Judge Mark H. Epstein, Case Number: 20SMCV03819, Date: 2023-07-21 Tentative Ruling

Judge: Mark H. Epstein, Case: 20SMCV03819, Date: 2023-07-21 Tentative Ruling

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Case Number: 20SMCV03819 Hearing Date: July 21, 2023 Dept: R

This is a motion sua sponte by the court as to whether to issue a JNOV as to the jury’s punitive damages award. Each side has filed a brief on the subject with plaintiff having the last word.

To recap, plaintiff alleged she was beaten and held prisoner by defendant during a party being held at the home he rented. Defendant denied that he engaged in any such conduct. There is a lot more to it than that, but the court means only to set forth the general contours. The jury returned a verdict for plaintiff of approximately 50% of the amount she requested. It also found that punitive damages were appropriate. At the second phase, which began immediately, plaintiff called defendant to the stand. He testified as to the rent he paid, the value of certain cars at the time he bought them, and the gross amount of money he made when he gave a performance. He also testified that he had very little money in the bank and a million dollar tax lien. There was no evidence offered in phase 2 other than defendant’s own testimony. Plaintiff had subpoenaed financial records for an earlier trial date, but did not re-serve it for the actual trial date. Defendant did not bring any financial records with him. At the start of the trial (phase 1), the court warned the parties that if there was a phase 2 it would begin immediately after phase 1 concluded. The jury returned a verdict in plaintiff’s favor in phase 2 in an amount equal to the compensatory award.

Defendant filed a notice of intent to move for a new trial, but never followed through. No motion for a JNOV was filed. The court, however, on its own motion, scheduled the instant hearing because it was concerned that there was insufficient evidence of defendant’s financial condition to support the verdict or even to have enabled the case to have gone to the jury.

The test for punitive damages is well established, and, frankly, the award here easily satisfies that test in all regards save one, which is far closer: defendant’s financial condition. Under California law, the purpose of punitive damages is to punish, but not to punish excessively. One important factor in making that determination and striking that balance is the defendant’s financial condition. The wealthier the defendant, the higher the award can be without it being overly punitive. On the other hand, for a defendant who is impecunious enough, any award beyond a nominal one could be excessive. Because plaintiff bears the burden of proof, plaintiff must produce evidence of ability to pay as part of the punitive case in chief. (Adams v. Murakami (1991) 54 Cal.3d 105.) One might question whether that makes sense from a policy perspective. After all, defendant is in the better position to put in that kind of evidence than is plaintiff. And the Civil Code bars discovery as to a defendant’s financial condition for punitive damages purpose as a discovery tool. But California law is clear and well-settled; the slate is not clean. This court’s job is to follow the law as it is.

The court has in the past used the improper shorthand of saying it was looking at defendant’s “net worth.” But that is not really the right question and the court wants to be clear that while it may have used that phrase, it is aware that “net worth” is not the right question. Net worth is certainly an aspect of financial condition, but it is not the test. One might have a high net worth, but due to the assets’ nature, and award may be excessive. Or one might have a low net worth but due to other factors, a higher award may be proper even so. Overall financial condition is the touchstone. Generally, that means information on assets and liabilities. (Kenly v. Ukegawa (1993) 16 Cal.App.4th 49.) But at the end of the day, overall financial condition is a somewhat expansive term, and the court (and, more importantly, the jury) can use whatever financial factors are in evidence to try and get a picture of that broader concept.

Here, the evidence is scant. We know that defendant made a lot of money in the past, but past financial condition is not the issue. He claims to have spent it all. He testified that his gross earnings are between $10,000 and $50,000 per concert depending on venue. But from that, he had to pay the crew, his managers, and others. Plaintiff contends that the net is $30,000 per show, but the court does not really see great evidence of that as a net. And defendant testified that does not enjoy the demand he once did. In fact, he claims that all of his 2023 concerts were cancelled. Defendant’s cars were worth $250,000 for each of two of them and $100,000 for another, but that was their value at the time of purchase. There is no evidence as to their current value. He testified to jewelry of about $18,000. There is evidence that defendant is able to rent a home for $25,000/month. There was evidence that he does not have a lot in the way of liquid assets. There was evidence that he is involved in some other ventures, but no evidence as to what sort of value those ventures have or what kind of income he derives from them. Finally, there is evidence that defendant owes the taxing authorities $1 million and (of course) he also owes plaintiff the compensatory damages awarded here (or at least he will if the judgment is affirmed on appeal). At least based on that evidence, defendant’s net worth is negative.

At the end of the day, the court is guided by the traditional rules governing JNOV motions. The court’s job is not to weigh the evidence. That might be something the court could do up to a point were this a motion for a new trial or for a remittitur, but not on JNOV. (The court lacks power to consider a new trial motion; while a notice of intent was filed, the supporting papers were never filed, and a motion for a new trial is a creature of statute; the court has no inherent power to so consider.) The only question is whether there is sufficient evidence from which a jury could conclude as it did. Key to the court, using that standard, is the following. While the cars are of an uncertain value, they do have value. The court cannot tell whether they are worth more or less than when he bought them, but there is no evidence that they have been trashed. The court is willing to believe that a jury could believe that they had and have value. The court does not know the net profits from defendants’ shows, but it must be something. And while it is not clear that defendant could just snap his fingers and book as many shows as he would like, neither is it clear that he cannot work at all. It might not be the work he wants (and he might not be headlining), but the court has no reason to believe that he cannot perform at all. Perhaps most significantly, the court is moved by his rent. Someone as close to zero (financially) as defendant claims to be might want to scale down the living arrangements. $25,000 is a lot of monthly rent—even in Los Angeles. There is no reason of which the court is aware that he could not relocate to a more “modest” $10,000/month home. Further, the court is aware of no debts that defendant owes other than the tax debt and the judgment here. That means that defendant must be earning money from somewhere sufficient to pay for the rent and whatever other monthly expenses he has. In other words, defendant is paying $300,000/year in rent alone. It stands to reason that he must have some other living expenses. And that money must come from somewhere. It is not coming from loans, for defendant did not testify as to any other debts. So, although the court does not know from whence the money is coming, it is coming from somewhere. It is not an impossible inference to conclude that his overall financial condition must be sufficient to allow him to live the life style he does without going into debt. And while the court cannot tell the exact contours of defendant’s overall financial condition due to defendant’s somewhat vague answers on the stand, the court believes that a reasonable jury could well conclude that defendant has the financial wherewithal to survive a punitive damages award. Nor is the amount so high as to render defendant financially destitute on its face. This is not a multi-million dollar award. The court also notes that while it is plaintiff’s burden to produce evidence, defendant is still the party with the better evidence. Thus, while plaintiff’s evidence was thin (at best), if defendant had an explanation for how he is able to live his lifestyle with essentially no money coming in and no additional debt, he had every opportunity to provide that explanation. His election not to do so is an election that (under the Evidence Code) could lead to an adverse inference. Were the court deciding punitive damages de novo, it might well reach a different conclusion than did the jury. But that is not the office of a JNOV. The court’s job begins and ends with the question whether a reasonable jury could reach the decision that it did. If the answer is “yes” (and the court believes it is), then the court’s inquiry is at an end; the court cannot suggest a remittitur as a discretionary matter.

The court frankly believes the question to be quite close. But the court, on balance, believes that plaintiff has put forth enough evidence, barely, to get by the JNOV test. The court will therefore DENY its own motion. The current judgment will stand.