IN THE SUPREME COURT OF TENNESSEE
AT JACKSON
FOR PUBLICATION
Filed: June 22, 1998
BILLIE J. METCALFE, )
JULIA M. METCALFE, and )
JOHNNY D. METCALFE, ) SHELBY CIRCUIT
)
Plaintiffs/Appellants, )
)
Vs. )
) HON. J. STEVEN STAFFORD,
) JUDGE
)
LARRY J. WATERS, )
)
FILED
Defendant, )
) June 22, 1998
and )
) Cecil Crowson, Jr.
Appellate C ourt Clerk
CHARLES W. PRUITT, )
) No. 02S01-9704-CV-00027
Defendant/Appellee. )
For Appellants Metcalfe: For Appellee, Charles W. Pruitt:
R. Sadler Bailey Robert C. Rosenbush
C. Philip M. Campbell Millington, Tennessee
BAILEY & CLARKE
Memphis, Tennessee
For Defendant, Larry J. Waters:
Paul E. Lewis
Millington, Tennessee
O P I N I O N
COURT OF APPEALS AFFIRMED
IN PART AND REVERSED IN PART;
REMANDED TO TRIAL COURT ANDERSON, C.J.
We granted this appeal to determine whether the Court of Appeals erred in
reversing the jury’s verdict awarding punitive damages in this legal malpractice
action. The appeals court held that punitive damages were improper because the
defendant’s malpractice did not constitute intentional, fraudulent, malicious or
reckless conduct and because the defendant’s efforts to conceal his actions were
not contemporaneous with his malpractice. The court affirmed the jury’s verdict as
to liability, but reversed the jury’s verdict as to compensatory damages because it
was excessive.
After our review of the record and applicable authority, we hold that as to
punitive damages, the evidence supported a finding that the defendant engaged in
intentional, fraudulent, malicious, or reckless conduct and that there is no
requirement that a defendant’s attempts to lie about or conceal his conduct must
be contemporaneous with the underlying malpractice. The judgment of the Court
of Appeals is therefore reversed in part and the jury’s verdict as to punitive
damages is reinstated. The case is remanded to the trial court for a new trial
solely on the issue of compensatory damages for the reasons expressed by the
Court of Appeals.
BACKGROUND
In September of 1986, the plaintiff, Billie Metcalfe, was a passenger in a car
that was involved in a head-on collision with another automobile. Metcalfe, who
was age 16 at the time, suffered a broken leg, a concussion, facial cuts, and had to
have a pin surgically placed in her hip. She spent thirteen days in the hospital.
The plaintiff and her parents, Julia and Johnny Metcalfe, later hired the
defendant, Larry Waters, to represent them in connection with the accident. In
September of 1987, Waters filed a complaint against the driver of the vehicle Billie
Metcalfe had been riding in, the driver’s parents, and several other defendants.
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The complaint was non-suited by Waters on March 15, 1990, because Waters was
not prepared on the day of trial. The complaint was re-filed on March 6, 1991;
however, Waters did not pay the filing fee, nor did he properly issue summons.
The complaint was dismissed by the trial court against some of the
defendants in December of 1992, due to the expiration of the statute of limitations.
It was dismissed as to the remaining defendants on May 14, 1993, when W aters
failed to appear for the trial. Waters lied to the plaintiffs about the status of the
case for several months, telling them that it was still pending even though he knew
it had been dismissed. When he finally informed the Metcalfes that the case had
been dismissed, he did not state the reason for the dismissal but nevertheless told
them it was not worth appealing.
The Metcalfes initiated a legal malpractice suit against W aters.1 In his
amended answer to the complaint and in his testimony, Waters admitted that he
failed to apprise the plaintiffs of the status of their case, failed to adequately
prepare for trial, failed to refile the suit properly after taking a non-suit, failed to file
summons properly, failed to appear the second time the case was set for trial, and
failed to file a notice of appeal on behalf of the plaintiffs. W aters conceded that his
failure to inform the plaintiffs that the case had been dismissed was an intentional,
fraudulent, malicious, or reckless effort to conceal his mistakes. He nonetheless
denied that punitive damages were warranted.
At trial, the trial court directed a verdict for the plaintiffs on liability. The jury,
having been instructed on the law, returned a verdict that included $100,000 in
punitive damages against Waters. In approving the verdict, the trial court found
1
The complaint also named Charles Pruitt and the law office of Pruitt & Waters as
defendants based on theories of respondeat superior and partnership liability. The jury found that
Pruitt and Waters w ere partners and that both were jointly and severally liable for the comp ensatory
dam age s. Th ese issue s are not b efor e us in this a ppe al.
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that “the conduct of the defendant Waters in not keeping the plaintiffs informed
about the status of their case and of lying to the plaintiffs about the dismissal is the
gravamen of the punitive damage award.” The trial court also stressed that W aters
“did not take any action to set aside the dismissal of the case or to protect his
clients’ interests after the case was dismissed.”
In reversing the trial court, the Court of Appeals found that W aters’
malpractice amounted to negligent conduct and not intentional, fraudulent,
malicious or reckless conduct. Although the intermediate court also found that the
defendant’s effort to conceal his malpractice was “egregious,” it could not serve as
the basis for punitive damages:
[A]n award of punitive damages must be made on the
basis of the same conduct that warrants an award of
compensatory damages. In the case before us,
compensatory damages were awarded for the negligent
conduct of Waters in allowing the dismissal of the
underlying case. Subsequent to this negligent conduct,
Waters committed the egregious act of lying to the
Metcalfes about the dismissal of the case. Certainly,
his conduct after the dismissal of the case cannot be
condoned, but at the same time it is conduct that was
not included in the negligent act or acts that resulted in
the award of compensatory damages.
We granted the plaintiffs’ application for permission to appeal.
ANALYSIS
This Court historically has recognized that “in an action of trespass the jury
[is] not restrained, in their assessment of damages, to the amount of the mere
pecuniary loss sustained by the plaintiff, but may award damages in respect of the
malicious conduct of the defendant, and the degree of insult with which the
trespass had been attended.” Wilkins v. Gilmore, 21 Tenn. 140 (1840)(emphasis
added). The purpose of such damages is not to compensate the plaintiff but to
punish the wrongdoer for conduct that is egregious and to deter others from
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engaging in similar conduct. Huckeby v. Spangler, 563 S.W.2d 555, 558 (Tenn.
1978).
In Hodges v. S. C. Toof & Co., 833 S.W.2d 896 (Tenn. 1992), we traced the
history of our case law and determined that punitive damages are only available
where a defendant has acted either intentionally, fraudulently, maliciously or
recklessly. We explained:
A person acts intentionally when it is the person’s
conscious objective or desire to engage in the conduct
or cause the result. A person acts fraudulently when (1)
the person intentionally misrepresents an existing,
material fact or produces a false impression, in order to
mislead another or to obtain an undue advantage, and
(2) another is injured because of reasonable reliance
upon that representation. A person acts maliciously
when the person is motivated by ill will, hatred, or
personal spite. A person acts recklessly when the
person is aware of, but consciously disregards, a
substantial and unjustifiable risk of such a nature that
its disregard constitutes a gross deviation from the
standard of care that an ordinary person would exercise
under all the circumstances.
Id. at 901 (citations omitted).
To achieve the twin purposes of punishment and deterrence, the
defendant’s conduct must be established by “clear and convincing” evidence. In
determining liability for punitive damages, evidence of the defendant’s financial
condition is inadmissible. Id. In determining the amount of punitive damages, the
following factors may be considered in a separate, bifurcated proceeding: the
defendant’s financial condition and net worth; the nature and reprehensibility of the
defendant’s conduct; the impact of the defendant’s conduct on the plaintiff; the
relationship of the defendant to the plaintiff; the defendant’s awareness of the
harm and motivation in causing the harm; the duration of the defendant’s
misconduct and whether the defendant attempted to conceal the conduct; the
expense the plaintiff has incurred in recovering any losses; whether the defendant
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profited from the conduct, and if so, whether damages in excess of the profit are
necessary to deter future conduct; whether the defendant has been subjected to
previous punitive damage awards based upon the same wrongful act; and whether
the defendant made any effort to take remedial action or to offer a fair and prompt
settlement for the actual harm caused. Id. at 901-902 (emphasis added).
In the present case, the Court of Appeals reversed the jury’s award of
punitive damages, finding that Waters’ malpractice amounted to negligence and
not intentional, fraudulent, malicious, or reckless conduct. The court further stated
that Waters’ conduct in concealing and lying about his malpractice, although
“egregious,” was not contemporaneous with the underlying malpractice and was
therefore, under Hodges, relevant only to the amount of, but not the liability for,
punitive damages. We disagree with both conclusions.
A majority of jurisdictions have recognized that punitive damages may be
proper in a legal malpractice case. Annotation, Allowance of Punitive Damages
Against Attorney For Malpractice, 13 A.L.R. 4th 95 (1982 & Supp. 1997); see also
Elliott v. Videan, 791 P.2d 639, 644 (Ariz. Ct. App. 1989)(“punitive damages have
historically been awarded against attorneys for legal malpractice”). As in any case
involving punitive damages, however, the plaintiff must prove that the defendant
engaged in the requisite culpable conduct. The Alabama Supreme Court has said,
for instance, that “some showing of fraudulent, malicious, willful, wanton, or
reckless behavior or inaction must be made to support a claim for punitive
damages in a legal malpractice case.” Boros v. Baxley, 621 So.2d 240, 245 (Ala.
1993). Other courts have used similar terms in describing the culpable conduct for
an award of punitive damages in a legal malpractice case.2
2
See, e.g., Hyatt Regency v. Winston & Strawn, 907 P.2d 506, 518 (Ariz. Ct. App. 1995)
(“aggra vated or o utrageo us con duct”); Orsini v. Larry Moyer Trucking, Inc., 833 S.W.2d 366, 368 (Ark.
1992)(w anton c onduc t; consc ious indiffe rence; m alice); Miller v. Byrne, 916 P.2d 566, 580 (Colo. C t.
App. 19 95)(“willful an d wanto n”); Ray-Mar Beauty College, Inc. v. Ellis Rubin Law Offices, 475 So.2d
718, 719 (Fla. Dist. C t. App. 198 5)(“gros s ma lpractice”); Hous ton v. Surr ett, 474 S.E.2d 39, 41 (Ga.
Ct. App . 1996)(“w illful miscon duct, m alice, fraud , wanton ness, o ppress ion”); Fitzgerald v. Walker, 826
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We join these jurisdictions in recognizing that punitive damages may be
awarded in a legal malpractice claim, provided the culpable conduct established in
Hodges, supra, i.e., intentional, fraudulent, malicious, or reckless, is proven by
clear and convincing evidence. In this regard, we disagree with the intermediate
court’s conclusion that Waters’ conduct was merely negligent. In addition to failing
to prosecute the Metcalfes’ claim, Waters’ failed to keep them informed about the
status of their lawsuit, failed to prepare when the case was set for trial, failed to re-
file the case properly after taking a nonsuit, failed to pay the filing fee, failed to
issue summons properly, failed to appear when the case was set a second time for
trial, failed to file a notice of appeal, and failed to take any actions in an effort to
preserve the Metcalfes’ right of appeal. Given Waters’ repeated transgressions
and callous disregard for the rights of his clients, there was overwhelming evidence
from which the jury could find, at a minimum, reckless conduct, that is, conduct
constituting a gross deviation from the applicable standard of care. See, e.g.,
Patrick v. Ronald Williams P.A., 402 S.E.2d 452, 460 (N.C. Ct. App.
1991)(“repeated course of conduct which constituted a callous or intentional
indifference to the plaintiff’s rights” stated a claim for punitive damages).
We also disagree with the conclusion that punitive damages were improper
because Waters’ malpractice was not contemporaneous with his efforts to lie about
and conceal his wrongdoing. Although the Court of Appeals correctly observed
that the concealment of wrongdoing is listed among the factors in Hodges that may
be considered in determining the amount of punitive damages, nothing in Hodges
precludes the factor from being considered with regard to a defendant’s liability for
punitive damages. Indeed, other factors listed among those for consideration with
respect to the amount of punitive damages are also necessarily considered with
P.2d 13 01, 1305 (Idaho 1 992)(“e xtrem e deviation from reason able stan dards o f condu ct”); Belford v.
McHale, Cook & Welch, 648 N.E.2d 1241, 1245 (Ind. Ct. App. 1995)(“malice, fraud, gross negligence,
or oppre ssivene ss”); McAlister v. Slosberg, 658 A.2d 658 (M e. 1995) (ma lice); Gautam v. DeLuca, 521
A.2d 13 43, 1347 (N.J. Su per. 198 7)(wan ton, reck less or m alice; cons cious w rongdo ing); but see Cripe
v. Leiter, 683 N.E.2d 516 (Ill. App. Ct. 1997)(discussing statute which precluded punitive damages for
attorney m alpractice ).
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respect to the threshold liability issue; for instance, the “nature and reprehensibility
of the defendant’s wrongdoing.” Hodges, 833 S.W.2d at 901. A close reading of
Hodges, in fact, indicates that only evidence of a defendant’s net worth or financial
condition is deemed inadmissible in determining a defendant’s liability for punitive
damages. Id. at 901-902.
Finally, we believe that limiting consideration of a defendant’s efforts to
conceal his or her wrongdoing is inconsistent with the purpose of punitive
damages: to punish egregious acts and deter others from committing the same or
similar acts. As other courts have recognized, an attorney’s concealment of
wrongdoing and/or misrepresentations affecting the client’s case relate directly to
the punitive damages issue. See, e.g., Houston v. Surrett, 474 S.E.2d 39, 41 (Ga.
Ct. App. 1996) (“an attorney’s concealment and misrepresentation of matters
affecting his client’s case will give rise to a claim for punitive damages.”); Asphalt
Engineers, Inc. v. Galusha, 770 P.2d 1180 (Ariz. Ct. App. 1989)(“the record also
supports an inference that [the attorney] attempted to cover up his misconduct.”).
In sum, the harm resulting from the original wrongdoing, as in the present case,
may be exacerbated by intentional, fraudulent, malicious, or reckless efforts that
prevent the plaintiff from taking immediate corrective action.
CONCLUSION
We have concluded that the Court of Appeals erred in reversing the jury’s
verdict awarding punitive damages. There was clear and convincing evidence of
intentional, fraudulent, malicious, or reckless conduct on the part of Waters, and
there is no requirement that attempts to conceal be contemporaneous with the
original wrongdoing. The judgment of the Court of Appeals is therefore reversed in
part and the jury’s verdict as to punitive damages is reinstated. The case is
remanded to the trial court for a new trial solely on the issue of compensatory
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damages. Costs of this appeal are taxed to the defendant/appellee, Larry Waters,
for which execution may issue if necessary.
_________________________________
RILEY ANDERSON, Chief Justice
Concur:
Drowota, Birch, and Holder, JJ.
Reid, Sp.J.
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