In Newland v. Superior Court, the California Court of Appeal, Third Appellate District, granted plaintiff’s writ petition challenging the trial court’s grant of summary adjudication on the plaintiff’s punitive damages claim. The potentially punitive conduct was an insurance company’s denial of a claim for a stolen car based upon the insurance adjuster’s opinion that the insured had been responsible for the theft. The Court of Appeal found that the insurance company had not met its burden to show that the conduct could not be punitive given the allegedly inappropriate manner in which the insured was treated.

By contrast, in Old Republic Home Protection Co., Inc. v. Superior Court, the California Court of Appeal, Fourth Appellate District, Division Two, granted defendant’s writ petition challenging the trial court’s overruling of its demurrer to an insurance bad faith complaint that included a prayer for punitive damages. The lawsuit involved a claim for breach of a home warranty contract. The Court of Appeal held that breach of contract actions should not lightly be turned into tort actions outside the insurance context. Therefore, the bad faith claim, and the attendant claim for punitive damages, should be dismissed with prejudice.

Rex Heeseman, an L.A. County Superior Court judge who has written a series of op-eds for the Daily Journal on punitive damages and insurance law, has an op-ed in today’s Daily Journal (subscription required) discussing the Behr v. Redmond case. 

Judge Heeseman’s op-ed concludes with a discussion about appellate strategy for defendants facing the issues raised in Behr.  He suggests that when a defendant appeals from a large compensatory damages award and a relatively smaller punitive damages award, and the defendant challenges the amount of the compensatory damages award, the defendant should also argue that the punitive damages are excessive when compared to the compensatory award after the expected reduction on appeal (assuming the defendant can predict how much the reduction will be).  He also suggests that defense counsel should not ask for a retrial of the punitive damages award, but should ask the appellate court to simply reduce the amount of punitive damages without a remand.  He doesn’t get into the split of authority that was the subject of the petition for review, but he observes that the trend of recent cases is to resolve the final amount of punitive damages at the appellate level without further trial proceedings. 

Related posts:

Two out of three ain’t bad: Supreme Court denies review in Behr v. Richmond, despite my prediction that they’d take the case

Petition for review asks Cal. Supreme Court to resolve split in authority regarding the proper treatment of a punitive damages award after reduction of compensatories

Behr v. Redmond: Court of Appeal publishes previously unpublished opinion, creates split of authority

Behr v. Redmond: $2.8M punitive award affirmed, despite reduction of compensatory damages from $4M to $1.6M

In 2009, the defendant in this case persuaded the California Court of Appeal (Second Appellate District, Division Seven) to reverse a $800,000 punitive damages award.  (We described the reversal in a prior post.)  While the appeal was pending, however, the plaintiff had forced the defendant to pay the $800,000.  Apparently the defendant was unable to post an appeal bond or otherwise obtain a stay of enforcement pending appeal.

After the appeal, the defendant sought restitution of its $800,000, with interest.  Ordinarily, when a defendant is forced to pay a money judgment that is reversed on appeal, the defendant is entitled to get the money back with interest.  But the trial court here ruled that the defendant was not entitled to interest because it engaged in “inequitable” conduct by resisting the plaintiff’s enforcement efforts; specifically, the defendant avoided attempts to serve writs of execution and ignored a subsequent court order.

The California Court of Appeal (Second Appellate District, Division Seven) affirmed in this published opinion, holding that the trial court acted within its discretion when it weighed the equities and declined to award interest.  The Court of Appeal noted that the plaintiff had expended $100,000 in attorney’s fees to collect the judgment, and concluded that letting the plaintiff keep the interest on the $800,000 would properly return the plaintiff to the position he would have been in if he hadn’t enforced the judgment.  The defendant, however, ends up in a worse position, losing out on the interest on the $800,000 that rightfully belonged to the defendant all along. 

Related posts:

Gunderson v. Wall: inconsistencies in defendant’s testimony are not alone sufficient to support punitive damages

This case illustrates how a defendant can lose its ability to challenge a punitive damages award by not requesting a sufficiently detailed verdict form.  This case involved both contract and tort claims, and the jury rendered a lump-sum $500,000 compensatory damages award, without differentiating between tort damages and contract damages. The defendant argued on appeal that the portion of the compensatory damages attributable to the tort claim might be as low as $1 (or even $0), making the $1 million punitive damages award constitutionally excessive.

The California Court of Appeal (Second Appellate District, Division Six) didn’t buy it.  In this unpublished opinion, the court held that, because the defendant failed to ask for a verdict form segregating the tort damages from the contract damages, it must be inferred that the jury found the damages co-extensive for both claims (i.e., that the tort and the breach of contract both caused the same $500,000 in damages).  The court then concluded that the $1 million punitive damages award was not excessive in relation to the $500,000 compensatory damages award.

Don’t mess with Pumkin the cat, or you may end up paying punitive damages.  That’s the message of this published opinion from the California Court of Appeal (First Appellate District, Division One).

The plaintiff alleged that the defendants shot his beloved cat Pumkin with a pellet gun while Pumkin was perched on a fence between the plaintiff’s property and the defendants’ property.  Pumkin needed emergency surgery costing $6,000.  She survived but was left partially paralyzed.  Plaintiff sued to recover the cost of the surgery, increased costs of care due to Pumkin’s paralysis, and punitive damages.  The trial court ruled, however, that plaintiff could only recover Pumkin’s fair market value.  The plaintiff conceded that Pumkin had no market value, so the trial court dismissed his case.

The Court of Appeal reversed the judgment of dismissal, ruling that the plaintiff was entitled to recover damages for the reasonable and necessary costs he incurred due to the wrongful injury of his cat.  More importantly for purposes of this blog, the court ruled that the plaintiff could recover punitive damages under California Civil Code section 3340(f), which provides that “exemplary damages may be given” in cases involving “wrongful injuries to animals . . committed willfully or by gross negligence, in disregard of humanity.”  The statutory language leaves me wondering whether there are any cases defining “disregard of humanity,” but I’ll leave that issue for another day.  

UPDATE (6/2/11):  Bob Egelko of the San Francisco Chronicle reports: Brentwood man cleared to sue over cat’s shooting (the article contains a photo of Pumkin)

In this unpublished opinion, the California Court of Appeal (Second District, Division Five) reverses a trial court order that granted summary adjudication for the defense on the plaintiffs’ disability discrimination claims, but affirms the trial court’s grant of summary adjudication for the defense on the issue of punitive damages.  The Court of Appeal thought the plaintiff had enough evidence to proceed with his liability claims, but the court ruled that the plaintiff presented no clear and convincing evidence that his employer’s possibly tortious conduct was the result of malice, oppression, or fraud.

In a prior post we pointed out that there are strong arguments that punitive damage awards issued by arbitrators should be subject to judicial review for constitutional error notwithstanding the general rule against review of arbitration awards for legal error. The California Court of Appeal (Second Appellate District, Division Eight) rejected that argument in a published opinion, re-affirming Rifkind & Sterling, Inc. v. Rifkind (1994) 28 Cal.App.4th 1282 and holding that the amount of punitive damages awarded in a private arbitration is not subject to judicial review for constitutional error because the constitutional limits on punitive damages apply only when a state is imposing punitive damages through a court proceeding, not when a private arbitrator is imposing them in a contractual arbitration proceeding.

The court rejected the argument that judicial confirmation and enforcement of the arbitrator’s punitive damage award is a form of state action that triggers the protections of the Due Process Clause. But the court did not rule out the possibility that, in some cases, a private arbitration award may be so excessive and contrary to public policy that judicial review is appropriate. The court concluded, however, that the punitive damages award in this case, which was only 1.2 times the amount of the compensatory damages award, did not represent an exceptional circumstance in which judicial review is required.

This unpublished opinion from the California Court of Appeal (Fourth District, Division Three) addresses a recurring procedural question: can an appellate court consider a defendant’s argument that a punitive damages award is excessive even if the defendant did not raise that argument in a new trial motion?

Ordinarily, a defendant who wants to argue excessive damages must do so in a new trial motion, or waive the right to make the argument on appeal.  The idea is that the trial court is in the best position to evaluate any factual disputes regarding the appropriate amount of damages.

The plaintiff tried to invoke that rule here, to argue that the defendant had waived any right to challenge the amount of punitive damages appeal by not raising that argument in a new trial motion.  The Court of Appeal disagreed, holding that a constitutional challenge to the amount of a punitive damages award is a purely legal issue that the Court of Appeal reviews de novo, and therefore can be considered for the first time on appeal.  (That seems entirely correct to me, but I’m not sure any published California opinion says so.)

The court’s ruling on that procedural issue turned out to be important for the parties to this case, because the court went on to determine that the jury’s $250,000 punitive damages award (ratio of 8.3 to 1) was excessive, and that any award in excess of $125,000 (ratio of 4.2 to 1) would be unconstitutional.

Justice Aronson dissented, disagreeing with the court’s decision to reduce the award. In his view, the defendant’s conduct (fraudulently promising to take care of the plaintiff’s elderly father, and then neglecting him) was sufficient to support the jury’s award.  The dissenting opinion also cites the defendant’s wealth as a basis for affirming a higher award, which seems inconsistent with the U.S. Supreme Court’s statement in State Farm v. Campbell that “[t]he wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.”