E. Punitive Damages for Fraud and Misrepresentation

• Library: South Carolina Damages (SCBar) (2009 Ed.)

E. Punitive Damages for Fraud and Misrepresentation ³⁰

Generally, a plaintiff may recover punitive damages "only when the defendant's conduct is shown to be willful, wanton, or in reckless disregard of the rights of others."³¹

However, even if the defendant acts willfully or with fraudulent purpose, it does not necessarily mean that a plaintiff will reach the jury on the issue of punitive damages.³² First, the trial court must ascertain "the culpability of a defendant's conduct to determine whether punitive damages . . . should be submitted to the jury."³³ Then, a trial judge will instruct the jury that the amount of punitive damages to be awarded must be "measured . . . against the character of the wrong committed."³⁴

Further, after the jury has made a determination that punitive damages are proper, the trial court will employ its supervisory powers to review the jury's assessment of punitive damages.³⁵ In doing so, "the trial judge alone has the power to grant a new trial nisi when he finds the amount of the verdict to be merely inadequate or excessive."³⁶

A trial court is required to grant a new trial "when a verdict is so grossly excessive so as to shock the conscience of the court and clearly indicates the figure reached was the result of caprice, passion, prejudice, partiality, corruption, or other improper motives."³⁷ Trial courts are granted this discretion because the trial judge has heard the evidence in the case and is more familiar with the evidence and atmosphere at trial than are the appellate courts. Therefore, the South Carolina Supreme Court has held on numerous occasions that "it is fundamental that a trial judge's ruling on [new trial nisi] motions . . . will not be [disturbed] on appeal absent an abuse of that discretion."³⁸

In addition to the longstanding jurisprudence of South Carolina, the United States Supreme Court held in 1991 that an inappropriate award of punitive damages may infringe on the due process rights of the defendant.³⁹ In response, the South Carolina Supreme Court issued the opinion in Gamble v. Stevenson,⁴⁰setting forth an eight-factor post-verdict review for trial courts to employ to ensure the constitutionality of any punitive damages award.⁴¹The trial court must consider:

(1) defendant's degree of culpability; (2) duration of the conduct; (3) defendant's awareness or concealment; (4) the existence of similar past conduct; (5) likelihood the award will deter the defendant or others from like conduct; (6) whether the award is reasonably related to the harm likely to result from such conduct; (7) defendant's ability to pay; and finally, (8) as noted in Haslip, "other factors" deemed appropriate.⁴²

In reconciling Gamble with existing South Carolina jurisprudence, the South Carolina Supreme Court held that the Gamble decision agreed with the longstanding proposition of law in South Carolina that the trial judge is vested with considerable discretion over the amount of a punitive damages award.⁴³ Therefore, the standard of appeal of a trial court's review of a punitive damages award post-Gamble continues to be abuse of discretion.⁴⁴ As stated by the court:

Accordingly, it is clear that Gamble did not alter the discretion historically afforded to trial courts of this state to reduce, or add to, verdicts which they find inadequate or excessive. Gamble merely draws a bright line at which a trial court must reduce a punitive damage award, to ensure the defendant's due process rights have not been violated. Gamble did not, however, hold that a trial judge may only reduce a damage award upon finding a due process violation, nor did it overrule prior precedent permitting the trial judge to exercise its

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