March 19, 2010

Gellerman v. Aldrich: Another Reversal for Failure to Present Financial Condition Evidence

Regular readers of this blog are well aware that California appellate courts frequently reverse punitive damages awards if the plaintiff failed to introduce meaningful evidence of the defendant's financial condition. In this unpublished opinion, the Sixth Appellate District reverses another judgment on that basis, with a bit of a twist.

The trial court made a highly unorthodox damages award after a bench trial; the court awarded a lump sum amount of damages, without differentiating between compensatory damages and punitive damages. The Court of Appeal criticizes that practice, and then goes on to point out flaws in both the compensatory and punitive elements of the undifferentiated award.

First, the court concludes that the trial court used the wrong measure of compensatory damages. Then the court concludes that the trial court should have decided whether the plaintiff presented sufficient evidence of the defendant's financial condition to permit an award of punitive damages. The trial court had expressed doubt about the sufficiency of the plaintiff's evidence, but never actually decided the issue. The plaintiff tried to argue on appeal that California law does not require plaintiffs to introduce financial condition evidence, but the Court of Appeal summarily rejected that contention as a misreading of the law. So the case goes back to the trial court to make evaluate the sufficiency of the plaintiff's evidence. (And consistent with California law, the plaintiff should not be permitted to introduce new financial condidtion evidence on remand - - see Kelly v. Haag (2006) 145 Cal.App.4th 910, 914.)