This published opinion could be headed for the California Supreme Court.

The opinion addresses whether the right to recover punitive damages is assignable under California law. The Court of Appeal (Third Appellate District) held that the right to recover punitive damages is assignable if that right arises from a cause of action that is assignable. The court observed that causes of action arising from an injury of a personal nature (e.g., slander, assault, malicious prosecution) are not assignable. But the injury in this case was groundwater contamination, an injury to real property. The court observed that claims for injury to real property are transferred with the property when title passes from one owner to another. Accordingly, the court concluded that a property owner could assign its right to seek punitive damages in connection with injury to the property.

The court acknowledged that several other cases, including California Supreme Court cases, contain language suggesting that the right to seek punitive damages is never assignable. But the Court of Appeal said the results in those cases could be harmonized with the new rule announced in this opinion. Nevertheless, the result in this case is inconsistent with the plain language of other published opinions, which makes a strong case for Supreme Court review.

To my knowledge, this opinion is the first published opinion in California to uphold joint and several liability for punitive damages. If anyone knows about another one, I would love to hear about it.

The trial court entered a judgment holding five different defendants jointly liable for $700,000 in compensatory damages and $2.41 million punitive damages. Only one of the defendants challenged the punitive damages award on appeal. He argued, among other things, that the trial court lacked authority to impose joint and several liability against all defendants for the total punitive damages award, and should have assessed punitive damages separately against each defendant.

The Court of Appeal (Second Appellate District, Division Seven) rejected that argument: “[W]hen the theory of liability is that the defendants acted jointly in tortiously pursuing a course of conduct, imposing joint and several liability for punitive damages is not prohibitied.” The court acknowledged that in most cases, punitive damages are assessed separately, even against joint tortfeasors. Indeed, the California Supreme Court expressly stated in Thomson v. Catalina (1928) 205 Cal. 402 that it was proper for a trial court to instruct a jury to award punitive damages in different amounts against different defendants.

The Court of Appeal here did not cite a single case in California (or anywhere else) allowing punitive damages to be assessed jointly and severally. Nevertheless, the court concluded that “punitive damages do not have to be apportioned when the finder of fact determines that the defendants acted jointly to commit a single wrong and each acted with essentially the same degree of culpability.”

This case appears to be inconsistent not only with California practice, but with the approach taken by other jurisdictions nationwide. (See McFadden v. Sanchez (2d Cir. 1983) 710 F.2d 907, 913 [“In modern times American jurisdictions have come to the conclusion that punitive damages should be assessed on an individual basis’”].) That practice makes sense to me; a defendant should be required to pay punitive damages only for its own acts of malice, and should not be jointly liable for the malice of others.

UPDATE: Although this opinion is certified for publication, the punitive damages analysis appears in an unpublished portion of the opinion. Thanks to Kevin Underhill for pointing that out. (For those who don’t know, Kevin writes Lowering the Bar. I used to think legal humor was an oxymoron, until I started reading Kevin’s blog. This post is one of my all-time favorites.)

FURTHER UPDATE: This post at Cal Biz Lit discuses this case and the concept of joint and several liability for punitive damages.