Opinion
[Copyrighted Material Omitted] [Copyrighted Material Omitted] REVIEW GRANTED BY CAL. SUPREME COURT
Reprinted without change for tracking pending review and disposition by the Supreme Court.
Superior Court of San Diego County, No. 579743, Wayne L. Peterson, Judge.
COUNSEL
Higgs, Fletcher & Mack, John Morris, Gilbert, Kelly, Crowley & Jennett and Clifford H. Woosley for Defendant and Appellant.
Thickstun & Stern, Marc O. Stern and Sean Hennessey for Plaintiffs and Respondents.
OPINION
FROEHLICH, J.
The judgment in this bad faith insurance case consisted of a very small award of economic damages, a slightly larger award of noneconomic damages identified as damage for emotional distress, and a very large award of punitive damages. We conclude that the award of damages for emotional distress must be reversed because of erroneous jury instructions, and that the award of punitive damages must be reversed because of fatally flawed procedures utilized in reaching the final determination. Finally, we determine that we must return the entire case for retrial because California statutory authority requires that punitive damages may be awarded only by the same jury that makes the award of compensatory damages, thus precluding our remand for retrial only of the punitive damage issue.
Factual and Procedural Background
Jose Ceballos (Ceballos), a 24-year-old citizen of Mexico, was in San Diego living with his uncle, Fidel Rubalcaba (Rubalcaba). Rubalcaba got Ceballos a job with Rubalcaba's employer at the San Diego Stadium, Ceballos giving a false name (Alfonso de la Cruz) and a false Social Security number. Ceballos's status in the United States was based on a 72-hour "student" visa; yet he had crossed the border only once during the 6 months preceding the event leading to this case, and hence was living and working in the United States in violation of the terms of his visa. On June 23, 1979, Ceballos took his uncle's automobile for a drive and commenced a night of beer drinking. Early the next morning, while driving the wrong way up a freeway off-ramp, he collided with a vehicle driven by Richard A. Torres, Sr. (hereafter referred to as either Torres or Richard). Torres and his son, Anthony, were injured in the accident.
When arrested, Ceballos told officers he was living with his uncle, but stated his name was Alfonso de la Cruz, and gave a false address for his residence. Rubalcaba, for reasons related to his understanding of his insurance coverage, reported that his car had been stolen. Rubalcaba was insured under a policy with the Automobile Club of Southern California (Auto Club).
The Torreses filed suit against Rubalcaba and Ceballos on August 23, 1979. The Auto Club provided a defense for Rubalcaba, but declined to represent Ceballos, and a default judgment was taken by the Torreses against Ceballos for $38,563. After obtaining this judgment the Torreses dismissed their action against Rubalcaba.
The Torreses then brought suit directly against the Auto Club on the basis of Insurance Code section 11580, subdivision (b) (2), which provides for such direct action by a creditor who has obtained a judgment against an insurance company's insured. Since the judgment on which suit was brought was against Ceballos, it was necessary for the Torreses to allege and prove Ceballos was covered by the Auto Club's policy. Their theory in this regard was that Ceballos was a "permissive user" of Rubalcaba's auto, and (as a separate ground) that Ceballos was a "relative" of Rubalcaba's who was "resident" in his home (the "relative resident" theory). The confused facts surrounding Ceballos's status, name and place of residence gave rise to denials of coverage by the Auto Club. The Torreses had considerable difficulty in proving their case because of problems in obtaining and presenting the testimony of Ceballos, who was in Mexico. We do not detail, however, the allegations of misrepresentation and deception by the Auto Club or its counsel in allegedly hiding information about Ceballos, because the ultimate determination of "bad faith" on the part of the Auto Club is not challenged in this appeal.
The Torreses ultimately prevailed in their action, and in October 1986 were awarded damages against the Auto Club of $25,000 in favor of Richard and $13,000 in favor of Anthony (thus aggregating the $38,000 default judgment earlier taken against Ceballos). The judgment was paid in full by the Auto Club in November 1986. Including interest the payment amounted to over $55,000.
The Torreses then commenced, in December 1986, yet another lawsuit against the Auto Club. Although their one cause of action stated grounds for relief on several theories, the basis of their eventual presentation to the jury was violation of the statutory duties imposed by Insurance Code section 790.03, the statutory definition and preclusion of unfair and deceptive insurance practices. The case eventually came down to a claim for unreimbursed costs incurred by the Torreses in their long campaign to recover for their injuries (termed in instructions "economic damages") and claims for emotional distress (termed "noneconomic damages").
At the time this action was filed the rule of Royal Globe Ins. Co. v. Superior Court of Butte County (1979) 23 Cal.3d 880 [153 Cal.Rptr. 842, 592 P.2d 329] prevailed, permitting a private action based on the statutory definition of insurance bad faith and deceptive practices. This authority was overruled in 1988 by Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287 [250 Cal.Rptr. 116, 758 P.2d 58]. However, the Supreme Court determined that its reversal of the Royal Globe authority would apply only prospectively, and that the direct action approved by Royal Globe would still be available for cases filed before the Moradi-Shalal opinion had become final. Accordingly, the case we now review was properly tried based on Royal Globe and the rule that the Torreses could sue on the authority of Insurance Code section 790.03.
The jury found that the Auto Club had violated the provisions of Insurance Code section 790.03 by (1) misrepresenting the facts and policy provisions, (2) failing to achieve prompt investigation and processing of claims, and (3) failing to provide a good faith and fair settlement after liability had become clear. The jury awarded Richard $4,251 in economic damages (his costs and fees previously incurred and not reimbursed) and $20,000 in noneconomic damages; it awarded Anthony Torres nothing for economic damages and $10,000 for noneconomic damages. The jury further found the Auto Club guilty of malice, fraud or oppression, and in a subsequent hearing thereafter awarded punitive damages in the sum of $1.7 million.
The Auto Club brought a posttrial motion for judgment notwithstanding the verdict. The trial court granted the motion as to Anthony, finding no evidence to support a claim of emotional distress. The court denied the balance of the Auto Club's motion, affirming the $24,251 judgment in favor of Richard as well as the punitive damage award.
Contentions of Error
We view the effective issues raised by the appellant as falling into three categories:
1. The court, over objection, instructed the jury in accordance with BAJI No. 12.85, which states that a plaintiff suffering substantial financial injury caused by a defendant's intentional or reckless wrongful conduct is entitled to recover damages for "any" mental or emotional distress resulting from the financial injury. It is contended that this is an overbroad and misleading characterization of the complicated problem of awarding damages for emotional distress when no personal injury or "impact" has been suffered.
2. An original award of punitive damages was made to both plaintiffs. Then when all compensatory damages as to one plaintiff were stricken, on the motion for judgment notwithstanding the verdict, the punitive damage award was left unchanged and made applicable to only one plaintiff. Appellant contends this not only violates state law providing that punitive damages are the exclusive province of the finder of fact, but also transgresses recent pronouncements of the United States Supreme Court concerning punitive damages and the due process procedures necessary in their achievement. Appellant also contends that in the event we reverse the award of noneconomic damages to plaintiff Torres, we must reverse the punitive damage award as then not being supported by compensatory damages.
3. We raise a new issue, not previously addressed by courts reversing punitive awards, concerning the propriety of retrial of only punitive damages. We conclude that when the punitive damage portion of a judgment must be retried the compensatory award must also be resubmitted to the same jury.
Discussion
I. The Emotional Distress Damage Issue
As we have explained above, the Torreses' damages in chief resulting from their collision with Ceballos were paid in full, including interest, after their first action against the Auto Club. The only "economic" damage remaining thereafter was a small amount of costs or fees they had incurred in their saga of litigation which, for reasons not now important, had not been paid-some $4,000. Their last action against the Auto Club (the subject of this appeal) therefore concerned only this small amount of damage plus emotional distress ("noneconomic damages") and the claim for punitive damages. As illustrated by the ruling of the trial court on the motion for judgment notwithstanding the verdict, young Anthony, although physically injured in the accident, could present no evidence of emotional distress resulting from the bad faith of the Auto Club.
The only recoverable emotional distress, therefore, was that related to Richard, the father. As we stated previously, evidence was introduced which supported the jury's finding of bad faith on the part of the Auto Club, and that conclusion is not the subject of appeal. [1] We therefore are faced with the question of whether and to what extent a plaintiff who has been financially injured by an insurance company's failure to comply with its statutory insurance obligations can collect damages for emotional distress. The issue is not whether such an award can be made where the emotional distress is demonstrable, clearly evident, substantial or otherwise undoubtedly proved. The question is whether such damage can be awarded when the emotional distress is no more than that which attends any lawsuit and bedevils any ordinary litigant.
The problem is that Richard could not establish the existence of any substantial amount of emotional damage. On direct examination Torres was asked: "Do you feel that you have suffered any emotional distress as a result of the Auto Club's tactics over the last, let's see, '92, what, six years?" He answered: "I don't think I've suffered any emotional distress."
Further questioning revealed rather clearly that Torres had been angered and frustrated by the Auto Club's tactics-he thought they had been "uncaring" and "malicious" and he was "outraged at their conduct." His counsel then asked him: "[Do] you feel you should be compensated for the frustration and anger and distress you've been put through for this insurance company?" An objection to this question, which was sustained by the court, illustrates one problem of identification of the components of "emotional distress." As impliedly determined by the trial court, compensable emotional distress does not necessarily include "frustration" or "anger." The question was rephrased to ask whether Torres felt he should be "compensated for any of the emotions" he had suffered. Although subject to the same objection as the previously asked question, Torres was now allowed to answer in the affirmative, thus ambiguously although possibly supporting a finding of some emotional distress.
"Emotional distress," however, has been broadly defined as including all "highly unpleasant" mental reactions, such as " 'fright, horror, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment, worry, and nausea.' " (Golden v. Dungan (1971) 20 Cal.App.3d 295, 311 [97 Cal.Rptr. 577], quoting from Rest.2d Torts, section 46, com. j., at p. 77 [a case involving intentional infliction of emotional distress]; Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 397 [89 Cal.Rptr. 78, 47 A.L.R.3d 286].) Since we acknowledge the existence of evidence supporting the finding of at least minimal emotional distress, we have no cause to, and do not, rule that "anger" or "frustration" under some circumstances may not constitute or at least contribute to "emotional distress."
The record does disclose some bits of testimony which, generously viewed, would support a conclusion that Torres suffered mental distress. He testified that he was "upset." When asked if he had lost sleep over the matter he said, "a little bit of sleep, yes, sir." However, on cross-examination he admitted that his reaction to the denial of coverage by the Auto Club was more anger than a feeling of being "upset." He had taken no medication for any emotional or mental problems, nor had he seen a psychologist or psychiatrist. The lost sleep was actually because of concern over his son's injuries rather than the denial of his insurance claim.
In sum, this is about as skinny a case in terms of proof of emotional distress as one will run across. As we noted in an earlier case, "[l]oss by anyone of property or money ... will normally produce mental anguish." (Branch v. Homefed Bank (1992) 6 Cal.App.4th 793, 801 [8 Cal.Rptr.2d 182].) It is common knowledge among those in the legal profession, and certainly also people who have been parties to litigation, that the process normally engenders concern, distress, some sleeplessness, and a feeling of being "upset." It has long been the rule that when physical injuries result from a wrong, whether intentional or negligent, any attendant emotional distress is compensable. (See BAJI No. 14.13; 6 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, sections 1409-1411, pp. 879-881.) Whether emotional distress damages are available where the injury is only financial, however, has been the subject of considerable debate.
A sturdy line of authority stands for the proposition that in cases in which the loss as the result of tort claims is only financial, recovery for attendant emotional distress may be had only if the emotional injury suffered is "severe, i.e., substantial or enduring as distinguished from trivial or transitory." (Young v. Bank of America (1983) 141 Cal.App.3d 108, 114 [190 Cal.Rptr. 122].) The case usually first cited for this proposition is Fletcher v. Western National Life Ins. Co., supra, 10 Cal.App.3d 376, 396. The concept has subsequently been restated several times. In Commercial Cotton Co. v. United California Bank (1985) 163 Cal.App.3d 511 [209 Cal.Rptr. 551, 55 A.L.R.4th 1017] (a case involving the wrongful cashing of forged checks by the bank) the court stated that "... while damages for emotional distress unaccompanied by physical injury may be awarded in a tort action arising out of a breach of a covenant of good faith and fair dealing, the injuries suffered must be severe, i.e., substantial or enduring as distinguished from trivial or transitory." (Id. at p. 517.) Young v. Bank of America, supra, 141 Cal.App.3d 108, 114, in which the same rule requiring "severe, substantial or enduring" damage was quoted, was a similar case of a bank's tortious failure to honor its contractual commitments (refusal to adjust account for unauthorized use of a credit card).
Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239 [264 Cal.Rptr. 598] cited and followed the language in Commercial Cotton, holding that emotional distress damages could be recovered without physical injury only if such damage was severe, substantial or enduring. In that case a summary judgment against the plaintiff was upheld because the evidence "indicated that plaintiff was angry and upset; however, ... as a matter of law, such feelings do not qualify a plaintiff to a recovery of damages for emotional distress." (Id. at p. 258.)
To be contrasted with these cases is a series of opinions growing out of insurance bad faith claims, which on first consideration would seem to suggest that where bad faith in the administration of an insurance claim is shown, "any" emotional distress is recoverable. The beginning of this discussion is Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 433 [58 Cal.Rptr. 13, 426 P.2d 173]. The insurance company had wrongfully refused to settle its insured defendant's case for policy limits, resulting in a much greater jury verdict. The court broadly defined damages recoverable in tort as including recovery "for all detriment caused" including mental suffering. The opinion acknowledged that the most common example of the award for mental suffering is that which results from physical personal injuries, but stated that "damages for mental distress have also been awarded in cases where the tortious conduct was an interference with property rights without any personal injuries apart from the mental distress." (Id. at p. 433.)
The next case of interest in this series is Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566 [108 Cal.Rptr. 480, 510 P.2d 1032]. The Supreme Court reviewed a dismissal after the sustaining of demurrers. The transgressions alleged against the insurance company included the wrongful denial of liability and a fraudulent claim of arson against the insured. The Supreme Court rejected the insurance company's argument that recovery should be denied because the plaintiff's allegations taken at face value were not "outrageous" or "extreme." The court held that this standard (outrageous or extreme conduct) was appropriate for the tort of intentional infliction of emotional distress, but not necessary for liability for a tortious breach of the duty of good faith and fair dealing (Id. at p. 579.) Citing Crisci for the proposition that recovery in tort includes all damages directly caused, the court noted that the plaintiff had "alleged substantial damages for loss of property apart from damages for mental distress," and that such was sufficient to state a claim for emotional distress damages. (Id. at p. 580.) Fletcher v. Western National Life Ins. Co., supra, 10 Cal.App.3d 376 was distinguished on the ground that the language contained therein requiring severe and intense damage of long duration related to the tort of intentional infliction of emotional distress. (Gruenberg, supra, 9 Cal.3d at p. 580.)
Finally we must cite Jarchow v. Transamerica Title Ins. Co. (1975) 48 Cal.App.3d 917 [122 Cal.Rptr. 470]. The title insurance company's delict was the tortious failure to discover, disclose or eliminate an easement. A jury awarded the plaintiffs $200,000 in general damages, which included some component of damage for the infliction of mental distress. In upholding the mental distress award the appellate court stressed the existence of "substantial damage" apart from the mental distress, rather than any severe or enduring nature in the distress itself. The court stated that impact and injury were no longer prerequisites to recovery of mental distress damages, and that "courts may adjudicate negligence claims for mental distress when sufficient guarantees of genuineness are found in the facts of the case-e.g., when the plaintiff has suffered substantial damage apart from the alleged emotional injury." (Id. at p. 937, italics in original.)
The comparison and consideration of these two lines of cases is somewhat perplexing. It would seem that either insurance cases are sui generis, or the later pronouncements, culminating in Commercial Cotton and Twaite, are in disagreement with the insurance cases. We believe, however, that close examination of the cited authorities reveals some harmony in the decisions. We understand and put aside from this discussion, for instance, the special rules pertaining to the singular tort of intentional infliction of emotional distress. As noted in Restatement Second of Torts section 46, the requirement of extreme or outrageous conduct pertains to actions in which the sole invasion of rights is to the emotional well-being of the plaintiff. Where other rights are invaded (such as injury to property or person) and tort liability arises apart from emotional distress, damage for attendant emotional distress can be determined upon rules unrelated to those required for the intentional tort of infliction of emotional distress. (Rest.2d Torts, section 46, com. b., p. 72.) The rationale here is understandable: when no injury is manifested other than emotional disturbance the possibility of trivial or fraudulent actions is apparent. (See Fuentes v. Perez (1977) 66 Cal.App.3d 163, 169 [136 Cal.Rptr. 275].) Thus, in such cases a high standard of proof is appropriate. (See Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 498 [86 Cal.Rptr. 88, 468 P.2d 216].)
. In that case we attempted in very brief discussion to identify the few classes of cases in which emotional distress damages are allowed, absent impact or physical injury. We stated that such recovery was approved "when the negligence arises in a situation involving breach of fiduciary or quasi-fiduciary duties, as in bad-faith refusal to pay insurance proceeds" (citing Crisci, Gruenberg, and Jarchow). We would point out that in Branch we had no occasion to define the nature or extent of emotional distress damages which would warrant, even in the insurance cases, an award. As our discussion in the accompanying text indicates, the cited insurance cases all involve substantial, serious damage arising from emotional distress, which constitute a "reliability factor" supporting the award. We believe that nothing contained in our opinion in Branch v. Homefed Bank suggested the recoverability of damages for emotional distress in insurance bad faith cases when the distress shown by the evidence is transitory or trivial. While perhaps not directly applicable, it is noted that Twaite v. Allstate Ins. Co., supra, 216 Cal.App.3d at pages 257-258 is an insurance bad faith case which adopts the Commercial Cotton rule requiring a showing of "severe, substantial or enduring" damage to permit recovery for emotional distress. Respondent argues that insurance cases are indeed unique, and that because of the quasi-fiduciary relationship of the insurer to the insured a special rule permitting damages for emotional distress when the insurance contract is intentionally breached is appropriate, even though the emotional distress may be minor. Hence, respondent urges that we accept the literal application of BAJI No. 12.85 when applied to a bad faith case against an insurance company. Respondent suggests that we have approved this concept by our opinion in Branch v. Homefed Bank, supra, 6 Cal.App.4th at page 800
The Jarchow line of cases might appear to dispense with any showing of a "reliability factor" to sustain the otherwise elusive concept of emotional distress. Outrageous conduct is not required; serious or persistent emotional distress is not a specified factor. In each of our cited cases, however, some persuasive element of damage is found which supports or validates the attendant emotional distress claims. Justice Puglia in Merenda v. Superior Court (1992) 3 Cal.App.4th 1 [4 Cal.Rptr.2d 87] explained that "[d]amages for emotional distress have been permitted only where there is some means for assuring the validity of the claim." (Id. at p. 8.) In each of our bad faith insurance claims cases in which emotional distress damages were permitted, "means for assuring the validity of the claim" existed.
In Crisci v. Security Insurance Co., supra, for instance, the failure of the insurance company to pay a valid claim against Mrs. Crisci resulted in her loss of property, becoming an indigent at the age of 70, having to babysit for wages and tolerating financial assistance from her grandchildren, all of which led to a decline in her physical health, hysteria and suicide attempts. (Crisci v. Security Ins. Co., supra, 66 Cal.2d at p. 429.) The court noted the principal reason for limiting recovery for mental distress was to prevent fictitious claims and preclude recovery for mere bad manners or trivialities, and found no cause to apply that policy as to Mrs. Crisci because she had incurred "substantial damages apart from those due to mental distress" and the defendant's conduct had resulted in "substantial invasions of clearly protected interests." (Id. at p. 434.)
The tort alleged in Gruenberg was the fraudulent reporting of arson, thus subjecting the insured to the potential of criminal conviction. While the Supreme Court declined to label this conduct as extreme or outrageous (Gruenberg v. Aetna Ins. Co., supra, 9 Cal.3d at p. 579), it found as a validating factor the "substantial invasion of property interests of the insured." (Id. at p. 580.) The court noted that the plaintiff was compelled to go out of business, was unable to pay his creditors, incurred large medical expenses, and "that since plaintiff has alleged substantial damages for loss of property apart from damages for mental distress, the complaint is sufficiently pleaded with respect to the latter element of damages." (Ibid.) Finally, Jarchow, too, relied on the finding of a "validity" factor. The court stated that the "impact or injury" rule was no longer to be applied strictly in California, and that "... courts may adjudicate negligence claims for mental distress when sufficient guarantees of genuineness are found in the facts of the case-e.g., when the plaintiff has suffered substantial damage apart from the alleged emotional injury." (Jarchow v. Transamerica Title Ins. Co., supra, 48 Cal.App.3d at p. 937, italics in original.) Here the undiscovered cloud on the plaintiff's land title had resulted in a loss of his savings, his wife was required to return to work, the financial reversals were a constant source of worry causing lack of sleep and resulting in resort to psychiatric treatment.
Thus, while the Crisci-Gruenberg-Jarchow line of cases does not purport, explicitly, to require severe, substantial or enduring emotional distress as a ground for recovery, such distress was present in all cases. Also, importantly, the damage incurred by the plaintiffs in these cases other than the emotional distress damage was substantial. There were clear "validating" factors in each case.
In Commercial Cotton, on the other hand, the damage was the loss of $4,000 in the "essentially dormant" commercial account of a practicing neurosurgeon. Lacking any "substantial damage" other than the alleged emotional distress, it seems quite reasonable that the court adopted the requirement that the emotional distress damage be shown to be severe, substantial and enduring. Similarly, in Twaite v. Allstate Ins. Co. the plaintiff had been fully compensated for the loss of his automobile, and sued for the seemingly frivolous deprivation of his policy right to have the vehicle appraised before loss payment. As with Commercial Cotton, the only "validating factor" for the emotional distress claim would have been the nature of the distress itself. Under the circumstances it seems most appropriate that the court dismissed the claim by requiring that the evidence show severe, substantial or enduring injury.
Our conclusion, therefore, is that before recovery for emotional distress may be allowed in a case in which the only other damage is financial, there must be a showing of "substantial" injury other than the emotional distress, or the emotional distress damage itself must be "severe, substantial or enduring." Here it can be argued that the financial loss should be identified as the $35,000 unrecovered judgment (rather than the somewhat minimal $4,000 in economic loss ultimately recovered in the bad faith action). Even assuming some demonstrated financial deprivation of consequence, however, we remain of the view that there was no "validating" factor in this case which would assure the finder of fact that the emotional distress alleged was other than transitory or trivial. None of the cited cases, we believe, supports the concept of recovery for the worry, bother and status of being "upset" which normally attend any litigation. Nothing in the nature of the injury to Torres resulting from the delayed payment of his $35,000 judgment pointed demonstrably to the likelihood of his having suffered emotional distress which should be compensable. He did not lose any property; he was not forced to change jobs or file for bankruptcy; his personal distress appears mostly to be the result of worry about his son's physical injuries. Under these circumstances the jury should not have been permitted to award damages for emotional distress based on a conclusion that simply "any" such distress had been suffered.
We obviously have not attempted to review all theories on which emotional distress damages may be awarded. For instance, they may be granted without a showing of great distress when the defendant has committed a willful trespass or a tort constituting a nuisance. (Acadia, California, Ltd. v. Herbert (1960) 54 Cal.2d 328 [5 Cal.Rptr. 686, 353 P.2d 294].) There also are factual situations which provide convincing validation of the emotional distress claims other than those we have noted. In Burgess v. Superior Court (1992) 2 Cal.4th 1064 [9 Cal.Rptr.2d 615, 831 P.2d 1197], for instance, a mother was allowed to press a claim for emotional distress based on a birth defect caused by negligent treatment by physicians at the time of her child's delivery. "Physical injury is not a prerequisite for recovering damages for serious emotional distress, especially when, as here, there exists a 'guarantee of genuineness in the circumstances of the case.' " (Id. at p. 1079.)
Another way of looking at these facts would be to find that there was no substantial evidence supporting any award for emotional distress. The trial court surely would have been justified in the award of judgment to the defense notwithstanding the verdict not only as to Anthony but also as to Richard, based on the lack of any substantial evidence of emotional distress. We prefer to believe, however, that had the jury been properly instructed as to the necessity for a finding of "severe, substantial or enduring" damage before it could make an award for emotional distress, it would have made no award of such damage to Richard. Also, it would be inequitable to deprive the plaintiff of an opportunity to establish emotional distress under the more stringent test we now apply, recognizing that the plaintiff presumably approached the initial burden of proof in reliance on BAJI No. 12.85. The jury very evidently was mistaken about the grounds on which emotional distress damages could be awarded, since it returned an award of emotional distress damages to Anthony when there was a complete absence of evidence that he had suffered any. II. The Punitive Damage Award
With reluctance we frontally attack an instruction in BAJI which has been in place for many years and upon which trial judges reasonably rely. However, as is apparent from our decision in this case, we believe that BAJI No. 12.85 overstates the entitlement to damages for emotional distress when the other injury is only financial. When the only factor validating the claim for emotional distress, other than the evidence of the distress itself, is financial loss, we believe the jury should be instructed that an award of noneconomic damages for emotional distress may be made only if the jury determines upon substantial evidence that the emotional distress is "severe, substantial, or enduring."
"A legitimate and often-reiterated factor ... is the principle that exemplary damages should bear a reasonable relation to actual damages ...." (Rosener v. Sears, Roebuck & Co. (1980) 110 Cal.App.3d 740, 751 [168 Cal.Rptr. 237].) Having determined there was error in the award of noneconomic damages, the only element of compensatory damages remaining in the case is the award of some $4,000 based on previously unreimbursed costs and fees. This is indeed a small judgment. Our courts have not provided any consistent guidelines as to what ratio of punitive damages to compensatory damages will be deemed excessive. Our court in Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381 [202 Cal.Rptr. 204] analyzed a number of then existing reported ratios, failing to discover any bright line which would reveal excess. (Id. at pp. 393-396.) Cases are reported affirming ratios as high as 2,000 to 1. (Finney v. Lockhart (1950) 35 Cal.2d 161 [217 P.2d 19].) Generally, however, courts reviewing awards of substantial amounts, such as that of this case (i.e., upwards of hundreds of thousands of dollars) appear to view ratios of greater than 60 or 70 to 1 as excessive. For instance, in Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910 [148 Cal.Rptr. 389, 582 P.2d 980] (this being perhaps the most cited case laying out the requirements for an award of punitive damages) a greater award was reduced to one which would produce a ratio of 74 to 1.
The original comparison in this case-$1.7 million to $34,000-produces a ratio of 50 to 1. When the trial court reduced the total compensatory damages to $24,000 the ratio changed to 70 to 1, which the trial court apparently did not view as excessive. Our present reduction of compensatory damages to $4,000, however, creates a ratio of 425 to 1. This seems excessive, particularly when the nature of the remaining damage derives from nothing more than unreimbursed fees and costs.
The manner in which the punitive damages were determined also disturbs us. The jury was properly instructed that the case involved two plaintiffs whose cases were to be determined separately. Following this instruction and utilizing appropriate jury verdict forms, the jury returned separate compensatory damage verdicts in favor of Anthony Torres and Richard. When the jury was asked to award punitive damages, however, the form provided lumped all damages together, simply assessing total damage "against" the Auto Club and in favor of both plaintiffs. Presumably, the jury followed the instruction it had received as to "separate" plaintiffs and their rights to individual treatment, determined the separate punitive damage awards appropriate for Anthony and Richard, and then aggregated the two to reach $1.7 million. If there was error in this treatment it presumably was waived, or invited, by appellant's failure to object to the jury verdict form.
The lumping of the two verdicts for punitive damages, however, created what appear to be insurmountable problems for postreview by the trial court. The trial court on motion for judgment notwithstanding the verdict erased Anthony's compensatory damages. This presumptively should have worked a reversal also of the punitive damages allocable to Anthony. (See Kuffel v. Seaside Oil Co. (1970) 11 Cal.App.3d 354, 367 [90 Cal.Rptr. 209].) This, however, was not possible for the court to effect because no one knew what portion of the $1.7 million the jury had allocated to Anthony.
Further, by affirming the total punitive damages even though reducing the compensatory damages, the court appears to have increased the punitive award to Richard. The granting of punitive damages is exclusively the province of the finder of fact. (Gagnon v. Continental Casualty Co. (1989) 211 Cal.App.3d 1598, 1602 [260 Cal.Rptr. 305].) It is not necessary for a court to reduce a punitive damage award when it reduces on posttrial motion the compensatory damages. (Betts v. Allstate Ins. Co. (1984) 154 Cal.App.3d 688, 712 [201 Cal.Rptr. 528].) However, we know of no authority permitting a court to shift the punitive damage award from one plaintiff to another plaintiff after the jury has rendered its verdict.
All told, we believe the irregularities in the procedure for reaching the final punitive damage award, coupled with the apparent excessive amount it reflects, require reversal and retrial.
Appellant contends the irregularities of the court's proceedings amount to a denial of due process. Reference is made to the recent United States Supreme Court cases which approve awards of punitive damages only when it can be determined that the state process for review of the size of the award is meaningful. (See Pacific Mutual Life Insurance Co. v. Haslip (1991) 499 U.S. 1 [113 L.Ed.2d 1, 111 S.Ct. 1032]; TXO Production v. Alliance Resources Corp. (1993) ___ U.S. ___ [125 L.Ed.2d 366, 113 S.Ct. 2711]; Honda Motor Co. v. Oberg (1994) ___ U.S. ___ [129 L.Ed.2d 336, 114 S.Ct. 2331].) The process here by which the trial judge effectively increased a punitive damage award to one plaintiff without benefit of jury approval does not comport with due process, appellant argues. However, since we reverse the punitive damage award on other grounds we need not enter the deep waters of federal constitutional due process analysis.
C. Retrial Required of Entire Case
A reversal of only a portion of a judgment ordinarily does not require complete retrial of the cause. (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, section 643, p. 625.) In Brewer v. Second Baptist Church (1948) 32 Cal.2d 791, 801 [197 P.2d 713] it was held proper to order retrial on the limited issue of punitive damages, allowing the award of compensatory damages to stand. Since that time, however, the Legislature has enacted a number of reforms not only in the rules of substance governing the entitlement to punitive damages but also in the procedures to be used in reaching an award. (See Sen. Bill No. 241, adopted in 1987, amending Civ. Code, sections 3294 and 3295.) Evidence of a defendant's wealth (long a requirement for the establishment of entitlement to punitive damages [see Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928]) will be precluded, on motion of the defendant, until a jury makes its initial award of compensatory damages and finds the plaintiff entitled to punitive damages. (Civ. Code, section 3295, subd. (d).) It was further provided that "Evidence of profit and financial condition shall be presented to the same trier of fact that found for the plaintiff and found one or more defendants guilty of malice, oppression, or fraud." (Ibid.)
The effect of this provision is to require that the jury making the initial finding of entitlement to punitive damages be the same jury determining the amount thereof. This conclusion was directly reached in City of El Monte v. Superior Court (1994) 29 Cal.App.4th 272 [34 Cal.Rptr.2d 490]. The initial jury in that case was inadvertently discharged after it reached a verdict favorable to the plaintiff on the issue of entitlement to punitive damages. It was held that any award of actual punitive damages would require the retrial of the entire cause, because a new jury could not be impaneled solely to hear the issue of the amount of punitive damages which might be awarded.
The only exception to this requirement would appear to rest upon waiver by the defendant of the right to trial of both issues by the same jury (see Medo v. Superior Court (1988) 205 Cal.App.3d 64 [251 Cal.Rptr. 924]). There has been no waiver of the right in this case. The first opportunity that would arise to demand retrial of the entire cause would come about upon the reversal by this court of the punitive award without reversal of the entire cause. Appellant could not foresee this eventuality, and hence could not be expected to raise the claim of prohibition of partial retrial until the hearing on appeal. Disposition
Respondent cites for our consideration several recent cases which reverse a punitive damage award and remand for retrial only of this issue. These are Dumas v. Stocker (1989) 213 Cal.App.3d 1262 [262 Cal.Rptr. 311]; Barber v. Rancho Mortgage & Investment Corp. (1994) 26 Cal.App.4th 1819 [32 Cal.Rptr.2d 906]; and Adams v. Murakami (1991) 54 Cal.3d 105 [284 Cal.Rptr. 318, 813 P.2d 1348]. We note that the Dumas case is from our own court, and can affirmatively state that the issue of partial retrial was neither raised nor considered in our somewhat automatic remand for only partial retrial. Since no mention of the issue is made in either of the other two cases, we may reasonably assume that it similarly was not brought in those cases to the court's attention. These cases cannot, therefore, constitute authority for the proposition that the new provision of Civil Code section 3295, subdivision (d) does not require retrial of both phases of a punitive damage case when reversal is required only by reason of the punitive award.
The judgment is reversed and the cause remanded for complete retrial. Each party shall bear his or its own costs on appeal.
It is, of course, conceivable that the plaintiff might elect to waive the claim for punitive damages, as well as that for emotional distress, choosing to recover only the judgment for economic damages. Should this somewhat unlikely election be desired and presented to the superior court, then the judgment for economic damages could be confirmed.
Benke, Acting P. J., and Hoffman, J., concurred.
Judge of the San Diego Superior Court sitting under assignment by the Chairperson of the Judicial Council.