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Tran v. Vo

Court of Appeals of Arkansas, Division I

November 15, 2017



          Hancock Law Firm, by: Alex Burgos; and Brett D. Watson, Attorney at Law, PLLC, by: Brett D. Watson, for appellant.

          One brief only.

          N. MARK KLAPPENBACH, Judge

         Appellant Thy Tran ("Tran") was in a nail-salon partnership with appellees Thi Vo and Tran Ngoc Uyen Vo (collectively "Vo"). The salon was established and operated in leased space in Maumelle, Arkansas. Within months, the relationship among the partners soured. After being ousted from the partnership and the salon, Tran sued Vo alleging several claims related to being wrongfully terminated, excluded from the still-active business, and deprived of her share of the partnership's assets. A jury in Pulaski County Circuit Court found in favor of Tran and against Vo on the claims of breach of contract and conversion, awarding Tran $57, 200 in compensatory damages and $114, 400 in punitive damages. Vo filed a motion for new trial or remittitur. The trial court upheld the compensatory-damages award but granted Vo's motion for a new trial or remittitur as to the punitive-damages award. In this one-brief appeal, Tran asserts that the trial court erred in granting a new trial or remittitur. We agree that the trial court erred and reverse.

         Here, the trial court decided to grant a new trial or remittitur for a reason it raised sua sponte and not for any of the reasons set forth in Vo's motion. The trial court determined that it had not fully instructed the jury regarding punitive damages. Although Vo had objected during trial that a punitive-damages instruction should not have been given at all because there was no evidence of malice on Vo's part, the trial court disagreed and decided to give the model jury instruction on punitive damages. Vo admittedly did not raise any objection to the form of this model jury instruction, either during discussions between the court and counsel or when the jury was instructed. The jury was instructed as follows on punitive damages, in line with the Arkansas Model Jury Instruction on this topic:

Now, in addition to compensatory damages for actual losses [Tran] may have sustained, [Tran] asked for punitive damages. Punitive damages may be imposed to punish a wrongdoer and deter the wrongdoer and others from similar conduct. In order to recover punitive damages from the defendants, [Tran] has the burden of proving by clear and convincing evidence, first, that the defendants [Vo], knew or ought to have known, in light of the surrounding circumstances, that their conduct would naturally and probably result in damage and that they continued such conduct with malice or reckless disregard of the consequences from which malice may be inferred, or that [Vo] intentionally pursued a course of conduct for the purpose of causing damage.

         The jury rendered the verdict as recited above. Vo filed a motion for new trial or remittitur within ten days of the judgment being filed. In that motion, Vo challenged the entire award, both compensatory and punitive, presenting various arguments, none of which concerned jury instructions.[1] Tran responded to each of the bases raised by Vo, asserting that no new trial or remittiur was warranted.

         At the hearing on the motion for new trial or remittitur, the trial judge remarked that the punitive-damages instruction was not complete because the second page was missing, leaving out the definition of "clear and convincing evidence." The model instruction recites that "'[c]lear and convincing evidence' is proof that enables you without hesitation to reach a firm conviction that the allegation is true." The trial court, sua sponte, raised this as an issue.

         Tran's attorney asserted that the jury "understood punitive damages and how they're going to work." Only then, and with prodding by the trial court, did Vo's attorney agree with the trial court that the failure of the jury to be given a definition of clear and convincing evidence constituted "an error or irregularity" in the proceedings. Vo's attorney said that he followed along with the trial court's reading of this model jury instruction to the jury to ensure its accuracy but did not recall thinking that this instruction was incomplete. The trial court stated from the bench that it had the discretion to raise this issue on its own in the interest of justice and that the lack of a definition of "clear and convincing evidence" invalidated the punitive-damages award. The trial court remarked that, regardless of whether the attorneys realized that the instruction lacked that definition, "I knew about it and it's been bothering me."

         A formal order was prepared and filed. The order set forth that Arkansas Rule of Civil Procedure 59(a) provides that a new trial may be granted when there is any irregularity in the proceedings or when there is error in the assessment of the amount of recovery, whether too small or too large. The order found that the jury instruction on punitive damages "was incomplete, and thus the jury was not properly instructed on the basis for awarding punitive damages." The order recited that Ark. R. Civ. P. 59 implicitly grants a trial court power to order a new trial when the damages are excessive, unless the prevailing party agrees and consents to a remittitur. The trial court's order upheld the compensatory-damages award but gave Tran the option of agreeing to the remittitur of the punitive-damages award or submitting to a new trial.[2] Tran filed a timely notice of appeal from that order.[3]

         Remittitur is within the inherent power of the court if an award is grossly excessive or appears to be the result of passion or prejudice. Holmes v. Hollingsworth, 234 Ark. 347, 352 S.W.2d 96 (1961). It may be ordered sua sponte. McNair v. McNair, 316 Ark. 299, 307, 870 S.W.2d 756, 761 (1994). When considering the issue of remittitur of punitive damages, we review the issue de novo. See Smith v. Hansen, 323 Ark. 188, 914 S.W.2d 285 (1996). We consider the extent and enormity of the wrong, the intent of the party committing the wrong, all the circumstances, and the financial and social condition and standing of the erring party. See United Ins. Co. of Am. v. Murphy, 331 Ark. 364, 961 S.W.2d 752 (1998); McLaughlin v. Cox, 324 Ark. 361, 922 S.W.2d 327 (1996). Punitive damages are a penalty for conduct that is malicious or perpetrated with the deliberate intent to injure another. See United Ins. Co., supra. When punitive damages are alleged to be excessive, we review the proof and all reasonable inferences in the light most favorable to the party awarded those damages, and we determine whether the verdict is so great as to shock the conscience of this court or to demonstrate passion or prejudice on the part of the trier of fact. See Houston v. Knoedl, 329 Ark. 91, 947 S.W.2d 745 (1997); Collins v. Hinton, 327 Ark. 159, 937 S.W.2d 164 (1997).

         In this case, however, the grant of a new trial or remittitur of punitive damages was based solely on the notion that the jury was required to be informed of a definition of "clear and convincing evidence." The remittitur was not grounded in any defect in stating what Tran had to prove in order to be awarded punitive damages; in any inherent problem with the amount awarded such as the award's ratio or relationship to compensatory damages; in any perceived passion or prejudice of the jury; or in the allegation that the punitive-damages instruction should not have been given at all. The trial court's order of remittitur here simply does not fall within the ambit of the law regarding remittitur.

         Thus, our focus is on whether the trial court abused its discretion in finding that a new trial was warranted due to a jury instruction not including a definition of clear and convincing evidence. We hold ...

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