Appeal and cross-appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Edward Fine, Judge; L.T. Case No. 502004CA009272XXXXMB.
The opinion of the court was delivered by: Taylor, J.
This appeal stems from a suit against the law firm of Becker & Poliakoff for legal malpractice and breach of fiduciary duty. Jacquelyn Young appeals from the trial court's order remitting the jury's $4.5 million punitive damages award against Becker & Poliakoff to $2 million, or alternatively, granting a new trial on punitive damages. Becker & Poliakoff cross-appeals, contending that it was entitled to a directed verdict on legal malpractice and a new trial due to the trial court's limitation on cross-examination of a crucial witness. We affirm as to all issues raised in both the appeal and the cross-appeal.
The underlying litigation arose from Young's dissatisfaction with Becker & Poliakoff's handling of her federal employment discrimination suit against BellSouth Telecommunications (BellSouth). The suit was filed on May 1, 2001 by Thomas Romeo, an associate with Becker & Poliakoff, on behalf of Young and twelve other BellSouth employees. At that time, Becker & Poliakoff was engaged in settlement negotiations on behalf of Young and several other plaintiffs in a separate action against BellSouth, styled Jackson v. BellSouth Telecommunications, 372 F.3d 1250 (11th Cir. 2004). The Jackson case was brought against the law firm of Ruden, McClosky, Smith, Schuster & Russell, P.A. (Ruden McClosky) for alleged misconduct arising out of their settlement of a prior employment discrimination lawsuit against BellSouth, styled Adams v. BellSouth Telecommunications.
In the original Adams litigation, Ruden McClosky represented the plaintiffs and negotiated a settlement for them. In the later-filed Jackson case, the plaintiffs alleged that Ruden McClosky, while negotiating the settlement in Adams, made an improper side deal with BellSouth and entered into undisclosed agreements that were unlawful and unethical.*fn1 Young was among the several plaintiffs in the Jackson case who hired Becker & Poliakoff to represent them against BellSouth and Ruden McClosky.
Ultimately, Becker & Poliakoff settled the Jackson case in the summer of 2002 for $8 million. The firm received $2,927,540.00 for its fees and costs. Before the case was settled, however, and while settlement negotiations were underway, Attorney Thomas Romeo and Becker & Poliakoff were hired by Young and twelve other plaintiffs to file a separate federal lawsuit on their behalf against BellSouth for alleged continuing discrimination. Unbeknownst to Young, this new lawsuit was dismissed due to the statute of limitations. The conflict of interest posed by Becker & Poliakoff's representation of plaintiffs in this new lawsuit, while settling the Jackson case, underlay Young's claims of legal malpractice and breach of fiduciary duty in the instant case.
In her lawsuit against Becker & Poliakoff, Young alleged that the law firm intentionally delayed telling her about the dismissal of her case until after the Jackson case was settled. The jury determined that Becker & Poliakoff knew that the case had been dismissed, but withheld that information from Young so they could settle Jackson and secure the $2.9 million fee and cost reimbursement in that case. The jury returned a verdict for Young of $394,000 in compensatory damages and $4.5 million in punitive damages against Becker & Poliakoff. However, the trial court remitted the punitive damages to $2 million, finding that the amount was not supported by evidence that Becker & Poliakoff had sufficient financial resources to support such a verdict without facing bankruptcy. Young rejected the remittitur/new trial order and filed this appeal.
"Under Florida law, a trial court's determination of whether a damage award is excessive, requiring a remittitur or a new trial, is reviewed by an appellate court under an abuse of discretion standard." Engle v. Liggett Group, Inc., 945 So. 2d 1246, 1263 (Fla. 2006); see also City of Hollywood v. Hogan, 986 So. 2d 634, 647 (Fla. 4th DCA 2008); Weinstein Design Group, Inc. v. Fielder, 884 So. 2d 990, 1002 (Fla. 4th DCA 2004). In ruling on a motion for remittitur, the trial court must evaluate the verdict in light of the evidence presented at trial. Hogan, 986 So. 2d at 648. Section 768.74, Florida Statutes, provides criteria for evaluating awards of damages and mandates that courts subject awards of damages to close scrutiny and make certain that they be adequate and not excessive. Id.
In evaluating a punitive damages award, the trial court must also determine whether the award comports with constitutional due process requirements. "The three criteria a punitive damages award must satisfy under Florida law to pass constitutional muster are: (1) 'the manifest weight of the evidence does not render the amount of punitive damages assessed out of all reasonable proportion to the malice, outrage, or wantonness of the tortuous conduct;' (2) the award 'bears some relationship to the defendant's ability to pay and does not result in economic castigation or bankruptcy to the defendant;' and (3) a reasonable relationship exists between the compensatory and punitive amounts awarded." R.J. Reynolds Tobacco Co. v. Martin, 53 So. 3d 1060, 1072 (Fla. 1st DCA 2010) (citing Engle, 945 So. 2d at 1263-64).
In this case, the trial court found that the $4.5 million punitive damages award overcame the presumption of excessiveness under section 768.73, Florida Statutes. The court further found that the first and third criteria mentioned above were met: the award was proportional to reprehensible conduct of the defendant and bore a reasonable relationship between the compensatory and punitive amount awarded. However, the court concluded that the award fell short on the second criteria; it was excessive because it was "too much for Defendant to bear without economic castigation or bankruptcy." As explained in the trial court's thorough and detailed order, this finding is supported by the record.
After noting that the jury apparently discredited evidence presented by the defense regarding Becker & Poliakoff's financial picture, the trial court turned to testimony of Young's financial expert, Dr. Pettingil, in determining that the $4.5 million punitive damages award would bankrupt Becker & Poliakoff. In short, the trial court found that Dr. Pettingil's opinion placed the law firm's net worth at $9.7 million to $11.1 million, and that "a $4.5 million punitive damages award constitutes forty percent of the net worth of the company." This amount, the court reasoned, was "too large" and exceeded "the highest amount that can be sustained based upon the evidence." Explaining how it arrived at the $2 million remittitur amount, the court stated the following:
The court finds that the maximum award that will not be excessive is $2 million which constitutes about 18%-20% of the firm's net worth. Dr. Pettingil's testimony establishes sufficient assets to bear this amount. His testimony established annual earnings of $675,000.00 per year increasing by 3% in 2010 and every year thereafter, $3 million per year in extraordinary compensation and a total of $1.5 million in retained earnings. Over 2009 and 2010 this would amount to assets exposable to collection of a punitive damage award of $6 million to $9 million, depending upon the extent of payment to officers' extraordinary compensation.
$2 million is as close to disgorging what the jury determined to be ill-gotten gains as Defendant's financial wealth will tolerate.
Contrary to Young's contention, the trial court did not improperly substitute its judgment for that of the jury, but instead properly exercised its discretion in reviewing the award upon the financial information in evidence.*fn2 See Arab Termite & Pest Control of Fla. v. Jenkins, 409 So. 2d 1039, 1043 (Fla. 1982) ("Since the defendant's financial position is proper for the jury to consider in imposing punitive damages, it must be considered along with the malice of the defendant's conduct in ruling on the question whether the jury's assessment is excessive in light of the manifest weight of the evidence.") (citation omitted). While a punitive damages award should be painful enough to provide some retribution and deterrence, it should not financially destroy a defendant. See Lipsig v. Ramlawi, 760 So. 2d 170, 188 (Fla. 3d DCA 2000) (remanding for trial court to remit the punitive damage award to reflect a reasonable relationship to the defendant's net worth). We, therefore, do not disturb the amount of the punitive damages ordered by remittitur; reasonable people could differ over this matter, and, therefore, no clear abuse of discretion is shown. See S & S Toyota, Inc., v. Kirby, 649 So. 2d 916, 921 (Fla. 5th DCA 1995) (applying abuse of discretion standard in upholding remittitur of punitive damages award).
We further find any error in the trial court's ruling that prohibited Dr. Pettingil from testifying that an award of $10 million would not bankrupt Becker & Poliakoff to be harmless. Here, the witness was allowed to state his opinion concerning valuation of the firm's net worth and its financial ability to pay an award. And, even without hearing the witness's opinion as to whether an award of $10 million would bankrupt the firm, the jury still awarded ...