Shane v. Rhines

¶1concurring.

¶2I agree with the Per Curiam Opinion. I write separately to state what procedure I believe should be used when a civil action for punitive, as well as compensatory, damages proceeds to jury trial. The problem is obvious. On the one hand, evidence of the defendant’s ability to respond in damages can improperly influence the jury’s determination of liability. Accordingly, such evidence, and particularly evidence of insurance, is generally inadmissible at trial because of the danger of its misuse. Poulin v. Zartman, 548 P.2d 1299, 1300 (Alaska 1976); Alaska R.Evid. 411. On the other hand, when punitive damages are at issue, evidence of the defendant’s wealth, including any insurance, is relevant to determining what amount should be awarded so as to fulfill the purposes of punishment and deterrence. Thus, in an action in which punitive damages may be awarded, there is a strong reason not to present evidence of the defendant’s wealth to the jury and, at the same time, there is a need to present such evidence. Justice would be best served if both of these conflicting interests could be accommodated.

¶3*902I believe the solution to this dilemma is as obvious as the problem is. Civil Rule 42(b) specifically states that “[t]he court, in furtherance of convenience or to avoid prejudice, ... may order a separate trial of any ... issue.. .. ” This Rule was designed to provide flexibility in handling trials, and its use in cases such as this would easily resolve the problem presented. The issue of the proper amount of punitive damages to award can simply be bifurcated from the other issues in the case. In this fashion, the liability issues could be determined without the possibility of the jury’s decision being tainted by evidence of the defendant’s wealth. If the jury decides. in the first phase of the trial that an award of punitive damages is appropriate, a second phase of the trial, using the same jury, could then be held to determine the proper amount of the award. At this separate phase, the needed evidence of the defendant’s wealth, including evidence of any insurance coverage, could be presented. The minimal additional costs and delay entailed in using this procedure would clearly be outweighed by the benefits it would confer in ensuring that the interests of justice are fulfilled.

¶4The benefits of bifurcating the issues in this fashion so clearly outweigh any possible burdens, I am of the opinion that it would be an abuse of discretion for the court not to follow this procedure in this or similar cases.

¶5with whom MATTHEWS, Justice, joins, dissenting in part, concurring in part.

¶6I respectfully disagree with the court’s conclusion that evidence of Rhines’ insurance policy was properly excluded by the trial court. Under the circumstances, the evidence should have been admitted and I would so hold.

¶7The purpose of introducing the insurance policy was to establish Rhines’ ability to pay punitive damages. Evidence of the defendant’s financial condition is admissible to determine how large a punitive damage award must be to achieve the purposes of punishment and deterrence. Clary Insurance Agency v. Doyle, 620 P.2d 194, 205 (Alaska 1980); Sturm, Ruger & Co. v. Day, 594 P.2d 38, 48 (Alaska 1979), modified on rehearing, 615 P.2d 621 (Alaska 1980), cert. denied, 454 U.S. 894, 102 S.Ct. 391, 70 L.Ed.2d 209 (1981). A defendant’s insurance policy is a part of his financial resources and will obviously affect the degree to which a defendant is punished by a punitive damage award.

¶8Although Evidence Rule 411 states that evidence of insurance is not admissible to determine fault or negligence, it does not require its exclusion “when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.” Alaska R.Evid. 411. The list of permissible purposes is illustrative, not exclusive, and thus “evidence of insurance is admissible for any purpose that does not involve an inference from the fact of insurance to the existence of negligence or similar wrongdoing.” 23 C. Wright & K. Graham, Federal Practice and Procedure § 5365, at 454 (1980); see also 10 J. Moore, Moore’s Federal Practice § 411.04 (1981).

¶9Since Shane’s purpose in offering the evidence of Rhines’ insurance policy was not to show negligence or wrongdoing, but was offered to establish Rhines’ ability to pay punitive damages, Rule 411 does not bar the admission of that evidence. Cf. 23 C. Wright & K. Graham, Federal Practice and Procedure § 5364, at 449 (1980) (“Finally, Rule 411 does not prohibit the use of evidence of insurance where it is relevant to the question of damages or punitive damages .... ”). Furthermore, there is no danger that Rhines will be unfairly prejudiced by the admission of the insurance policy since he has already admitted that he was at fault, and thus the policy of Rule 411 is not compromised at all in this case. See Commentary to Alaska R.Evid. 411 (“The courts have . . . rejected evidence of liability insurance for the purpose of proving fault and absence of liability insurance as proof of lack of fault”). Therefore, I believe the trial court erroneously excluded *903evidence of Rhines’ insurance policy, and that Shane should receive a new trial.1

¶10My proposed holding raises the further question of whether the new trial should be limited to the issue of punitive damages alone, or whether it should encompass, as well, the issue of compensatory damages. We have previously stated that “a partial retrial should not be ordered unless it clearly appears that the issue to be decided is distinct and separable, and can be had without injustice to any party.” Caterpillar Tractor Co. v. Beck, 624 P.2d 790, 795 (Alaska 1981). In my judgment, the second of these conditions is not clearly met in the case at bar.

¶11Rhines’ attorney was permitted to introduce evidence of his client’s financial condition. Because the trial court excluded evidence of Rhines’ insurance policy, a distorted and false depiction of his financial condition was presented. I am unable to say that this false picture did not influence the jury in assessing compensatory as well as punitive damages. The trial court did not instruct or admonish the jury to consider the evidence of Rhines’ financial condition only on the question of punitive damages. This, in other words, is not a case in which the parties on appeal can “pinpoint error so as to show that the error .. . may have affected only one issue.” Caterpillar Tractor Co. v. Beck, 624 P.2d at 795, quoting from Maxwell v. Portland Terminal Railroad Co., 253 Or. 573, 456 P.2d 484, 486 (Or.1969). Thus, I would hold that a new trial on both issues is required.

¶12On the remaining issues, I concur. I disagree, however, with Justice Compton’s concurring opinion which states that it is an abuse of discretion per se for a trial judge to fail to order a bifurcated trial in cases such as this. In my view there are too many factors bearing on the propriety of a bifurcated trial which are individual to each particular case to justify laying down any per se rule and thus wresting discretion from the hands of the trial judge. See J. Ghiardi and J. Kircher, Punitive Damage Law and Practice § 12.04 (1981) and cases cited therein. I do not believe that the prejudice to a defendant that might result from the introduction of evidence of liability insurance will always justify the added time and expense of a split trial. To me the proposition that routine bifurcation in every punitive damage case is desirable seems highly questionable. Leading commentators who have examined the issue have also found this proposition to be dubious. Id. § 12.13; see also Weinstein, Routine Bifurcation of Jury Negligence Trials: An Example of the Questionable Use of Rule Making Power, 14 Vand.L.Rev. 831 (1961).