Sunday, April 19, 2009

Stealing plaintiffs’ money and then lying to them about the theft, notwithstanding fiduciary duty, was malice as a matter of law.

New trial on amount of punitive damages granted, even though plaintiff made no Rule 50 motion. DeYoung v. Ruggerio, 2009 VT 9 (Dooley, J.)

This is an action by clients against a lawyer who misappropriated funds belonging to the clients. The lawyer failed to answer the complaint, and the superior court entered a default judgment in favor of plaintiffs. The court held a trial on damages, and a jury awarded no punitive damages based on a special interrogatory that it did not find malice. On appeal, we conclude that the element of malice was demonstrated as a matter of law in this case. Even though Plaintiff made no Rule 50 motion on this issue, 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.

Our longstanding definition of malice has been a source of confusion by referring not only to “conduct manifesting personal ill will” but also to “conduct showing a reckless disregard to the rights of others.” 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 as a matter of law.

Malice or “bad motive” does not arise exclusively from “personal ill will” toward a particular person. Malice may also be found when the defendant engages in 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. 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. Especially this case involving wrongdoing by a fiduciary, Defendant’s admitted motive to enrich himself and promote the interests of his company, in and of itself demonstrates a bad motive.

The trial court could have found malice as a matter of law, 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 the absence of a Rule 50 motion, 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.

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