Top 10: Top 10 points on punitive damages

Mark J. Moretti

1. “[P]unitive or exemplary damages may be awarded where the defendant’s conduct amounts to such gross, wanton or willful fraud, dishonesty, or malicious wrongdoing as to involve a high degree of moral culpability, making it appropriate to deter the defendants from engaging in similar conduct in the future and to induce the victim to take action against the wrongdoer,” Whitney v. Citibank, N.A., 782 F.2d 1106, 1118 (2d Cir. 1986) (citing Walker v. Sheldon, 10 N.Y.2d 401, 404–05 [1961]).

2. Punitive damages are limited to actions which are “morally culpable, or is actuated by evil and reprehensible motives, not only to punish the defendant, but to deter [it], as well as others who might otherwise be so prompted, from indulging in similar conduct in the future,” Seynaeve v. Hudson Moving & Storage, Inc., 261 A.D.2d 168, 169 (1st Dept. 1999) (quoting Walker v. Sheldon, 10 N.Y.2d 401, 404 [1961]).

3. Punitive damages may be awarded not only for intentionally harmful conduct, but for willfully or wantonly negligent or reckless actions as well, Fordham-Coleman v. Nat’l Fuel Gas Distribution Corp., 42 A.D.3d 106, 113, 834 NYS.2d 422, 428 (4th Dept. 2007).

4. Punitive damages should be reserved for cases where defendant acted with the degree of malice akin to the mens rea required for most crimes, Jeffries v. Harleston, 21 F.3d 1238, 1249, cert. granted, vacated on other grounds, 513 U.S. 996 (1994).

5. No separate cause of action for punitive damages exists under New York law. Punitive damages may be only be recovered if they are available upon establishing the underlying claim, In re Pfohl Bros. Landfill Litig., 26 F.Supp.2d 512, 548 vacated Freier v. Westinghouse Elec. Corp., 303 F.3d 176 (WDNY 1998).

6. Punitive damages are never awarded as of right, no matter how egregious defendant’s conduct, In re Simon II Litigation, 211 FRD 86, 162 (EDNY 2002), vacated, Simon II Litig. v. Philip Morris USA Inc. (In re Simon II Litig.), 407 F.3d 125 (2d Cir. 2005).

7. Even if plaintiff suffers only minimal damage, willful and intentional misconduct may be basis for award of punitive damages, In re Baker, 18 B.R. 243, 245 (Bankr. WDNY 1982)

8. Punitive damages are generally not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights, Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 358 (1976). Nor may they be recovered for an isolated breach of contract even if it is willful and without justification, Campo v. 1st Nationwide Bank, 857 F.Supp. 264, 273 (EDNY 1994). Punitive damages may be awarded in a tort action arising from the parties contractual relationship if the plaintiff demonstrates; (1) that the defendant’s conduct is actionable as independent tort; (2) the tortious conduct is of an egregious nature; (3) the egregious conduct is directed toward the plaintiff; (4) the defendant’s conduct is part of a pattern directed at the public generally, Conocophillips v. 261 E. Merrick Rd. Corp., 428 F.Supp.2d 111, 129 (EDNY 2006).

9. New York law provides that fraudulent conduct may give rise to punitive damages; however, mere fraud is insufficient to support a claim of punitive damages. Evil and reprehensible motives are still required. Solutia Inc. v. FMC Corp., 456 F.Supp.2d 429, 453 reconsideration denied (SDNY 2006).

10. To recover punitive damages for intentional infliction of emotional distress, the plaintiff must show that the defendant engaged in extreme or outrageous conduct which intentionally or recklessly caused severe emotional distress to plaintiff. Conduct which is merely incidental to proper business motives is by itself insufficient, O’Dell v. New York Prop. Ins. Underwriting Assn., 145 A.D.2d 791, 792, 535 NYS.2d 777, 779 (3d Dept. 1988).

Mark J. Moretti is a partner with the Rochester office of Phillips Lytle LLP.  He focuses his practice in business and tort litigation and is a former chairman of the New York State Bar Association’s Trial Lawyers Section. He can be reached at [email protected].