Punitive damages, while somewhat controversial, have been a well-established part of civil law in the United States since the mid-1800s. Punitive damages are best defined as monetary compensation awarded to an injured party that goes beyond those damages which are necessary to compensate the individual for his or her losses. They are penal in nature and are awarded solely for the purpose of punishing the wrongdoer and deterring similar wrongful conduct in the future. Punitive damage awards include awards for punitive or exemplary damages as well as awards for aggravating circumstances under Missouri’s 2005 Tort Reform Act.
A punitive damages award requires a “clear and convincing” standard of proof, which most courts interpret as falling somewhere between the “preponderance of the evidence” standard used in civil proceedings and the “beyond a reasonable doubt” standard used in criminal proceedings. A recent decision by the Missouri Court of Appeals, J M Neil & Associates, Inc., v. Alexander Robert William, Inc., et al., 362 S.W.3d 21 (Mo. App. W.D. 2012), reiterated that a plaintiff seeking punitive damages must show clear and convincing evidence of a defendant’s culpable mental state. A plaintiff establishes a defendant’s culpable mental state by showing that the defendant either committed an intentional wanton, willful and outrageous act without justification or acted with reckless disregard for the plaintiff’s rights and interest. Thus, a jury can infer the defendant’s evil motive when the defendant recklessly disregards the interests and rights of the plaintiff. Likewise, if a defendant intentionally does a wrongful act, and knows at the time the act is wrongful, it is done wantonly and with a bad motive.
Punitive damages are not a matter of right. Instead, they are a matter of discretion for the trial court; and they are generally considered so harsh that courts only rarely award punitive damages. Some factors Missouri courts consider in awarding punitive damages are: (1) the nature of the tort; (2) the amount of actual damages; (3) the defendant’s financial position; (4) the plaintiff’s legal expenses; (5) the degree of malice; (6) the nature, type and extent of the plaintiff’s injury; (7) whether the defendant’s conduct meriting the punitive damages award was criminal in nature; and (8) the intelligence of the defendant.
Since an award of punitive damages is considered an extraordinary remedy, a request for punitive damages is not submissible in every case. The submissibility of punitive damages depends in large part upon the type of claims asserted by the plaintiff. For instance, punitive damages are generally available in intentional tort actions upon a showing that the defendant’s conduct was outrageous because of the defendant’s evil motive or reckless indifference to the rights of others. However, punitive damages are only available in negligence actions under certain circumstances. First and foremost, the plaintiff must have suffered some type of monetary harm before he or she can submit a punitive damages claim. Moreover, since a claim for negligence generally involves an unintentional breach of duty, to successfully bring a claim for punitive damages in a negligence action, the plaintiff must establish facts demonstrating complete indifference or conscious disregard by the defendant for the safety of others.
In the rare occasion in which a court allows the submission of punitive damages against a defendant and the jury actually awards punitive damages, Missouri has established an “override” system to ensure the award is proper. Section 510.263.6 of the Missouri Revised Statutes gives a trial judge the power to override the jury’s punitive damages award under the statutory-based additur (adding damages) and remittitur (reducing damages) doctrine. In other words, Section 510.263.6 gives the trial judge discretion to add to or reduce the jury’s punitive damages award upon the judge’s own assessment of punitive damages based upon “the totality of the surrounding circumstances.”
Missouri’s 2005 Tort Reform Act provides yet another limitation on a plaintiff’s ability to obtain punitive damages against a defendant. Section 510.265, RSMo., provides that no award for punitive damages shall exceed the greater of $500,000.00 or five (5) times the net amount of the judgment against the defendant. For example, if a plaintiff is awarded a $25,000.00 judgment in a tort action, that individual is entitled to a maximum punitive damages award of only $125,000.00, regardless of what the jury awards.
But wait, there’s more. In the above-referenced example, the plaintiff would actually only take home less than $75,000.00 in punitive damages, the remainder of which would be placed into the Tort Victims Compensation Fund (“TVCF”). The TVCF was established under Section 537.675, RSMo., to compensate tort victims; and the statute provides that fifty percent (50%) of a final punitive damages award judgment (after deductions for attorneys’ fees and expenses) shall be rendered to the state of Missouri for placement into the TVCF.
Despite the foregoing limitations placed upon punitive damages awards, such an award can sometimes provide greater security for a plaintiff than a general damages award. Unlike most judgments against a defendant, punitive damages awards are not dischargeable in bankruptcy so long as the relevant cause of action was based upon willful and malicious actions. 11 U.S.C. § 523(a)(6). This rule is important for plaintiffs, as defendants oftentimes hide behind bankruptcy to avoid large judgments against them. However, if a punitive damages award was based solely upon reckless indifference to the plaintiff’s rights or reckless conduct, the award is still dischargeable in bankruptcy.