The right to a punitive damages award in California is statutory. California Civil Code section 3294 provides that a plaintiff can obtain punitive damages when it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice. But it isn’t so easy to arrive at the awards stage in the case. In fact, plaintiffs and cross-defendants have to make sure that they properly plead facts to support a claim of punitive damages. A simple recitation that “..the defendant acted maliciously” generally won’t cut it.
Punitive damages have a heightened pleading standard
The California Legislature has raised the bar for pleading punitive damages, making it more difficult for plaintiffs to plead them to ensure that punitive damages are reserved for only the most exceptional of cases. (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 712 (stating that in recent years, the Legislature has made it more difficult for plaintiffs to plead and prove punitive damages); Shade Foods, Inc. v. Innovative Prods. Sales & Mktg., Inc. (2000) 78 Cal.App.4th 847, 890-91(citing College Hospital Inc., 8 Cal. 4th at 725 and reaffirming that the requirement of “despicable conduct represents a “substantive limitation on punitive damage awards”); Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287 (stating that “punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.”)
Actually, California law “does not favor punitive damages and they should be granted with the greatest caution.” (Dyna-Med, Inc. v. Fair Employment & Housing Comm’n (1987) 43 Ca1.3d 1379.) Furthermore, California Courts consistently have expressed disfavor towards awarding punitive damages except in the most egregious cases. As one California court put it, “[w]e must be guided by the well-established principle that punitive damages are not favored by law.” (Rosner v. Sears, Roebuck & Co. (1980) 110 Cal.App.3d 740, 750.).
Moreover, “[c]ourts historically have adopted a restrictive attitude towards awards of punitive damages. Such awards are generally disfavored.” (Baker v. Sadick (1984) 162 Cal.App.3d 618, 629.) In fact, relatively recent legislative amendments have made it more difficult for plaintiffs to plead and prove punitive damage claims. (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 712-713 (stating that the Legislature began modifying the elements of punitive damage awards beginning in 1980 by providing specific definition to the concepts of “oppression,” “fraud,” and “malice” and identifying additional requirements imposed by the 1987 Reform Act as to “despicable” and “willful” conduct.)
So how can a plaintiff properly plead a claim for punitive damages?
Conclusory characterizations unsupported by specific factual allegations of malice, oppression, or fraud are insufficient as a matter of law to allege a claim for punitive damages. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042; Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 168; G. D, Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29.) Further, merely characterizing a defendant’s conduct as “oppressive,” “malicious” or “wanton” is insufficient to meet the pleading burden; specific facts must be alleged. (Appl v. Lee Swett Livestock Co. (1987) 192 Cal.App.3d 466, 470.)
Punitive damages require both the “intent to act” and “malice”— “mere negligence or recklessness will not suffice.” (Johns-Mansville Sales Corporate Private Carriage v. Workers Compensation Appeals Bd. (1979) 96 Cal.App.3d 923, 931; see also Civ. Code § 3294.) To maintain a claim for punitive damages based on allegations of malice, Plaintiff must set forth specific facts supporting malice. (See Brousseau, 73 Cal.App.3d at 872; see also Cervantes v. Great American Insurance Co. (1983) 140 Cal.App.3d 763, 767 fn. 2 (allegations of malice and “wanton and reckless and conscious disregard” constitute mere “contentions, deductions, or conclusions of fact or law”); Foy v. Greenblott (1983) 141 Cal.App.3d 1, 13-14 (allegations of “willful and reckless and wanton disregard” were conclusions unsupported by facts and insufficient for punitive damages); Dawes v. Superior Court (1980) 111 Cal.App.3d 82, 91 (allegations of reckless conduct or conscious disregard were mere conclusions that had to be supported by facts.)
The malice requirement implies an act conceived in a spirit of mischief or with criminal indifference towards the obligations owed to others. (Ebaugh v. Raukin (1972) 22 Cal.App.3d 891, 894.) There must be an intent to vex, annoy or injure. (Id.) Mere spite or ill will is not sufficient; and mere negligence, even gross negligence is not sufficient to justify an award of punitive damages.” (Id.) (emphasis in original.)
This heightened pleading standard exists because, “[w]hen a defendant must produce evidence in defense of an exemplary damage claim; fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D, Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 28-29.)
Sufficient Particularity in the Complaint is necessary to successfully allege a claim for punitive damages
Ultimately, the Court’s analysis in Lehto v. Underground Constr. Co. (1977) 69 Cal.App.3d 933 is highly instructive. There, the California Court of Appeal held that it is essential that the facts and circumstances which constitute the claim for punitive damages “be set out clearly, concisely and with sufficient particularity…to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the fraud.” (Id. at 944.)
If a plaintiff survives demurrer, then the next issue they have to deal with is presenting the evidence.
Presenting the evidence in punitive damages claims
Punitive damages are available only “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice…” (Civ. Code § 3294, subd. (a).) The definitions of the relevant terms exemplify the strict standard:
Malice is defined as “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.” (Id., subd. (c)(1).)
Fraud is defined as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of…causing injury.” (Id., subd. (c)(3).)
Oppression means “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id., subd. (c)(2).)
The burden is on the plaintiff to establish clear and convincing evidence of despicable conduct
If the complaint survives demurrer and punitive damages are properly pled, then the next step is to produce evidence that can prove clear and convincing evidence of despicable conduct.
In 1987, the California Legislature amended the Civil Code to require “clear and convincing evidence” of “despicable conduct which is carried on by the defendant with a willful and conscious disregard for the rights and safety of others.” (Civ. Code § 3294(a), (c).) The California Supreme Court indicated that this amendment requiring “despicable conduct” represents “a new substantive limitation on punitive damage awards” and on plaintiffs’ ability to claim punitive damages in garden-variety tort actions. (College Hospital. Inc. v. Superior Court (1994) 8 Cal.4th 704, 725; see also Mock v. Michigan Millers Mut. Ins. (1994) 4 Cal.App.4th 306, 331.)
Punitive damages are not generally available in a breach of contract cause of action
There is an important exception to awards of punitive damages. California has long established that punitive damages are not available in a breach of contract cause of action. (Myers Building Industries, Ltd., 13 Cal. App. 4th at 960.) Moreover, punitive damages are not available in breach of contract actions unless the conduct is accompanied by an intentional tort, and “[e]ven in those cases in which a separate tort action is alleged, there is ‘but one verdict based upon contract’ and a punitive damage award is improper.” (Id.).
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