August 13, 2014

Court of Appeal holds that defendant's conservators must pay punitive damages award even if it wipes out assets of conservatorship (Conservatorship of Parker)

In 2010 we reported on the unpublished opinion in Boothby v. Parker, which affirmed a $350,000 punitive damages award.  Four years later, the same litigation has now generated a published opinion.

The new opinion reveals that defendant Parker never paid the punitive damages award against him in the prior proceedings, because a conservatorship was established for him during that litigation.  The conservators took the position that, under the Probate Code, the decision to pay the punitive damages award against their conservatee was entirely discretionary, and that they should not be forced to pay a debt that would deprive Parker of funds needed for the necessities of life.  The trial court disagreed and ordered the conservators to pay the award.

The conservators appealed and the California Court of Appeal (Second Appellate District, Division Two) affirmed the trial court's order.  The court rejected the conservators' reliance on a provision of Probate Code section 2430, which provides that debts occurring during a conservatorship need not be paid if doing so would impair the ability to provide for the necessaries of life.  The court concluded that provision was inapplicable because Parker's liability for punitive damages "occurred" when he committed the underlying tort, not when the punitive damages were awarded or affirmed on appeal.  Thus, the payment of the debt was mandatory and not discretionary, regardless of whether paying the debt means that the conservators will no longer be able to provide for Parker's basic needs.

It's a harsh result, one that hardly seems consistent with the California cases stating that punitive damages should only punish a defendant, not destroy him financially.  The lesson appears to be that attorneys defending a conservatee against a punitive damages claim must demonstrate during the underlying tort litigation the punitive damages award will be financially ruinous to the defendant.  Otherwise, the conservators will be bound to pay the award in the future regardless of whatever financial impact it may have.