record contained no evidence that Lamar’s agent knew the Blusts might subdivide their farm for residential purposes. The record also contained nothing to indicate that the agent knew of any plans to sell the walnut trees for veneer. Likewise, the agent did not know that the Blusts – who did not live on the parcel – would ever want to replace some or all of the trees. Thus, the agent could not have known that cutting the trees would harm the future value of the land as subdivided plots, frustrate the prospects of marketing veneer, or even just lead to $25,000 – $40,000 replacement costs.

However, fair market value is a different story. Even Lamar admitted that the cutting may have reduced the Blusts’ property value $3,870. “A reasonable juror,” the Court said, “could find that a loss of this size qualifies as substantial harm and not a trivial loss.” A decline in property value because of losing trees is a “typical measure of the harm, and it is entirely predictable.”

When a verdict is influenced by passion or prejudice, the Court held, a trial court must order a new trial. However, when a verdict is merely excessive, but not influenced by passion or prejudice, a trial court must offer the plaintiff a choice between remittitur or a new trial. If the plaintiff rejects remittitur, a new trial must be ordered.

The Court agreed that the Blusts’ punitive damages award was grossly excessive under constitutional standards, and had to be set aside. Therefore, the judge properly directed the Blusts to choose remittitur or a new trial. However, the only issue tainted by error was the jury’s punitive damages award. The Blusts should not have been required to place in jeopardy their compensatory damages award or the jury’s determination that some punitive damages are warranted by undergoing a new trial on those issues.

The case was sent back to the trial court for a new calculation of punitive damages.

– Tom Root

TNLBGray

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