January 8, 2009

Rojas v. Akopyan: Plaintiffs Get Another Bite at the Apple After Failing to Prove Case for Punitive Damages

The California Court of Appeal (Second District, Division Eight) issued this unpublished opinion yesterday, affirming a trial court order granting a new trial on the issue of punitive damages.

The plaintiffs obtained a jury verdict for $225,000 in punitive damages, but the trial court granted a new trial because the plaintiffs failed to present sufficient evidence of the defendant's financial condition. As we have mentioned before, it is surprising how often plaintiffs overlook this requirement of California law, and forfeit punitive damages as a result. In this case, the plaintiffs presented evidence of the defendant's income, but not expenses or liabilities. The Court of Appeal noted that, under California law, evidence of expenses and liabilities are necessary to create a complete picture of the defendant's financial condition.

One thing strikes me as odd about this opinion. Under California law, when a plaintiff fails to present evidence of the defendant's financial condition, the proper remedy is to enter judgment in favor of the defendant on the punitive damages claim. (See Kelly v. Haag (2006) 145 Cal.App.4th 910, 919-920; see also these four unpublished opinions from 2007.)

In other words, the plaintiff only gets one chance to prove its claim for punitive damages, and if the plaintiff fails to present sufficient evidence to support the claim, the plaintiff does not get to try again. Game over. That rule applies not only to punitive damages claims, but to any situation in which the Court of Appeal reverses a judgment based on a failure of proof. (See McCoy v. Hearst Corp. (1991) 227 Cal.App.3d 1657, 1661.)

So why did the plaintiffs in this case get a new trial after failing to present sufficient evidence the first time around? I'm not quite sure. The opinion doesn't say. Perhaps the defendant never argued for judgment as a matter of law, or perhaps the defendant raised the argument but the Court of Appeal neglected to address the issue. If it's the latter, a petition for rehearing may be in order.