California Punitives by Horvitz & Levy

  • Belk v. Electra Cruises: Court of Appeal Affirms Trial Court’s Reduction of Punitive Damages to 1 to 1 Ratio

    Both the defendant and the plaintiff lose in this unpublished opinion.

    The plaintiff prevailed at trial on a wrongful termination claim and won $80,000 in compensatory damages and $225,000 in punitive damages. The trial court reduced the punitive damages to $80,000 (a 1 to 1 ratio). Both sides appealed. The plaintiff sought reinstatement of the jury’s award, and the defendant argued that the $80,000 was still excessive.

    The Court of Appeal (Fourth Appellate District, Division Three) rejected both appeals and affirmed the $80,000 punitive damages award. Even though both parties lost their respective appeals, the court apparently viewed the plaintiff as the prevailing party on appeal, because the court awarded the plaintiff her costs on appeal.

  • Rambeau v. Barker: Punitive Damages Vacated Due to Defendant’s Negative Net Worth

    In this unpublished opinion, the Court of Appeal (Fourth Appellate District, Division Three) vacated a $100,000 punitive damages award because the defendant had a negative net worth.

    The opinion recites the evidence regarding the defendant’s financial condition in some detail and concludes that, although the defendant owned multiple properties, he had a negative net worth at the time of trial because of his significant debt. Quoting the Supreme Court’s statement that the purpose of punitive damages “is to deter, not to destroy” (Adams v. Murakami (1991) 54 Cal.3d 105, 112), the court ordered the punitive damages award stricken from the judgment.

    Contrast this opinion with Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 582-583, which upheld a $300,000 punitive damages award against a defendant with a negative net worth.

  • Unzipped Apparel v. Sweet Sportswear: $5M Punitive Damages Award Affirmed

    This is a very long unpublished opinion, only a small portion of which relates to punitive damages.

    In a nutshell, the jury awarded $30 million in compensatory damages against one of the defendants, Guez, who succeeded in knocking out $3.8 million of that award on appeal. Despite the reduction of the compensatory damages, the Court of Appeal (Second Appellate District, Division Seven) declined to order a reduction of the punitive damages. Instead, the court examined the amount of the punitive damages award under state law (because the defendant did not challenge the amount of the award on federal due process grounds) and concluded that the award was not excessive.

    It’s not all that surprising that the court affirmed the amount of this punitive damages award, since the compensatory damages, even as reduced, were still much larger than the punitive damages. But it’s interesting that the court did not discuss the case law stating that a reduction in compensatory damages necessarily requires a reduction of the punitive damages award, or at least a new trial on punitive damages. As we have noted before, California courts have taken conflicting positions on this issue. Neither line of authorities is discussed in this opinion.

  • Singh v. Southland Stone: $350,000 Punitive Damages Award Reversed

    In this published opinion, the California Court of Appeal (Second Appellate District, Division Three) reversed a $350,000 punitive damages award because the jury’s factual findings were fundamentally inconsistent.

    The plaintiff alleged that the defendant, his former employer, made intentional misrepresentations in order to lure him to to the U.S. to work. In a confusing a contradictory verdict, the jury found that the defendant did not make the alleged misrepresentations, but also found that the defendant acted with malice, oppression, or fraud (the prerequisites for punitive damages under Civil Code section 3294). The Court of Appeal concluded that those findings were fundamentally inconsistent, requiring a new trial.

  • Meadowbrook Estates HOA v. Equity Lifestyle Properties: Trial Court Properly Granted Motion to Strike Punitive Damages Claim

    We report on every California punitive damages decision, published or unpublished, but sometimes there isn’t much to say. In this unpublished opinion, the California Court of Appeal (Fourth Appellate District, Division One) affirms a trial court’s decision to strike a plaintiff’s claim for punitive damages on the ground that the facts alleged in the complaint, even if true, could not support a finding of malice, fraud, or oppression. Yawn.

  • Trattman v. Key: Punitive Damages Claim Reinstated Because Trial Court Fumbled Bifurcation Procedure

    In this unpublished opinion, the California Court of Appeal (Second Appellate District, Division 8) corrects an obvious error by the trial court.

    The case involves Civil Code section 3295, which gives defendants the right to request a bifurcated trial on punitive damages. If a defendant invokes its rights under section 3295, the trial court must bifurcate the trial so that the jury does not hear any evidence of the defendant’s financial condition (or any other evidence relating to the amount of punitive damages), until the trier of fact has already ruled in the plaintiff’s favor on liability and ruled that the defendant acted with malice, oppression, or fraud, the prerequisites for awarding punitive damages under Civil Code section 3294.

    The defendant in this case requested bifurcation under section 3295. The first phase went forward and the trial court, acting as the trier of fact, ruled in favor of the plaintiff on liability and found that the defendant had acted with malice, oppression, or fraud. But the court concluded that the plaintiff waived his right to punitive damages by failing to introduce evidence of the defendant’s financial condition during the first phase.

    I can’t figure out what the trial court could have been thinking. Under section 3295, the plaintiff was prohibited from presenting any evidence of the defendant’s financial condition during the first phase of trial. Clearly the plaintiff did not waive any rights by complying with the plain language of the statute. That’s exactly what the Court of Appeal said, and reversed the case for a limited retrial on the punitive damages. (See our prior discussion of problems associated with limited retrials on punitive damages.)

  • Rodriguez v. Daniel: $100,000 in Punitive Damages Reversed

    Here’s another unpublished opinion that reverses a punitive damages award because a plaintiff failed to present meaningful evidence of the defendant’s financial condition.

    The plaintiff argued that he met his burden because he introduced evidence about the profitability of the defendant’s misconduct. The California Court of Appeal (Second District, Division Four) said that’s not good enough; a plaintiff must provide evidence of the defendant’s overall financial condition, including assets and liabilities. Because the plaintiff here didn’t do that, he gets no punitive damages. He doesn’t get a new trial because he failed to prove his case the first time around, and is not entitled to a second bite at the apple.

    I’ve lost track of how many times we seen punitive damages get reversed for this reason since we started this blog. Without a doubt, this is most frequent basis for reversal of punitive damages in California.

  • Oliver v. Pacific Real Estate: Default Judgment Awarding $292,717 in Punitive Damages Affirmed

    In this unpublished opinion, the California Court of Appeal (Fifth District) affirmed a default judgment that includes a $50,000 punitive damages award.

    The appellant asked the court to strike the punitive damages award because the plaintiff did not comply with Code of Civil Procedure section 425.115. Under that statute, a plaintiff cannot obtain punitive damages in a default judgment unless the plaintiff serves the defendant with a statement requesting a specific amount of punitive damages. The idea is to notify the defendant of the amount at stake so the defendant can decide whether to put up a fight.

    In this case, the plaintiff did not serve a statement of damages as described in section 425.115. But he did attach a document to his complaint indicating that he sought $500,000 in punitive damages. The court said that was close enough to satisfy section 425.115.

  • Devlin v. Foot & Ankle Doctors: $142,500 in Punitive Damages Affirmed

    Nothing earth-shattering here. The California Court of Appeal (Second District, Division Four) concludes in an unpublished opinion that a $142,500 punitive damages is not excessive in relation to a $57,000 compensatory damages award (ratio of 2.5 to one).

  • Cupps v. Mendelson: Trial Court Properly Vacated $160,000 Punitive Damages Award Because Plaintiff Failed to Prove Defendant’s Financial Condition

    Here’s another case in which a plaintiff forfeited his right to punitive damages because he failed to present meaningful evidence of the defendant’s financial condition.

    The plaintiff won a verdict for $288,000 in compensatory damages and $160,000 in punitive damages. The trial court granted the defendant’s motion for partial JNOV and eliminated the punitive damages award, on the ground that the plaintiff had failed to introduce meaningful evidence of the defendant’s financial condition.

    The California Court of Appeal (Fourth District, Division One) affirmed. The plaintiff apparently conceded on appeal that he presented no direct evidence of the defendant’s financial condition, but he tried to prop up the punitive damages award by pointing to expert testimony regarding the value of a business partly owned by the defendant. The Court of Appeal determined that the expert never directly opined about the value of the business, and was not even qualified to do so.

    The plaintiff also tried to rely on Cummings Medical Corp. v. Occupational Medical Corp. (1992) 10 Cal.App.4th 1292 for the proposition that a plaintiff need not introduce evidence of the defendant’s financial condition, and can rely instead on the amount of profit the defendant gained from the misconduct at issue. The Court of Appeal noted that it had previously rejected that reasoning in Kenly v. Ukegawa (1993) 16 Cal.App.4th 49, which held that an award cannot be based solely on the alleged “profit” gained by the defendant, “without examining the liabilities side of the balance sheet.”