April 28, 2017
This week the Texas Supreme Court has issued 10 opinions. These opinions address a range of issues including the scope of governmental immunity in a medical-malpractice claim and the constitutionality of exemplary damages awarded in a malicious-prosecution claim. The Court’s evaluation of the constitutionality of exemplary damages is of particular interest.
Tom Bennett and James B. Bonham Corp. v. Larry Wayne Grant – 15-0338
This malicious-prosecution case arose from a cattle-rustling incident. Various criminal and civil suits followed resulting in a rich and interesting procedural history. For purposes of the exemplary damage ruling, the most pertinent facts are: (1) Bennett and his company sought and obtained felony indictments against Grant based on allegations of blackmail, (2) those indictments were ultimately quashed as barred by the statute of limitations, (3) Grant asserted a malicious prosecution claim, (4) the trial court awarded $10,703 in actual damages and $2 million in exemplary damages to Grant, and (5) the appellate court remitted the exemplary damage award to approximately $1 million.
Because the claim involved felony criminal conduct affecting pecuniary interest, the Texas Supreme Court affirmed that the caps of Chapter 41 of the Texas Civil Practice and Remedies Code did not apply. However, finding that federal due process still limits exemplary damages even when the state caps do not apply, the Court found that the appellate court’s remitted exemplary damage award was excessive and unconstitutional. Specifically, based on the fact that “there was essentially zero likelihood of imprisonment because the statute of limitations barred the claim,” the Court held that the appellate court erred in considering wrongful imprisonment in its calculation of the harm likely to result. Exclusion of wrongful imprisonment as a factor changed the ratio between the exemplary damages awarded and the actual harm suffered or the harm likely to result if the tortious plan had succeeded from 3:1 to approximately 48:1. Affirming that “few awards exceeding a single-digit ratio satisfy due process standards,” the Court reversed and remanded the exemplary damage award to the appellate court for substantial remittitur.