Punitive damages, exemplary damages and civil penalties
“Punitive damages” consist of an award of money against a defendant in a court case, in an amount intended to, and sufficient to, punish the defendant and make an example of him or her. Another name for these damages is “exemplary damages” because they make an example of the defendant and hopefully deter others from the same kind of conduct. A related concept is a “civil penalty” that serves the same end.
Punitive damages are unusual because the usual measure of damages “is the amount which will compensate for all the detriment proximately caused [by the defendant’s act or omission], whether it could have been anticipated or not.” (California Civil Code sec. 3333.)
Grounds required – cases against individuals – California
Special grounds are required before punitive damages can be awarded against individuals in California:
- If the injury is intended, or where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. (California Civil Code sec. 3294.)
- Some cities provide for punitive damages or civil penalties against dog owners. For example, the City of San Jose, California, authorizes a special award of $5,000.00 (in addition to other damages) against the owners of dangerous dogs that injure people.
- If injury to an animal is “committed willfully or by gross negligence, in disregard of humanity, exemplary damages may be given.” (California Civil Code sec. 3340.) See the discussion below.
There are specific definitions of “malice,” “oppression” and “fraud” in California Civil Code section 3294:
- “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.
- “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.
- “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.
Grounds required – cases against employers and corporations
There are special rules that apply to employers and corporations. These differ from state to state. The majority rule is that an employer must pay punitive damages for the acts of its employees whether or not the acts were specifically authorized or ratified. For a thorough discussion of this principle, see Stroud v. Denny’s Restaurant, Inc., 532 P. 2d 790 (Oregon 1975).
California has a more limited rule. California Civil Code section 3294 states that an employer shall not be liable for punitive damages, based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.
Insurance companies are not required to pay punitive damages, with one exception discussed below. As a practical matter, therefore, it usually is self-defeating for a victim to attempt to prove a case for punitive damages. The reason is that, if there is proof that the defendant’s actions were willful, then the insurance company may contend it has no contractual or legal duty to pay the victim — at least to the extent of the punitive damages, but possibly the entire amount of the damages!
The exception pertains to acts of a minor which result in liability that is imputed to the parents. An insurance company may have to pay on behalf of the parents if the minor was not listed as an insured person under the policy. The limit, however, is $10,000.00. (To read more about this, return to the home page of Dog Bite Law, click on Lawyers, and select Civil Liability for Dog Bites In California. Once there, scroll to the subsection entitled Minors.)
Punitive damages generally cannot be discharged in bankruptcy. Therefore, a person who has assets that can be reached by a court judgment has a great deal to lose if punitive damages are awarded against him or her. On the other hand, if the defendant has insufficient assets and no insurance, then even a claim for punitive damages might not benefit the victim.
Every case is different, and the decision to attempt getting punitive damages must be made by a competent attorney after review of all the relevant facts. Furthermore, the laws pertaining to punitive damages differ from state to state; there are some municipal code sections pertaining to dogs that add to state law. Therefore, it is essential that a victim obtain the advice of a competent attorney regarding punitive damages.
Punitive damages – injury to dog
Throughout the USA, there are statutes that provide for punitive damages when a dog is injured or killed under particular circumstances. For example, see California Civil Code section 3340 (“For wrongful injuries to animals being subjects of property, committed willfully or by gross negligence, in disregard of humanity, exemplary damages may be given.”)
Even where no statute seems to apply, courts permit punitive damage awards where the circumstances suggest the necessity to punish the wrongdoer:
- In LaPorte v. Associated Independents, Inc., 163 So. 2d 267, 1 A.L.R.3d 992 (Fla. 1964), the court permitted an award of punitive damages where the defendant was malicious and demonstrated an extreme indifference to the dog owner’s rights. A garbage collector’s threw the owner’s empty garbage can at or toward a miniature dachshund named Heidi. This happened after collecting the garbage. The court upheld an award of punitive damages, finding it obvious that the conduct of the collector, who laughed after throwing the garbage can, had been malicious and had demonstrated an extreme indifference to the dog owner’s rights.
- In Levine v. Knowles, 228 So. 2d 308 (Fla. Dist. Ct. App. 3d Dist. 1969), the court said that, while punitive damages were allowable where a veterinarian’s negligent treatment led to the death of the dog owner’s dog, the amount awarded should bear some reasonable relationship to the amount of compensatory damages, which the court implied was to be determined in relation to the dog’s value of approximately $100.
- In an action by the owners of a dog that suffered severe burns after being placed on a heating pad at an animal hospital and left there for a day and a half, the court, in Knowles Animal Hospital, Inc. v. Wills, 360 So. 2d 37 (Fla. Dist. Ct. App. 3d Dist. 1978), cert. denied, 368 So. 2d 1369 (Fla. 1979), affirmed a judgment against the animal hospital that included an award of $12,000 in punitive damages. The court declared that, on the evidence, the jury could, and no doubt did, view the neglectful conduct that resulted in the burn injury suffered by the dog to have been of a character amounting to great indifference to the property of the dog owners, such as to justify the jury’s award.
- In Johnson v. Wander, 592 So. 2d 1225 (Fla. Dist. Ct. App. 3d Dist. 1992), a dog owner’s action to recover from a veterinarian for injuries suffered by her dog Coco when, after being spayed, it was left on heating pads for a long period of time and suffered severe burns, the court held that a jury question existed as to the veterinarian’s liability for punitive damages and damages for the owner’s mental suffering at finding out about her dog’s injury.
- In a dog owner’s action to recover from a neighbor, who shot and killed eight of the owner’s rat terriers, the court, in Mendenhall v. Struck, 207 Iowa 1094, 224 N.W. 95 (1929), reversing a “no-damage” judgment, stated that the owner had grounds to pray for both actual and punitive damages. After killing one adult dog, the neighbor entered the dog owner’s house against his wishes, drove two adults and five puppies out from the house, and shot and killed those dogs outside the house. Malice, the court said, does not necessarily mean spite or hatred; it means, the court continued, the doing of an actual wrong in itself without just cause or excuse.
- In a dog owner’s action against a person who maliciously poisoned five of the owner’s dogs, killing three, the court, in Heiligmann v. Rose, 81 Tex. 222, 16 S.W. 931 (1891), held that a $75 judgment for the dog owner, not apportioned between actual and exemplary damages, was supportable. When the evidence, as it did in this case, justified a verdict for either actual or exemplary damages, or both, the court said, it would not presume that the finding of the jury was based on improper grounds.
- In Wright v. Clark, 50 Vt. 130 (1877), the plaintiff’s dog was shot by the defendant when the dog pursued a fox across the defendant’s premises into a wooded area. The defendant testified that he had intended to shoot the fox but accidentally shot the dog. The trial judge properly allowed the jury to award punitive damages if it found that the defendant acted purposely and recklessly, or without proper regard for the rights of the plaintiff.
In California, a court order is required before discovery of defendant’s financial condition
California Civil Code section 3295(c) requires plaintiffs attempting to discover evidence of financial condition to file a motion with the court before the defendant is required to respond to such discovery. To win such a motion, Civil Code section 3295(c) requires the plaintiff to prove it is more likely than not the plaintiff will prevail on a punitive damage claim. The plaintiff is required to file declarations and/or other admissible evidence which support a finding of “oppression, fraud or malice” on the part of the defendant.
A defendant’s net worth is a necessary component for the purpose of establishing a punitive damages award. In determining the reasonableness of a punitive damages award, courts look to the following three factors: “(1) the reprehensibility of the defendant’s conduct; (2) the actual harm suffered; and (3) the wealth of the defendant.” (Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 581-582.)
The plaintiff has the burden to present evidence of the defendant’s financial condition and net worth to support the amount of punitive damages sought by the plaintiff.
“[A] defendant’s ability to pay a punitive damage award must be based on meaningful and substantial evidence of his or her financial condition. [Citations.] A defendant’s ‘net worth’ is the critical determinant of financial condition, but there is no rigid formula and other factors may be dispositive especially when net worth is manipulated and fails to reflect actual wealth. [Citations.] The purpose of punitive damages ‘is not served by financially destroying a defendant. The purpose is to deter, not to destroy.’ [Citation] In all cases, the plaintiff has the burden of proving the financial condition of the defendant.” (County of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533, 546 (“Walsh”).)
In Adams v. Murakami (1991) 54 Cal.3d 105 at fn. 7, the court made it clear that evidence of financial condition is not the same thing as net worth, and therefore declined to require proof of net worth before punitive damages could be awarded.
At least one court has held that even if the defendant has a negative net worth, that fact alone will not allow the defendant to escape a punitive damages award. (Zaxis Wireless Communications v. Motor Sound Corporation (2001) 89 Cal.App.4th 577. See also, Rufo v. Simpson, supra, 86 Cal.App.4th at 621.) In Zaxis, the court found that even though the defendant had a negative net worth, it had a credit line of $50 million that would allow the company to pay a $300,000 punitive damage award.
Because some appellate courts have stated more recently that proof of net worth is essential to a punitive damage claim, it is the best practice to obtain proof of both. (See i.e. Lara v. Cadag (1993) 13 Cal.App.4th 1061 and Kenly v. Ukegawa (1993) 16 Cal.App.4th 49.)
The Court may authorize Plaintiff to conduct pretrial discovery of a defendant’s financial condition. California Civil Code section 3295, subdivision (c), provides, “[n]o pretrial discovery by the plaintiff shall be permitted with respect to the evidence referred to in paragraphs (1) and (2) of subdivision (a) unless the court enters an order permitting such discovery pursuant to this subdivision.” Section 3295, subdivision (a), paragraphs (1) and (2), refer to profits gained by wrongful conduct and the defendant’s financial condition.
The order must be obtained through a noticed motion and a hearing is not necessarily required. Section 3295(c), instructs as follows: “[u]pon motion by the plaintiff supported by appropriate affidavits and after a hearing, if the court deems a hearing to be necessary, the court may at any time enter an order permitting the discovery otherwise prohibited by this subdivision if the court finds, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established that there is a substantial probability that the plaintiff will prevail on the claim pursuant to Section 3294.”
The court order should specify some of the things that the plaintiff may inquire about. Civil Code section 3295, subdivision (c) provides, “the defendant may be required to identify documents in the defendant’s possession which are relevant and admissible for that purpose and the witnesses employed by or related to the defendant who would be most competent to testify to those facts.” This allows plaintiffs to request the identity of witnesses and documents relating to profits or the defendant’s financial condition. The discoverable information includes the following:
- The identity of key witnesses
- All financial records related to a defendant’s financial condition.
- Documents showing net worth, assets and gross income
- Credit information.
- Tax returns. with all schedules, W-2s, 1099s.
- Tax records.
- Real property statements.
- Personal property statements.
- Loan applications.
- Credit applications.
- Credit reports.