2009 VT 9


DeYoung v. Ruggerio (2006-357)
 
2009 VT 9
 
[Filed 30-Jan-2009]
 
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions, Vermont Supreme Court, 109 State Street, Montpelier,
 Vermont05609-0801
of any errors in order that corrections may be made before this opinion goes to
press.

 
 

2009 VT 9

 

No. 2006-357

 

Teresa DeYoung, Abigayle DeYoung,
  Tristan DeYoung, Nathaniel DeYoung and Trevor DeYoung


Supreme Court


 


 


 


On Appeal from


     v.


Rutland Superior Court


 


 


 


 


John M. Ruggerio, Esq. and The
  Law Office of 
John M. Ruggerio


January Term, 2008


 


 


 


 


Richard
  W. Norton, J.


 

James A. Dumont of Law Office of James A. Dumont, PC, Bristol, for 
  Plaintiffs-Appellants.
 
Robert F. O’Neill and Ross A. Feldmann of Gravel and Shea, Burlington, for 
  Defendants-Appellees/Cross-Appellants.
 
 
PRESENT:  Dooley, Johnson, Skoglund and Burgess, JJ.,
and Kupersmith, D.J., 
                    
Specially Assigned
 
 
¶ 1.             DOOLEY,
J.   This is an action by clients (hereinafter plaintiffs) against
a lawyer who misappropriated funds belonging to the clients.  The
complaint sought the funds, additional compensatory damages, and punitive
damages on multiple theories.  The lawyer failed to answer the complaint,
and the superior court entered a default judgment in favor of plaintiffs. 
Thereafter, the court held a trial on damages, and a jury awarded plaintiffs a
limited amount of compensatory damages but no punitive damages.  On
appeal, plaintiffs contend that the court erred by: (1) granting them a default
judgment rather than summary judgment, particularly on the question of whether
defendant’s[1]
conduct demonstrated malice; (2) allowing the jury to decide whether they had
demonstrated malice on defendant’s part; (3) not striking defense counsel’s
prejudicial statements regarding malice during closing argument; (4) refusing
to grant them a new trial based on the jury’s finding of no malice; (5)
refusing to instruct the jury that damages were available to them for insult,
indignity, and humiliation resulting from defendant’s intentional breach of a
fiduciary duty; (6) refusing to award them costs incurred after defendant made
a lump-sum settlement offer to all of the plaintiffs; and (7) ruling, as a
matter of law, that consideration under the Consumer Fraud Act (CFA), upon
which treble damages would be based, was the fee defendant said he would have
charged them rather than the money he misappropriated from them. 
Defendant cross-appeals, arguing that, in awarding attorney’s fees, the
superior court erred by not considering plaintiffs’ rejection of his settlement
offers and by not comparing the total damage award plaintiffs sought with the
amount the jury actually awarded them.  We conclude that the element of
malice was demonstrated as a matter of law in this case.  Accordingly, we
reverse the judgment in part and remand the matter for the jury to determine
how much in punitive damages, if anything, to award plaintiffs.  The only
other issues we address are those that remain relevant in light of our remand
on punitive damages.
¶ 2.             Plaintiffs
are a widow (mother) and her four children.  In July 2001, shortly after
mother’s husband committed suicide in Massachusetts,
where the family was living, mother and the children moved to Vermont to be near mother’s parents. 
Mother hired defendant, a successful real estate attorney, to close on her
purchase of a home in Vermont. 
In early 2002, mother’s mother-in-law died and left a substantial inheritance
for mother’s children.  Because husband’s suicide had resulted in a
complete breakdown in communication between mother and husband’s family, mother
hired defendant to ensure that her children would receive their inheritance
from their grandmother’s estate.
¶ 3.             Defendant
advised mother to invest the estate funds in his real estate business once they
were acquired, but she rejected this advice.  Nonetheless, in July 2002,
shortly after receiving a partial distribution of $300,000 from the estate and
setting up a trust account for the funds, defendant transferred the funds into
his own account and used the money over the next two and one-half years for his
real estate business, without informing plaintiffs that the funds had been
received.  Some nine months later, in April 2003, defendant received a
final distribution of approximately $109,000 and paid these amounts to
plaintiffs without disclosing the earlier distribution.
¶ 4.             From
the time mother hired defendant, she made repeated inquiries as to when the
funds would be available, and defendant lied to her to cover up his theft of
the funds, telling her that there were problems getting the funds out of the
probate estate.  Partly because they were unable to access the entire
estate funds, some of the children had to change their college plans and attend
less expensive institutions that were closer to home.  
¶ 5.             At
the end of 2004, mother renewed communications with her Massachusetts in-laws and learned the estate
had made the $300,000 payment to the children in 2002.  Plaintiffs filed
suit against defendant in January 2005, bringing claims for willful breach of
fiduciary duties, misrepresentation, misappropriation, negligence, breach of
contract, and deceptive acts in violation of the CFA.  At the same time,
disbarment proceedings were commenced against defendant.  In those
proceedings, defendant filed an affidavit with the Professional Responsibility
Board admitting that he “misused for my own benefit and contrary to the entitlement
of my clients . . . funds . . . delivered to me in trust for distribution to
estate beneficiaries . . . [totaling] approximately $300,000.”  Following
his disbarment, defendant paid plaintiffs $300,000, along with attorney’s fees
and interest.  He never, however, filed an answer in this case.
¶ 6.             Meanwhile,
plaintiffs moved for summary judgment, attaching a statement of undisputed
facts, mother’s affidavit, and defendant’s affidavit to the Board.  In
response, defendant asserted that plaintiffs were seeking summary judgment
rather than a default judgment to obtain more attorney’s fees from him. 
Defendant asked the court to enter a discretionary default judgment against him
pursuant to Rule 55 of the Vermont Rules of Civil Procedure.
¶ 7.             The
court granted defendant’s motion and denied that of plaintiffs.  The court
reasoned that entry of default judgment “offer[ed] an expedient resolution on
the question of liability.”  The court noted that plaintiffs had not
agreed to entry of default judgment only because they feared that a default
judgment would not allow them to have a jury trial on damages.  Finding
that entry of default judgment would not bar a jury hearing on damages, and
that plaintiffs were entitled to such a hearing, the court granted defendant’s
motion for a default judgment and held a damages hearing.
¶ 8.             Following
the close of evidence at the damages hearing, the court held a charge
conference in chambers to discuss the issue of malice as it related to
common-law and consumer-fraud punitive damages.  Plaintiffs’ position was
that the default judgment entered against defendant determined the presence of
malice as a matter of law and precluded the submission of the issue of malice
to the jury.  In the alternative, plaintiffs argued that they had
submitted sufficient evidence of malice, as a matter of law, to require an
award of punitive damages.  The court rejected these arguments and
instructed the jury that plaintiffs “must establish that [defendant] acted with
malice” before the jury could award punitive damages.  Towards that end,
the jury was given special interrogatories in response to which they first were
to indicate whether defendant had acted with malice, and second, if so,
indicate what amount of punitive damages, if any, they would award.  
¶ 9.             At
the charge conference, plaintiffs also asked the court to instruct the jury
that if they were able to establish that defendant had injured them, they were
entitled to damages for emotional harms, and specifically for insult,
indignity, humiliation, or injury to feelings.  The court refused to give
plaintiffs’ proposed instruction and instead charged the jury that plaintiffs
could be awarded damages for emotional harms suffered, but did not refer to the
specific harms enumerated by plaintiffs.
¶ 10.         At the charge
conference, plaintiffs’ counsel withdrew plaintiffs’ count alleging that
defendant violated the CFA, but only after agreeing with defense counsel that
plaintiffs could obtain an award of attorney’s fees as if liability were based
on the CFA.  The withdrawal occurred after plaintiffs’ counsel concluded
that the court would rule against plaintiffs on an issue involving the
construction of the punitive-damages provision of the CFA, 9 V.S.A. § 2461(b). 
The anticipated ruling is described in greater detail in ¶¶ 38-39, infra.
¶ 11.         During closing
argument, defense counsel emphasized the need for the jury to find malice
predicated on a showing of bad motive.  In responding to examples of obvious
malice proffered by plaintiffs’ attorney, defense counsel reminded the jury
that the court had not instructed them that defendant’s actions demonstrated
malice as a matter of law.  When plaintiff objected to this comment, the
court told the jury that “the issue of malice is going to be submitted to the
jury” although “it may have been found by a Court in other
circumstances.”  Defense counsel then reiterated to the jury that “if
there hasn’t been a showing of malice, then you don’t analyze the punitive
damages.”
¶ 12.         During its
deliberations, the jury submitted questions to the court concerning perceived
inconsistencies in the definition of malice set forth in the court’s charge,
which was taken from our case law.  After discussing with counsel how to
respond, the court read parts of Brueckner v. Norwich University, 169
Vt. 118, 730 A.2d 1086 (1999) to the jury to clarify its instruction.  In
so doing, the court acknowledged the jury’s apparent confusion over the words
“reckless” and “recklessness” as they related to the concept of malice, and
attempted to distinguish the two terms.
¶ 13.          Ultimately,
the jury awarded $5000 to mother and $1000 to each child in unreimbursed
compensatory damages, but indicated by special interrogatory that it did not
find malice and thus did not award plaintiffs any punitive damages. 
Plaintiffs moved for the judgment to be set aside under Rules 52, 55, 59, and
60 of the Vermont Rules of Civil Procedure.  The court rejected
plaintiffs’ motion, ruling, in part, that the default judgment entered against
defendant did not decide the issue of malice in plaintiffs’ favor.  The
court reasoned that: (1) this was not an ordinary default judgment in that
defendant himself moved for default; (2) the court had broad discretion to
allow evidence on elements of a claim following entry of default judgment; and
(3) the policy interests underlying default judgments and the role of the jury
in determining punitive damages favored submitting the question of malice to
the jury.
¶ 14.         The court also
addressed the parties’ claims concerning costs and attorney’s fees. 
Defendant argued that because plaintiffs had rejected his settlement offers and
because the offers exceeded the aggregate amount eventually awarded to them,
V.R.C.P. 68 precluded them from recovering attorney’s fees under the CFA. 
Rule 68 states in pertinent part that “[i]f the judgment finally obtained by
the offeree is not more favorable than the offer, the offeree must pay the
costs incurred after the making of the offer.”  Ruling that Rule 68
applied only to monies defined by statute as costs, the court granted
plaintiffs’ motion for attorney’s fees in the amount they requested.  The
court applied Rule 68 to plaintiffs’ request for costs, however, limiting their
recovery to costs accrued before defendant’s offer of judgment.  This
appeal and cross-appeal followed.
¶ 15.         On appeal,
plaintiffs first argue that the superior court erred by entering a default
judgment rather than granting their motion for summary judgment. 
According to plaintiffs, summary judgment was mandatory under Rule 56(c)(3)
because defendant did not oppose by affidavit, as required by the rule, any of
their claims on the merits, including their claim that defendant’s willful and
wanton conduct was sufficient to support an award of punitive damages.  On
this point, we conclude that the superior court acted well within its
discretion in granting a default judgment rather than summary judgment. 
Cf. Dougherty v. Surgen, 147 Vt.
365, 366, 518 A.2d 364, 365 (1986) (noting that denial of motion to vacate
default judgment will be reversed on appeal only upon showing of trial court’s
abuse of discretion).
¶ 16.         Plaintiffs sought
summary judgment because they wanted a judgment on the merits and a jury trial
on damages with respect to defendant’s allegedly outrageous conduct.  They
received both.  “A default judgment is a judgment on the merits that conclusively
establishes the defendant’s liability.”  United States v. Shipco
Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987).  Further, as the
trial court ruled, entry of default judgment did not preclude plaintiffs from
obtaining a jury trial on damages.  Thus, the superior court did not abuse
its discretion by entering a default judgment based upon defendant’s concession
to a judgment on liability, which effectively rendered plaintiffs’ summary
judgment motion moot.  Cf. Bambu Sales, Inc. v. Ozak Trading Inc.,
58 F.3d 849, 854 (2d Cir. 1995) (declining to review “unusual” entry of summary
judgment following trial court’s proper entry of default judgment).
¶ 17.         Plaintiffs’
reason for raising this argument now is their apparent belief that the summary
judgment motion, if granted, would have entitled them to at least some amount
of punitive damages, even if the default judgment did not.  Yet, in asking
the trial court for summary judgment rather than default judgment, plaintiffs
never explicitly claimed that it would make a difference as to the availability
of punitive damages.  We conclude that the slight differences in wording
between the requested summary judgment and the default judgment would not have
caused a different result.
¶ 18.         We also reject
plaintiffs’ argument that the default judgment entered by Judge Cohen decided
the malice issue in their favor, thereby precluding the jury from reaching the
issue.  In his order, Judge Cohen stated that the only facts that were
disputed by defendant related to the extent of punitive damages and did not
prevent the court from entering a default judgment as to liability.  In so
ruling, the judge emphasized that “[t]he issue of damages is not before the
court at this time.”  Accordingly, the judge set the matter for a “jury
determination of the appropriate amount of damages.”
¶ 19.         Seizing upon the
phrase “appropriate level of damages,” plaintiffs argue that the court’s order
determined liability as to punitive damages by accepting as true their allegation
of defendant’s willful and wanton conduct.  According to plaintiffs, the
court intended for a jury to determine only the amount of punitive damages, and
not whether punitive damages were appropriate in this case.  We conclude
that plaintiffs read too much into Judge Cohen’s order.  Nothing in the
order suggests that the court intended to rule that plaintiffs were entitled to
an award of punitive damages.  To the contrary, the order merely states
that liability in general was proven, and that damages would be considered by a
jury at a later hearing.
¶ 20.         Plaintiffs argue,
however, that even if Judge Cohen’s order did not establish malice as a matter
of law, the superior court erred in denying their motion for a new trial under
Rule 59, in which they claimed that the jury’s finding of no malice was not
supported by any evidence.  Conceding that the jury could have declined to
award punitive damages even if it had found malice, plaintiffs did not file a
motion for judgment notwithstanding the verdict, but rather argued that they
were entitled to a new trial on damages because of the absence of any evidence
supporting the jury’s finding of no malice.  In denying plaintiffs’ Rule
59 motion, the trial court stated simply that its discretion was limited
because it had to give presumptive weight to the jury’s verdict.  We
review that ruling.  See 9B C. Wright & A. Miller, Federal Practice
& Procedure § 2531, at 478-79 (3d ed. 2008) (“The failure to seek a
judgment as a matter of law at the close of all the evidence does not
procedurally bar a motion for a new trial, but it does bar a renewed motion for
judgment as a matter of law.”); Vieau v. City & County of Honolulu,
653 P.2d 1161, 1166 (Haw. Ct. App. 1982) (“[D]espite the lack of a motion for a
directed verdict, the denial of defendants’ Rule 59(a) motion for a new trial
is reviewable by this court”); see also Proctor Trust Co. v. Upper Valley
Press, Inc., 137 Vt. 346, 349-50, 405 A.2d 1221, 1223-24 (1979) (upholding
trial court’s denial of plaintiff’s motion for judgment notwithstanding the
verdict because of plaintiff’s failure to renew motion for directed verdict
following close of evidence, but concluding that court abused its discretion in
denying plaintiff’s motion for new trial based on absence of evidence
demonstrating that plaintiff engaged in fraudulent activities); Houghton v.
Leinwohl, 135 Vt. 380, 381-82, 376 A.2d 733, 735-36 (1977) (concluding that
appellant waived his right to file motion for judgment notwithstanding the
verdict, but timely filed Rule 59 motion for new trial based on insufficient
evidence of negligence and causation).
¶ 21.         Before addressing
the merits of that ruling, however, we note that the malice issue was at the
heart of the parties’ dispute at the damages hearing.  Defendant’s
principal defense to punitive damages was that he had not acted with malice,
and that plaintiffs had failed to demonstrate that he had acted with
malice.  Defendant’s testimony and defense counsel’s closing argument
emphasized these points.  Because of plaintiffs’ position that malice
existed as a matter of law, their proposed jury charge listed the relevant
factors for the jury to consider in determining punitive damages, but did not
include a threshold question on whether malice existed.  The court
declined to exclude the threshold malice question, however, and the parties’
attorneys engaged the court in a vigorous debate about how to charge
malice.  During deliberation following the charge, the jury asked several
questions concerning the meaning of malice and the perceived discrepancies in
the definition of malice set forth in the court’s instruction. 
Ultimately, the jury indicated in response to a special interrogatory that
there was no malice and thus did not weigh the relevant factors to determine
how much, if anything, to award plaintiffs in punitive damages.
¶ 22.         Upon review of
the record in this case, we conclude that the evidence manifestly demonstrated
malice on defendant’s part, and thus the trial court should have granted
plaintiffs’ motion for a new damages hearing, one in which the jury would not
be charged with finding malice.  Although the default judgment on
liability did not entitle plaintiffs to an award of punitive damages, it served
as a basis for such an award.  Because plaintiffs obtained a default
judgment, “the factual allegations of the[ir] complaint, except those relating
to the amount of damages, will be taken as true.”  10A C. Wright,
A. Miller, & M. Kane, Federal Practice & Procedure § 2688, at 58-59 (3d
ed. 1998) (emphasis added); accord Comdyne I, Inc. v. Corbin, 908 F.2d
1142, 1149 (3d Cir. 1990); Beck v. Atlantic Contracting Co., 157 F.R.D.
61, 64 (D. Kan. 1994).  Indeed, “all well-pled claims including those
supporting liability for punitive damages are deemed admitted and supported by
evidence, and punitive damages may be awarded in a case of default
judgment.”  Wilson
Welding Serv. v. Partee, 507 S.E.2d 168, 170 (Ga. Ct. App. 1998).
¶ 23.         Here, plaintiffs’
complaint contained the following allegations.  When mother hired
defendant to obtain estate funds earmarked for her children following their
father’s suicide and their grandmother’s death, defendant unsuccessfully tried
to persuade mother to invest the funds in his real estate business as they
became available.  Even though mother declined this offer, defendant
transferred $300,000 of estate funds he received into his own account to
support his business, without informing plaintiffs that he had received the
funds.  Mother called defendant regularly about the status of the funds,
but defendant deceived her by saying that the funds were tied up in probate or
were otherwise not available.  Defendant’s theft of the funds and deceit
about their availability continued for over two years, until mother learned
that the funds had been sent to defendant for the children years earlier. 
Defendant did not dispute any of these facts, contending only—and not by
affidavit—that he was not aware of the children’s needs for the funds, as mother
claimed.  In short, the undisputed facts demonstrated that defendant was a
lawyer who breached his fiduciary duty to vulnerable clients recovering from
the loss of a family member by stealing their money and then lying about it
over a period of years until the clients discovered the theft.
¶ 24.          Although
plaintiffs did not explicitly allege malice in their complaint, they contend
that their allegations, which were not disputed in any significant sense at the
damages hearing, demonstrate malice as a matter of law.[2]  In considering this contention, we
first examine our law on the elements of malice.  To demonstrate the
malice necessary to establish liability for punitive damages, one must show
“conduct manifesting personal ill will or carried out under circumstances
evidencing insult or oppression, or even by conduct showing a reckless or
wanton disregard of one’s rights.”  Brueckner, 169 Vt. at 129, 730 A.2d at
1095 (internal quotes omitted).  In recent cases, we have emphasized that,
in addition to a showing of illegal, wrongful, or reckless conduct, there must
be some evidence of bad motive on the defendant’s part to establish malice and
support an award of punitive damages.  Id.
at 130, 730 A.2d at 1096; see also Bolsta v. Johnson, 2004 VT 19, ¶¶ 5,
7, 9, 176 Vt.
602, 848 A.2d 306 (mem.) (holding that reckless conduct of drunken driver,
without additional evidence of personal ill will or bad motive, was
insufficient to establish malice per se and support award of punitive
damages).  This emphasis on bad motive has been a source of confusion, as
evidenced by the jury’s response to the trial court’s charge in this case.
¶ 25.         On the one hand,
as indicated above, our longstanding definition of malice has included not only
“conduct manifesting personal ill will” but also “conduct showing a reckless
disregard to the rights of others.”  Bolsta, 2004 VT 19, ¶ 5. 
On the other hand, we also require some evidence of “bad motive,” which could
be interpreted as personal ill will or, at minimum, some indication of bad
faith beyond a willful violation of the law or a reckless disregard of the
rights of others.  Id.
¶¶ 5, 7.  This is the discrepancy that confused the jury in this case and
caused the trial judge to attempt to explain to the jury the difference between
the words “reckless” and “recklessness.”
¶ 26.         Our case law is
consistent in this area only if we acknowledge that “bad motive” does not arise
exclusively from “personal ill will” toward a particular person.  Although
malice is perhaps most often found when “the defendant’s tortious conduct is
motivated by ill will toward the plaintiff,” it may also be found when the
defendant engages in deliberate and outrageous conduct that is not necessarily
motivated by ill will toward any particular person.  Tuttle v. Raymond,
494 A.2d 1353, 1361 (Me. 1985); see also Preston v. Murty, 512 N.E.2d
1174, 1175 (Ohio 1987) (stating that malice can be found based upon either
“behavior characterized by hatred, ill will, or a spirit of revenge” or
“extremely reckless behavior revealing a conscious disregard for a great and
obvious harm”).
¶ 27.         Thus, malice may
arise from deliberate and outrageous conduct aimed at securing financial gain
or some other advantage at another’s expense, even if the motivation underlying
the outrageous conduct is to benefit oneself rather than harm another. 
Cf. Proctor Trust, 137 Vt. at 354, 405 A.2d at 1226 (“Actual fraud is
accomplished with an evil intent, . . . and if a jury finds that actual fraud
was committed, an injured party is entitled to have the jury consider punitive
or exemplary damages.”); Nye v. Merriam, 35 Vt. 438, 446 (1862) (stating
“that wilful fraud, as well as malice, may be punished by exemplary damages in
an action of tort”).  This is particularly true when attorneys defraud
their clients.  When an attorney defrauds a client for financial gain, “it
evidences a total disregard for the existing fiduciary relationship,” making
“an award of punitive damages [] likely if sought.”  2 Punitive Damages:
Law & Practice § 17:11, at 17-29 (2d ed. 2001).  Many cases illustrate
this principle.  See, e.g., Oliver v. Towns, 770 So. 2d 1059,
1061-62 (Ala. 2000) (upholding punitive-damages award where attorney committed
the “particularly reprehensible act” of misappropriating proceeds of client’s
settlement check); Ball v. Posey, 222 Cal. Rptr. 746, 750 (Cal. Ct. App.
1986) (concluding that jury acted with restraint in awarding $40,000 in
punitive damages based upon attorney’s conversion of client funds); Thomas
v. White, 438 S.E.2d 366, 367-68 (Ga. Ct. App. 1993) (allowing
punitive-damages award upon showing of attorney’s willful and knowing deception
as to reason for dismissal of client’s case); Hill v. Montgomery, 84
Ill. App. 300 (1899) (stating that case in which attorney gave client false
information, thereby causing her harm, “is one calling for punitive damages”); Harmening
v. Howland, 141 N.W. 131, 133 (N.D. 1913) (stating that attorney’s willful
and deceitful conduct toward client was sufficient to impose punitive damages).
¶ 28.         In cases
involving wrongdoing by a fiduciary such as a lawyer, courts have stressed that
malice arises when the attorney intentionally makes false statements to a
client to obtain some personal gain.  In Thomas, for example, the
attorneys were alleged to have intentionally and fraudulently misinformed their
client about their failure to file for a jury trial in order to insulate
themselves from suit and protect their financial well-being.  The court
found, on the basis of this behavior, clear and convincing evidence of
malice.  Thomas, 438 S.E.2d at 367-68.  In another case with
facts similar to the instant case, the court awarded significant punitive
damages to the clients of an attorney who appropriated estate funds entrusted
to her.  See Fulton v. Gavlick, 63 Pa. D. & C. 4th 250, 264-67
(Pa. Ct. Comm. Pleas 2003).
¶ 29.         In this case,
although defendant acknowledges stealing plaintiffs’ money and then lying to
them about the theft for years notwithstanding his fiduciary duty to them, he
contends that the jury could reasonably have found no malice because (1) he did
not intend to harm them, and (2) he always intended to return the money to them
sooner rather than later.  We conclude that even if the jury accepted this
explanation entirely, defendant’s fraudulent conduct demonstrated bad motive
and malice.  Defendant’s admitted motive was to enrich himself and promote
the interests of his company, which in and of itself demonstrates a bad motive. 
Cf. Sweet v. Roy, 173 Vt. 418, 445-46, 801 A.2d 694, 714 (2002) (finding
that defendants’ conduct aimed at gaining ownership of homes in mobile home
park at unreasonably low prices “was particularly reprehensible and warranted a
large punitive damage award”); Fulton, 63 Pa. D. & C. 4th at 265-66
(awarding punitive damages based on attorney’s theft of client funds motivated
by attorney’s desire to maintain her lifestyle in face of financial
problems).  To find malice, the jury was not required to determine that
defendant’s motive in stealing plaintiffs’ estate funds was to harm them rather
than enrich himself.  If that were the case, punitive damages would never
be available against companies that, for example, knowingly placed dangerous
products into the market, hoping that people would not get hurt, but willing to
ignore a great risk of harm to increase profits.
¶ 30.         Based on the
state of the evidence in this case, the trial court could have found malice as
a matter of law.  See V.R.C.P. 50(a)(1) (“If  during a trial by jury
a party has been fully heard on an issue and there is no legally sufficient
evidentiary basis for a reasonable jury to find for that party on that issue,
the court may determine the issue against that party and may grant a motion for
judgment as a matter of law . . . .”); cf. Dependable Ins. Co. v.
Kirkpatrick, 514 So. 2d 804, 806 (Ala. 1987) (finding that defendant’s
conversion of property demonstrated malice as a matter of law sufficient to
justify punitive damages); Anderson v. Int’l Harvester Co. of Am., 116
N.W. 101, 102 (Minn. 1908) (noting that authorities very generally permit
recovery of punitive damages when manner of commission of tort justifies
“inference of malice as a matter of law”).   Defendant was “fully
heard” on his claim that there was no malice, but his position lacked the
requisite evidentiary support, in light of the record demonstrating his
intentional course of wrongdoing, committed with conscious and deliberate
disregard for plaintiffs’ rights, and pursuant to an illegitimate motive. 
In such circumstances, malice existed as a matter of law, and thus the jury
could not have declined to award punitive damages based on the absence of
malice.  In the absence of a motion for a directed verdict, the court
should have granted plaintiffs’ post-hearing motion for a new trial based on
the complete absence of evidence to support the jury’s finding of no
malice.  Accordingly, we reverse and remand for the jury to consider the
proper amount of punitive damages, if any, without requiring them to make the
threshold determination of whether malice existed.
¶ 31.         We do not reach
this determination lightly.  We recognize that a trial court considering a
Rule 59 motion claiming insufficient evidence to support a jury verdict must
view the evidence most favorably to the verdict, and, further, that the trial
court’s denial of such a motion will be reversed only upon a showing of a clear
abuse of discretion.  EBWS, LLC v. Britly Corp., 2007 VT 37, ¶ 21,
181 Vt. 513, 928 A.2d 497; Brueckner, 169 Vt. at 132-33, 730 A.2d at
1097; see also Pulla v. Amoco Oil Co., 72 F.3d 648, 656-57 (8th Cir.
1995) (trial court’s denial of motion for new trial based on claim that jury
verdict was against weight of evidence will be reversed only when there is
absolute absence of evidence to support verdict, assuming that trial court
weighed evidence based on proper legal standard).  Nevertheless, because
of the arguable lack of clarity in our case law regarding the meaning of
malice, and the fact that the evidence overwhelmingly demonstrated malice on
defendant’s part, this is one of the rare cases in which we are obliged to take
such action.
¶ 32.         We also emphasize
that the jury still retains full discretion to award any amount of punitive
damages to plaintiffs, including none at all.  See Bruntaeger v. Zeller,
147 Vt. 247, 254, 515 A.2d 123, 127 (1986) (stating that under ordinary civil
law, “an award of exemplary damages is discretionary with the fact finder even
where malice is present”).  Indeed, “[u]pon the clearest proof of malice
in fact, it is still the exclusive province of the jury to say whether or not
punitive damages shall be awarded.”  Brewer v. Second Baptist Church of
Los Angeles, 197 P.2d 713, 719-720 (Cal. 1948) (quotation omitted); see
also Van Lom v. Schneiderman, 210 P.2d 461, 469 (Or. 1949) (“[T]he jury
has entire discretion to refrain from giving any punitive damages at all even
though all the elements of malicious and damaging misconduct may have been
established.”).  The decision whether to award punitive damages in a civil
trial against a defendant represents an area of unparalleled discretion on the
part of a jury in a civil trial.  Our decision today in no way limits the
scope of that discretion.  “A plaintiff is entitled to such damages only
after the jury, in its untrammeled discretion, has made the award.”  Brewer,
197 P.2d at 719 (quotation omitted).
¶ 33.         Having determined
the main issue in the case favorably to plaintiffs, we now turn to the
others.  One issue on appeal—whether the offer of judgment precluded the
award of costs—and the cross-appeal issue—whether the offer of judgment and
plaintiffs’ limited success precluded the award of attorney’s fees, at least in
the amount ordered by the court—are now moot because the amount of plaintiffs’
recovery is unknown.  Therefore, we do not reach those issues.  We do
reach, however, plaintiffs’ argument that the trial court erred in failing to
present to the jury all the categories of damages to which plaintiff was
entitled.  As detailed below, we also address plaintiffs’ argument that
the court improperly determined the amount of punitive damages that the jury
could award under the CFA, but we conclude that there is no trial court ruling
we can review.
¶ 34.         We start with
plaintiffs’ arguments concerning the court’s instructions to the jury on
damages for emotional harm.  Plaintiffs argue that the court erred in not
instructing the jury that plaintiffs could recover compensatory damages for
insult, humiliation, and indignity.  Plaintiffs submitted a request to
charge on this point and argued for its inclusion at the charge
conference.  After much discussion, the court rejected plaintiffs’
language and instead instructed the jury, in pertinent part, that: “[t]hese
damages could include an amount to compensate [plaintiffs] for any emotional
harm or anguish that they have suffered as a result of the activity complained
of and to compensate for any lost educational opportunity.” 
¶ 35.         Plaintiffs’
argument is based almost entirely on this Court’s decision in Rogers v.
Bigelow, 90 Vt. 41, 95 A. 417 (1916).  Rogers is a civil
assault and battery case in which the issue was whether plaintiff had to
specially plead mental suffering in order to recover damages for that
element.   In the course of deciding that issue, the Court noted: “in
actions for intentional wrongs, such as trespass for assault and battery,
damages are recoverable for mental suffering consisting in a sense of insult,
indignity, humiliation or injury to the feelings.”  Id. at 46, 95
A. at 419.  Plaintiffs rely on that language to argue that the trial court
had to instruct that emotional injury includes humiliation, indignity and
insult.
¶ 36.         We assume that
the Rogers description is applicable to this action for intentional
misappropriation of funds, but nonetheless stress that Rogers says
nothing about what a court must include in a charge to the jury.  Our rule
is that the court can select its own language in crafting the charge, Weaver
v. Brush, 166 Vt. 98, 107, 689 A.2d 439, 445 (1996), and “the degree of
elaboration lies within . . . [the] sound discretion” of the trial judge,
  Knapp v. State, 168 Vt. 590, 591, 729 A.2d 719, 720 (1998).
We review to determine whether the instructions convey the “true spirit and
doctrine of the law.”  John A. Russell Corp. v. Bohlig, 170 Vt. 12,
19, 739 A.2d 1212, 1218 (1999).  
¶ 37.         Plaintiffs do not
argue that the instructions the court gave were inaccurate or misleading. 
The argument is entirely that the court should have elaborated by using the Rogers
language.   After hearing extensive discussion at the charge
conference, the presiding judge decided to leave the elaboration to argument of
counsel in the closing arguments.  We conclude that the court acted within
its discretion, and its instructions must be affirmed under our standard of
review.
¶ 38.         Plaintiffs also
ask us to review a ruling of the court, which also came in the charge conference,
with respect to damages under the CFA.  The complaint charged that
defendant had violated the CFA, and plaintiffs sought punitive damages and
attorney’s fees under 9 V.S.A. § 2461(b) for this violation.  The
statutory section provides:
  Any consumer
who contracts for goods or services in reliance upon false or fraudulent
representations or practices . . ., or who sustains damages or injury as a
result of any false or fraudulent representations or practices . . . may sue
for appropriate equitable relief and may recover . . . the amount of his
damages, or the consideration or the value of the consideration given by the
consumer, reasonable attorney’s fees, and exemplary damages not exceeding three
times the value given by the consumer.
 
9 V.S.A. § 2461(b).  The
parties disputed the meaning of the term “the value given by the consumer” in
the clause providing for exemplary damages.  It was undisputed that
plaintiffs had paid defendant nothing for his services and that there was no
contract establishing defendant’s fee or the method of its calculation. 
Defendant argued that the “value given by the consumer” was the amount that he
would have charged plaintiffs, and that the jury could determine that amount
from his testimony.  Plaintiffs apparently[3] argued that the jury could consider at
least part of the money defendant misappropriated as “value given by the
consumer.”  
¶ 39.         We have commented
in other decisions that it is difficult to find reviewable rulings in charge
conferences. See Winey v. William E. Dailey, Inc., 161 Vt. 129, 137-38,
636 A.2d 744, 750 (1993).  This case is a good example.  In their
brief, plaintiffs argue that they had “orally requested a charge allowing the
jury to decide the value of the consideration . . . and objected to the jury
charge that this had been taken from the jury” because the “court ruled that
the consideration was only the amount Mr. Ruggiero said he would have charged
for his time.”  Although we cannot determine this conclusively because
there was no definitive ruling by the trial judge, we doubt that the trial
judge would have ruled as a matter of law what the value given by plaintiffs
was for purposes of § 2461(b).[4] 
It does appear, however, that the trial judge was likely to craft an
instruction that favored defendant’s, and not plaintiffs’, definition of
“value,” but again the events never reached that stage, and no specific charge
language was considered.  When plaintiffs’ counsel saw that the issue was
not likely to be resolved in his favor, he withdrew the count charging a
violation of the CFA, first from consideration of punitive damages and then
from consideration of compensatory damages.  In return, defendant agreed
that plaintiffs could recover attorney’s fees under § 2461(b) as if liability
was determined under the CFA.
¶ 40.         Plaintiffs argue
that we should reach the issue because they preserved it through an objection
under V.R.C.P. 51(b) after the charge was delivered.  The objection was
irrelevant, however, because by the time it was given the CFA was out of the
case and the charge never mentioned the CFA. Plaintiffs’ problem is not with
the absence of an objection, but with the absence of a definitive ruling that
we can review.  Ordinarily, we would review a ruling such as this that
could reemerge on remand, but, for the reasons stated above, we cannot do so
with respect to this issue.
Reversed and remanded for further proceedings in
accordance with this opinion.
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 
 





[1] 
For ease of reading, the two defendants, John Ruggiero, Esq. and the Law Office
of John M. Ruggiero, Esq., will be referred to, in the singular, as defendant.


[2] 
We note that this Court has suggested, but never explicitly held, that the jury
determines whether malice exists as a question of fact.  See Gaylord v.
Hoar, 122 Vt. 143, 148, 165 A.2d 358, 362 (1960) (noting that punitive
damages may be awarded in action for conversion characterized by malice or
reckless and wanton disregard of plaintiffs’ rights, and further stating that
question of existence of reckless and wanton disregard of plaintiffs’ rights is
one of fact for the jury).  Some jurisdictions hold that the trial court
initially determines whether malice exists, and, if the court finds malice, the
jury determines the amount of punitive damages.  See, e.g., Cent.
Office Tel., Inc. v. Am. Tel. & Tel. Co., 108 F.3d 981, 994 (3d Cir.
1997) (noting that, under Oregon law, “the judge determines whether there is
evidence of malice as a matter of law, and if he decides there is, the
assessment of damages is committed to the jury’s discretion”); Dillard Dep’t
Stores, Inc. v. Beckwith, 989 P.2d 882, 887 (Nev. 1999) (stating that trial
court has responsibility “to determine whether, as a matter of law, the
plaintiff has offered substantial evidence of malice in fact to support a
punitive damages instruction” (quotation omitted)).  Most courts, however,
hold that the jury, as the finder of fact, determines whether malice
exists.  See, e.g., Lindquist v. Friedman’s, Inc., 8 N.E.2d 625,
628 (Ill. 1937) (stating that “question of malice is one of fact for the
jury”); Dahlen v. Landis, 314 N.W.2d 63, 69 (N.D. 1981) (stating that
question of malice is one primarily “for the jury”).  In this case,
neither party raises this issue, but instead both presume that the jury
ordinarily makes this determination.  Given that the parties have not
raised this issue, we do not reach it.


[3]
We have said “apparently” because plaintiffs’ theory is not clear. 
Plaintiffs seemed to argue at one point that defendant would have kept a third
of the recovery, but in their brief they argue that embezzled funds are treated
for income tax purposes as income “and the remedial purpose of the Consumer
Fraud Act requires the same treatment here.”
 


[4]
The judge said in the charge conference that he was still “debating in my mind
whether I have the jury decide,” but shortly thereafter said “I think I’ll
charge the jury that in this case the consideration would be . . . guided by
the fee charged.”



