FEW, C.J.
The primary issue in this appeal is whether the trial court erred in imposing punitive damages of $3.5 million against Stonington Development, LLC. We find the trial court properly denied Stonington's motion for a directed verdict as to punitive damages, and we find no reversible error in the charge given to the jury. However, we find the amount of punitive damages is excessive and therefore that due process requires the amount of the award to be reduced. As to all other issues, we affirm.
The plaintiffs are brothers Glenn and John Hollis; Janette Robinson, who is Glenn's daughter; and Janette's husband, Joseph Robinson. The Hollises and Robinsons jointly own approximately nineteen acres of land that has been in the Hollis family for generations. The Robinsons live on the property with their son in a house overlooking two ponds that Glenn, John, and their father built over fifty years ago. The only driveway to the Robinsons' home crosses an earthen dam that divides the three-acre upper pond from the five-acre lower pond.
In 1999, Stonington purchased property directly upstream from the Hollis and Robinson property for the purpose of developing a residential subdivision. The Hollises and Robinsons proved at trial that over the next five years Stonington ignored the recommendations of its own stormwater management engineers; violated State regulations and local laws regarding erosion control and stormwater runoff; and misled them, perhaps even lied, about Stonington's intention to remedy the problems. The result was severe flooding on the Hollises and Robinsons' property, which inhibited the Robinsons' access to their home and filled the ponds with as much as four feet of sediment. The estimated cost to restore the property is over $250,000.00. The jury awarded $400,000.00 in
The troubles between the parties began in 2000, shortly before Stonington began construction. At their first meeting, Stonington asked the Robinsons to relinquish easement rights for their driveway and asked if it could put a sewer line through their front yard to serve the development. When the Robinsons refused both requests, Stonington threatened to condemn the land and install the sewer line anyway.
Before beginning construction, Stonington hired Power Engineering to prepare stormwater management plans for the subdivision. The Hollises and Robinsons' expert testified that stormwater management is a field of engineering that prevents the type of severe flooding, erosion, and sediment accumulation that eventually occurred on the Hollis and Robinson property. The plans Power Engineering prepared for Stonington included protective measures such as silt fences and detention ponds to catch eroding soil and sediment runoff. Stonington failed to follow the plans, despite its admitted responsibility to do so.
By late 2002, the Hollises and Robinsons started to see silt and sediment coming from the development and accumulating in the ponds. Around the same time, Stonington received its first notice of violation from Richland County, requiring it to alleviate the accumulation in the ponds to avoid penalties. By the spring of 2003, the runoff worsened to the point of causing the ponds to flood the Robinsons' yard and cover part of their driveway with rushing water. The Hollises and Robinsons continually complained to Stonington and asked it to fix the problem. Stonington assured them the problem would be fixed, but failed to take action.
A Stonington employee testified that, as part of its attempt to compromise with the Hollises and Robinsons, Stonington placed a fifty-foot-wide conservation easement on the part of its property bordering the Hollises and Robinsons to provide them with a buffer for protection from the runoff. Stonington told them the buffer increased the size of their property
After numerous other State and County violation notices and no action from Stonington to alleviate the damage, the Hollises and Robinsons finally filed suit against Stonington and Power Engineering
At trial, the Hollises and Robinsons' expert in stormwater management testified that Stonington did not follow Power Engineering's stormwater management plans and failed to maintain the limited stormwater management system it did build. Stonington's only representative to testify at trial admitted it was responsible for complying with the stormwater management plans. The Hollises and Robinsons' expert testified that while the Hollises and Robinsons may still have experienced some problems if Stonington had followed the plans and maintained the system, the problems would have been "significantly" less serious. The expert gave an example of Stonington's failure to follow the plans. He explained that the stormwater system as designed includes a temporary check dam to catch sediment after a rainstorm. The system then requires the check dam be cleaned out and the sediment hauled elsewhere. The expert said Stonington cleaned out the sediment, but then "piled it right on the slope right above it[,]... obviously making it available for a source of erosion the next time it rains."
At the end of a five-day trial, the jury returned a defense verdict for Power Engineering, but found for the Hollises and Robinsons against Stonington for negligence, trespass, and private nuisance.
When ruling on a directed verdict motion as to punitive damages, "the circuit court must view the evidence
The record contains evidence that Stonington ignored regulations regarding erosion control, stormwater runoff, and even its own engineer's plans; took no action to prevent or correct damage it knew it was causing to the ponds; and used threats and deception to avoid the consequences of its misconduct. The trial judge, who had the benefit of observing the witnesses and the presentation of evidence first-hand, summarized the evidence of punitive damages in his post-trial order as follows:
Stonington objected to a portion of the beginning of the jury charge on damages in which the trial judge said:
Stonington argued the charge required the jury to find actual and punitive damages as to both defendants. We find no reversible error.
"When an appellate court reviews an alleged error in a jury charge, it `must consider the court's jury charge as a whole in light of the evidence and issues presented at trial.'" Ardis v. Sessions, 383 S.C. 528, 532, 682 S.E.2d 249, 250 (2009) (quoting Keaton ex rel. Foster v. Greenville Hosp. Sys., 334 S.C. 488, 497, 514 S.E.2d 570, 575 (1999)). "If, as a whole, the charges are reasonably free from error, isolated portions which might be misleading do not constitute reversible error." Keaton, 334 S.C. at 497, 514 S.E.2d at 575.
Throughout the damages charge, the trial court made numerous statements indicating that the jury was not required to award actual or punitive damages.
Considered in isolation, the sentence to which Stonington objected might be misleading. However, considering the charge as a whole, the trial court adequately explained to the jury that it could not award actual or punitive damages unless the plaintiffs met the applicable burden of proof. In the context of the entire charge, we find the sentence at issue was merely transitional, serving as an introduction to the damages portion of the charge.
Stonington challenges the constitutionality of the amount of punitive damages. Therefore, we are required to determine whether the award of punitive damages in this case is consistent with due process. James v. Horace Mann Ins. Co., 371 S.C. 187, 194, 638 S.E.2d 667, 670 (2006); see Mitchell v. Fortis Ins. Co., 385 S.C. 570, 583, 686 S.E.2d 176, 183 (2009) (holding an appellate court must conduct a de novo review of a trial court's determination of the constitutionality of a punitive damages award). This requires us to determine whether the award was reasonable in light of the following guideposts:
Austin v. Stokes-Craven Holding Corp., 387 S.C. 22, 52, 691 S.E.2d 135, 151 (2010) (citing Mitchell, 385 S.C. at 585, 587-88, 686 S.E.2d at 184-86; BMW of N. Am. v. Gore, 517 U.S. 559, 575, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996)). We affirm the
Our discussion of the facts of this case demonstrates that Stonington's misconduct was reprehensible. In order to evaluate the reasonableness of the amount of the award, however, we must determine the degree of reprehensibility. Austin, 387 S.C. at 53, 691 S.E.2d at 151; see also State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) ("[P]unitive damages should only be awarded if the defendant's culpability, after having paid compensatory damages, is so reprehensible as to warrant the imposition of further sanctions to achieve punishment or deterrence."); Gore, 517 U.S. at 575, 116 S.Ct. 1589 (describing reprehensible conduct sufficient for an award of punitive damages as reflecting "`the enormity of [the] offense'" and "the accepted view that some wrongs are more blameworthy than others" (quoting Day v. Woodworth, 54 U.S. (13 How.) 363, 371 (1852))). In doing so, we must consider whether
Mitchell, 385 S.C. at 587, 686 S.E.2d at 185.
Our analysis of the first two of these considerations indicates Stonington's misconduct involved a lesser degree of reprehensibility. First, although the Hollises and Robinsons incurred significant monetary damages, they did not suffer any physical harm. Finding only economic harm "would typically weigh against [] reprehensibility." 385 S.C. at 589, 686 S.E.2d at 186; see also Duncan v. Ford Motor Co., 385 S.C. 119, 143, 682 S.E.2d 877, 889 (Ct.App.2009) (finding the existence of only economic harm weighs in favor of the defendant).
As to the third consideration, the record does not indicate, and neither of the parties argues, whether the Hollises and Robinsons were financially vulnerable. Thus, the third consideration does not favor a lesser or a higher degree of reprehensibility.
The fourth and fifth considerations, however, indicate a higher degree of reprehensibility. As to the fourth consideration, no evidence was presented as to whether Stonington or its members had engaged in similar conduct on other development projects. However, Stonington's conduct involved repeated actions towards the Hollises and Robinsons, and thus was not an isolated incident. In the face of repeated requests from the Hollises and Robinsons to fix the ongoing problems, and despite repeated official notices of regulatory violations, Stonington continued for over four years
Considering the entire record in this case in light of the five factors discussed above, we find that Stonington's misconduct was moderately reprehensible.
The ratio of punitive damages awarded by the jury in this case to actual damages is 8.75 to 1.
We note initially that the parties have given us little information to use in evaluating the first and third considerations.
In upholding the award, the trial court relied on the deterrent effect this award may have on others in the development business. In its post-trial order the court stated: "The jury's punitive damages award will send a strong message to developers that such a way of doing business is not acceptable to the people of Richland County." We significantly discount the importance of this consideration in evaluating the constitutionality of the award. The deterrent effect the imposition of punitive damages may have on others cannot be used as a significant basis for upholding an award of punitive damages.
Deterrence has long been an important consideration in the imposition of punitive damages. In Mitchell, the supreme court began its discussion of the history of due process limitations on punitive damages awards by stating "[t]he practice of awarding punitive damages originated in principles of common law `to deter the wrongdoer and others from committing like offenses in the future.'" 385 S.C. at 584, 686 S.E.2d at 183 (quoting Laird v. Nationwide Ins. Co., 243 S.C. 388, 393, 134 S.E.2d 206, 210 (1964)). Summarizing its decision reducing the award of punitive damages in Mitchell, the supreme court stated: "We are also certain that a $10 million award will adequately vindicate the twin purposes of punishment and deterrence that support the imposition of punitive damages." 385 S.C. at 594, 686 S.E.2d at 188.
The concept of deterrence includes the specific effect on the party against whom the award is imposed and the general effect the award will have on others similarly situated. In Gamble v. Stevenson, the supreme court listed as one of the factors a trial court may consider in its post-trial review of punitive damages the "likelihood the award will deter the
Because of the trial court's consideration of the deterrent effect on other developers to justify this punitive damages award, the omission of the "or others" language is significant in our review of the trial court's decision. The Mitchell court noted that "much of the [United States] Supreme Court's punitive damages jurisprudence has focused on the type of evidence that may be used to support a punitive damages award." 385 S.C. at 585-86, 686 S.E.2d at 184. In support of the point that "the Supreme Court has continued to ... delineate the contours of punitive damages awards that `run wild,'" the court cited Campbell, 538 U.S. at 421-22, 123 S.Ct. 1513, for the proposition that "punitive damages awards may not be based on out-of-state conduct," and Philip Morris USA v. Williams, 549 U.S. 346, 354, 127 S.Ct. 1057, 166 L.Ed.2d 940 (2007), for the proposition that "a punitive damages award that is based on evidence of harm to persons other than the plaintiff ... will violate due process." Mitchell, 385 S.C. at 586, 686 S.E.2d at 184. Just as these decisions have limited the use of harm "to others" as a basis of a punitive damages award, we believe there are significant concerns associated with using a punitive damages award's deterrent effect "on others" to justify the amount of an award. Thus, although the deterrent effect on the specific defendant must be considered, the general deterrent effect on others who are not connected to the case is not a significant factor in analyzing the constitutionality of an award.
This case, however, presents a "deterrence" consideration somewhere in the middle. Stonington's only representative to testify at trial described the members of Stonington Development, LLC. In particular, the witness's testimony indicates that the managing member of Stonington is heavily involved in the development business, not only with Stonington,
The second consideration is "whether the award is reasonably related to the harm likely to result from such conduct." Mitchell, 385 S.C. at 588, 686 S.E.2d at 185. In making this comparison, we note that the award of actual damages was substantial. Both our supreme court and the United States Supreme Court have stated that when the actual damages awarded are substantial, "`a lesser ratio, perhaps only equal to compensatory damages, can reach the outer limits of the due process guarantee.'" Mitchell, 385 S.C. at 592, 686 S.E.2d at 187 (quoting Campbell, 538 U.S. at 425, 123 S.Ct. 1513). The fact that the actual damages award in this case is substantial helps us to evaluate whether the punitive damages award is reasonably related to the harm likely to result from similar conduct. We find the award of $3.5 million is not reasonably related to the likely harm.
We must also consider whether the amount to which we reduce the award is reasonably related to the likely harm. While a $2 million award results in a ratio of 5 to 1, considerably higher than the actual damages, such an award is reasonably related to the harm likely to result from ignoring stormwater management regulations on large residential development projects such as the subdivision created by Stonington.
As to the third consideration, other than evidence that Stonington still owns large portions of the original development, the record contains no direct evidence of Stonington's ability to pay a punitive damages award.
The third guidepost is "the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases." Austin, 387 S.C. at 52, 691 S.E.2d at 151. There are two civil penalties that
Under federal law, the Administrator of the Environmental Protection Agency may seek a civil penalty of up to $25,000.00 per day for misconduct similar to that engaged in by Stonington. 33 U.S.C. § 1319(d) (Supp.2010). Applicable federal regulations require that sediment and erosion controls must "[a]t a minimum ... be designed, installed, and maintained to:... (2) Control stormwater discharges ... to minimize downstream channel and streambank erosion; ... (5) Minimize sediment discharges from the site....; (6) Provide and maintain natural buffers around surface waters...." 40 C.F.R.
Because we find the award of $3.5 million in punitive damages is excessive and violates due process, we must reduce the award.
Additionally, Mitchell's holding that appellate courts must conduct the review of punitive damages awards de
Therefore, reviewing de novo the trial court's determination of constitutionality, but deferring to the jury's constitutional role as factfinder, we find the upper limit of the range of punitive damages awards consistent with due process on the facts of this case to be $2 million, and we reduce the award accordingly.
Finally, Stonington appeals the denial of its motion for judgment notwithstanding the verdict or for a new trial based on the trial judge entering the jury room to answer a juror's question. We find this issue unpreserved for our review.
At one point during a witness's testimony, the judge interrupted and said to a juror, "You need a break?" to which the juror responded, "Is it possible for me to get a pen and a piece of paper? I have a question for you." The judge instructed
Stonington's counsel neither objected nor asked for any clarification as to the conversation between the judge and the jurors.
"[I]t is the responsibility of trial counsel to preserve issues for appellate review." Jackson v. Speed, 326 S.C. 289, 306, 486 S.E.2d 750, 759 (1997). "[A]n issue cannot be raised for the first time on appeal, but must have been raised to and ruled upon by the circuit court to be preserved." RRR, Inc. v. Toggas, 378 S.C. 174, 185, 662 S.E.2d 438, 443 (Ct.App. 2008).
We recognize that our supreme court has held a trial judge entering the jury room is reversible error. State v. Elmore, 279 S.C. 417, 421-22, 308 S.E.2d 781, 784-85 (1983) ("Although we find no actual prejudice in this instance, we hold this conduct to be reversible error regardless of the presence of counsel."). However, Elmore is not controlling in a civil case. The ruling in Elmore was based in part on the right of a criminal defendant to "be present at all stages of a trial." 279 S.C. at 422, 308 S.E.2d at 785. Further, Elmore was a death penalty case decided before the supreme court abrogated in favorem vitae in State v. Torrence, 305 S.C. 45, 60, 406 S.E.2d 315, 324 (1991) (Toal, J., concurring). We make no comment on the continued viability of this holding from Elmore in death penalty or other criminal cases. However, such an exception to the rules of issue preservation is not warranted on the facts of this civil case.
As to the remainder of Stonington's allegations that the trial court erred in refusing to grant its post-trial motions for JNOV, new trial absolute, or new trial nisi remittitur, we deem them abandoned and decline to address the merits. See Rule 208(b)(1)(D), SCACR (stating each "particular issue to be
We affirm the denial of a directed verdict on punitive damages, the jury charge on punitive damages, and the denial of Stonington's post-trial motions. We also affirm the imposition of punitive damages, but because we find the amount excessive, in violation of due process, we reduce the award from $3.5 million to $2 million.
THOMAS and KONDUROS, JJ., concur.