California Punitives by Horvitz & Levy

  • Stewart v. Union Carbide: $6 million punitive damages award affirmed

    In this published opinion, the California Court of Appeal (Second Appellate District, Division Five) affirms a $6 million punitive damages award to a plaintiff who recovered $2.7 million in compensatory damages.

    This opinion bucks the trend of California appellate decisions over the past few years, which have consistently applied the rule that the ratio of punitive damages to compensatory damages cannot exceed one-to-one when the compensatory damages award is “substantial.” In keeping with the usual practices on this blog, I won’t comment further because our firm represents the defendant and the litigation is ongoing.

  • Brea Imperial v. Automotive Wheels: punitive damages claim reinstated

    We don’t see many opinions in which a trial court rules that a plaintiff is not entitled to punitive damages, and the Court of Appeal disagrees.  But here’s one. 

    The Fourth Appellate District, Division Three, concludes that the trial court misinterpreted a contract between the parties.  The trial court said the contract unambiguously prohibited the plaintiff from recovering punitive damages, but the Court of Appeal says no, the contract only prohibits the plaintiff from seeking indemnity for punitive damages awarded to a third party.  Accordingly, the Court of Appeal sends the case back to the trial court for a retrial limited to the issue of punitive damages.  The opinion contains no discussion of any of the potential problems associated with a partial retrial limited to punitive damages. 

  • Sharp v. Kay: $5.2M punitive damages award affirmed

    In this unpublished opinion, the California Court of Appeal (Second Appellate District, Division Seven) affirms a punitive damages award in excess of $5.2 million.  Our firm represents the defendant in this case so, per our usual policy, we won’t comment on the decision while the litigation is ongoing.

  • Essex Ins. v. Prof. Building Contractors: settlement offsets should not be considered when calculating ratio

    It’s amazing how many questions continue to arise with respect to the proper method for calculating the ratio between punitive damages and compensatory damages.  In this unpublished opinion, the California Court of Appeal (Second Appellate District, Division Two) tackles the following ratio-calculation issue:

    Whether the one-to-one ratio between compensatory damages and punitive damages ordered by the trial court and affirmed by this Court must be measured by the jury’s award of compensatory damages or by an amount that takes account of a setoff for a third-party settlement.

    The court answers the question by concluding that the ratio calculation should not take settlement offsets into account; courts should compare punitive damages to the jury’s award of compensatory damages before any post-verdict reductions under Code of Civil Procedure section 877. 

    The opinion relies on out-of-state authorities reaching the same result.  But it makes no mention of  some prior California opinions that appear inconsistent with this result.  Two published Court of Appeal opinions have held that a proper calculation of punitive damages should take into account any amounts the plaintiffs received from third parties as compensation for their injuries.  (See Palmer v. Ted Stevens Honda, Inc. (1987) 193 Cal.App.3d 530, 540-542 and Krusi v. Bear, Stearns & Co. (1983) 144 Cal.App.3d 664, 680-681.)  Perhaps the Court of Appeal thought these cases were distinguishable, or perhaps the parties simply did not call them to the court’s attention.  In any event, given the apparent conflict in these cases, we probably haven’t seen the last of this issue. 

    Related post: Essex Ins. v. Professional Building Contractors: punitive damages reduced to 1-to-1 ratio in insurance bad faith case

  • Yusuf v. Tija: $500,000 punitive damages award affirmed

    This unpublished opinion from the California Court of Appeal (Second Appellate District, Division Eight) affirms $500,000 in punitive damages.  The defendant apparently didn’t challenge the amount of the award, and argued only that the evidence was insufficient to support a finding of malice, oppression, or fraud.  The court easily disposed of that argument, concluding that the evidence of the defendants’ participation in human trafficking and false imprisonment was sufficient to warrant punitive damages.

  • Uzyel v. Kadisha: An increase in compensatory damages does not entitle plaintiffs to a new trial on punitive damages

    This published opinion holds that a plaintiff cannot take advantage of a procedural rule adopted for the benefit of defendants.
    We have previously blogged about California’s rule that, when a defendant gets hit with both compensatory damages and punitive damages, and a court later reduces the compensatory damages, the defendant is entitled to a reduction of the punitive damages (or possibly a retrial on punitive damages, depending on the reason why the compensatory damages were reduced).  That’s the general rule, although we have seen some inconsistent decisions in this area.  The rationale behind the rule is to ensure that the punitive damages bear a reasonable relationship to the reduced compensatory damages award.
    In this opinion from the Second Appellate District, Division Five Three, the court holds that when a trial court or appellate court increases the compensatory damages, the plaintiff is not entitled to a proportionate increase in punitive damages, nor to a retrial on punitive damages to try for a larger amount.
    Full disclosure: Horvitz & Levy represents the defendant on appeal in this case.

  • Mack Film Development v. Johnson: Defendant Waived Right to Challenge $1.75 Million Punitive Damages Award By Failing to Comply With Court Order

    The defendants in this unpublished opinion asked the California Court of Appeal to reverse a $1.75 million punitive damages award on the ground that the plaintiff had failed to introduce meaningful evidence of the defendants’ financial condition. The Second Appellate District, Division Five, wasn’t buying it.

    The court put the blame on the defendant for failing to respond to a valid court order to produce its financial information after the jury found that the defendant had acted with malice. Citing Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, the Court of Appeal concluded that the defendant waived its right to complain that the award was not supported by financial condition evidence:

    Johnson was not entitled to escape punitive damages by the simple expedient of refusing to produce financial information needed to fix such an award, as doing so would have allowed him to flout a court order with impunity and undermine the legal process. In view of Johnson’s failure to produce evidence of his financial condition, he may not complain the amount of punitive damages is excessive.

  • Cutler v. Dike: Small Punitive Damages Awards Affirmed, Court not Persuaded by “Self-Serving” Testimony that Defendants Had Negative Net Worth

    We have blogged quite a bit about the frequency with which California Court of Appeal reverses punitive damages awards on the ground that the plaintiff failed to introduce meaningful evidence of the defendant’s financial condition. But here’s an unpublished opinion from the Second Appellate District, Division Five, rejecting a challenge to a punitive damages award on that basis.

    The plaintiff here presented audited financial statements showing that the two defendants had net worths of $3.6 million and $246,000 shortly before trial. The Court of Appeal said that evidence was more than enough to support punitive damages awards of $2,500 and $5,000 against the two defendants, nothwithstanding the “self-serving” testimony by the defendants’ CEO that the defendants had a negative net worth at the time of trial.

  • Vidrio v. Hernandez: No Special Scrutiny of Default Judgments That Include Punitive Damages

    I wonder why this opinion wasn’t published.

    In Vidrio v. Hernandez, the California Court of Appeal (First Appellate District, Division Five) expressly disagreed with Nicholson v. Rose (1980) 106 Cal.App.3d 457. Nicholson included some broad language stating that courts should give special scrutiny to default judgments in which punitive damages are awarded. But the unpublished opinion in Vidrio says: “We find no support for the broad statement in Nicholson that appellate review of default judgments is any more or less stringent where punitive damages are awarded.” That sort of disagreement is usually enough to warrant publication.

    Perhaps the court decided not to publish its opinion because the court found that it lacked jurisdiction to directly review the punitive damages award. Jurisdiction was lacking because the defendant appealed only from an order denying his motion to vacate the default judgment and did not appeal from the judgment itself. Thus, the criticism of Nicholson appears to be dictum. Still, publication of the opinion would have provided some guidance to future litigants.

  • Citizens of Humanity v. Caitac Intern., Inc.: $1.5M Punitive Damages Award Affirmed

    In this unpublished opinion, the California Court of Appeal (Second Appellate District, Division Two) affirms a $1.5 million punitive damages award without much discussion.

    The court says that the appellant’s counsel waived a challenge to the evidence supporting the punitive damages award because the argument was asserted “perfunctorily asserted in two sentences in Caitac’s opening brief.” The court goes on to say that, even if the appellant had not waived the argument, the court would have upheld the punitive damages award because there was sufficient evidence that the defendant acted with conscious disregard of the plaintiff’s rights.