July 15, 2008

Miller v. Mercury: Unpublished Opinion Affirms Order Granting Motion to Strike Punitive Damages Claim

The California Court of Appeal (Second Appellate District, Division Seven) issued an unpublished opinion yesterday that highlights an underutilized defense strategy. The defendant in this case successfully moved to strike a punitive damages claim from the plaintiffs' complaint on the ground that the plaintiffs failed to plead that claim with specificity. The Court of Appeal affirmed. Here's the relevant portion of the Court of Appeal's opinion:

It is settled law that in order to state a claim for punitive damages the pleadings require specificity and not generalities. This means pleading the “facts” with certainty and specificity. Miller's SAC is simply wanting in this regard. In essence, it merely alleges that Mercury disagreed that there was a potential for coverage under the policy and simply refused to provide a defense as requested. As the cases point out, even a mistaken belief as to lack of coverage and denial thereof does not warrant imposition of punitive damages. We further note that the plaintiff's burden of proof with respect to punitive damages, as well as the requirement of specificity in pleading, is that of “clear and convincing evidence” which is an elevated standard over the usual civil burden of proof by a preponderance of the evidence. Additionally, it has been historically held in appellate decisions that punitive damages are generally disfavored in the law. This decisional attitude is an additional reason for requiring specificity in pleading facts to warrant punitive damages. The Millers have simply failed in their effort to convince this court that punitive damages should be allowed under the facts and status of the pleadings in this case.
UPDATE (7/16/07): Spencer Kook at Cal Insurance Regulation has a post about this case, in which he links to our post. In response to our observation that this defense strategy is underutilized, Spencer notes that his firm (Barger & Wolen) employs this strategy and he has seen it used regularly by others as well.