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20380769v8DCDB01 -- GMAC Brief - Hicks - _20380769v8DCDB01

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20380769v8DCDB01 -- GMAC Brief - Hicks - _20380769v8DCDB01 Powered By Docstoc
					                             No. 1998-CA-01217
                 _________________________________________

                 IN THE SUPREME COURT OF MISSISSIPPI
                 _________________________________________


            GENERAL MOTORS ACCEPTANCE CORPORATION
               and MIC LIFE INSURANCE CORPORATION,

                                                             Appellants,

                                      v.

              BETTYE HICKS, Individually and as Administratrix
                  of the Estate of David E. Hicks, deceased,

                                                             Appellee.

               ____________________________________________

                  On Appeal From Jones County Circuit Court
                                No. 95-7-89
               ____________________________________________

                         BRIEF OF APPELLANT
            GENERAL MOTORS ACCEPTANCE CORPORATION
              ____________________________________________

ANDREW L. FREY                             JESS H. DICKINSON
 Mayer, Brown & Platt                        MS Bar No. 6120
 1675 Broadway                              RONALD PERESICH
 New York, New York 10019                    MS Bar No. 4113
 (212) 506-2500                            KATHARINE M. SAMSON
                                             MS Bar No. 8727
EVAN M. TAGER                                Page, Mannino, Peresich,
MIRIAM R. NEMETZ                             Dickinson & McDermott, P.L.L.C.
 Mayer, Brown & Platt                        2301 - 14th Street, Suite 600
1909 K Street, N.W.                          Gulfport, Mississippi 39501
Washington, D.C. 20006                       (228) 863-8861
 (202) 263-3000
                                           MICHAEL A. BENDER
                                            General Motors Acceptance Corporation
                                            3031 West Grand Boulevard
                                            Detroit, Michigan 49232

                             Attorneys for Appellant
                     General Motors Acceptance Corporation


                         ORAL ARGUMENT REQUESTED
    General Motors Acceptance Corporation and MIC Life Insurance Corporation v.
Bettye Hicks, Individually and as Administratrix of the Estate of David E. Hicks, Deceased
                                   No. 1998-CA-01227


                     CERTIFICATE OF INTERESTED PERSONS

       The undersigned counsel of record certifies that the following listed persons have an

interest in the outcome of this case. These representations are made in order that the Justices

of the Supreme Court may evaluate possible disqualification or recusal.

       General Motors Acceptance Corporation (“GMAC”) and MIC Life Insurance

Corporation (“MIC Life”) are the Appellants. GMAC, a Delaware corporation, is a wholly-

owned subsidiary of General Motors Corporation, whose common stock is publicly traded on

the New York Stock Exchange. GMAC is the sole owner of Motors Insurance Corporation,

a New York corporation, which in turn is the sole owner of MIC Life, a Delaware corporation.

       Bettye Hicks, administratrix of the Estate of David Hicks, is the Appellee.




                                              ___________________________________
                                              Jess H. Dickinson
                                              Attorney of Record for
                                              General Motors Acceptance Corporation




                                               i
                                              TABLE OF CONTENTS
                                                                                                                            Page

CERTIFICATE OF INTERESTED PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

STATEMENT OF ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

I.        GMAC IS ENTITLED TO JUDGMENT AS A MATTER OF LAW
          OR A NEW TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

          A.         GMAC Did Not Breach A Fiduciary Duty To Mr. Hicks . . . . . . . . . . . . . 14

          B.         GMAC Was Not Unjustly Enriched By MIC Life’s
                     Failure To Refund The Unearned Premium . . . . . . . . . . . . . . . . . . . . . . . . 17

          C.         GMAC Is Entitled To Judgment On Plaintiff’s Negligence Claim . . . . . . 19

II.       PREJUDICIAL TRIAL ERRORS NECESSITATE A NEW TRIAL . . . . . . . . . . 23

          A.         Judge Landrum’s Comments During The Trial Manifested
                     His Disbelief of Defendants’ Representatives . . . . . . . . . . . . . . . . . . . . . . 23

          B.         Evidence Concerning GMAC’s Practices In Eight Other States
                     Should Not Have Been Admitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

          C.         Improper Testimony Concerning Legal Issues Prejudiced
                     GMAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

          D.         Plaintiff’s Counsel Repeatedly Made Prejudicial And Unfounded
                     Statements During Closing Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

III.      GMAC DID NOT ENGAGE IN PUNISHABLE CONDUCT . . . . . . . . . . . . . . . 30

          A.         The Conduct In This Case Does Not Satisfy Mississippi’s Standard
                     For Imposing Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31


                                                                 ii
                                           Table Of Contents - Cont’d                                                    Page

          B.        Punitive Damages May Not Be Imposed Because GMAC
                    Lacked
                    Fair Notice That Its Conduct Was Subject To Punishment . . . . . . . . . . . . 34

IV.       THE $5 MILLION PUNITIVE EXACTION IS GROSSLY EXCESSIVE
          UNDER BOTH STATE LAW AND THE FOURTEENTH AMENDMENT . . . 36

          A.        The Punitive Damages Verdict Against GMAC Is Grossly Excessive
                    Under The Standards Imposed By Both Federal And Mississippi Law . . 37

                    1.         Application of the three BMW guideposts establishes the
                               excessiveness of the $5 million punishment against GMAC . . . . 39

                               a.        Reprehensibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

                               b.        The ratio of punitive to actual
                                         damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

                               c.        Statutorily established penalties for comparable
                                         misconduct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

                    2.         GMAC’s substantial net worth cannot justify
                               the punishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

          B.        The Excessive Punitive Verdict Was The Product Of Passion, Bias And
                    Prejudice And Must Be Set Aside or Reduced Under Mississippi Law . . 46

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49




                                                              iii
                                       TABLE OF AUTHORITIES
                                                                                                             Page(s)

Cases

Ace v. Aetna Life Ins. Co.,
       1999 WL 183805 (D. Alaska Mar. 29, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . 38, 46

Alfa Mut. Fire Ins. Co. v. Thomas,
      1999 WL 219636 (Ala. Apr. 16, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Allen v. Ritter,
        235 So. 2d 253 (Miss. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

American Cyanamid Co. v. Wilson & Toomer Fertilizer Co.,
      51 F.2d 665 (5th Cir. 1931) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

American Pioneer Life Ins. Co. v. Williamson,
      704 So. 2d 1361 (Ala. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 42

Anderson v. State,
      300 N.E.2d 674 (Ind. Ct. App. 1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Apache Corp. v. Moore,
      960 S.W.2d 746 (Tex. Ct. App.1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 42

Auster Oil & Gas, Inc. v. Stream,
       835 F.2d 597 (5th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Baldwin v. Laurel Ford Lincoln-Mercury, Inc.,
      32 F. Supp. 2d 894 (S.D. Miss. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Bankers Life & Cas. Co. v. Crenshaw,
      483 So. 2d 254 (Miss. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

BMW of N. Am., Inc. v. Gore,
     701 So. 2d 507 (Ala. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 38, 39, 45

BMW of N. Am., Inc. v. Gore,
     517 U.S. 559 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Boling v. A-1 Detective & Patrol Serv., Inc.,
       659 So. 2d 586 (Miss. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Bowen v. Calder, Inc.,
      710 A.2d 267 (Md. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39


                                                           iv
                                    Table of Authorities - Continued

                                                                                                            Page(s)

Chrysler Corp. v. Schiffer,
       1999 WL 97991 (Ala. Feb. 26, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Clement v. R.L. Burns Corp.,
      373 So. 2d 790 (Miss. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Consolidated Am. Life Ins. Co. v. Toche,
       410 So. 2d 1303 (Miss. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Continental Coffee Prods. v. Cazarez,
       937 S.W. 2d 444 (Tex. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Creative Demos, Inc. v. Wal-Mart Stores, Inc.,
       955 F. Supp. 1032 (S.D. Ind. 1997), aff’d in relevant part
       on other grounds, 142 F.3d 367 (7th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . 38, 45

Denesha v. Farmers Ins. Exch.,
      161 F.3d 491 (8th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

DeWitt County Pub. Building Comm’n v. County of DeWitt,
       469 N.E. 2d 689 (Ill. App. Ct. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Dixie Ins. Co. v. Mooneyhan,
       684 So. 2d 574 (Miss. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Dunn v. State Farm Fire & Cas. Co.,
      927 F.2d 869 (5th Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

EEOC v. HBE Corp.,
     135 F.3d 543 (8th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Employees’ Benefit Ass’n v. Grissett,
      1998 WL 599498 (Ala. Sept. 11, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Eselin-Bullock & Assoc. Ins. Agency Inc. v. National Gen. Life Ins. Co.,
       604 So. 2d 236 (Miss. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Fall v. Indiana Univ. Bd. of Trustees,
        33 F. Supp. 2d 729 (N.D. Ind. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

FDIC v. Hamilton,
      122 F.3d 854 (10th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42


                                                           v
                                    Table of Authorities - Continued

                                                                                                            Page(s)

Florez v. Delbovo,
       939 F. Supp. 1341 (N.D. Ill. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42, 45

Food Lion, Inc. v. Capital Cities/ABC, Inc.,
      984 F. Supp. 923 (M.D.N.C. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Ford Motor Co. v. Sperau,
      708 So. 2d 111 (Ala. 1997), cert. denied, 118 S. Ct. 1519 (1997) . . . . . . . . . . . . 39

Foremost Ins. Co. v. Parham,
      693 So. 2d 409 (Ala. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Foster v. Bass,
       575 So. 2d 967 (Miss. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Fowler v. King,
      179 So. 2d 800 (Miss. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Fuller v. Aetna Cas. & Sur. Co.,
        369 F. Supp. 967 (S.D. Miss. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Geuss v. Pfizer, Inc.,
       971 F. Supp. 164 (E.D. Pa. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Gorman v. Southeastern Fidelity Ins. Co.,
     775 F.2d 655 (5th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Groom v. Safeway, Inc.,
      973 F. Supp. 987 (W.D. Wash. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Grynberg v. Citation Oil & Gas Co.,
      573 N.W.2d 493 (S.D. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 42

Gulf Guar. Life Ins. Co. v. Kelley,
      389 So. 2d 920 (Miss. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Haley v. Friedman,
       40 Cal. Rptr. 1 (Cal. Dist. Ct. App. 1964), rev’d by stip . . . . . . . . . . . . . . . . . . . 26

Harrison v. Allstate Ins. Co.,
       662 So. 2d 1092 (Miss. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35




                                                          vi
                                      Table of Authorities - Continued

                                                                                                                 Page(s)

Hinson v. Department of Transp.,
      217 S.E. 2d 606 (Ga. Ct. App. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Homer v. Pabst Brewing Co.,
      806 F.2d 119 (7th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Honda Motor Co. v. Oberg,
      512 U.S. 415 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Hopewell Enters., Inc. v. Trustmark Nat’l Bank,
     680 So. 2d 812 (Miss. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Hurst v. Southwest Mississippi Legal Servs. Corp.,
       708 So. 2d 1347 (Miss. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Iannone v. Harris,
      941 F. Supp. 403 (S.D. N.Y. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

In re Arnold,
        206 B.R. 560 (Bankr. N.D. Ala. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

In re Greenberg,
       212 B.R. 422 (Bankr. D. Mass. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Kelley v. Sears, Roebuck & Co.,
       882 F.2d 453 (10th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Kemezy v. Peters,
      79 F.3d 33 (7th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Kim v. Dial Serv. Int’l., Inc.,
       1997 WL 458783 (S.D.N.Y. Aug. 11, 1997),
       cert. denied, 119 S. Ct. 1030 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Kim v. Nash Finch Co.,
       123 F.3d 1046 (8th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Kimzey v. Wal-Mart Stores, Inc.,
      107 F.3d 568 (8th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

KLLM, Inc. v. Fowler,
      589 So. 2d 670 (Miss. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28


                                                            vii
                                      Table of Authorities - Continued

                                                                                                                 Page(s)


Kukanskis v. Jasut,
      362 A.2d 898 (Conn. 1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Landers v. Long,
      300 So. 2d 112 (Ala. Civ. App. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Langmead v. Admiral Cruises, Inc.,
      696 So. 2d 1189 (Fla. Dist. Ct. App. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Lawyer v. 84 Lumber Co.,
      991 F. Supp. 973 (N.D. Ill. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Leab v. Cincinnati Ins. Co.,
       1997 WL 360903 (E.D. Pa. June 26, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 45

Lee v. Edwards,
        101 F.3d 805 (2d Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Life Ins. Co. of Georgia v. Johnson,
        701 So. 2d 524 (Ala. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 39, 42

Life Ins. Co. of Georgia v. Parker,
        726 So. 2d 619 (Ala. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Mahoney v. Canada Dry Bottling Co.,
     1998 WL 231082 (E.D.N.Y. May 7, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Maiorino v. Schering-Plough Corp.,
      695 A.2d 353 (N.J. Super. App. Div. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Management Computer Servs., Inc. v. Hawkins, Ash, Baptie & Co.,
     557 N.W.2d 67 (Wis. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Martes v. USLife Corp.,
       927 F. Supp. 146 (S.D.N.Y. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Martinez v. Associates Fin. Servs. Co. of Colorado, Inc.,
      891 P.2d 785 (Wyo. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Matsushita Elec. Industrial Co. v. Zenith Radio Corp.,
      475 U.S. 574 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33


                                                            viii
                                      Table of Authorities - Continued

                                                                                                                 Page(s)


May v. V.F.W. Post No. 2539,
       577 So. 2d 372 (Miss. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Merchants & Planters Bank of Raymond v. Williamson,
      691 So. 2d 398 (Miss. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Minneapolis St. P. & S. Ste. M. Ry. v. Moquin,
      283 U.S. 520 (1931) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Montgomery Ward & Co. v. Skinner,
      25 So. 2d 572 (Miss. 1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Mosby v. Gandy,
      375 So. 2d 1024 (Miss. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Murdock Acceptance Corp. v. Adcox,
      138 So. 2d 890 (Miss. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Mutual Life Ins. Co. v. Estate of Wesson,
      517 So. 2d 521 (Miss. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 41, 44

Nichols v. Munn,
       565 So. 2d 1132 (Miss. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Nichols v. Tri-State Brick & Tile Co.,
       608 So. 2d 324 (Miss. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Norcon, Inc. v. Kotowski,
      971 P.2d 158 (Alaska 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Omnibank of Mantee v. United Southern Bank,
      607 So. 2d 76 (Miss. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 19

Ortiz-Del Valle v. National Basketball Ass’n,
       1999 WL 179356 (S.D.N.Y. Mar. 31, 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Parks v. City of Marshalltown,
       440 N.W. 2d 377 (Iowa 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Parrott v. Carr Chevrolet, Inc.,
       965 P.2d 440 (Or. Ct. App. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39


                                                             ix
                                     Table of Authorities - Continued

                                                                                                               Page(s)

Patterson v. P.H.P. Healthcare Corp.,
       90 F.3d 927 (5th Cir. 1996),
       cert. denied, 519 U.S. 1091 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Peoples Bank & Trust Co. v. Cermack,
       658 So. 2d 1352 (Miss. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 16, 19

Pivot Point Int’l, Inc. v. Charlene Prods., Inc.,
       932 F. Supp. 220 (N.D. Ill. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Rauch Indus., Inc. v. Poloron Prods. of Mississippi, Inc.,
       362 So. 2d 605 (Miss. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Rivera v. Baccarat, Inc.,
       10 F. Supp. 2d 318 (S.D.N.Y. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Rush v. Scott Specialty Gases, Inc.,
       930 F. Supp. 194 (E.D. Pa. 1996),
       rev’d on other grounds, 113 F.2d 476 (3d Cir. 1997) . . . . . . . . . . . . . . . . . . . 38, 42

Schimizzi v. Illinois Farmers Ins. Co.,
       928 F. Supp. 760 (N.D. Ind. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42

Speagle v. Nationwide Mut. Life Ins. Co.,
       226 S.E.2d 459 (Ga. 1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Stacy v. Aetna Cas. & Sur. Co.,
        484 F.2d 289 (5th Cir. 1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Strickland v. Liberty Nat’l Life Ins. Co.,
        710 So. 2d 423 (Ala. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Talent Tree Personnel Servs. v. Fleenor,
       703 So. 2d 917 (Ala. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 42

Travelers Indem. Co. v. Rawson,
       222 So. 2d 131 (Miss. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

TXO Prod. Corp. v. Alliance Resources Corp.,
      509 U.S. 443 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 47




                                                            x
                                     Table of Authorities - Continued

                                                                                                             Page(s)

United States v. Dean Van Lines, Inc.,
       531 F.2d 289 (5th Cir. 1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Utah Foam Prods. Co. v. Upjohn Co.,
      930 F. Supp. 513 (D. Utah 1996),
      cert. denied, 119 S. Ct. 1358 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 42, 45

Watkins v. Lundell,
      169 F.2d 540 (8th Cir. 1999),
      cert. denied, 1999 WL 184168 (U.S. May 17, 1999) . . . . . . . . . . . . . . . . . . . . . . 38

Wedman v. Home Nat’l Bank of Arkansas City,
     1990 WL 7501 (D. Kan. Jan. 25, 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Westbrook v. General Tire & Rubber Co.,
      754 F.2d 1233 (5th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Whitehead v. Food Max of Mississippi, Inc.,
      163 F.3d 265 (5th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Wigod v. Chicago Mercantile Exch.,
      981 F.2d 1510 (7th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Wilkerson v. Randall,
       180 So. 2d 303 (Miss. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Wilson v. IBP, Inc.,
       558 N.W.2d 132 (Iowa 1996), cert. denied, 118 S. Ct. 52 (1997) . . . . . . . . . . . . . 39

Wirtz v. Switzer,
        586 So. 2d 775 (Miss. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 25

Young v. Anderson,
      163 So. 2d 253 (Miss. 1964) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Zipper v. Health Midwest,
       978 S.W.2d 398 (Mo. Ct. App. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18




                                                           xi
                                     Table of Authorities - Continued

                                                                                                               Page(s)

Statutes and Rules

MISS. CODE ANN. § 11-1-65 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

MISS. CODE ANN. § 11-1-65(1)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 34

MISS. CODE ANN. § 11-1-65(1)(f)(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

MISS. CODE ANN. § 11-1-65(1)(f)(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 37, 40

MISS. CODE ANN. § 11-1-65(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

MISS. CODE ANN. § 15-1-49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

MISS. CODE ANN. § 83-5-17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

MISS. CODE ANN. § 83-53-17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 35, 43


Miscellaneous

11 C. WRIGHT, A. MILLER & M. KANE,
       FEDERAL PRACTICE AND PROCEDURE § 2815 (2d ed. 1995) . . . . . . . . . . . . . . . . . 46




                                                           xii
                                STATEMENT OF ISSUES

       Appellee Bettye Hicks’s late husband purchased credit life insurance from appellant

MIC Life Insurance Corporation (“MIC Life”) to ensure that in the event of his death,

amounts owed to appellant General Motors Acceptance Corporation (“GMAC”) under a retail

instalment sale contract (“the Instalment Contract”) for the purchase of a motor vehicle would

be paid. Mr. Hicks paid off the Instalment Contract early and the credit life insurance

coverage terminated, giving Mr. Hicks a contractual right to a refund from MIC Life of the

unearned premium. Although it had no contractual obligation to do so, GMAC notified Mr.

Hicks of his possible entitlement to a refund from MIC Life and advised him to contact the

dealer or the insurer. Although Mr. and Mrs. Hicks received the notice from GMAC, neither

of them read it.

       After Mr. Hicks died, Mrs. Hicks tried to collect a death benefit from MIC Life; MIC

Life properly denied her claim because there was no unpaid balance on the Instalment

Contract,1/ but it did inform Mrs. Hicks that she was entitled to a refund of the unearned

premium. Because of a clerical error, MIC Life failed to make the refund. Rather than

informing MIC Life that she had not received the promised refund, Mrs. Hicks sued MIC Life

and GMAC.

       Although GMAC had nothing to do with the insurance purchase, received no part of

the premium, and suggested to Mr. Hicks that he contact the dealer or the insurance company

about a possible refund, the trial court directed verdicts against GMAC as well as MIC Life

on all of plaintiff’s claims. The court held GMAC and MIC Life jointly and severally liable

for compensatory damages of $637.99, and submitted to the jury only the questions of liability

for and the amount of punitive damages. The jury awarded punitive damages of $30 million

against GMAC and $6 million against MIC Life. The court ordered remittitur of the punitive


1/
       The benefit provided by the policy was payment of the unpaid balance due under the
Instalment Contract. Since there was no balance due, there was no benefit to be paid.

                                              1
damages to the still-exorbitant amounts of $5 million and $1 million. GMAC’s appeal

presents the following issues:

        1. Whether the trial court erred in directing verdicts against GMAC on plaintiff’s

breach of fiduciary duty, unjust enrichment, and negligence claims and whether instead

GMAC was entitled to judgment on each of those claims.

        2. Whether a new trial is necessary because the trial court (a) repeatedly disparaged

the credibility of defendants’ representatives; (b) admitted irrelevant and prejudicial evidence

concerning GMAC’s practices in states that, unlike Mississippi, have statutes that impose

special refund obligations on lienholders; (c) admitted lay testimony concerning the meaning

of statutory and contractual provisions; and (d) allowed improper and unfounded statements

of counsel during closing arguments.

        3. Whether GMAC is entitled to judgment with respect to punitive damages because

(a) it lacked notice that its conduct could be considered tortious; and/or (b) the plaintiff proved

no conduct that satisfies the standard for imposing punitive damages under Mississippi law.

        4. Whether the $5 million punitive damages award — which is more than 7,800 times

the compensatory damages — must be set aside as excessive under the United States

Constitution and/or Mississippi law.

                               STATEMENT OF THE CASE

        Nature of the Case. Appellee Bettye Hicks, individually and as the administratrix

of the estate of David Hicks, sued appellants GMAC and MIC Life, contending that they had

wrongfully failed to pay a refund of unearned premium for credit life insurance that Mr. Hicks

had purchased from MIC Life to ensure payment of an instalment contract held by GMAC.

Mrs. Hicks asserted claims for unjust enrichment, negligence, and breach of fiduciary duty

against GMAC and claims for breach of contract, breach of fiduciary duty, unjust enrichment,

breach of the duty of good faith and fair dealing, and negligence against MIC Life. R. 14-23.

MIC Life never denied that it owed Mr. Hicks’s estate a refund of the unearned premium (R.


                                                 2
31-32) and, immediately after suit was filed, tendered a check for the premium, plus interest,

to the Clerk of the Court. R. 33. At the close of a two-day trial, the court denied GMAC’s

and MIC Life’s motions for directed verdict, and instead directed verdicts against them on all

counts, holding them jointly and severally liable for compensatory damages of $637.99. The

court sent the issue of punitive damages to the jury, which returned awards of $30 million

against GMAC and $6 million against MIC Life. The court denied each defendant’s motion

for judgment notwithstanding the verdict, but partially granted their motions for remittitur,

reducing the punitive awards against GMAC and MIC Life to $5 million and $1 million,

respectively.

        Statement of Facts. The following facts, which are most relevant to the resolution

of this appeal, are not in dispute.

        1. GMAC’s Practices With Respect to Credit Life Insurance. An individual may

purchase a motor vehicle by entering into a retail instalment sale contract with a motor vehicle

dealer. In such contracts, the buyer agrees to pay the purchase price of the vehicle, plus a

finance charge, over a specified period of time. At the time of sale, motor vehicle dealers

sometimes facilitate the buyer’s purchase of credit life insurance, which insures payment of

the amount due under the instalment contract if the buyer were to die. The premium is often

included in the instalment contract, to be paid over time along with the other amounts due

under the contract.

        GMAC purchases motor vehicle instalment contracts from dealers.            Tr. 330:16-

331:10. Some of these contracts include dealer-financed credit life insurance. Tr. 327:21-26.

GMAC itself, however, neither sells nor administers credit life insurance. Tr. 328:1-12. It

never holds the insurance premium, it receives no commission, and it undertakes no

contractual obligations with regard to insurance. Tr. 245:25-246:3.

        When a customer pays off the covered indebtedness prematurely, under some

insurance policies (including MIC Life’s), the insurance terminates, and the customer may be


                                               3
due a refund of part of the premium. When it purchases contracts on which dealers have

financed credit life insurance premiums, GMAC requires the dealer to sign an agreement that

states, in pertinent part:

        Creditor life and disability insurance purchased through a carrier is eligible for
        financing as long as you agree that on prepayment of an account, the unearned
        insurance charge will be refunded to the customer. This is accomplished either by
        our notifying the customer to make application to you for the insurance refund, or by
        you authorizing us to make the refund.

Ex. P-9 (Record Excerpts (“RE”) 90) (emphasis added); see also Ex. P-10 (RE 91); Tr. 286:

10-14. When a customer prepays an instalment contract that includes credit life insurance,

then (except as discussed below) GMAC sends the customer and the dealer notice that the

customer may be entitled to a refund of unearned insurance premiums. Tr. 279:3-26, 340:23-

341:21; Ex. P-3 (RE 84). In this litigation, GMAC’s notification — which is printed on a

green, non-standard-size piece of paper — came to be called the “OLA notice.”

        Over the defendants’ objections, Mrs. Hicks adduced evidence of GMAC’s procedures

for complying with the laws of eight states that statutorily require lienholders such as GMAC

to process refunds of credit life insurance premiums. In such states, GMAC advances any

unearned premiums to the prepaying debtor (amounts which it has already paid once to

purchase the instalment contract) and then seeks reimbursement from the dealer. See Ex. P-10

(RE 91). GMAC’s internal manual notes that its branches “on occasion absorb losses due to

a dealer’s refusal to reimburse GMAC for these refunds.” Id. Mississippi has no statute

requiring lienholders to pay refunds of insurance premiums. Instead, Mississippi’s statute

governing credit life insurance provides:

        Each individual policy or group certificate shall provide that in the event of
        termination of the insurance prior to the scheduled maturity date of the indebtedness,
        any refund of an amount paid by the debtor for insurance shall be paid or credited
        promptly to the person entitled thereto; * * *. The insurer shall pay or cause to be
        paid to the debtor any refund due pursuant to this subsection within thirty (30) days
        of the accrual of such refund.




                                              4
MISS. CODE ANN. § 83-53-17(2) (emphasis added). Thus, Mississippi specifically places the

responsibility for refunding unearned premiums squarely on the shoulders of the insurer.

         During the time period relevant to this case, GMAC purchased instalment contracts

which included dealer-financed credit life insurance sold by fifteen different insurance

companies, including MIC Life. Tr. 310:28-312:11. A subsidiary of GMAC owns the stock

of MIC Life. With respect to the issues in this litigation, GMAC employed the exact same

policies and procedures concerning refunds whether MIC Life or an unrelated insurance

company was the insurer. Tr. 312:5-9.

        2. Mr. Hicks’s Purchase of Credit Life Insurance. On April 2, 1991, David Hicks

purchased a 1991 Chevrolet pickup truck pursuant to an instalment sale contract with Hankins

Chevrolet Co. (“Hankins”) in Taylorsville, Mississippi. Ex. P-1 (RE 81-82). Mr. Hicks also

signed a separate application to obtain credit life insurance from MIC Life. Ex. P-4 (RE 85).

The policy’s $1,044.48 premium was included in the Instalment Contract. Ex. P-1 (RE 81-

82).

        GMAC purchased the Instalment Contract from Hankins and sent Hankins the

purchase price of the Instalment Contract. Tr. 329:26-330:2; 331:21-24; 350:9-11. Hankins

then sent the premium, less its commission, to MIC Life. Tr. 246:14-19. MIC Life provided

Mr. Hicks a credit life insurance certificate, which explained that coverage would terminate

on “the date your indebtedness is discharged, whether by payment, renewal, refinancing, or

otherwise,” and that, “[i]n the event of termination of this insurance prior to the maturity date,

the unearned portion of the insurance charge will be refunded to you or credited toward your

indebtedness.” Ex. D-MIC 106, at 2 (RE 93). GMAC, by contrast, undertook no contractual

obligations with regard to payment of benefits or refund of the insurance premium.

        In June 1992, Mr. Hicks went to a different dealer and traded in his 1991 pickup truck

for a later model. Tr. 369:18-370:16, 384:13-23. As part of that transaction, the balance due

under the Instalment Contract for the 1991 vehicle was paid in full. Tr. 384:24-29. Shortly


                                                5
thereafter, GMAC mailed Mr. Hicks the Instalment Contract, marked “canceled” to indicate

that it had been paid in full. In the same envelope, GMAC sent Mr. Hicks the “OLA notice,”

which stated: “Since the account shown above has been paid in full, we suggest that you

contact the dealer or the insurance company regarding a possible rebate of the creditor life

and/or disability insurance premium.” Ex. P-3 (RE 84) (emphasis added); Tr. 385:21-

386:25. GMAC also sent a copy of the OLA notice to the Hankins dealership. Id.; Tr.

274:18-23.

       Mr. and Mrs. Hicks received the canceled contract and the OLA notice from GMAC.

Tr. 371:20-373:9. Mrs. Hicks opened the envelope containing these materials in the presence

of her husband, but neither of them read the enclosed documents. Tr. 371:2-16, 372:26-

373:9. Instead, Mrs. Hicks filed the papers away. Tr. 372:14-16. They did not contact

Hankins, MIC Life, or GMAC about the refund. Tr. 386:26-387:12.

         3. Mrs. Hicks’s Attempt to Collect Insurance Benefits From MIC Life. On February

24, 1995, Mr. Hicks died. Tr. 367:26-27. Thereafter, Mrs. Hicks reviewed her husband’s

papers and found the OLA notice. Tr. 373:10-374:1. She then contacted the Hankins

dealership concerning the insurance policy. After expressing surprise that Mrs. Hicks had not

yet obtained a refund of the unearned premium (see Tr. 388:28-389:19, 374:10-11), the

Hankins office manager sent Mrs. Hicks a form for obtaining a refund from MIC Life. Tr.

374:29-375:6, 390:3-29; Exs. P-4 and P-5 (RE 85-86). Mrs. Hicks told the dealer, however,

that she wished to claim benefits under the insurance policy, not just obtain a premium refund.

She testified:

       So I sat down and I called them back and I told her, I said, that’s not what I asked for.
       I said, I am not asking for a refund right now; I’m asking to file a claim. And she
       said she would have to talk to the manager or the, you know, the business man there.
       So she came back on the phone and she told me she would send me a claim form.

Tr. 375:7-13 (emphasis added); see also Tr. 391:1-16. Hankins then sent Mrs. Hicks a claim

form. Tr. 375:12-14; Ex. P-6 (RE 87).



                                               6
       On March 23, 1995, Mrs. Hicks submitted the claim form to MIC Life. Id.; Tr. 392:2-

7. On April 10, 1995, MIC Life wrote Mrs. Hicks that there were no life insurance benefits

due but that it would refund the unearned premium. The letter explained:

       Under the terms of the policy, the insurance coverage terminates “the date the
       indebtedness is discharged by payment, renewal, refinancing or otherwise.” Our
       investigation has disclosed this loan was paid in full on June 29, 1992. We are,
       therefore, unable to accept liability for your claim.

       The above certificate will be cancelled effective June 29, 1992, and the unearned
       premium refunded.

Ex. P-7 (RE 88) (emphasis added). Because of a clerical mistake, however, MIC Life did not

make the refund. Tr. 256:10-257:18. Mrs. Hicks made no effort to contact MIC Life again

regarding the refund, and never at any time contacted GMAC about any aspect of the

insurance. Tr. 393:12-15.

       Proceedings Below. Without warning, Mrs. Hicks sued GMAC in the Circuit Court

of Jones County, asserting multiple claims. During the two-day trial of the case, Mrs. Hicks

relied on her own testimony and that of two adverse witnesses — Michael E. Bush of MIC

Life, and Mildred Wilbanks of GMAC. The two companies presented their defenses through

examination of plaintiff’s witnesses. At trial, Mrs. Hicks did not dispute the following facts:

GMAC did not provide or sell credit life insurance (Tr. 397:4-7); GMAC had no contractual

obligation to Mr. Hicks with regard to credit life insurance or any refund (Tr. 398:11-15)); and

GMAC received no part of the credit life insurance premium (Tr. 245:27-246:25). In light of

these undisputed facts, Mrs. Hicks conceded that if GMAC had done nothing

whatsoever with regard to the refund of insurance premiums it would have incurred no

liability. See Tr. 409:5-12 (“[I]f GMAC had not stuck their nose into the refund business and

if they had just relied upon the fact that they didn’t have a contract or a duty to give any kind

of notice, and if they had stayed out of it and let the dealer and MIC Life Insurance handle the

refund procedure, I would agree that there would be no liability on behalf of GMAC.”). Mrs.

Hicks also admitted that GMAC notified both Mr. Hicks and Hankins that the cancellation of


                                                7
the Instalment Contract might entitle Mr. Hicks to a refund of unearned insurance premium.

Tr. 274:18-23.

       Despite these concessions, Mrs. Hicks contended that GMAC had devised a “scheme”

to minimize refunds required to be paid by MIC Life. According to plaintiff’s counsel:

       The truth of the matter is * * * that this is a scheme or plan * * * that was concocted
       by GMAC and went along with by MIC Life, their wholly-owned subsidiary once
       removed, so that they could get around the state statute, and so they could get around
       the contract, and so that people would have a burden to go through to try to get their
       refunds.

Tr. 410:23-411:1. According to Mrs. Hicks, GMAC’s practice of providing notice to

customers and dealers concerning the customers’ refund rights was the centerpiece of the

supposed scheme. See, e.g., Tr. 496:27-28 (“The OLA letter plan that causes all of the

problems is designed by GMAC. The OLA letter is the whole problem.”); Tr. 497:11-12

(“The letter was a scheme so they wouldn’t have to give them their money back.”); Tr. 317:9-

11 (“[S]omebody in GMAC devised this OLA scheme so that there would be some money that

would never be paid back to the customer; did they not?”).

       Appearing to lend its support to the plaintiff’s claims, the trial court repeatedly

commented on the credibility of MIC Life employee Michael Bush, accusing him of

“equivocating” when he hesitated before answering a confusing question or sought to limit

his testimony to his own company’s procedures. See, e.g., Tr. 199:16-19 (emphasis added)

(“He can answer the questions for the corporation, he is required to do so without

equivocation.”); Tr. 251:18-25 (accusing witness of “equivocating,” and directing him to be

“candid”); Tr. 206:1-2 (“I told him not to equivocate.”). The court also subjected GMAC

witness Mildred Wilbanks to improper and prejudicial questioning, requiring her to answer

questions regarding the application of state law to GMAC’s practices (see, e.g., Tr. 276:25-

277:5) and permitting her to be questioned about GMAC’s refund practices in states requiring

lienholders to refund credit life insurance premiums, even though she averred that she was




                                              8
familiar with neither the laws nor GMAC’s refund procedures in those states (see, e.g.,Tr.

280:13-14, 284:6-8).

        Although Mrs. Hicks introduced no evidence to challenge the separate corporate

identities of GMAC and MIC Life, the court resisted all efforts to distinguish between the two

corporations. For example, the court was inclined to deny to GMAC’s counsel the right to ask

leading questions of Bush, positing: “You’re cross examining a man that works for your

corporation?” Tr. 233:15-16. After counsel reminded him that Bush worked for MIC Life,

not GMAC (Tr. 233:15-22), the court stated:

        Gentlemen, y’all need to tread on thin ice here whenever you are dealing with these
        people because it’s already been — this man has already admitted that everything that
        he does is a subsidiary — it’s done as a subsidiary of GMAC.

Tr. 235:8-12. When GMAC later moved for a mistrial on the grounds that the court had

suggested to the jury that MIC Life and GMAC were one and the same. Tr. 265:21-25. The

court replied:

        You people have been together at counsel table, you’ve got all your witnesses in the
        same room, you’ve consulted with each other. You’ve done everything together. It’s
        hard for the Court to decide what’s going on here between you people.”

Tr. 267:28-268:3 (emphasis added). He then opined, “if the company of GMAC wholly owns

MIC, they can do what they want with the company and the profits” (Tr. 268:16-18), and

concluded:

        So I don’t know where all of this is going to or what y’all intend to do about your
        separation of the entities here. I don’t know. All I know is that everything y’all
        have presented has been presented together. You’ve got your heads bent together,
        you’ve got your bodies leaning on each other and everything in this procedure has
        been to where y’all have planned this together, worked together.

Tr. 268:21-28 (emphasis added).

        At the close of the case, Judge Landrum denied GMAC’s motions for a directed

verdict, stating,

        I think that the jury is entitled to consider this case, based on whether or not GMAC
        had an affirmative duty to pay the refund. It will be up to them to decide whether the
        letter was adequate, as far as whether or not they felt — that it was sufficient, rather


                                               9
           — that they notify that they may have a right to get money back, when by the exercise
           of due care and common knowledge among the two companies here, they should have
           known that they were entitled to the money back. And by not taking any affirmative
           action to see that it was refunded remains a jury question.

Tr. 414:10-21 (RE 35) (emphasis added). Despite his remarks that GMAC’s liability was a

jury question, Judge Landrum the next morning granted directed verdicts against both

defendants, ruling that GMAC and MIC Life were jointly and severally liable to pay Mrs.

Hicks compensatory damages of $637.99. When GMAC asked the court to specify the counts

on which it was directing a verdict, the judge (who had to be reminded what claims the

plaintiff had raised against GMAC) then stated: “Allow all three. * * * I don’t see any

difference. They are all intermingled. If you violated one, you violated all of them as far

as the Court see[s] under the pleading and under the proof.” Tr. 432:8-14 (RE 37)

(emphasis added). The court never explained its reasons for directing a verdict against either

defendant.

           The court then ruled that the jury could consider whether to award punitive damages,

stating:

           I’m finding that both of them, in conjunction with each other * * * [t]hat the scheme
           devised by the OLA letter and the lack of affirmative action on the part of the
           companies that were involved to see that the money was refunded without putting
           somebody to the burden of having to fill out forms and etc., whenever they knew, or
           should have known, by the exercise of due care that they owed this money.

Tr. 442:15-29 (RE 46). The court then informed the jury that “Mrs. Hicks is entitled to a

judgment against [GMAC and MIC Life], equally” (Tr. 486:7-9) and that, “based on the

evidence that’s before the Court, the Court has decided to allow the jury to decide whether

there should be any punitive aspects in this case as far as the defendants are concerned.” Tr.

487:4-8.

           In his closing argument on the issue of punitive damages, counsel for Hicks strongly

emphasized GMAC’s net worth, and argued repeatedly that it would take an enormous award

to punish the company. See, e.g., Tr. 496:6-9, 532:15-17; 534:24-25. He argued that GMAC


                                                10
should be held liable for failing to adopt in Mississippi the extraordinary refund procedure that

some other states, but not Mississippi, require by statute (Tr. 499:14-16), and suggested that

other states had enacted those laws because of wrongdoing by the defendants. Tr. 530:2-5

(“They’ve had this problem before. Do you understand? They’ve been called on the carpet

by these states * * * .”). While repeatedly emphasizing that GMAC is a non-Mississippi

corporation (Tr. 525:11-20, 533:6-8, 534:25-26, 535:10-11, 530:27-28), he asserted that

GMAC had obtained “eight billion dollars in a pile” by “charging interest to poor folks so they

can drive pickup trucks”; that Mr. Hicks was a truck driver “out there on the road every day

and sweating those notes”; and that GMAC “ought to be ashamed to come up here and say

they did him a service” by lending him money. Tr. 527:3-18. Finally, he referred to “a thirty

eight million dollar verdict up here not long ago” in another case as a yardstick by which to

measure the punitive award. Tr. 533:26-27.

       Thus influenced, the jury awarded punitive damages of $30 million against GMAC and

$6 million against MIC Life. Tr. 538:18-25; R. 653 (RE 27). Both defendants moved for

JNOV, a new trial or remittitur. The court reduced the punitive awards against GMAC and

MIC Life to $5 million and $1 million, respectively, but denied the other post-trial motions.

R. 1075-1080 (RE 28-34).

                               SUMMARY OF ARGUMENT

       The plaintiff’s case against GMAC was so weak that the key “evidence” of GMAC’s

supposed role in denying Mr. Hicks his refund was GMAC’s notice reminding him to inquire

about that refund. In this upside-down case, however, the trial judge took the rare step of

directing a verdict against GMAC on breach of fiduciary duty, unjust enrichment, and

negligence, apparently without considering whether the elements of any of those claims had

been satisfied. He then submitted the issue of punitive damages to the jury, after a trial during

which he had clearly conveyed his own disdain for the defendants’ case and allowed improper

evidence and argument unfairly casting GMAC as a wrongdoer. The jury returned a


                                               11
shockingly large punitive verdict of $30 million against GMAC, which was no less arbitrary

after its remittitur to $5 million. To avoid a gross injustice, this Court must, for the reasons

explained below, reverse both the compensatory and punitive verdicts against GMAC and

enter judgment for GMAC on all counts.

          For the trial court to direct a verdict against GMAC in this case was indefensible; in

fact, the court plainly erred in failing to direct a verdict for GMAC. First, GMAC did not owe

(much less violate) any fiduciary duty to Mr. Hicks. GMAC indisputably held no money

belonging to Mr. Hicks and had no other dealings with Mrs. Hicks that could have

transformed their arms-length debtor-creditor relationship into a fiduciary one. Second,

GMAC was not unjustly enriched. The plaintiff’s contention that GMAC benefitted from

MIC Life’s retention of unearned premiums (a prerequisite to liability for unjust enrichment)

was entirely based on GMAC’s corporate relationship to MIC Life, which, as a matter of law,

is insufficient to generate liability unless the strict criteria for piercing the corporate veil can

be satisfied. Third, plaintiff failed to establish her negligence claim because she could not

demonstrate that GMAC, which was a stranger to the transaction by which Mr. Hicks

purchased insurance from MIC Life, owed any duty to ensure that Mr. Hicks received a

refund.

          In addition to ordering the jury to find GMAC liable, the court also conducted the trial

in an unfair manner that undoubtedly prejudiced GMAC when the jury considered whether

to impose punitive damages. The court delivered a running commentary on the credibility

of the defendants’ witnesses and pressured them into testifying about matters outside their

competence. It allowed evidence concerning GMAC’s practices in states having statutes

completely different from Mississippi law, permitting an unfair inference that GMAC had

committed an intentional wrong by following different practices in Mississippi. The court

overruled GMAC’s objections to testimony by lay witnesses about legal issues, which

prejudiced GMAC by misdescribing the law applicable to its conduct.                 And the court


                                                 12
permitted plaintiff’s counsel to accuse GMAC of misconduct and generate sympathy for the

plaintiff by arguing facts that were not in evidence.

       The improper directed verdicts and the unfair trial each require reversal of both the

compensatory and the punitive award against GMAC. Even if the directed verdict had been

proper and the trial fair, however, the award of punitive damages would be untenable, because

the plaintiff proved no conduct by GMAC that justifies punishment under Mississippi law.

Plaintiff’s tortured theory that GMAC’s notification to customers of their refund rights was

designed to minimize refunds was both implausible and wholly unsupported by the record.

Plaintiff’s less extreme theory that GMAC should have taken additional steps to ensure that

Mr. Hicks received his refund, even if proven, would demonstrate neither the “actual malice”

nor “gross negligence” evidencing “reckless disregard for the safety of others” that can lead

to punitive liability. Moreover, even if the simple failure to satisfy some duty relating to

refunds could create liability for punitive damages under Mississippi law, such punishment

would be inappropriate in this case. Both federal and Mississippi courts require fair notice

to defendants that their conduct may be subject to punishment, and any duty imposed on

GMAC to facilitate a rebate by another company would be so novel that GMAC could not

have anticipated that its breach could be punishable.

       Finally, even assuming that the imposition of some amount of punitive damages was

proper, the $5 million remitted award, which is more than 7,800 times the compensatory

damages and more than three times the largest punitive award ever upheld by this Court, was

grossly excessive under both the United States Constitution and Mississippi law. There are,

moreover, ample reasons for belief that the jury was motivated by passion and prejudice when

it awarded punitive damages against GMAC.           Accordingly, at the very least, GMAC is

entitled to either an unconditional new trial on punitive damages or, at a minimum, a remittitur

to a modest multiple of the compensatory damages.




                                               13
                                        ARGUMENT

I.     GMAC IS ENTITLED TO JUDGMENT AS A MATTER OF LAW OR A NEW
       TRIAL

       The trial court directed a verdict against GMAC on all claims raised by the plaintiff

— breach of fiduciary duty, unjust enrichment, and negligence. The court never explained

the reasons for its ruling; indeed, Judge Landrum revealed his cavalier attitude toward his

decision when he stated that he “[didn’t] see any difference” among those three very different

claims and believed that “[i]f you violated one, you violated all of them.” Tr. 432:11-14. As

we explain in this section, the court should have directed a verdict for GMAC on each of these

counts; the undisputed facts demonstrate that GMAC is entitled to judgment as a matter of

law.

       At the very least, however, it was improper for the trial court to take away from the

jury the decision whether to hold GMAC liable under any or all of the plaintiff’s claims, and

GMAC is entitled to a new trial. A circuit court may direct a verdict for a plaintiff only where

the evidence and all reasonable inferences that can be drawn from it, viewed in the light most

favorable to the defendant, could not support a verdict for the defendant. See Eselin-Bullock

& Assoc. Ins. Agency Inc. v. National Gen. Life Ins. Co., 604 So. 2d 236, 239-40 (Miss. 1992).

The evidence supporting the charges against GMAC did not rise anywhere near that standard.

       A.      GMAC Did Not Breach A Fiduciary Duty To Mr. Hicks

       Although Judge Landrum did not explain his directed verdict ruling, after oral

argument on GMAC’s motion for a directed verdict on punitive damages, he stated:

       [I]n regard to fiduciary responsibility, it has always been my * * * pet peeve as a
       judge, when dealing with anybody that’s holding anybody else’s money, that that
       created in itself or would produce a fiduciary capacity within that relationship.

Tr. 448:11-16. Whether or not that is an accurate description of Mississippi law, it plainly

does not support a determination that GMAC owed a fiduciary duty to Mr. Hicks. It was

undisputed that GMAC never for a moment held Mr. Hicks’s premium. Tr. 245:27-246:25.



                                               14
Rather, it was MIC Life that received the premium from Mr. Hicks and which owed Mrs.

Hicks the refund.

       All other possible theories of fiduciary duty are equally implausible. GMAC had an

arms-length, debtor-creditor relationship with Mr. Hicks, which began when GMAC

purchased the Instalment Contract from Hankins and ended when Mr. Hicks paid off his

account balance. This Court has squarely held that “‘there is not a fiduciary relation between

debtor and creditor as such.’” Peoples Bank & Trust Co. v. Cermack, 658 So. 2d 1352, 1358

(Miss. 1995) (citation omitted). See also Baldwin v. Laurel Ford Lincoln-Mercury, Inc., 32

F. Supp. 2d 894 (S.D. Miss. 1998) (assignee of retail instalment contract for purchase of

automobile owes no fiduciary duty to purchaser under Mississippi law). Even the mortgagor-

mortgagee relationship, where the lender has a lien on the borrower’s house, not just a car,

is not normally considered fiduciary in nature; instead, that relationship “is properly entered

into and carried out in a manner similar to other contractual relationships: with diligence,

caution, and with knowledge of the subject matter of the contract.” Merchants & Planters

Bank of Raymond v. Williamson, 691 So. 2d 398, 404 (Miss. 1997).

       Debtor-creditor relationships take on a fiduciary character only where:

       (1) the activities of the parties go beyond their operating on their own behalf, and the
       activities [operate] for the benefit of both; (2) where the parties have a common
       interest and profit from the activities of the other; (3) where the parties repose trust in
       one another; and (4) where one party has dominion or control over the other.

Hopewell Enters., Inc. v. Trustmark Nat’l Bank, 680 So. 2d 812, 816 (Miss. 1996). These

criteria plainly were not applicable here. GMAC and Mr. Hicks operated completely

independently and without any “common interest”— unless every seller of goods or services

operates for the benefit of, and has a common interest with, its customers. Nor was there any

suggestion that GMAC had “dominion or control” over Mr. or Mrs. Hicks.

       Mrs. Hicks did assert that she and her husband “trusted everybody,” including GMAC,

and “thought everything was taken care of.” Tr. 387:8-12. However, a debtor may not

“‘unilaterally impose a fiduciary relationship on another without a conscious assumption of


                                               15
such duties by the one sought to be held liable as a fiduciary.’” Martinez v. Associates Fin.

Servs. Co. of Colorado, Inc., 891 P.2d 785, 790 (Wyo. 1995) (citation omitted). See also In

re Greenberg, 212 B.R. 422, 429 (Bankr. D. Mass. 1997) (holding that “allegations that

[borrower] was relying on the Bank to accurately advise her will simply not suffice to create

a fiduciary duty to her by the Bank”); Wedman v. Home Nat’l Bank of Arkansas City, 1990

WL 7501, at * 4 (D. Kan. Jan. 25, 1990) (despite plaintiff borrowers’ contention that they

“placed particular reliance and confidence” in defendant bank, no fiduciary relationship

created because “there is no evidence that the bank consented to or anticipated the creation

of a fiduciary relationship”); DeWitt County Pub. Building Comm’n v. County of DeWitt, 469

N.E. 2d 689, 700 (Ill. App. Ct. 1984) (“In order to establish a fiduciary relationship, the trust

and confidence allegedly reposed by the first party must actually be accepted by the second

party.”) (citation omitted). There was no evidence that GMAC was aware of, much less

accepted, the Hicks’s supposed “trust” that GMAC would arrange for them to obtain a refund

from MIC Life.2/ Indeed, there is no evidence that GMAC and Mr. and Mrs. Hicks even had

any contact capable of fostering such trust. GMAC’s transmittal of the canceled contract and

the “OLA notice” was its sole communication with Mr. and Mrs. Hicks — and the couple did

not even read those documents.3/

       “Because of the severity of the burdens and penalties that are integral to a fiduciary

relationship, the party seeking to prove the existence of the relationship must do so by clear

and convincing evidence.” Cermack, 658 So. 2d at 1358 (citations omitted). Here, there was

no evidence of a fiduciary relationship. Affirming Judge Landrum, therefore, would be

2/
        Although plaintiff’s counsel made much at trial of GMAC’s corporate relationship
with MIC Life, there was no evidence that the relationship was known to Mr. and Mrs. Hicks
or contributed to their “trust” that GMAC would take care of the refund. Accordingly, a
ruling that GMAC had a fiduciary duty to secure a refund here would apply equally to cases
where customers procure credit life insurance from entirely unrelated companies.
3/
        GMAC’s voluntary act of providing notice of a possible refund cannot have created
a fiduciary duty to ensure that Mr. Hicks obtained the refund. Even if Mr. Hicks had read the
notice, nothing in it suggested that GMAC would get his refund for him.

                                               16
tantamount to holding that the borrower-creditor relationship is fiduciary as a matter of law.

No court has imposed that heavy burden on creditors to date, and this Court should not do so

now.

        B.      GMAC Was Not Unjustly Enriched By MIC Life’s Failure To Refund The
                Unearned Premium

         The sine qua non of an unjust enrichment claim is an “economic benefit” to the

defendant. Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76, 92 (Miss. 1992).

The court never explained its ruling that GMAC was liable for unjust enrichment, but the

plaintiff theorized that the alleged scheme to avoid the payment of refunds benefitted GMAC

through its corporate relationship with MIC Life. Although the court repeatedly resisted

distinguishing between the two defendants (see page 9, supra), GMAC and MIC Life were

entitled to be treated as legally separate entities, and the mere fact that GMAC indirectly owns

the stock of MIC Life cannot make it liable for unjust enrichment. Accordingly, the court

should have directed a verdict for GMAC, not the plaintiff.

        It was undisputed that GMAC received no money from Mr. Hicks from the sale of

credit life insurance (other than appropriate payments of principal and finance charges under

the Instalment Contract).4/ Both Bush and Wilbanks testified that GMAC received no part of

the premium paid to MIC Life, either as commission or otherwise. Tr. 245:27-246:28, 328:6-

8. To show a benefit to GMAC, therefore, plaintiff relied entirely on GMAC’s indirect

ownership of MIC Life’s stock; she contended that any benefit to MIC Life from its receipt

of Mr. Hicks’s premium inured to GMAC because of that corporate relationship. See, e.g.,

Tr. 219:6-8, 219:12-14, 250:24-26. But as this court has frequently held, a corporation and

its subsidiary are separate legal entities and are not liable for the actions of one another unless

the plaintiff establishes circumstances that justify piercing the corporate veil. See, e.g., Rauch

Indus., Inc. v. Poloron Prods. of Mississippi, Inc., 362 So. 2d 605, 607 (Miss. 1978) (applying

4/
       Plaintiff has not alleged that GMAC breached the Instalment Contract or was unjustly
enriched by payments it received under the contract.

                                                17
rule that “‘the subsidiary corporation will be treated as an entity separate from the parent”)

(citation omitted); Murdock Acceptance Corp. v. Adcox, 138 So. 2d 890, 895-896 (Miss. 1992)

(parent automobile finance company and subsidiary insurance company treated as separate

entities where there was no evidence that either was organized for an illegitimate purpose or

that one was “merely an instrumentality or an adjunct of the other”). To rule that a parent

corporation can be held liable for unjust enrichment merely because it indirectly benefits from

the revenues of its subsidiary would eviscerate these decisions.

        The Fifth Circuit examined precisely this issue in United States v. Dean Van Lines,

Inc., 531 F.2d 289 (5th Cir. 1976). In Dean Van Lines, the United States sued the domestic

parent of a Belgian corporation, Condyne, that had allegedly overcharged the government for

freight forwarding. Id. at 290. The government argued that the parent was liable on a theory

of unjust enrichment because the subsidiary’s alleged overcharges had increased the

subsidiary’s value, which benefitted the parent when it sold its shares of the subsidiary. Id.

at 291. The Fifth Circuit rejected this view, reasoning that, “[a]t the time of sale, Condyne had

among its assets the overcharges due the government. But at the same time, Condyne had a

corresponding legal obligation * * *. Thus, as long as Condyne remained a going concern,

its shareholder * * * could not be unjustly enriched through the sale of its Condyne stock.”

Id. at 292. The court also explained that to impose liability on the parent would open the door

to tort suits against the parents of subsidiary tortfeasors, as well as “action[s] against numerous

shareholders of a corporation.” Id. at 293. Other courts have reached the same conclusion.

See Zipper v. Health Midwest, 978 S.W. 2d 398, 413 (Mo. Ct. App. 1998) (plaintiff must show

facts adequate to pierce the corporate veil to pursue unjust enrichment claim against parent);

Martes v. USLife Corp., 927 F. Supp. 146, 149 (S.D.N.Y. 1996) (characterizing as “specious”

unjust enrichment claim against parent based on liability of subsidiary whose shares parent

had sold); American Cyanamid Co. v. Wilson & Toomer Fertilizer Co., 51 F.2d 665, 671 (5th




                                                18
Cir. 1931) (wholly-owned subsidiary’s funds “cannot reach the coffers of the [parent] as

belonging to it until the [subsidiary] is liquidated and its affairs settled”).

        Plaintiff neither introduced evidence that would justify piercing the corporate veil

between MIC Life and GMAC, nor identified any other special circumstances that would

justify a finding that GMAC benefitted from MIC Life’s actions. Under plaintiff’s theory,

therefore, any parent company could be liable for any wrongdoing of its subsidiary (as could

any shareholder), because any plaintiff with a cause of action against a subsidiary could allege

that the subsidiary’s conduct produced ill-gotten gains that unjustly enriched the parent. Such

a rule not only would void innumerable holdings of this Court, it would fundamentally alter

the entire structure of corporate law in this State by calling into question the limited liability

of shareholders.

        This Court should accordingly direct entry of judgment for GMAC on this claim. At

a minimum, GMAC is entitled to a new trial in which the jury would decide whether the

elements of plaintiff’s unjust enrichment claim were satisfied. 5/

        C.      GMAC Is Entitled To Judgment On Plaintiff’s Negligence Claim

        To prevail on a claim of negligence, the plaintiff must prove, among other things, (1)

that the defendant “had a duty, or obligation, recognized by law, requiring [it] to conform to

a certain standard of conduct, for the protection of others against unreasonable risks”; and (2)

“[a] breach of the duty, a failure on [the defendant’s] part to conform to the standard

required.” Cermack., 658 So. 2d at 1359. “[A] duty and a breach of that duty are essential

to a finding of negligence under the traditional and accepted formula.” May v. V.F.W. Post

No. 2539, 577 So. 2d 372, 375 (Miss. 1991) (quoting Foster v. Bass, 575 So.2d 967, 972


5/
        Even if the Court were to determine that plaintiff’s unjust enrichment claim has merit,
that claim alone cannot be the basis for a punitive damages award. Unjust enrichment is
simply the violation of an implied-in-law contract. See Omnibank, 607 So. 2d at 92 (“Unjust
enrichment * * * is a creature of equity closely associated with ‘implied contracts,’ quasi-
contracts and trusts.”) (citation omitted). Punitive damages may not be awarded for a simple
breach of contract. Cermack, 658 So. 2d at 1361 (citation omitted).

                                                19
(Miss. 1990). Because the plaintiff failed to show that GMAC owed or breached any duty to

Mr. Hicks, GMAC should have been awarded judgment on the negligence claim.

        Plaintiff admitted that GMAC had no obligation to become involved in the refund

process. See Tr. 409:6-12 (“[I]f they had just relied upon the fact that they didn’t have a

contract or a duty to give any kind of notice, and if they had stayed out of it and let the dealer

and MIC Life Insurance handle the refund procedure, I would agree that there would be no

liability on behalf GMAC.”). Plaintiff contended, however, that GMAC incurred a duty to

ensure that Mr. Hicks received a refund when it “stuck [its] nose into the refund business.”

Id. Even if GMAC somehow assumed duties regarding premium refunds by its minimal

involvement in the process, in such a case “the scope of a duty is limited by the extent of the

undertaking.” Homer v. Pabst Brewing Co., 806 F.2d 119, 121 (7th Cir. 1986) (citation

omitted). The defendant can be held liable only for failing to perform adequately those duties

that it specifically assumed. See, e.g., Stacy v. Aetna Cas. & Sur. Co., 484 F.2d 289 (5th Cir.

1973) (insurance company performing limited safety inspection did not assume employer’s

duty of inspection and was not liable under Mississippi law to employee injured in accident);

Fuller v. Aetna Cas. & Sur. Co., 369 F. Supp. 967 (S.D. Miss. 1974) (same).

        GMAC cannot reasonably be found to have incurred any duty to ensure that Mr. Hicks

receive a refund of unearned premiums. GMAC merely provided notice to prepaying

customers (as well as their dealers) that they should contact their dealers or their insurance

companies about a possible refund, informed dealers of this practice, and required dealers to

promise that they would make refunds upon customer request. These actions might create a

duty for GMAC to follow its own procedures (as it did in this case), to avoid defeating any

expectation that it would do so. But GMAC’s efforts to remind its customers of their refund

rights cannot reasonably be found to saddle GMAC with the duty to ensure that customers

received refunds without asking for them. If anyone had such a duty, it was MIC Life; and




                                               20
there is no reason why GMAC’s helpful practice of reminding customers of their rights should

change that.

       In an effort to show that GMAC had assumed broader duties regarding refunds,

counsel for plaintiff claimed that GMAC completely controlled the refund process. See Tr.

426:29-427:6 (asserting that GMAC “completely controlled MIC’s actions in regard to the

refund situation.”); Tr. 525:28-29 (“They blocked * * * their wholly-owned subsidiary from

sending the money”); Tr. 532:11-12 (“[T]heir child, MIC, their subsidiary, obeyed them just

like a child would obey their parents.”). But these assertions were completely unfounded;

there was no evidence that GMAC was at all involved in MIC Life’s decisionmaking about

how to make refunds. At most, plaintiff was able to prove the unremarkable point that GMAC

was the author of its own policies concerning refunds. See Tr. 276:12-17 (witness agrees with

plaintiff’s counsel that GMAC “came up with a plan to send the OLA letters out”); Tr. 280:7-

15 (witness confirms that GMAC “devised the plan” to give prepaying debtors a credit for

unearned insurance premiums in the eight states requiring it). But that plainly was insufficient

to prove that GMAC controlled MIC Life’s actions with regard to refunds. This point

becomes obvious when one considers that GMAC uses the same notice procedures for all

prepaying customers that have credit life insurance. Surely, no one would argue that GMAC

therefore controls the refund process at the 15 different companies from which GMAC’s

customers purchase credit life insurance.

       Relatedly, plaintiff also argued that GMAC’s form dealership agreement concerning

refunds convinced dealers “that they can rely upon the OLA procedure.” See Tr. 286:28-

287:1. But that agreement represents only the minimum commitment that GMAC required

from dealers before it would purchase their instalment contracts that included credit life

insurance premiums. Neither the agreement nor any other action by GMAC prevented

insurance companies (or dealers, for that matter) from taking whatever steps were necessary

to satisfy their own obligations with respect to refunds. In fact, if a customer paid cash for


                                               21
credit life insurance, GMAC would not even have been made aware that the insurance had

been purchased (Tr. 332:5-10), and accordingly would be unable even to send the OLA notice.

Yet the customer would still have a right to a refund of unearned premiums if he or she

prepaid her contract with GMAC. It is absurd to suggest, therefore, that GMAC assumed all

responsibility for premium refunds and is thus responsible for any failure by MIC Life or the

dealers. Whatever truth there may be to the saying that “no good deed goes unpunished,” it

should not be adopted as a principle of Mississippi law.

        In a further effort to shift the duty to provide refunds to GMAC, plaintiff adduced

evidence that, in eight states requiring lienholders to do so, GMAC gives prepaying customers

a credit for unearned insurance premiums, and then seeks reimbursement from the insurance

companies. Tr. 281:1-25. But those statutes simply do not apply in Mississippi; Mississippi’s

insurance statute requires the insurer to make a prompt refund, and neither GMAC’s contract

with Mr. Hicks nor Mississippi common law shifted that obligation to GMAC. In short, the

fact that GMAC has procedures for complying with extraordinary obligations in states that

have imposed them by statute does not make it liable for failing to follow those procedures

in other states — whether under the rubric of negligence or under any other theory.

Furthermore, if GMAC truly had been obliged to give Mr. Hicks a credit when he paid off the

Instalment Contract on June 29, 1992, then the three-year statute of limitations on a suit for

breach of that duty (see MISS. CODE ANN. § 15-1-49) surely lapsed before Mrs. Hicks filed the

action against GMAC on July 5, 1995 — which, by itself, entitles GMAC to judgment on all

counts. See Brief of Appellant MIC Life at 15-16.

        Finally, the plaintiff contended that GMAC’s form notice letter itself was flawed,

because it referred to a “possible” refund, rather than stating definitively that the recipient was

entitled to a refund. See, e.g., Tr. 279:27-29 (“Don’t you think that that letter is misleading

in that it used the word possible when you, GMAC, know that he is absolutely entitled to a

refund?”). But GMAC did not in fact know when sending the notice whether the recipient



                                                22
was entitled to a refund from the insurance company. For example, the customer may already

have obtained a refund from the dealer (Tr. 280:1-6), or may have exercised his right under

the insurance contract to terminate the coverage and obtain a refund long before paying off

the instalment sale contract (Ex. D-106, at 2 (RE 93)). More importantly, there was no

evidence that the use of the word “possible” in the OLA notice confused Mr. Hicks or

discouraged him from attempting to collect his refund. As Mrs. Hicks testified, neither she

nor her husband read the OLA notice when they received it; and when Mrs. Hicks did finally

read the OLA notice, she promptly contacted her dealer and then MIC Life. Thus, even if the

phrase “possible refund” somehow rendered the notice defective, that flaw did not cause any

harm to Mrs. Hicks and therefore is not actionable in this case.

       Mrs. Hicks thus failed utterly to prove that GMAC had assumed or violated any duty

with respect to the refund of credit life insurance premium, and GMAC is entitled to entry of

judgment in its favor on her negligence claim. At the very least, GMAC was entitled to have

the jury decide whether its notice to Mr. Hicks was sufficient to satisfy any duty that it had

regarding refunds.

II.    PREJUDICIAL TRIAL ERRORS NECESSITATE A NEW TRIAL

       Judge Landrum’s conduct of the trial was grossly unfair. His many negative comments

on the testimony of defendant MIC Life’s representative telegraphed to the jury his low

opinion of the defendants and his disbelief that their conduct should be judged individually.

His admission of irrelevant evidence concerning GMAC’s compliance in other states with

statutes requiring lienholders to refund unearned insurance premiums permitted an improper

inference that GMAC was wrong not to adopt that extraordinary practice in Mississippi. He

permitted the plaintiff to shore up her weak claims by requiring a lay witness, GMAC’s

Mildred Wilbanks, to testify about the meaning of Mississippi’s statute and the party’s

contracts. Finally, he did not stop plaintiff’s counsel from arguing “facts” not in the record,




                                              23
thereby permitting him to make prejudicial statements that had no evidentiary basis. For each

and all of these reasons, a new trial is required.

        A.     Judge Landrum’s Comments During The Trial Manifested His Disbelief
               Of Defendant MIC Life’s Representative

        This Court has cautioned that judges must conduct trials in a neutral manner. “‘It is

a matter of common knowledge that jurors * * * are very susceptible to the influence of the

judge. * * * [J]urors watch closely his conduct, and give attention to his language, that they

may, if possible, ascertain his leaning to one side or the other, which, if known, often largely

influences their verdict.’” Young v. Anderson, 163 So. 2d 253, 256 (Miss. 1964) (internal

quotation marks omitted). In particular, judicial comments that go “directly to the [witness’s]

credibility” often warrant a new trial. Fowler v. King, 179 So. 2d 800, 805 (Miss. 1965).

Indeed, this Court has warned that “[a] trial judge should not in any way inadvertently

communicate to the jury his opinion regarding the value or credibility of the testimony being

offered.” Wirtz v. Switzer, 586 So. 2d 775, 783 (Miss. 1991) (internal quotation marks

omitted).

        Judge Landrum communicated his disdain for the defendants’ case so blatantly that

it would be difficult to conclude that his message to the jury was “inadvertent[].” His repeated

comments concerning the credibility of MIC Life representative Michael Bush made clear that

he disbelieved Bush’s testimony. Moreover, his refusal to accept Bush’s reluctance to

speculate about the operations of GMAC — an entity legally and factually separate from

Bush’s employer MIC Life — conveyed his view that the two companies should not be treated

as distinct.

        For example, at one juncture plaintiff’s counsel asked Bush whether GMAC financed

Mr. Hicks’s vehicle purchase “as a favor or gratuitously.” Tr. 251:12. Bush declined to

answer, stating: “I can’t speak for GMAC.” Tr. 251:14. The court interrupted and demanded

that Mr. Bush respond: “I don’t want to do this in front of the jury. But if you keep on

equivocating in front of this jury * * * I am going to make the statement to you at this time,


                                               24
just answer out what you know. And I don’t think that the jury or anybody else is going to

believe that you don’t know what you just said. Please be candid about it.” Tr. 251:18-25

(emphasis added). This statement is strikingly similar to the trial court’s interjection in

Nichols v. Munn, 565 So. 2d 1132, 1133-1134 (Miss. 1990) (emphasis added), that “I find it,

quite frankly, incredible that you wouldn’t remember that you had an accident.” According

to the Court, that statement constituted plain error and warranted a new trial. Here, as in

Nichols, “there was no necessity for [the court’s] quite open display of incredulity before the

jury.” Id. at 1137 (emphasis added).

       This exchange was not the only one in which Judge Landrum questioned Bush’s

credibility. The court reprimanded him for “equivocat[ing]” when Bush — who was, again,

testifying as an employee of MIC Life — declined to speculate about how refunds were issued

by GMAC in other states (Tr. 199:16-19) and when he hesitated before answering to a

confusing question concerning MIC Life’s response to this lawsuit (Tr. 206:4).6/ As the

Supreme Court of Georgia has noted, a judge’s statement that a witness is “equivocating”

constitutes “an improper comment on the credibility of the witness” and is cause for a new

trial. Speagle v. Nationwide Mut. Life Ins. Co., 226 S.E.2d 459, 460 (Ga. 1976)

       Under these circumstances, “[t]he court will not stop to inquire whether the jury was

actually influenced by the conduct of the judge. * * * [I]f they were exposed to improper

influences, which might have produced the verdict, the presumption of law is against its

purity; and * * * [i]t is a conclusive presumption.” Young, 163 So. 2d at 256. Even if this

presumption were not available, however, the prejudice to the defendants here is obvious.

This was not a case in which a few offhand remarks by the judge might have escaped the

jurors’ notice; Judge Landrum’s repeated comments throughout the examination of Bush (one

6/
        Objections are not required each time the trial court improperly comments on a
witness’s credibility, since “[t]he circuit judge injecting himself into a trial * * * does so by
his own deliberative intent, and he is at least supposed to know better. He should not need to
be told by trial counsel that he has exceeded propriety or deviated from probity.” Nichols, 565
So. 2d at 1137. See also Wirtz, 586 So. 2d at 782 (reaffirming Nichols holding).

                                               25
of only three witnesses in the trial) clearly conveyed the court’s disdain for the witness, and,

by extension, the corporation he represented and its parent company. The monstrous size of

the verdict further confirms the probability of severe prejudice. A new trial is required. See

Travelers Indem. Co. v. Rawson, 222 So. 2d 131, 136-137 (Miss. 1969) (where “comments

of the trial judge related to material issues of fact * * * could have been prejudicial to the

rights of appellant[s] * * * this Court has no alternative but to remand the case for a new

trial.”).

            Apart from their improper tone, the court’s repeated admonitions compelled Bush to

testify to facts he did not know and prevented defendants from fully pressing their case. This

coercion, we should note, only increased outside the presence of the jury. On one occasion,

after Bush declined to speculate concerning GMAC, the trial judge lectured him: “I am telling

you that I don’t allow a witness to equivocate in my courtroom * * *. Now if y’all don’t know

what the word equivocate means, there is a dictionary right here and you had better follow it.

Now give an answer one way or the other.” Tr. 207:1-8. The court continued in that vein

later, in front of the jury, when counsel for MIC Life objected to a question to Bush that called

for a legal conclusion. Overruling the objection, the court stated that Bush should answer “if

he knows what he is supposed to know.” Tr. 217:27-28 (emphasis added). Obviously

intimidated by the judge, Bush proceeded to testify “unequivocally” about that matter — and

about many matters concerning GMAC. For example, he agreed with counsel for Hicks that

it benefits GMAC if MIC Life keeps premiums to which it is not entitled (Tr. 219:6-9), even

though he readily admitted when questioned by GMAC’s counsel that he did not know

whether or not GMAC gets MIC Life’s profits (Tr. 238:26-239:16). Such interference by the

trial judge requires a new trial presided over by a different judge. See Anderson v. State, 300

N.E.2d 674, 677 (Ind. Ct. App. 1973) (“‘intimidated participants in the trial may be unable to

perform their proper function — a cowed defense counsel fails to object to inadmissible

evidence — a rattled witness becomes incoherent’”); Haley v. Friedman, 40 Cal. Rptr. 1, 14,



                                                26
16-17 (Cal. Dist. Ct. App. 1964), rev’d by stip (unfair bench trial requiring reversal resulted

where trial judge deterred defendants’ counsel from calling witness).

       B.      Evidence Concerning GMAC’s Practices In Eight Other States Should
               Not Have Been Admitted

       The plaintiff adduced evidence concerning GMAC’s practices for complying with state

statutes requiring lienholders to refund unearned insurance premiums directly to prepaying

debtors. That evidence was totally irrelevant to the case, and its introduction prejudiced

GMAC by inviting the jury to punish GMAC for failing to adopt such practices in Mississippi,

which has not enacted such a statute.

       Throughout the trial, and over GMAC’s repeated objections (Tr. 160:18-161:4,

162:10-20, 281:11-18, 282:7-8; 310:17-20, 323:14-20), plaintiff emphasized GMAC’s

practices in the eight states requiring lienholder refunds. Counsel for plaintiff introduced the

topic in his opening statement (Tr. 156:24-157:17); explored the topic at length during the

testimony of Ms. Wilbanks (Tr. 280:7-286:9, 323:14-22); and dwelled on the subject in

closing arguments at the punitive damages phase of the trial:

       In eight states, in eight states, they pay the money back to them, automatically. Now
       they can’t tell us that it couldn’t be done in Mississippi. If it can be done in Alabama,
       why can’t it be done in Mississippi? It can be done in Mississippi. * * * Our law says
       you’re supposed to give it back promptly. In Alabama they give it back promptly.
       Because when you go to get your pay-off, it’s figured in the balance. That’s pretty
       promptly.

              There’s no reason they couldn’t do that in Mississippi. The only reason they
       wouldn’t do that in Mississippi is because they want to keep the money. They want
       to keep the people’s money. They don’t ever intend to pay it back.

Tr. 495:20-496:3 (emphasis added); see also Tr. 499:14-16 (“If their motive was to do right,

why aren’t the other forty-two states just like the eight states?”).

       As discussed above, evidence concerning GMAC’s procedures for complying with

statutory duties in jurisdictions requiring lienholder refunds does not establish the standard

of conduct in Mississippi and was therefore irrelevant to this case. Plaintiff’s repeated

invocation of those procedures could only confuse the jury into believing that there was



                                               27
something sinister about GMAC’s failure to follow the same practices in Mississippi. Indeed,

plaintiff’s counsel argued exactly that. See Tr. 496:1-2 (“The only reason they wouldn’t do

that in Mississippi is because they want to keep the money.”). The improper admission of this

prejudicial evidence requires a new trial.

       C.      Improper Testimony Concerning Legal Issues Prejudiced GMAC

       In Mississippi, as elsewhere, witnesses may not opine on issues of law. See KLLM,

Inc. v. Fowler, 589 So. 2d 670, 673 n.3 (Miss. 1991) (witness correctly prohibited from

responding to questions concerning “the meaning of the Worker’s Compensation Law” since

“questions regarding the interpretation of the law were for the [Workman’s Compensation]

Commission and the court”); Kukanskis v. Jasut, 362 A.2d 898, 903 (Conn. 1975) (trial court

properly sustained objection to question about legal implications of decedent’s action); Hinson

v. Department of Transp., 217 S.E. 2d 606, 608-609 (Ga. Ct. App. 1975) (reversing jury

verdict because witness was permitted to testify about the applicability of zoning laws to

defendant’s business). Nevertheless, a lay witness from GMAC was required to respond to

plaintiff’s questions concerning the application of the law to the facts of this case. This was

prejudicial to GMAC and necessitates a new trial.

       Over GMAC’s objections (Tr. 276:29-277:5, 277:23-26, 354:9-355:11), GMAC

employee Mildred Wilbanks was required to interpret Mississippi law and to assess its

application to GMAC’s conduct. First, she was asked “whether or not [the OLA notice]

places an additional requirement on the borrower that is not required by either the statute or

the law.” Tr. 276:25-28; see also Tr. 277:10-14 (“And this statute * * * doesn’t require the

person to make an application for the refund, does it?”). Next, she was asked whether

GMAC’s procedure “violates Section 83-53-17 of the State of Mississippi, as far as refunds.”

Tr. 354:23-25. Explaining that she was not familiar with the Mississippi insurance statute (Tr.

354:23-26), Wilbanks did not answer these questions affirmatively. Nonetheless, plaintiff’s

counsel continued to pursue this improper line of questioning, and Wilbanks finally agreed



                                              28
with his statement that “[y]ou, GMAC put a burden on the customers with this OLA procedure

to make the customers claim their refunds, and that’s a burden that is not required by the law

* * *.” Tr. 358:3-5 (emphasis added). Wilbanks was not qualified to answer that question,

and her uninformed response (which did not point out, for example, that the insurance statute

does not apply to GMAC) prejudiced GMAC.

       Wilbanks — who, again, worked for GMAC — also was required to answer questions

that called for an interpretation of Mr. Hicks’ contract with MIC Life. Over GMAC’s

objections (Tr. 277:23-26), she was asked to testify that the insurance contract “does not place

any requirement on the customer to make an application [for a refund].” Tr. 277:21-22. When

she stated that she was unfamiliar with the contract because, in her job, she does not review

MIC insurance certificates (Tr. 278:5-12), she was subjected (again over GMAC’s objection

(Tr. 278:23-25)) to argumentative questioning about that lack of knowledge. Tr. 278:13-22

(“As a designated corporate representative here, should that be something that you should be

familiar with, the contract of insurance that GMAC is allowing to be placed on its customers

for credit life? * * * Didn’t you realize that that’s what this whole suit was about, was about

refunds on unearned premiums for credit life insurance?”). Obviously cowed by this line of

questioning, by the end of her testimony Wilbanks agreed with counsel for plaintiff that “the

OLA procedure that the customer has to file a claim for a refund * * * is not required by the

policy itself, the policy of insurance.” Tr. 358:7-10. That testimony falsely and prejudicially

implied that GMAC was bound by the insurance contract; especially in light of her statement

that she was unfamiliar with the contract, Wilbanks was unqualified to give it.

       Compounding the prejudice to defendants, Judge Landrum permitted plaintiff to

discuss the supposed evasion of the law’s requirements at length in closing argument, when

she emphasized that “[t]heir own witnesses * * * said * * * when we keep this money and

don’t send it back, we break the law.” Tr. 528:16-20. See also, e.g., Tr. 494:6-8 (“[t]hey

admitted to you that there’s nothing in this code and there’s nothing in their statute that says



                                               29
you’ve got to ask for your money back”); 494:14-17 (OLA plan established in order “to go

around the statute * * * so that they can keep money that don’t belong to them”); 529:13-15

(“They have come here today and admitted * * * that it’s against the law.”). The improper

testimony thus played a central role in plaintiff’s case, and substantially prejudiced GMAC.

       D.      Plaintiff’s Counsel Repeatedly Made Prejudicial And Unfounded
               Statements During Closing Argument

       In Mississippi, “‘[a] statement by counsel in argument of facts not in evidence is

generally regarded as reversible error.” Dixie Ins. Co. v. Mooneyhan, 684 So.2d 574, 582

(Miss. 1996). Over GMAC’s objections, Judge Landrum permitted plaintiff’s counsel to make

three such statements, each of which prejudiced GMAC.

       Counsel first asserted that GMAC had built its business by “charging interest to poor

folks so they can drive pickup trucks” and that Mrs. Hicks’s deceased husband was a truck

driver “out there on the road every day and sweating those notes.” Tr. 527:11-13. There was

no evidence that GMAC’s customers were “poor folks” or that Mr. and Mrs. Hicks themselves

were “sweating” their payments under the Instalment Contract; indeed, Judge Landrum

excluded evidence that the plaintiff drove a late-model Mercedes.                Tr. 22:14-29:8.

Nevertheless, over GMAC’s objection (Tr. 527:19-29), the judge permitted the false and

grossly improper appeal to the jurors’ sympathies and biases.

       Next, counsel argued that the defendants had “had this problem before. * * * They’ve

been called on the carpet” by the eight states in which lienholders are required to refund

unearned premiums directly to borrowers. Tr. 530:2-14.             GMAC’s counsel correctly

characterized this statement as “absurd” in his prompt objection (Tr. 530:7); there was no

proof that the different legislative treatment of unearned credit life insurance by those states

had anything to do with the conduct of either defendant.

       Finally, in his rebuttal argument, plaintiff’s counsel stated that “there was a thirty eight

million dollar verdict up here not long ago.” Tr. 533:26-27. Plaintiff introduced no evidence

of such a verdict, which undoubtedly would have been irrelevant in any event, and the


                                               30
reference to it in closing argument had a clearly prejudicial effect: the jury award fell just

short of the $38 million figure that counsel invoked.

III.   GMAC DID NOT ENGAGE IN PUNISHABLE CONDUCT

       As we have explained, the trial court erred by directing verdicts against GMAC and,

for that reason alone, the punitive damages award must also be set aside. But even if this

Court permits the directed verdicts on compensatory liability to stand, GMAC is entitled to

judgment on punitive damages because Mrs. Hicks adduced no evidence whatsoever that

GMAC engaged in the sort of conduct that can support punishment.

A.     The Conduct In This Case Does Not Satisfy Mississippi’s Standard For Imposing
       Punitive Damages

       GMAC’s treatment of Mr. Hicks, if wrongful at all, falls far short of being the kind of

conduct that is punishable in this State. This Court has long held that punitive damages

“should be allowed only with caution and within narrow limits.” Consolidated Am. Life Ins.

Co. v. Toche, 410 So. 2d 1303, 1304-1305 (Miss. 1982). This principle has since been

embodied in legislation that restricts punitive damages to cases in which the plaintiff proves

by clear and convincing evidence that the defendant acted with “[1] actual malice, [2] gross

negligence which evidences a willful, wanton or reckless disregard for the safety of others,

or [3] committed actual fraud.” MISS. CODE ANN. § 11-1-65 (1)(a) (emphasis added).7/ Mrs.

Hicks has not (and could not have) begun to demonstrate that GMAC’s conduct meets any of

these descriptions, let alone carried her “heavy burden” of proving any of these theories

clearly and convincingly. See Mosby v. Gandy, 375 So. 2d 1024, 1028 (Miss. 1979)

(describing clear and convincing standard as it applies to fraud). Her failure to do so requires




7/
        By its plain terms, Section 11-1-65 applies to “any action in which punitive damages
are sought” and provides the standard both for determining punitive liability and for reviewing
any award for excessiveness. MISS. CODE ANN. §§ 11-1-65(1), (1)(a), (1)(f)(ii). None of the
exceptions to the statute applies to Mrs. Hicks’s causes of action against GMAC. See id. §
11-1-65(2). In particular, the suit against GMAC was not “founded on a contract.” See Hurst
v. Southwest Mississippi Legal Servs. Corp., 708 So. 2d 1347, 1350 (Miss. 1998).

                                               31
this Court to set aside the entire punitive verdict and grant judgment to GMAC with respect

to punitive damages.

       In the court below, Mrs. Hicks pursued punitive damages under both “actual malice”

and “gross negligence” theories.8/ See RE 58-61 (punitive damages instructions). In an effort

to show that GMAC acted with actual malice,9/ Mrs. Hicks contended that GMAC and MIC

Life conspired together to permit MIC Life to retain unearned insurance premiums by creating

an inefficient system for administering refunds that was specifically intended to permit MIC

Life occasionally to avoid the knowledge that a refund was due. Under this theory, the OLA

notices — belying their apparent purpose of encouraging customers to seek refunds — were

instead a fig leaf intended to show the parties’ good faith in an eventual lawsuit (see Jury

Instruction P-7 (RE 61); Tr. 526:24-29) and a means of discouraging dealers from giving

spontaneous refunds themselves (Tr. 496:17-20). But Mrs. Hicks offered literally no evidence

of such a conspiratorial plan — much less the clear and convincing evidence necessary to

prove punishable conduct. Not a single document or a word of any testimony suggests that

GMAC or MIC Life wanted to avoid paying refunds, or that GMAC sent the OLA notices

with anything other than the benign purpose of notifying customers that they might be due


8/
         There were no misrepresentations or other conduct by either defendant that could be
found to constitute “actual fraud”; indeed, Mrs. Hicks did not even bother to plead fraud,
much less attempt to prove it. See generally Boling v. A-1 Detective & Patrol Serv., Inc., 659
So. 2d 586, 589-590 (Miss. 1995) (noting that Miss. R. Civ. Proc. 9(b) “requires that when
pleading fraud, the circumstances of the alleged fraud shall be stated with particularity” and
that “[f]raud is never to be presumed or inferred, but must be proven by clear and convincing
evidence”).
9/
        Although the term has yet to be defined in the context of Section 11-1-65, the
Mississippi Supreme Court has made clear in an analogous context that actual malice is
something beyond the state of mind that “is implied in law from a groundless act.” Wilkerson
v. Randall, 180 So. 2d 303, 307 (Miss. 1965) (describing standard that must be met to sustain
a punitive award for wrongful garnishment). And courts in other jurisdictions consistently
have required plaintiffs to produce “evidence of ill-will, spite, or a specific intent to cause
injury to the [plaintiff]” to demonstrate “actual malice.” Continental Coffee Prods. v.
Cazarez, 937 S.W. 2d 444, 454 (Tex. 1996); see also Parks v. City of Marshalltown, 440 N.W.
2d 377, 379 (Iowa 1989) (“[a]ctual malice is shown by such things as personal spite, hatred,
or ill will”).

                                              32
refunds from their credit life insurance companies. Mrs. Hicks relied on nothing but the

fallacy of post hoc ergo propter hoc: because Mr. Hicks in fact did not request the refund,

GMAC must have intended that its procedures would minimize refund requests.10/

       Mrs. Hicks suggested that the jury could infer an illicit conspiratorial scheme from the

pecuniary benefits that MIC Life — and, indirectly, GMAC as its corporate grandparent —

could obtain by avoiding the payment of refunds. But it is utterly implausible that GMAC

would involve itself in an elaborate conspiracy based on the hope that the customers to whom

it provided notice of refund rights would not read their mail. Indeed, Mrs. Hicks could not

show that any significant proportion of GMAC debts covered by credit life insurance were

insured by MIC Life, rather than some entirely independent insurer. See Tr. 208:23-25

(counsel for GMAC states that list includes instalment contracts that could have been insured

by “many, many more companies” other than MIC Life); Tr. 212:11-18 (plaintiff’s counsel

notes that GMAC loans are insured by “a lot of companies”); Tr. 310:28-311:11 (GMAC

sends OLA notice to customers insured by companies other than MIC Life). It should go

without saying that GMAC could have no pecuniary motive for perpetrating a “scheme” that

(allegedly) would result in “many, many” unaffiliated insurers retaining a significant portion

of premiums they should have refunded. Moreover, the conspiratorial hypothesis cannot

possibly survive the conceded fact that GMAC had no duty at all to advise instalment



10/
        Even if this faulty reasoning were correct, it would not establish any illicit agreement
between GMAC and MIC Life. In a variety of contexts, courts repeatedly have refused to find
conspiracies where plaintiffs rely on only the ultimate result of allegedly wrongful behavior
rather than evidence of concerted action by the defendants. Cf. Clement v. R.L. Burns Corp.,
373 So. 2d 790, 794-795 (Miss. 1979) (refusing to find civil conspiracy on the basis of
“conjecture” where plaintiffs offered no evidence of a wrongful scheme); Matsushita Elec.
Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) (“a plaintiff seeking damages
for a violation of § 1 [of the Sherman Act] must present evidence ‘that tends to exclude the
possibility’ that the alleged conspirators acted independently”); Wigod v. Chicago Mercantile
Exch., 981 F.2d 1510, 1518-1520 (7th Cir. 1992) (summary judgment affirmed where plaintiff
provided no evidence of Sherman Act § 1 conspiracy even though timing of one allegedly
wrongful act was “[s]uspicious”); Nichols v. Tri-State Brick & Tile Co., 608 So. 2d 324, 331
(Miss. 1992) (affirming summary judgment for defendant on tortious interference claim where
plaintiff offered no evidence that defendant intended to harm plaintiff).

                                              33
purchasers of possible entitlement to premium refunds. How GMAC’s notice could possibly

increase the likelihood that insurers would retain unearned premiums cannot be plausibly

explained. Accordingly, even if in some circumstances one could properly infer ill-will from

the mere fact that the defendant received pecuniary benefits (something we assuredly do not

concede), no such inference would be appropriate here.

        Mrs. Hicks’s “gross negligence” rationale for punitive damages is also fatally

flawed.11/ She contended that GMAC should have done more to ensure that Mr. Hicks

received a refund — either by notifying MIC Life of the termination of the loan so that MIC

Life would refund the unearned premium or by contractually requiring the dealer to do so or

by providing the refund to Mr. Hicks itself. Even if (contrary to our arguments above) GMAC

may be deemed negligent for failing to do these things, treating such a lapse as “gross

negligence” would empty the term “gross” of any meaning. Under the plain language of the

statute, moreover, gross negligence can give rise to punitive damages only if it implicates the

“safety” of others. MISS. CODE ANN. § 11-1-65(1)(a). Indeed, Mrs. Hicks herself recognizes

that limitation. See Plaintiff’s Opp. 11, R. 914. It is beyond dispute that GMAC’s handling

of Mr. Hicks’ premium refund posed no threat to the safety of Mr. or Mrs. Hicks or anyone

else.

        In sum, this simply is not a case for punitive damages under the Mississippi statute.

The punitive award against GMAC accordingly must be set aside in its entirety.

        B.     Punitive Damages May Not Be Imposed Because GMAC Lacked Fair
               Notice That Its Conduct Was Subject To Punishment

        Even if GMAC’s alleged conduct did satisfy one of the criteria for awarding punitive

damages, such an award would be inappropriate in this case, because the duties that Mrs.

Hicks seeks to impose on GMAC are novel ones. The United States Supreme Court has held

11/
      Mrs. Hicks relied entirely on the “gross negligence” rationale in responding to
GMAC’s post-trial motions. See Plaintiff’s Opp. to Motion by Defendant, GMAC for
Judgment Notwithstanding the Verdict, etc. [hereinafter “Plaintiff’s Opp.”] at 10-11, R. 913-
914.

                                              34
that “[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate

that a person receive fair notice * * * of the conduct that will subject him to punishment.”

BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996). Similarly, Mississippi law prohibits

the imposition of punitive damages where the defendant had “no prior notice” that its actions

were wrongful. Harrison v. Allstate Ins. Co., 662 So. 2d 1092, 1095 (Miss. 1995); see also

Dunn v. State Farm Fire & Cas. Co., 927 F.2d 869, 874 (5th Cir. 1991) (defendant “was

entitled to have a court resolve the undecided question of law to determine its liability without

being punished for referring the question to a court”); Gorman v. Southeastern Fidelity Ins.

Co., 775 F.2d 655, 659 (5th Cir. 1985) (disallowing punitive damages where “[t]here [were]

no reported opinions construing [the statute in question] in the situation presented by th[e]

case”); Gulf Guar. Life Ins. Co. v. Kelley, 389 So. 2d 920, 923 (Miss. 1980) (issue of punitive

damages should not have been submitted to jury where case was the first in which a court had

rejected defendant’s interpretation of insurance contract). Because GMAC had no prior notice

that the conduct being challenged here was wrongful, punitive damages may not be awarded.

       As discussed above, Mrs. Hicks claimed that GMAC should have taken steps to ensure

that Mr. Hicks received a refund from MIC Life without asking for one. Even assuming that

compensatory liability was properly imposed for such inaction, GMAC indisputably lacked

notice of any obligation to take such steps. Mississippi’s statute governing credit life

insurance (which Mrs. Hicks repeatedly cited) provides only that the insurer must promptly

refund unearned insurance premiums. MISS. CODE ANN. § 83-53-17. Nowhere does it state,

or even suggest, that the creditor to which the insured debt is owed must ensure that a refund

is issued. Nor does the common law provide notice of any such duty: we have found no

Mississippi case imposing on a creditor such as GMAC the responsibility to ensure a premium

refund. Finally, the fact that some states have enacted legislation requiring the advancement

of refunds by lienholders cannot have given GMAC notice that the same procedures are




                                               35
required in Mississippi; to the contrary, it affirmatively undermines the notion that punishment

may properly be imposed when Mississippi has not enacted such legislation.

        In short, GMAC was entirely without notice that its conduct could even be considered

actionable, much less subject to punishment. Accordingly, neither due process nor Mississippi

common law allows punitive damages to be imposed on GMAC.12/

IV.     THE $5 MILLION PUNITIVE EXACTION IS GROSSLY EXCESSIVE UNDER
        BOTH STATE LAW AND THE FOURTEENTH AMENDMENT

        Even if some amount of punitive damages could be justified on this record — and we

reiterate that the finding of punitive liability is unsustainable — the $5 million punitive award

against GMAC is grossly excessive under both Mississippi law and the Due Process Clause

of the Fourteenth Amendment to the U.S. Constitution and accordingly must be either

overturned or, at a minimum, dramatically reduced. This Court has an obligation to review

the punitive award with care to ensure that “the award is reasonable in its amount and

rationally related to the purpose to punish what occurred * * * and to deter its repetition

* * * .” MISS. CODE ANN. § 11-1-65(f)(i). That review can produce only one conclusion: the

$5 million punitive damages award — which, as far as our research has disclosed, is more

than three times the largest amount ever upheld by this Court (see Bankers Life & Cas. Co.

v. Crenshaw, 483 So. 2d 254 (Miss. 1985) (affirming award of $1.6 million)) and more than

7,800 times the compensatory damages — is grossly excessive. Put another way, the punitive

verdict against GMAC “shock[s] the conscience” and thus must be set aside or reduced under

Mississippi law. Mooneyhan, 684 So. 2d at 586.13/

12/
        Plaintiff also theorized that GMAC and MIC Life actually conspired together to deny
refunds to Mr. Hicks and other customers. We do not contend that such a plot would not be
subject to punishment. But, as discussed above in Section III.A, Mrs. Hicks offered literally
no evidence of such a conspiratorial plan.
13/
          The fact that the trial court reduced the award to $5 million from its even more
shocking original level of $30 million does not insulate the award from review. The trial court
did not explain why a $5 million award is any more justifiable than a $30 million award, and
it is not. Appellate courts, moreover, routinely reduce punitive awards that have already been
subject to remittitur at the trial court level. See, e.g., Life Ins. Co. of Georgia v. Johnson, 701

                                                36
       A.      The Punitive Damages Verdict Against GMAC Is Grossly Excessive
               Under The Standards Imposed By Both Federal And Mississippi Law

       In BMW of N. America, Inc. v. Gore, 517 U.S. 559 (1996), the U.S. Supreme Court

described the constitutional limitations on punitive damages. The case involved a $2 million

(remitted) punitive award against BMW for its failure to disclose that it had refinished the

plaintiff’s vehicle before selling it to the dealer. The Supreme Court accepted the finding of

the jury and the Alabama courts that BMW’s conduct constituted actionable fraud, and that

the conduct could support the imposition of some level of punitive damages. Nevertheless,

the Court held that $2 million punishment was so excessive as to deprive BMW of its property

without due process. On remand, the Alabama Supreme Court reduced the award to $50,000.

BMW of N. Am., Inc. v. Gore, 701 So. 2d 507 (Ala. 1997).

       In striking down the $2 million punitive exaction in BMW, the Supreme Court

identified three “guideposts” for evaluating whether a punitive damages award exceeds the

bounds of due process. The first and “[p]erhaps the most important” factor is the degree of

reprehensibility of the misconduct. 517 U.S. at 575. The Court emphasized that not every

punishable act is “sufficiently reprehensible to justify a significant sanction in addition to

compensatory damages.” Id. at 576; accord MISS. CODE ANN. § 11-1-65(1)(f)(ii)(2).

       The second and “perhaps [the] most commonly cited indicium” of excessive punitive

damages is the ratio of punitive damages to the plaintiff’s actual or potential harm. BMW, 517

U.S. at 580; accord MISS. CODE ANN. 11-1-65(1)(f)(ii)(1). This Court too has recognized that

under Mississippi law punitive damages should bear a reasonable relationship to the actual or

potential harm from the defendants’ conduct. See Mutual Life Ins. Co. v. Estate of Wesson,

517 So. 2d 521, 532-533 (Miss. 1987).




So. 2d 524 (Ala. 1997) ($15 million punitive award, remitted to $12.5 million by trial court,
further reduced to $3 million by the Alabama Supreme Court).


                                              37
       The third guidepost compares the punitive damages with any legislatively established

criminal fine or civil penalty for comparable misconduct. BMW, 517 U.S. at 583. Such

penalties reflect a more considered and expert manifestation of society’s judgment about the

relative gravity of various misdeeds (id.), and shed light on whether the defendant had fair

notice that it could be subject to a penalty in the amount of the punitive verdict (id. at 584).

       Since BMW was decided, dozens of courts have set aside large punitive verdicts as

excessive, especially when those verdicts were more than a small multiple of the

compensatory damages.14/ Here, too, application of the three BMW guideposts (the first two


14/
        See, e.g., Watkins v. Lundell, 169 F.3d 540 (8th Cir. 1999) (reducing $3.5 million
punitive award to $940,000), cert. denied, 1999 WL 184168 (U.S. May 17, 1999); Denesha
v. Farmers Ins. Exch., 161 F.3d 491 (8th Cir. 1998) (reducing $4 million punitive award to
$700,000); EEOC v. HBE Corp., 135 F.3d 543 (8th Cir. 1998) ($4.8 million aggregate
punitive award reduced to $480,000); Kim v. Nash Finch Co., 123 F.3d 1046 (8th Cir. 1997)
($7 million award reduced to $300,000); FDIC v. Hamilton, 122 F.3d 854 (10th Cir. 1997)
($1,200,000 award reduced to $264,000); Kimzey v. Wal-Mart Stores, Inc., 107 F.3d 568 (8th
Cir. 1997) ($5 million award reduced to $350,000); Lee v. Edwards, 101 F.3d 805 (2d Cir.
1996) ($200,000 award reduced to $75,000); Patterson v. P.H.P. Healthcare Corp., 90 F.3d
927 (5th Cir. 1996) ($150,000 award excessive under BMW; case remanded to district court
for further consideration), cert. denied, 519 U.S. 1091 (1997); Ortiz-Del Valle v. National
Basketball Ass’n, 1999 WL 179356 (S.D.N.Y. Mar. 31, 1999) ($7 million punitive award
reduced to $250,000); Ace v. Aetna Life Ins. Co., 1999 WL 183805 (D. Alaska Mar. 29, 1999)
($16.5 million punitive award reduced to $950,000); Fall v. Indiana Univ. Bd. of Trustees, 33
F. Supp. 2d 729 (N.D. Ind. 1998) ($800,000 punitive award reduced to $50,000); Mahoney
v. Canada Dry Bottling Co., 1998 WL 231082 (E.D.N.Y. May 7, 1998) ($650,000 punitive
award reduced to $100,000); Rivera v. Baccarat, Inc., 10 F. Supp. 2d 318 (S.D.N.Y. 1998)
(reducing $375,000 punitive award to $40,000); Lawyer v. 84 Lumber Co., 991 F. Supp. 973
(N.D. Ill. 1997) ($250,000 award reduced to $150,000); Food Lion, Inc. v. Capital
Cities/ABC, Inc., 984 F. Supp. 923 (M.D.N.C. 1997) (awards of $4 million and $1.5 million
reduced to $50,000 and $250,000); Kim v. Dial Serv. Int’l., Inc., 1997 WL 458783 (S.D.N.Y.
Aug. 11, 1997), cert. denied, 119 S. Ct. 1030 (1999) ($750,000 award reduced to $25,000);
Groom v. Safeway, Inc., 973 F. Supp. 987 (W.D. Wash. 1997) ($750,000 award reduced to
$50,000); Leab v. Cincinnati Ins. Co., 1997 WL 360903 (E.D. Pa. June 26, 1997) ($5.5
million award reduced to $35,000); Creative Demos, Inc. v. Wal-Mart Stores, Inc., 955 F.
Supp. 1032 (S.D. Ind. 1997) ($6.5 million award so grossly excessive as to justify a new trial),
aff’d in relevant part on other grounds, 142 F.3d 367 (7th Cir. 1998); Geuss v. Pfizer, Inc.,
971 F. Supp. 164 (E.D. Pa. 1996) ($150,000 award reduced to $17,500); Iannone v. F.R.
Harris, Inc., 941 F. Supp. 403 (S.D. N.Y. 1996) ($250,000 award reduced to $50,000); Florez
v. Delbovo, 939 F. Supp. 1341 (N.D. Ill. 1996) ($750,000 award reduced to $275,000); Utah
Foam Prods. Co. v. Upjohn Co., 930 F. Supp. 513 (D. Utah 1996) ($5.5 million award
reduced to approximately $600,000), cert. denied, 119 S. Ct. 1358 (1999); Rush v. Scott
Specialty Gases, Inc., 930 F. Supp. 194 (E.D. Pa. 1996) ($3 million award reduced to
$300,000), rev’d on other grounds, 113 F.2d 476 (3d Cir. 1997); Schimizzi v. Illinois Farmers
Ins. Co., 928 F. Supp. 760 (N.D. Ind. 1996) ($600,000 award reduced to $135,000); Alfa Mut.

                                               38
of which replicate Mississippi statutory factors) plainly demonstrates that the $5 million

punishment against GMAC is grossly excessive.

               1.      Application of the three BMW guideposts establishes the
                       excessiveness of the $5 million punishment against GMAC

       a. Reprehensibility. The court below apparently determined that, instead of notifying

Mr. Hicks of his right to a refund of his unearned credit life insurance premium, GMAC

should have refunded the unearned premium directly to him, contractually required the dealer

to do so, or notified MIC Life of the termination of the loan so that it would make the refund.

It is our position that GMAC acted reasonably in expecting that its customers would contact

their dealers or insurance companies to obtain their refunds and that it was not obliged to do

more than notify them of their potential right to a refund; indeed, Mrs. Hicks acknowledged



Fire Ins. Co. v. Thomas, 1999 WL 219636 (Ala. Apr. 16, 1999) (reducing $325,000 punitive
award to $40,000); Chrysler Corp. v. Schiffer, 1999 WL 97991 (Ala. Feb. 26, 1999) ($325,000
punitive award reduced to $150,000); Life Ins. Co. of Georgia v. Parker, 726 So. 2d 619 (Ala.
1998) ($200,000 punitive award reduced to $150,000); Employees’ Benefit Ass’n v. Grissett,
1998 WL 599498 (Ala. Sept. 11, 1998) ($150,000 punitive award reduced to $15,000);
Strickland v. Liberty Nat’l Life Ins. Co., 710 So. 2d 423 (Ala. 1998) (affirming reduction of
$5 million punitive award to $37,500); Talent Tree Personnel Servs. v. Fleenor, 703 So. 2d
917 (Ala. 1997) ($3 million award reduced to $2 million and further reduced to $1.5 million);
Ford Motor Co. v. Sperau, 708 So.2d 111 (Ala. 1997) ($6 million award reduced to $1.8
million), cert. denied, 118 S. Ct. 1519; American Pioneer Life Ins. Co. v. Williamson, 704 So.
2d 1361 (Ala. 1997) ($3 million award reduced to $2 million and then further reduced to
$750,000); Life Ins. Co. of Georgia v. Johnson, 701 So. 2d 524 (Ala. 1997) ($15 million
award reduced to $5 million and then further reduced to $3 million); BMW of N. Am., Inc. v.
Gore, 701 So. 2d 507 (Ala. 1997) (reducing what was once a $4 million award to $50,000);
Foremost Ins. Co. v. Parham, 693 So. 2d 409 (Ala. 1997) (reducing two $7.5 million awards
to $175,000 and $173,000); Norcon, Inc. v. Kotowski, 971 P.2d 158 (Alaska 1999)
($3,770,260.63 punitive award reduced to $500,000); Langmead v. Admiral Cruises, Inc., 696
So. 2d 1189 (Fla. Dist. Ct. App. 1997) (holding that $3.5 million award was so excessive as
to warrant a new trial); Wilson v. IBP, Inc., 558 N.W.2d 132 (Iowa 1996) ($15 million award
reduced to $2 million), cert. denied, 118 S. Ct. 52 (1997); Bowen v. Calder, Inc., 710 A.2d
267 (Md. 1998) (finding $9 million excessive and remanding for determination of proper
remittitur); Maiorino v. Schering-Plough Corp., 695 A.2d 353 (N.J. Super. Ct. App. Div.
1997) ($8 million award so excessive as to require a new trial); Parrott v. Carr Chevrolet,
Inc., 965 P.2d 440 (Or. Ct. App. 1998) ($1 million punitive award reduced to $300,000);
Grynberg v. Citation Oil & Gas Co., 573 N.W.2d 493 (S.D. 1997) ($4.8 million award
reduced to $1 million); Apache Corp. v. Moore, 960 S.W.2d 746 (Tex. Ct. App. 1997)
(aggregate punitive award of $1.5 million reduced to $43,000); Management Computer Servs.,
Inc. v. Hawkins, Ash, Baptie & Co., 557 N.W.2d 67 (Wis. 1996) ($1.75 million award reduced
to $650,000).

                                              39
that GMAC could properly have done nothing at all regarding refunds. Tr. 409:5-12. But

even if one believes that it would have been better had GMAC taken some of the other steps

suggested above, the conduct at issue — which has never before been identified as wrongful

in any case, statute or regulation — surely ranks low on the spectrum of tortious behavior.

       In this case, as in BMW, “none of the aggravating factors associated with particularly

reprehensible conduct is present.” 517 U.S. at 576. Not only is the harm in this case “purely

economic” (id.), but within the realm of economic torts, this one is well down on the

reprehensibility scale in that it was neither “done intentionally through affirmative acts of

misconduct” nor aimed at a “financially vulnerable” victim. Id.

       Indeed, as in BMW, the record in this case “discloses no deliberate false statements,

acts of affirmative misconduct, or concealment of evidence of improper motive * * *.” Id. at

579. In fact, GMAC’s actions here are even less reprehensible than the defendant’s in BMW,

since GMAC affirmatively disclosed Mr. Hicks’s right to a refund. If, as the Supreme Court

made clear in BMW, an omission of material facts is less serious, and warrants less severe

punishment than a “deliberate false statement” (id. at 580), surely the reprehensibility meter

reads near zero when the defendant actually discloses the relevant facts.

       In addition, as in BMW, there is no evidence that the behavior in this case was part of

a pattern of deliberate misconduct. Because there was no prior notice of a duty to take the

kinds of measures plaintiff insists were required, GMAC cannot be characterized as a

“recidivist” — i.e., someone who “has repeatedly engaged in prohibited conduct while

knowing or suspecting that it was unlawful.” Id. at 576; accord MISS. CODE ANN. § 11-1-

65(f)(ii)(2) (appropriate size of punitive award depends in part on “the duration of

[defendant’s] conduct, the defendant’s awareness, any concealment, and the existence and

frequency of any past conduct”). To the contrary, GMAC’s punctilious compliance with

statutory refund obligations in other states demonstrates that nothing more is needed than an




                                              40
indication, by statute or common law rule, of what duty Mississippi wishes to impose. The

need for deterrence by way of significant punitive damages is demonstrably absent.

       Thus, what the Supreme Court said in BMW applies fully here: the mere fact that

“conduct is sufficiently reprehensible to give rise to tort liability, and even a modest award

of exemplary damages, does not establish the high degree of culpability that warrants a

substantial punitive damages award.” 517 U.S. at 580 (emphasis added).

       b. The ratio of punitive to actual damages. In BMW, the remitted punitive damages

were 500 times the plaintiff’s compensatory damages. 517 U.S. at 582. The Supreme Court

deemed that ratio to be totally unacceptable. See id. at 580-583. Even before BMW, this

Court had cited the high ratio of punitive to compensatory damages as a ground for setting

aside punitive awards. See Mooneyhan, 684 So. 2d at 587 ($1,000,000 punitive damage award

that was 1,875 times the actual damages held excessive; case remanded for a new trial); Estate

of Wesson, 517 So. 2d at 533 (reducing $8,000,000 punitive exaction to $1,500,000 where

“the punitive damage award [was] ninety-two (92) times * * * the admitted amount of the

actual damages”).

       Here, the ratio of punitive to actual damages is more than 7,800:1. If the ratio criterion

in BMW is to mean anything at all, awards resulting in this kind of massive disparity between

harm and punishment must be vacated or drastically reduced. Indeed, since BMW was decided,

numerous courts have found ratios far smaller than this one to violate the Due Process Clause

and routinely have ordered either new trials or remittiturs to a modest multiple of




                                              41
compensatory damages.15/ As the myriad post-BMW cases reflect, the ratio “guidepost”

mandates a finding of gross excessiveness in this case.

       c. Statutorily established penalties for comparable misconduct. Turning to the

third BMW guidepost, the punitive damages verdict far exceeds the statutory penalties for

comparable, or even far more egregious, conduct. No Mississippi or federal statute applies

directly, since GMAC violated no statutory duty. However, the Mississippi statute that

requires insurers to refund unearned premiums presumably provides the best indication of the

penalty deemed appropriate by the legislature for the type of conduct at issue here. See MISS.


15/
         See, e.g., Denesha, supra (24:1 ratio reduced to 4:1 where compensatory damages
were approximately $165,000); EEOC v. HBE Corp., supra (43:1 ratio reduced to just over
4:1 where aggregate actual damages were $112,000; Kim v. Nash Finch, supra (reducing 70:1
ratio to 3:1 where actual damages were $100,000); Hamilton, supra (27:1 ratio reduced to 6:1
where actual damages were $44,000); Kimzey, supra (140:1 ratio reduced to 10:1 where actual
damages were $35,000); Patterson, supra (holding a punitive award that was approximately
6.5 times the roughly $20,000 actual damages to be excessive and observing that a 4:1 ratio
is “close to the line”); Ortiz -Del Val, supra (ratio reduced from 72:1 to 2.6:1 where
compensatory damages, as reduced, were approximately $97,000); Ace, supra (reducing 130:1
ratio 7.5:1 where compensatory damages were $127,000); Fall, supra (reducing 155:1 ratio
to 9.7:1 where compensatory damages were $5,157); Mahoney, supra (19:1 ratio reduced to
3:1 where actual damages were $50,000); Rivera, supra (19:1 ratio reduced to 2:1 when actual
damages were $20,000); Lawyer, supra (reducing 5:1 ratio to 3:1 where actual damages were
$25,000) Kim v. Dial, supra (reducing 30:1 ratio to 1:1 where actual damages were $25,000);
Groom, supra (reducing 150:1 ratio to 10:1 where actual damages were $5,000); Geuss, supra
(punitive damages award that was roughly equal to the actual damages reduced to one-tenth
of $165,000 actual damages award); Iannone, supra (10:1 ratio reduced to 2:1 where actual
damages were $25,000); Florez, supra (15:1 ratio reduced to 5:1 where actual damages were
$55,000); Utah Foam, supra (18:1 ratio reduced to 2:1 where actual damages were
approximately $315,000); Rush, supra (3:1 ratio reduced to 1:1 where actual damages were
approximately $300,000); Schimizzi, supra (13:1 ratio reduced to 3:1 where actual damages
were approximately $45,000); In re Arnold, 206 B.R. 560, 569 (Bankr. N.D. Ala. 1997)
(observing that ratios of 4:1 to 10:1 may be appropriate depending on the circumstances, but
imposing $15,000 punitive award that was between two and three times the debtor’s actual
damages); Alfa, supra (32.5:1 ratio reduced to 4:1 where compensatory damages were
$10,000); Schiffer, supra (6.5:1 ratio reduced to 3:1 where actual damages were $50,000);
Grissett, supra (170:1 ratio reduced to 17:1 where actual damages were $50,000); Talent Tree,
supra (reducing ratio from 10:1 to 5:1 where actual damages were $300,000); Ford Motor
Co., supra (reducing ratio from less than 4:1 to just over 1:1 where actual damages were
$1,692,000); American Pioneer, supra (reducing 12:1 ratio to 3:1 where actual damages were
$250,000); Life Ins. Co. of Georgia v. Johnson, supra (reducing 60:1 ratio to 12:1 where
actual damages were $250,000); Grynberg, supra (reducing 13:1 ratio to 3:1 where actual
damages were $354,000); Apache, supra (reducing aggregate ratio of 138:1 to 4:1 where
aggregate actual damages were $10,835); Management Computer Servs., supra (27:1 ratio
reduced to 10:1 where actual damages were $65,000).

                                              42
CODE ANN. § 83-53-17(2). (We reiterate that, since that statute creates duties for insurers, not

finance companies, GMAC cannot be said to have violated it.) That statute prescribes a

maximum administrative fine of $5,000 for such a violation. MISS. CODE ANN. § 83-5-17

(amended in 1997). To say that the punitive award against GMAC far exceeds any penalties

available for comparable misconduct, then, is an understatement; the remitted award is 1,000

times the maximum fine. As with the other BMW factors, the comparable penalties criterion

clearly indicates that the punitive award against GMAC is (to put it mildly) grossly excessive.

                ..
                2       GMAC’s substantial net worth cannot justify the punishment

        The circumstances strongly suggest that GMAC’s net worth was the crucial factor in

setting the punitive amount. Counsel for Mrs. Hicks argued to the jury that it should levy a

huge penalty against GMAC because of GMAC’s substantial assets; indeed, he urged that the

punitive awards against GMAC and MIC Life be proportionate to their net worth. See Tr.

534:24-25, 535:19-20. Apparently responding to this argument, the jury punished GMAC five

times more severely than MIC Life — and the trial court preserved that ratio when it remitted

the punitive verdicts to $5 million against GMAC and $1 million against MIC life — despite

the facts that made MIC Life (if blameworthy at all) more directly responsible than GMAC

for any harm to Mrs. Hicks.

        Although a defendant’s “pecuniary ability and financial worth” is a factor that may be

considered in evaluating a punitive damage award under Mississippi law (Mooneyhan, 684

So. 2d at 585), it is clear as a matter of both Mississippi law and federal constitutional law that

GMAC’s finances cannot be used as the basis for upholding the punishment here. This Court

long ago made clear that the wealth of the defendant “is not the sole factor which is to be

considered” in setting a punitive award. Allen v. Ritter, 235 So. 2d 253, 256 (Miss. 1970).

Accordingly, the Court has found excessive punitive awards representing a small fraction of

the defendant’s net assets. See Mooneyhan, 684 So. 2d at 586-587 (remanding punitive

damages award of $1,000,000 for new trial even though award constituted only 1.67% of



                                                43
defendant’s net assets); Estate of Wesson, 517 So. 2d at 533 & n.4 (Miss. 1987) (reducing

punitive damages award from $8,000,000 to $1,500,000 although the defendant’s net assets

totaled $8 billion); Montgomery Ward & Co. v. Skinner, 25 So. 2d 572, 581 (Miss. 1946) (en

banc) (reducing combined compensatory/punitive award from $11,250 to $7,500 against

defendant corporation with assets of over $261 million).

        Indeed, a defendant’s wealth cannot be used to justify a punitive award that is

excessive under the BMW factors. Although BMW did not expressly condemn use of a

corporate defendant’s wealth to support a sizable punitive award, that conclusion is implicit

in the opinion. To begin with, the Supreme Court did not list corporate financial condition as

a guidepost in BMW even though Dr. Gore urged it to uphold the award on the ground that the

amount was small in relation to BMW’s net worth. Brief for the Respondent at 39 & n.49,

BMW of N. Am., Inc. v. Gore, 517 U.S. 589 (1996). Moreover, corporate wealth bears no

discernable relationship to any of the three guideposts that the Court did identify. Plainly, it

is not correlated with reprehensibility: the fact that a corporation may be financially successful

does not make its conduct more reprehensible than identical conduct of a less wealthy

company. Nor has it any bearing on whether the punitive damages are disproportionate to the

plaintiff’s injury or out of line with the statutorily prescribed fines for comparable conduct.

Significantly, most administrative and criminal fining schemes do not take the offender’s

financial condition into account. See Kemezy v. Peters, 79 F.3d 33, 36 (7th Cir. 1996).

        Further, the use of wealth to justify a penalty that is otherwise excessive violates the

principle that the defendant is entitled to “fair notice * * * of the severity of the penalty that

a State may impose.” BMW, 517 U.S. at 574. As the Supreme Court put it in BMW, “[t]he

fact that BMW is a large corporation rather than an impecunious individual does not diminish

its entitlement to fair notice of the demands that the several States impose on the conduct of

its business.” Id. at 585.




                                               44
       Since BMW was decided, numerous courts have explicitly recognized that the decision

does not countenance the use of financial condition to justify an award that is excessive under

the three BMW guideposts. See, e.g., BMW v. Gore, 701 So. 2d at 514 (“where a defendant

has not committed an act that would warrant a large punitive damages award, such an award

should not be upheld upon judicial review merely because the defendant has the ability to pay

it”); Bowden v. Calder, Inc., 710 A. 2d 267, 279 (Md. 1998) (“merely because a defendant

may be able to pay a very large award of punitive damages, without jeopardizing the

defendant’s financial condition, does not justify an award which is disproportionate to the

heinousness of the defendant’s conduct”); Leab v. Cincinnati Ins. Co., 1997 WL 360903, at

*16 (E.D. Pa. June 26, 1997) (“Contrary to [plaintiff’s] assertions, the wealth of a defendant

is not, by itself, sufficient justification for the imposition of a large punitive damages award.

To accept [plaintiff’s] contention that a punitive damages award against a wealthy corporate

defendant must be significant in order to have any effect would mean that any punitive

damages award against a Fortune 500 company must necessarily be in the millions of dollars

to affect the company’s behavior. The law makes no such requirement.”) (citation omitted);

Creative Demos, Inc. v. Wal-Mart Stores, Inc., 955 F. Supp. 1032, 1044 (S.D. Ind. 1997)

(“The Supreme Court has consistently stated that the fact that a defendant is a large

corporation with deep pockets cannot serve to justify an otherwise excessive punitive damages

award.”), vacated on other grounds, 142 F.3d 367 (7th Cir. 1998); Florez v. Delbovo, 939 F.

Supp. 1341, 1345 (N.D. Ill. 1996) (the Supreme Court’s decision in BMW “appears to disfavor

consideration of the defendant’s financial worth and condition in deciding on what level of

punitive damages to award”); Pivot Point Int’l, Inc. v. Charlene Prods., Inc., 932 F. Supp.

220, 223 (N.D. Ill. 1996) (observing that “the Supreme Court did not treat the defendant’s

wealth as relevant” and that basing punitive damages on income and assets “calls into question

the courts’ commitment to do equal justice to the rich and the poor”); Utah Foam Prods. Co.

v. Upjohn Co., 930 F. Supp. 513, 531 (D. Utah 1996) (“Manifestly, wealth alone does not



                                               45
justify imposition of a disproportionately large punitive damage award.”). See also Ace, 1999

WL 183805, at *7 (concerns about extraterritorial punishment “counsel a more limited

reliance on [the defendant’s] total wealth then would be the case if the defendant were

principally operating in [the forum state]”).

       In short, neither federal nor Mississippi law permits the use of a defendant’s wealth

to justify an otherwise unsupportable award.

       B.      The Excessive Punitive Verdict Was The Product Of Passion, Bias And
               Prejudice And Must Be Set Aside Or Reduced Under Mississippi Law

       Mississippi common law too forbids demonstrably excessive punishments. Mississippi

courts reduce punitive awards when they are “so excessive that [they] evince[] passion, bias

and prejudice on the part of the jury so as to shock the conscience of the court.” Mooneyhan,

684 So. 2d at 586. As this language suggests, Mississippi courts will hold that an award

reflects passion and prejudice and shocks the judicial conscience when it appears grossly

excessive, as this one is.16/ But as the “passion and prejudice” formulation suggests, a

punishment is also unlawful when, apart from its size, there are specific reasons to conclude

that the verdict was influenced by improper appeals to the biases and prejudices of the jury.

In such cases, remittitur is an insufficient remedy, and a new trial is needed to cure the harm

to the defendant. See Auster Oil & Gas, Inc. v. Stream, 835 F.2d 597, 603 (5th Cir. 1988);

Minneapolis St. P. & S. Ste. M. Ry. v. Moquin, 283 U.S. 520, 521-522 (1931); TXO Prod.

Corp. v. Alliance Resources Corp., 509 U.S. 443, 495 (1993) (O’Connor, J., dissenting) (when

punitive damages are the product of “considerations inconsistent with due process,” the

judgment should be reversed and the case should be submitted to a new jury); 11 C. WRIGHT,

16/
       Accord Auster Oil & Gas, Inc. v. Stream, 835 F.2d 597, 603 (5th Cir. 1988) (size of
punitive damages award in and of itself “indicate[s] inherent passion and prejudice”). See also
Fitzgerald v. Mountain States Tel. & Tel. Co., 68 F.3d 1257, 1262 (10th Cir. 1995) (“Plainly
excessive damages * * * may support an inference that bias, passion or prejudice contributed
to the award.”); Kelley v. Sears, Roebuck & Co., 882 F.2d 453, 460 (10th Cir. 1989)
(“dramatic size” of the punitive award, in conjunction with weak evidence of punitive liability
and small compensatory award, “suggests * * * that the jury was influenced by passion and
prejudice when it awarded $1.25 million”).

                                                46
A. MILLER & M. KANE, FEDERAL PRACTICE AND PROCEDURE § 2815, at 165-167 & n.14 (2d

ed. 1995).

        Here, the record amply discloses the likelihood that improper considerations infected

the punitive damages verdict. Plaintiff’s counsel heavily emphasized GMAC’s size and

financial resources (Tr. 531:6-8, 532:15-17; 533:15-17 537:1-5), and specifically urged the

jury to award 1% of GMAC’s net worth as punitive damages (Tr. 533:6-535:18). He also

introduced impermissible considerations into the jury’s deliberations by referring to the fact

that GMAC is a non-Mississippi corporation, virtually inviting the jury to reach into a far-off

deep pocket to reward a fellow citizen. See Tr. 525:11-20 (referring four times to “Detroit,

Michigan”), 530:27-28 (“These big corporations from Detroit, or wherever they’re from, they

don’t know us. They don’t know us.”), 533:6-8 (“If you return two or three million dollars

* * * [t]hey are going to run to that pay phone down there and they’re going to call up to

Detroit, Michigan, and say, we won, we won, we won.”), 534:25-26 (referring to “somebody

in the board room in Detroit”), 535:10-11 (referring to “Detroit, Michigan”). Plaintiff’s

emphasis on GMAC’s wealth and domicile likely inflamed the jury’s passion, bias and

prejudice, distorting the deliberations that then produced the colossal punitive verdict against

GMAC.

        The U.S. Supreme Court repeatedly has recognized the tendency of evidence of

corporate net worth to result in unfair prejudice. See, e.g., Honda Motor Co. v. Oberg, 512

U.S. 415, 432 (1994) (“the presentation of evidence of a defendant’s net worth creates the

potential that juries will use their verdicts to express biases against big businesses, particularly

those without strong local presences”). TXO, 509 U.S. at 464 (plurality op.) (“the emphasis

on the wealth of the wrongdoer increased the risk that the award may have been influenced

by prejudice against large corporations, a risk that is of special concern when the defendant

is a nonresident”). The Fifth Circuit, moreover, has granted new trials on punitive damages

where the plaintiff’s improper appeals to local biases appears to have produced a large award.



                                                47
See Whitehead v. Food Max of Mississippi, Inc., 163 F.3d 265, 276 (5th Cir. 1998) (granting

new trial on damages where, inter alia, plaintiff appealed to local bias by repeatedly

“remind[ing] the jury that [defendant] is a national, not local, corporation with its principal

place of business in Troy, Michigan”); Westbrook v. General Tire & Rubber Co., 754 F.2d

1233, 1241 (5th Cir. 1985) (“[a]ppeals to local bias against an outsider are prejudicial, and a

large verdict accompanied by such appeals leads us to conclude they had an influential impact

on the jury’s deliberations”).

        While overemphasizing the wealth and remoteness of GMAC, plaintiff’s counsel

improperly and unfairly appealed to the jury’s sympathies in an effort to stimulate its sense

of outrage. Counsel repeatedly described Mrs. Hicks as a “widow woman” (Tr. 221:13,

221:23, 230:25) and suggested that GMAC was exploiting Mr. and Mrs. Hicks by lending

them money. Tr. 527:3-18 (asserting that GMAC accumulated “eight billion dollars in a pile”

by “charging interest to poor folks so they can drive pickup trucks”). Apart from the falsity

of these statements, they were improperly designed to evoke sympathy, perhaps even causing

the jury to punish GMAC in part for the loss of plaintiff’s husband. See generally Landers

v. Long, 300 So. 2d 112, 115-116 (Ala. Civ. App. 1974) (reversing and remanding for new

trial where plaintiff responded affirmatively to his attorney’s query “You are a poor man?”

and danger of prejudice was not cured by limiting instruction).

        Because the plaintiff’s improper appeals to the jury’s passion and prejudice plainly

affected the award in this case, a new trial is warranted. In the alternative, this Court should

order a drastic remittitur.




                                               48
                                    CONCLUSION

       For the reasons explained above, this Court should vacate the judgment below and

enter judgment in favor of GMAC on all counts. Alternatively, the Court should order a new

trial on both the underlying claims and punitive damages. At a minimum, this Court should

order a remittitur of the punitive damages award to a modest multiple of the compensatory

damages.

                                            Respectfully submitted,


_________________________                   ____________________________
ANDREW L. FREY                              JESS H. DICKINSON
 Mayer, Brown & Platt                         MS Bar No. 6120
 1675 Broadway                               KATHARINE M. SAMSON
  New York, New York 10019                    MS Bar No. 8727
  (212) 506-2500                              Page, Mannino, Peresich,
                                                 Dickinson & McDermott , P.L.L.C.
EVAN M. TAGER                                 2301 - 14th Street, Suite 600
MIRIAM R. NEMETZ                              Gulfport, Mississippi 39501
 Mayer, Brown & Platt                         (601) 863-8861
 1909 K Street, N.W.
 Washington, D.C. 20006                     MICHAEL A. BENDER
 (202) 263-3000                              General Motors Acceptance Corporation
                                             3031 West Grand Boulevard
                                             Detroit, Michigan 49232

                                Attorneys for Appellant
                        General Motors Acceptance Corporation



June 3, 1999




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