June 6, 2013

Court of Appeal rejects defendant's claim of inability to pay punitive damages, citing evidence that defendant failed to improve her financial condition (Morton v. Spotts)

This unpublished opinion contains a rather unusual twist on an issue that frequently arises in punitive damages cases in California, namely, whether a punitive damages award is disproportionate to the defendant's ability to pay.

In an appeal from a $15,000 punitive damages award, the defendant argued the award was excessive in light of her negative net worth.  The plaintiff disagreed with the defendant's interpretation of the evidence, and argued that the defendant's net worth was worth at least $350,000.  The Court of Appeal (Fourth Appellate District, Division One) affirmed the award.  The court could have just adopted the plaintiff's view of the evidence and left it at that.  But instead, the court cited the defendant's failure to fully utilize her financial assets, and said the jury could have concluded defendant was "failing to maximize her net worth or improve her financial condition."

That's a new one on me.  I don't recall ever seeing any other opinion suggesting that an award could be upheld on the theory that the defendant's inability to pay was the result of the defendant's failure to maximize his or her own net worth.