Kelly A. Knight is an attorney and mediator based in Los Angeles, CAlifornia. He handles matters throughout California.

Court of Appeal holds that finding of malice to support punitive damages requires an intent to cause injury, not actual injury; malice finding subject to substantial-evidence review

Today we look at Morgan v. Davidson, Cal. Ct. App. 4th Dist. no. E068344 (Nov. 27, 2018) (slip opinion linked here).

Morgan gives us some good guidance on two issues related to punitive damages. First, malice sufficient to impose punitive damages requires an intent to injure, regardless of actual injury. Second, although malice must be proven with clear and convincing evidence at trial, a malice finding is subject only to substantial-evidence review on appeal.

You can read the opinion to get the back story about what led up to this incident between two neighbors. The gist is that Morgan detained Davidson’s pit bull for purposes of turning it over to animal control when it came onto his property; the pit bull had “viciously” barked at Morgan’s alpacas and had “previously attacked Morgan’s animals.” See slip op. at 3. Ultimately, Davidson and her daughter’s boyfriend, Pena, attacked and beat Morgan when he refused to release the dog, punching and kicking him including while he was down, causing him injury. See id.

This led to a trial-court verdict against Davidson and Pena of $9,000 in special damages and $100,000 in general damages. Id. at 4. The trial court also found that Davidson and Pena acted with malice and awarded $100,000 in punitive damages. Id. Davidson appealed.

Davidson argued on appeal that there was no substantial evidence that she acted with malice. Why? Because she was wearing slippers, she argued, she could not have injured Morgan. See id. at 7. The appellate court easily rejected that argument with this key holding: “Malice requires an intent to injure, not actual injury.” See id. (Further, Davidson didn’t just kick Morgan—she also punched him. Id. From the repeated punching and kicking, it was reasonable to infer intent to inflict injury (i.e., malice), and that is enough to meet the substantial-evidence burden on appeal. Id.)

Davidson argued that the standard on review for a finding of clear and convincing evidence at the trial court is “substantial evidence to support a determination by clear and convincing evidence.” See id. at 8. Because there was evidence contradicting Morgan’s version (her own testimony), Davidson argued that the finding of malice was not supported by “substantial evidence of clear and convincing evidence.” Id. at 7. Davidson cited Pulte Home Corp. v. American Safety Indemnity Co., 14 Cal. App. 5th 1086 (2017), which seemed to support Davidson with the following language:

“‘As in other cases involving the issue of substantial evidence, we are bound to consider the evidence in the light most favorable to the prevailing party, giving him the benefit of every reasonable inference, and resolving conflicts in support of the judgment.” [Citation.] But since the [factfinder’s] findings were subject to a heightened burden of proof, we must review the record in support of these findings in light of that burden. In other words, we must inquire whether the record contains “substantial evidence to support a determination by clear and convincing evidence.” ’ ”

Morgan, slip op. at 8, citing Pulte Home Corp., 14 Cal. App. 5th at 1125.

The appellate court rejected this argument, holding that once a finding of malice is made at the trial court, on appeal it is reviewed only for substantial evidence:

In the trial court, the standard of proof for the punitive damages claim was clear and convincing evidence. (Civ. Code, § 3294, subd. (a).) “It is the law that whether evidence meets the ‘clear and convincing’ test is exclusively a matter for the determination of the trier of fact. Since the trial court, upon conflicting evidence, made such a determination the question is now closed on appellate review.” (Wurche v. Stenzel (1969) 270 Cal.App.2d 499, 505; see also Crail v. Blakely (1973) 8 Cal.3d 744, 750.)

In other words, “on appeal from a judgment required to be based upon clear and convincing evidence, ‘the clear and convincing test disappears [and] the usual rule of conflicting evidence is applied, giving full effect to the respondent’s evidence, however slight, and disregarding the appellant’s evidence, however strong.’ ” (Sheila S. v. Superior Court (2000) 84 Cal.App.4th 872, 881.) Thus, under the substantial evidence standard of review, we do not reweigh the evidence. Instead, we resolve any conflicts in the evidence in favor of Morgan. (City of Crescent City v. Reddy, supra, 9 Cal.App.5th at p. 466.) Accordingly, the presence of conflicts in the evidence does not persuade us that the substantial evidence standard has not been met because, under that appellate standard, any conflicts are resolved in favor of Morgan.

Slip op. at 7-8.

The appellate court declined to follow Pulte Home Corp., citing, among other cases, the California Supreme Court’s opinion in Crail, holding that findings by clear and convincing evidence are for the trial court, not for appellate review—if there is substantial evidence to support that conclusion, the inquiry is over:

We do not follow Pulte because it conflicts with California Supreme Court cases, such as Crail v. Blakely, supra, 8 Cal.3d at page 750: “It is true that the trial court reasonably could have concluded that [the witness’s] testimony failed to satisfy the ‘clear and convincing standard referred to above. That standard was adopted, however, for the edification and guidance of the trial court, and was not intended as a standard for appellate review. ‘The sufficiency of evidence to establish a given fact, where the law requires proof of the fact to be clear and convincing, is primarily a question for the trial court to determine, and if there is substantial evidence to support its conclusion, the determination is not open to review on appeal.” (See also In re Marriage of Saslow (1985) 40 Cal.3d 848, 863; National Auto. & Cas. Ins. Co. v. Industrial Acc. Commission (1949) 34 Cal.2d 20, 25; Beeler v. American Trust Co. (1944) 24 Cal.2d 1, 7; Stromerson v. Averill (1943) 22 Cal.2d 808, 815; Treadwell v. Nickel (1924) 194 Cal. 243, 260-261.)

We follow our Supreme Court’s precedent. (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456.) Therefore, we do not examine whether there is “[s]ubstantial evidence of clear and convincing evidence,” because whether there was clear and convincing evidence was a question for the trial court. At this court, we examine whether there was substantial evidence. As set forth ante, we conclude the trial court’s finding of malice is supported by substantial evidence.

Id. at 8-9.

The appellate court affirmed the punitive-damages award.

So there you have it. The first holding is important: it is the intent to cause injury that establishes the malice necessary to impose punitive damages. Next, once that finding is made in the trial court, it is subject to mere substantial-evidence review. It seems a tall task indeed to secure a reversal on appeal on the basis that the malice finding should not have been made. I’m mindful that this includes some repetition, but here’s how the Morgan court stated the substantial-evidence test in this case:

“[O]n appeal from a judgment required to be based upon clear and convincing evidence, ‘the clear and convincing test disappears [and] the usual rule of conflicting evidence is applied, giving full effect to the respondent’s evidence, however slight, and disregarding the appellant’s evidence, however strong.’ ” (Sheila S. v. Superior Court (2000) 84 Cal.App.4th 872, 881.) Thus, under the substantial evidence standard of review, we do not reweigh the evidence. Instead, we resolve any conflicts in the evidence in favor of Morgan.

Slip op. at 7-8.

Applying the substantial-evidence test, unless there was really an oddball malice finding at the trial-court level without any real evidence, the chances are slim of getting a malice finding overturned on this basis. (As practitioners know, there are other ways to challenge a punitive-damages award. But that’s beyond the scope of our discussion today. But challenging the evidentiary basis for a malice finding is surely a tough road.)

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