H. B. 2989

         (By Delegates Morgan, Pasdon, Craig and McCuskey)

         [Introduced March 20, 2013; referred to the

         Committee on the Judiciary.]

A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §53-9-1, §53-9-2, §53-9-3, §53-9-4, §53-9-5 and §53-9-6, all relating to the bifurcation for trial of claims for compensatory and exemplary damages and when punitive or exemplary damages may be awarded; maximum amounts.

Be it enacted by the Legislature of West Virginia:

    That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §53-9-1, §53-9-2, §53-9-3, §53-9-4, §53-9-5 and §53-9-6, all to read as follows:

ARTICLE 8. BIFURCATED TRIAL ON ISSUES OF COMPENSATORY AND EXEMPLARY DAMAGES; WHEN PUNITIVE OR EXEMPLARY DAMAGES MAY BE AWARDED; MAXIMUM AMOUNTS.

§53-9-1. Definitions.

    As used in this article:

    (1) "Civil action" means any noncriminal, civil action arising in tort that seeks damages for injury or loss to person or property, including civil actions involving claims based upon defective products but not a civil action for damages for breach of a commercial contract or agreement governed by article two, chapter forty-six of this code.

    (2) "Trier of fact" means the jury or, in a nonjury action, the court.

§53-9-2. Bifurcated trial.

    (a) In a civil action that is tried to a jury and in which a plaintiff makes a claim for compensatory and punitive or exemplary damages, upon motion of any party, the trial of the civil action shall be bifurcated as follows:

    (1) The initial stage of the trial shall be confined to the presentation of evidence concerning and a determination by the jury as to whether one or all of the defendants is civilly liable to the plaintiff and, if so, whether the plaintiff is entitled to recover from a defendant compensatory damages for any proven injury or loss to person or property. During this initial stage, neither the parties nor the court may advise, mention or otherwise imply to the jury that a claim for punitive damages in addition to a claim for compensatory damages is pending. Moreover, no party may present and the court may not permit a party to present, evidence that relates to the issue of whether plaintiff is entitled to recover from a defendant or multiple defendants, punitive or exemplary damages for the injury or loss to the person or property of the plaintiff.

    (2) Following the presentation of sufficient evidence with respect to liability and compensatory damages to warrant submission to the jury, the court shall instruct the jury to return, and the jury shall return, a general verdict and, if that verdict is in favor of the plaintiff, answers to special interrogatories that specify the total compensatory damages recovered by the plaintiff against each defendant.

    (3) If the jury returns a verdict in favor of the plaintiff against a defendant for compensatory damages for injury or loss to person or property of the plaintiff, evidence and arguments may then be presented to the jury in a second phase of the trial going to whether, in addition to those compensatory damages, the actions of the defendant or defendants upon which liability was predicated were such as to warrant the awarding of punitive damages over and above the compensatory damages previously awarded.

    (b) In a civil action tried to a court and in which a plaintiff makes a claim for compensatory and punitive or exemplary damages:

    (1) The court shall first make a determination with respect to whether the plaintiff is entitled to recover compensatory damages from a defendant for injury or loss to person or property. If the court's determination is in favor of the plaintiff and against a defendant, the court shall then make findings of fact that specify the total compensatory damages recoverable by the plaintiff from that defendant.

    (2) After making a determination as to the total compensatory damages the plaintiff is entitled to recover from a defendant, the court shall then hear arguments and testimony regarding whether punitive or exemplary damages over and above the compensatory damages previously awarded are warranted. If it determines that they are, the court shall enter a judgment with findings of fact and conclusions of law supporting both the award of punitive or exemplary damages and the amount of those damages.

§53-9-3. When punitive damages may be awarded.

    (a)Punitive damages may be awarded:

    (1) In a civil action where a plaintiff has been found to be entitled to compensatory damages against a defendant, the trier of fact shall determine the liability of a defendant for punitive or exemplary damages and the amount of those damages.

    (2) In a civil action if a plaintiff proves by clear and convincing evidence that the acts or omissions of that defendant demonstrate:

    (A) Actual malice;

    (B) Wanton, willful or reckless conduct;

    (C) Vindictive or egregious misconduct;

    (D) Criminal indifference to civil obligations affecting the rights of others appear; or

    (E) Where legislative enactment authorizes such damages.

    (b) Where a wrongful act, done under a bona fide claim of right, and without malice, punitive or exemplary damages are not recoverable in a civil action.

§53-9-4. Review of an award of punitive damages by a jury.

    (a) Before entering judgment for punitive or exemplary damages based upon a jury verdict awarding those damages, the court shall review the award and determine whether the amount of the punitive damages award is justified by aggravating evidence including, but not limited to:

    (1) The reprehensibility of the defendant's conduct;

    (2) Whether the defendant profited from the wrongful conduct;

    (3) The financial position of the defendant;

    (4) The appropriateness of punitive damages to encourage fair and reasonable settlements when a clear wrong has been committed; and

    (5) The cost of litigation to the plaintiff.

    (b) The court shall then consider whether a reduction of the award is warranted based upon mitigating evidence including, but not limited to:

    (1) Whether the punitive damages awarded bear a reasonable relationship to the harm that is likely to occur or has occurred in West Virginia as a result of the defendant's conduct;

    (2) Whether punitive damages bear a reasonable relationship to compensatory damages awarded the plaintiff;

    (3) The cost of litigation to the defendant;

    (4) Any criminal sanctions imposed on the defendant for the acts or omission upon which the award is based;

    (5) Any other civil actions against the same defendant based upon the same conduct;

    (6) Relevant information that was not available to the jury because it was unduly prejudicial to the defendant; and

    (7) Additional relevant evidence.

    (c) After conducting this review, the court shall, in entering judgment, make specific findings of fact and conclusions of law with respect to the determinations required under subsections (a) and (b) of this section.

§53-9-5. Limits on punitive damages.

    (a) A court may not enter a judgment for punitive or exemplary damages that is in excess of three times the amount of the compensatory damages, exclusive of attorney fees, awarded to the plaintiff, exclusive of attorney fees, unless it enters an order containing specific findings of fact and conclusions of law that justify a larger award. In no case, however, may a court enter a judgment for punitive or exemplary damages that would threaten the continued economic viability of the defendant.

    (b) In the event a court determines that an award of punitive or exemplary damages in excess of three times the amount of the compensatory damages awarded to the plaintiff from a defendant is warranted under the facts and the law, all punitive or exemplary damages in exceeding three times the amount of the compensatory damages shall be paid to a special fund established by the West Virginia Supreme Court of Appeals for the purpose of compensating residents of West Virginia who have suffered physical or psychiatric injuries to their person or damage to their property as a result of crimes perpetrated in West Virginia and for which full compensation for the injuries or damages have not been forthcoming from the perpetrator of those crimes or any third party payor.

    (c) An award of prejudgment interest may not include prejudgment interest on punitive or exemplary damages.

    (d) An award of punitive damages in a civil action may not be be entered against a defendant if that defendant files with the court a certified judgment, judgment entries or other evidence showing that punitive or exemplary damages have already been awarded and collected, in any state or federal court, against that defendant based on the same act, course of conduct or omissions that is alleged to have caused the injury or loss to person or property.

    (e) An award of punitive or exemplary damage may not be entered in a case involving contractual claims arising out of commercial transaction subject to article two, chapter forty-six of this code, regardless of whether the claims are couched in contract or tort, the remedies for the claims being limited to those specifically provided for in that article.

§53-9-6. Attorney fees.

    (a) Where a court awards punitive or exemplary damages to a plaintiff, the court may, but need not, award attorney fees payable by the defendant to the attorney or attorneys for the plaintiff based upon the amount of the punitive or exemplary damages awarded.     (b) In making such an award, the court shall consider the fees to which the attorneys for the plaintiff is entitled under any fee or retention agreement, the amount of work performed by the attorneys in developing the evidence presented supporting the award of punitive or exemplary damages, and whether an award of additional damages in the form of attorney fees would threaten the continued economic viability of the defendant against whom such damages are awarded.

    (c) Where the court elects to award attorney fees predicated upon entry of a judgment for punitive damages, it shall enter findings of fact sufficient to allow a reviewing court to determine the basis for and propriety of the award.

    (d) In no event may the attorney fees based upon an award of punitive or exemplary damages exceed fifteen percent of the total amount of the punitive and exemplary damages awarded.

    NOTE: The purpose of this bill is to create a system for the bifurcation for trial of claims for compensatory and exemplary damages. The bill provides when punitive or exemplary damages may be awarded and specifies maximum amounts.

    This article is new; therefore, it has been completely underscored.