Fountain Valley : Judge Dismisses Verdict, Orders New Trial in Suit

In an unusual decision, a judge has ordered a new trial and thrown out a $165,000 verdict against a Fountain Valley lawyer and his client whom a jury had found guilty of malicious prosecution.

Superior Court Judge John L. Flynn Jr., citing his own errors in the case, ruled that the jury’s verdict was ambiguous and that a portion of the money awarded was in violation of public policy.

At issue was a $135,000 insurance policy on the life of the late John Steinberg. An adopted son, a longtime friend and confidante and a medical research trust have engaged in a court battle over the insurance since 1978.

Shortly before Steinberg died of brain cancer, he altered the insurance policy to benefit a medical research trust and to pay nothing to his adopted son, Thomas, of Fountain Valley.

The son sued, alleging that a friend of his father, Newport Beach real estate agent Mary Lou Stiebling, had exerted “undue influence” on John Steinberg to persuade him to change the policy. In return, Stiebling claimed she should receive the full $135,000 because Steinberg’s intent was not being carried out.

Before the case was finally settled, the son and the medical research group agreed to a settlement which left Thomas Steinberg with $40,000.

Stiebling then sued Thomas Steinberg and his lawyer, Phillip Putnam, claiming that she had been subjected to malicious prosecution in the first lawsuit.

After a three-week trial in Flynn’s courtroom, a jury on March 20 awarded Stiebling $65,000 in regular damages and $100,000 in punitive damages.

Last week, Flynn took the unusual action of ordering a new trial, holding that the jury’s verdict was ambiguous in assessing punitive damages against both Steinberg and his lawyer. The verdict left it up to Stiebling to decide whether to collect from Putnam, Steinberg, or both. That, Flynn held, defeated the purpose of punitive damages, which are supposed to be awarded as punishment.