Prior Bad Acts – What Happens in Vegas May Have to Stay in Vegas

June 20, 2011

We all know that the Texas Rules of Evidence (TRE 404) generally prohibit us from using evidence of prior bad acts to show that our opponent acted in conformity therewith.  So what do you do when your investigation turns up the 500-pound skeleton in your opponent’s closet?  Look to the exceptions.

Rule 404 itself provides the first exception.  When offered for another purpose, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident, prior bad acts may be admissible. For example, while prior fires of suspicious origin would be generally inadmissible to prove arson in a particular case, they may be used to prove plan, scheme or design.  Payne v. Hartford Fire Ins. Co., 409 S.W.2d 591 (Tex.Civ.App. 1966) (Each of the previous fires destroying plaintiff’s houses occurred in the early morning, when no one was home, after personal effects of substantial value had been removed from the house, at a time when the plaintiff was in dire financial circumstances, and resulted in the collection of substantial money under fire insurance policies.)

If the exceptions in Rule 404 don’t apply, Rule 406 provides another exception for habit or routine:

Evidence of the habit of a person or of the routine practice of an organization … is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice. 

When prior bad acts rise to the level of habitual behavior, then these bad acts will be admissible to show action in conformity therewith.  This is because the law recognizes that a person is far more likely to act in conformity with established habit than to act in conformity with a perceived general character or disposition.  Isolated instances of bad conduct, however, will not invoke the Rule 406 exception.  Rule 406 applies only to highly repetitious conduct, along the lines of smoking cigarettes or reading the morning newspaper.  

Another significant exception to the rule comes into play with regard to punitive damages.  While prior bad conduct is generally not admissible to prove liability for an underlying tort, a jury is often allowed to consider prior bad acts at the punitive damage stage of trial.  For example, while evidence that a defendant regularly smoked marijuana while driving a car could not be used to prove negligent driving, it would be relevant to the determination of punitive damages for negligent driving.  Castro v. Sebesta, 808 S.W.2d 189, 193 (Tex. App. — Houston [1st Dist.] 1991).   

In the landmark decision of BMW of North America, Inc. v. Gore, the U.S. Supreme Court instructs that not only can prior bad acts be used as evidence within the punitive damage context, they should be admissible in assessing the degree of culpability of conduct at that point. 517 U.S. 559 (1996).  According to BMW, one of the factors which should be considered in determining the reasonableness of a punitive damage award is whether the conduct was an isolated incident or whether the conduct involved repeated bad behavior. Later, however, the Supreme Court took a second look at the use of this evidence, specifically in the context of out-of-state bad conduct, and limited the use of prior bad acts in two fairly significant ways.  State Farm Mutual Automobile Insurance Co. v Campbell, 538 U.S. 408 (2003). 

First, not just any bad acts will do.  Although prior transgressions need not be identical to the act being adjudicated, the prior act occurring out of state must “replicate” the conduct in question in order to be admissible at trial.      

Second, while bad acts occurring out of state may be probative as to deliberateness and culpability, if the conduct was lawful in the state where it occurred, the amount of punitive damages assessed cannot be based upon those lawful, out-of-state bad acts.  Declaring that states do not have a legitimate concern in imposing punitive damages to punish a defendant for acts committed in other jurisdictions, the Court held that an exemplary damage award cannot be based on conduct which is lawful in the state where it occurred, no matter how similar, no matter how bad.

In order to reconcile the two Supreme Court decisions – BMW and State Farm – it appears that while a jury may consider evidence of bad-yet-lawful out-of-state conduct in evaluating the egregious nature of a tortfeasor’s conduct during the exemplary damages phase of trial, the jury may not consider that same evidence to punish the tortfeasor (by way of assessment of exemplary damages) during that same phase of trial.  In other words, the jury may use the evidence to determine whether the conduct was really, really, bad, but when deciding how much money to assess for the really, really, bad conduct, the jury must disregard all of the bad-yet-lawful out-of-state conduct it heard and consider only in-state bad conduct and bad-and-unlawful out-of-state conduct in arriving at a proper amount to award in punitive damages.  

Confusing?  Let’s just hope that 500-pound skeleton you found is wearing cowboy boots firmly planted in the Lone Star State.  Otherwise, what happened in Vegas may have to stay in Vegas.

–Judge Bonnie Sudderth, 352nd District Court of Tarrant County, Texas

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