Senate Bill 2751

AN ACT TO AMEND SECTION 11-1-65, MISSISSIPPI CODE OF 1972, TO ENACT LIMITATIONS ON PUNITIVE DAMAGE AWARDS; TO AMEND SECTION 11-55-5, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE LOSER PAYS IN A LAWSUIT; TO CREATE A NEW CODE SECTION TO BE CODIFIED AS SECTION 11-1-67, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT CERTAIN COLLATERAL BENEFITS MUST BE CONSIDERED BY THE COURT AND USED TO REDUCE AN AWARD OF ACTUAL DAMAGES; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 11-1-65, Mississippi Code of 1972, is amended as follows:

11-1-65. (1) In any action in which punitive damages are sought:

(a) Punitive damages may not be awarded if the claimant does not prove by clear and convincing evidence that the defendant against whom punitive damages are sought acted with actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or committed actual fraud.

(b) In any action in which the claimant seeks an award of punitive damages, the trier of fact shall first determine whether compensatory damages are to be awarded and in what amount, before addressing any issues related to punitive damages.

(c) If, but only if, an award of compensatory damages has been made against a party, the court shall promptly commence an evidentiary hearing before the same trier of fact to determine whether punitive damages may be considered.

(d) The court shall determine whether the issue of punitive damages may be submitted to the trier of fact; and, if so, the trier of fact shall determine whether to award punitive damages and in what amount.

(e) In all cases involving an award of punitive damages, the fact finder, in determining the amount of punitive damages, shall consider, to the extent relevant, the following: the defendant's financial condition and net worth; the nature and reprehensibility of the defendant's wrongdoing, for example, the impact of the defendant's conduct on the plaintiff, or the relationship of the defendant to the plaintiff; the defendant's awareness of the amount of harm being caused and the defendant's motivation in causing such harm; the duration of the defendant's misconduct and whether the defendant attempted to conceal such misconduct; and any other circumstances shown by the evidence that bear on determining a proper amount of punitive damages. The trier of fact shall be instructed that the primary purpose of punitive damages is to punish the wrongdoer and deter similar misconduct in the future by the defendant and others while the purpose of compensatory damages is to make the plaintiff whole.

(f) (i) Before entering judgment for an award of punitive damages the trial court shall ascertain that the award is reasonable in its amount and rationally related to the purpose to punish what occurred giving rise to the award and to deter its repetition by the defendant and others.

(ii) In determining whether the award is excessive, the court shall take into consideration the following factors:

1. Whether there is a reasonable relationship between the punitive damage award and the harm likely to result from the defendant's conduct as well as the harm that actually occurred;

2. The degree of reprehensibility of the defendant's conduct, the duration of that conduct, the defendant's awareness, any concealment, and the existence and frequency of similar past conduct;

3. The financial condition and net worth of the defendant; and

4. In mitigation, the imposition of criminal sanctions on the defendant for its conduct and the existence of other civil awards against the defendant for the same conduct.

(g) Punitive damages shall not exceed the greater of five (5) times the amount of the total compensatory damages awarded to the plaintiff or One Million Dollars ($1,000,000.00), whichever is greater; provided, however, if the defendant is a business with fewer than twenty-five (25) full-time employees or a net worth of less than Two Million Dollars ($2,000,000.00), no award of punitive damages shall exceed Ten Percent (10%) of the business' net worth or One Hundred Thousand Dollars ($100,000.00), whichever is greater. This restriction shall not be disclosed to the trier of fact but shall be applied by the court to any punitive damages awarded.

(h) The seller of a product other than the manufacturer shall not be liable for punitive damages unless the seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the harm for which recovery of damages is sought; the seller altered or modified the product, and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought; the seller had actual knowledge of the defective condition of the product at the time he supplied same; or the seller made an express factual representation about the aspect of the product which caused the harm for which recovery of damages is sought.

(2) The provisions of Section 11-1-65 shall not apply to:

(a) Contracts;

(b) Libel and slander; or

SECTION 2. Section 11-55-5, Mississippi Code of 1972, is amended as follows:

11-55-5. (1) Except as otherwise provided in this chapter, in any civil action commenced or appealed in any court of record in this state, the court shall award to the prevailing party, as part of its judgment and in addition to any other costs otherwise assessed, * * * attorney's fees on a money judgment as follows:

(a) On the first Twenty-five Thousand Dollars ($25,000.00) or portion thereof:

(i) If contested with trial, twenty percent (20%);

(ii) If contested without trial, eighteen percent (18%);

(iii) If noncontested, ten percent (10%).

(b) On the next Seventy-five Thousand Dollars ($75,000.00) or portion thereof:

(i) If contested with trial, ten percent (10%);

(ii) If contested without trial, eight percent (8%);

(iii) If noncontested, three percent(3%).

(i) If contested with trial, ten percent (10%);

(ii) If contested without trial, six percent (6%);

(iii) If noncontested, two percent (2%).

(d) On any portion of the award in excess of Five Hundred Thousand Dollars ($500,000.00):

(i) If contested with trial, ten percent (10%);

(ii) If contested without trial, two percent (2%);

(iii) If noncontested, one percent (1%).

(2) In cases in which the prevailing party recovers no money judgment, the court shall award the prevailing party the prevailing party's reasonable attorney's fees which were necessarily incurred, including fees for legal work customarily performed by an attorney but which was delegated to and performed by an investigator, paralegal or law clerk.

(3) The court shall also award its other costs to the prevailing party * * *.

(4) No attorney's fees or costs shall be assessed if a voluntary dismissal is filed as to any action, claim or defense within a reasonable time after the attorney or party filing the action, claim or defense knows or reasonably should have known that it would not prevail on the action, claim or defense. No attorney's fees shall be allowed to the plaintiff if the court finds that the defendant offered to the plaintiff, prior to the commencement of the action, an amount at least equal to Ninety Percent (90%) of the amount awarded to the plaintiff.

(5) * * * A court * * * shall assess the attorney's fees and costs against the * * * attorneys or parties, or both, and in its discretion may allocate the payment among them, as it determines most just, and may assess the full amount or any portion to any * * * attorney or party liable therefor.

(6) No party, except an attorney licensed to practice law in this state, who is appearing without an attorney shall be assessed attorney's fees unless the court finds that the party clearly knew or reasonably should have known that such party's action, claim or defense or any part of it was without substantial justification.

SECTION 3. The following shall be codified as Section 11–1–67, Mississippi Code of 1972:

11-1-67. Actions for personal injury, injury to property or wrongful death.

In any action brought to recover damages for personal injury, injury to property or wrongful death, where the plaintiff seeks to recover for the cost of medical care, dental care, custodial care, rehabilitation services, loss of earnings or other economic loss, evidence shall be admissible for consideration by the court to establish that any such past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part, from any collateral source such as insurance, other than life insurance, social security, other than those benefits provided under title XVIII of the Social Security Act, workers' compensation or employee benefit programs; the court shall not consider collateral sources entitled by law or some right of subrogation to liens against any recovery of the plaintiff. If the court finds that any cost or expense was or will, with reasonable certainty, be replaced or indemnified from any allowable collateral source, it shall reduce the amount of the award by such finding, minus an amount equal to the premiums paid by the plaintiff for such benefits for the two-year period immediately preceding the accrual of the action and minus an amount equal to the projected future cost to the plaintiff of maintaining such benefits. In order to find that any future cost or expense will, with reasonable certainty, be replaced or indemnified by the collateral source, the court must find that the plaintiff is legally entitled to the continued receipt of such collateral source, pursuant to a contract or otherwise enforceable agreement, subject only to the continued payment of a premium and such other financial obligations as may be required by the agreement.

SECTION 4. This act shall take effect and be in force from and after July 1, 2002.