A Willful, Wanton or Reckless Disregard
May 18, 2015 § 2 Comments
It doesn’t come up very often in chancery court, but from time to time a party will ask a chancellor to impose punitive damages.
Not surprisingly, the latest reported case involved parties contending over an easement. I think most experienced chancery practitioners would nod in agreement that easement and property line disputes can quite often eclipse even bitter divorces for malicious, vicious, destructive behavior.
In the case of Muirhead v. Cogan, decided March 10, 2015, siblings Steve Muirhead and Lula Cogan, along with some other siblings, inherited some land near Vicksburg. A private easement, called “Muirhead Road,” gave both Steve and Lula access to their portions of the property. Steve’s son Ronnie built a home near Steve’s, and after he began using the road also, Steve augmented the hardpan dirt surface with gravel.
The gravel washed out in heavy rains, and Steve wanted Lula to contribute $3,000 to help maintain the easement. Lula, however, was not convinced. She had the road inspected by Pete B. (described in the COA opinion as “a construction worker who owns a construction business”), who opined that it did not need any maintenance.
That’s where things took a detour:
¶6. In 2006, Ronnie built a road that intersected Muirhead Road. After the new road was built, both Steve and Ronnie abandoned the easement and began using the newly built road to access their houses. Ronnie also installed a culvert near the intersection. The culvert directed water away from the newly built road and onto the easement. Also in 2006, after the new road was built, most of the gravel was mysteriously removed from the easement. At some point after the gravel was removed, dirt from the center of the easement was pushed up onto the sides of the easement. After that, a large v-shaped ditch was dug across the easement, preventing vehicular use of the easement.
¶7. In 2007, Lula hired Pete to perform conservation work on her property. To access Lula’s property, Pete and his employees had to use the easement. To make the easement usable, Pete instructed one of his employees, Marcus Clark, to fill the v-shaped ditch with dirt. Marcus complied. However, shortly thereafter, a trench, which was approximately four feet deep and five feet wide, was dug in the center of the easement. As a result, water settled in the center of the easement, causing severe erosion. By 2008, the easement had almost completely eroded.
Lula sued, and one of her claims was for punitive damages. The COA opinion is enlightening about what law the chancellor is required to apply in making a determination whether to assess punitive damages. Judge Irving, for the court:
¶25. Steve argues that the chancery court erred by awarding punitive damages after: (1) applying an improper legal standard and (2) failing to hold an evidentiary hearing on the issue of punitive damages. Second, Steve argues that the chancery court erred by finding that the erroneous award of punitive damages was a proper basis for the award of attorney’s fees. Finally, Steve argues that the chancery court erred by finding James’s testimony credible because James relied on notes prepared by Lula. On the other hand, Lula asserts that a careful reading of the final judgment reveals that the chancery court utilized the clear-and convincing standard in finding that Steve’s actions were malicious.
¶26. In [Jones v. Music, 2 F.Supp.2d 880 (SD Miss. 1988)], which the chancery court relied on in assessing punitive damages, the United States District Court for the Southern District of Mississippi indicated that the standard to be applied during a court’s assessment of punitive damages is a preponderance-of-the-evidence standard. Jones, 2 F. Supp. 2d at 884 (finding that “[p]unitive damages may be awarded only when the trier of fact is persuaded by a preponderance of the evidence that defendant’s actions were wanton, malicious[,] or fraudulent in nature.”) Likewise, in its final judgment, the chancery court found that “[p]unitive damages may be awarded only when the trier of fact is persuaded by a preponderance of the evidence that [the] defendant’s actions were wanton, malicious[,] or fraudulent in nature.” The chancery court further found
that [Steve’s] conduct was malicious, intentional[,] and outrageous. The court finds that removing the gravel that he bought and put on the easement, and cutting a vee down the easement, was spiteful. However, after the easement was made usable following these acts, regardless of who deepened the ditches (which the court believes was an act of [Steve]), digging the trench down the middle of the easement under the guise of saving his fence was clearly malicious, intentional[,] and outrageous. [Steve], as a farmer who retired from the construction business[,] knew that this action would destroy the easement (and having destroyed the easement, [Steve] now seeks to abandon it). He knew that he could take other, less invasive, remedial actions. He never discussed the fence situation with [Lula] to ascertain the best remedial action; therefore, he was not interested in finding the best solution or in saving the easement. Obviously, he wanted to prevent [Lula] from using the easement regardless of her right to use the easement. Through this aggressive action, which he even admits was wrong, [Steve] showed an intentional[,] wanton disregard for the rights of [Lula], and Lula is entitled to punitive damages in the amount of $10,000.
¶27. We find that the standard enunciated in Jones is in clear conflict with Mississippi statutory law. Mississippi Code Annotated section 11-1-65 (Rev. 2014) provides, in relevant part, as follows:
(1) In any action in which punitive damages are sought:
(a) Punitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud.
(c) If, but only if, an award of compensatory damages has been made against a party, the court shall promptly commence an evidentiary hearing to determine whether punitive damages may be considered by the same trier of fact.
(f)(i) Before entering judgment for an award of punitive damages the trial court shall ascertain that the award is reasonable in its amount and rationally related to the purpose to punish what occurred giving rise to the award and to deter its repetition by the defendant and others.
(ii) In determining whether the award is excessive, the court shall take into consideration the following factors:
1. Whether there is a reasonable relationship between the punitive[-]damage award and the harm likely to result from the defendant’s conduct as well as the harm that actually occurred;
2. The degree of reprehensibility of the defendant’s conduct, the duration of that conduct, the defendant’s awareness, any concealment, and the existence and frequency of similar past conduct;
3. The financial condition and net worth of the defendant; and
4. In mitigation, the imposition of criminal sanctions on the defendant for its conduct and the existence of other civil awards against the defendant for the same conduct.
¶28. Despite Lula’s argument to the contrary, it is unclear whether the chancery court required Lula to prove by clear and convincing evidence that Steve’s actions were malicious. However, the chancery court’s reliance on Jones suggests that the court applied the lesser standard. Additionally, the record does not reveal that the chancery court conducted an evidentiary hearing on the issue of punitive damages, or that the chancery court ascertained that the punitive-damages award was reasonable in its amount and rationally related to the purpose of deterrence. Furthermore, the chancery court failed to consider the factors enumerated in section 11-1-65(f)(ii). Therefore, we find that the chancery court erred by awarding punitive damages in this case. Consequently, we reverse and remand for an evidentiary hearing wherein the chancery court must determine by clear and convincing evidence whether Steve’s actions were willful, wanton, and malicious. If, on remand, the chancery court finds that punitive damages are warranted, then the chancery court must consider the factors enumerated in section 11-1-65(f)(ii) in determining the amount of punitive damages to be awarded.
The court went on to reverse the award of attorney’s fees in the case because the judge had not enunciated any basis other than punitive damages for the attorney fee award.