July 21, 2009

Pagarigan v. Libby Care: Conclusory Allegations of Corporate Ratification Cannot Support Punitive Damages Claim

The California Court of Appeal (Second Appellate District, Division Seven) issued this unpublished opinion yesterday, affirming a trial court's order striking a claim for punitive damages.

The plaintiffs were seeking punitive damages against a corporation that operates a nursing home. The plaintiffs alleged that the nursing home was understaffed and underfunded, which ultimately led to the death of their mother, a resident at the facility.

Under California law, punitive damages cannot be awarded against a corporation unless an officer, director, or managing agent of the corporation committed, authorized, or ratified the punishable conduct. (Civil Code section 3294.) To satisfy this requirement, the plaintiffs alleged in their complaint that the decision to underfund and understaff the facility was "committed by, or authorized and ratified by officers, directors and/or managing agents." In other words, the complaint alleged a legal conclusion but did not allege any specific facts to support that conclusion.

The Court of Appeal affirmed the trial court's order striking the punitive damages claim, holding that:

absent any allegations that employees at [the nursing home] have any responsibility for or authority over . . . corporate-wide policies and procedures, rather than day-to-day management duties at one facility, or allegations that individuals . . . within [the corporation's] leadership group were aware of and ratified the corporate funding and staffing policies that allegedly led to the abuse suffered by [plaintiffs' mother], the trial court properly granted the motion to strike the claims for punitive damages
In the year and half since we launched this blog and began tracking all California appellate opinions on punitive damages, this is only the second case involving a punitive damages claim that was rejected because the allegations of the complaint were insufficiently specific. (Here's our post about the other case.)