PUNITIVE DAMAGES – LAW 101

Hello, I’m attorney Kyle Bachus. The legal world is full of overly complicated jargon and terminology that can be intimidating if you don’t know what it means. In my law 101 video series, I’m breaking down some commonly used legal terms so you can be informed and confident should you ever need to take legal action.

In this episode of law 101, we’re going to break down the term punitive damages.

Now in another video, we talked about compensatory damages. Punitive damages are different than compensatory damages. Different in amount, and different in purpose. The biggest difference is purpose. The purpose of punitive damages is to punish the person who caused the damages in the first place, and there are two reasons to punish them.

One is to inflict monetary punishment on them, to deter that person from acting in the manner again. And the second is societal, to send a message to society as a whole, that if you act in the manner that this particular person or company chose to act, you will be subjected to monetary punishment damages. Punitive damages are only available if the person causing the harm, the person who has acted unreasonably did so in a willful and wanton manner. Drunk driving is a perfect example.

If you choose to consume enough alcohol or drugs that you are intoxicated and you go out, and you cause harm to somebody. In addition to being subject to compensatory damages, you have now acted in a willful and wanton manner with disregard for the safety of others. In such a manner that society says we’re going to punish you or allow the opportunity for a jury to punish you beyond just the compensatory damages. But to actually punish you with money, additional money, because of the way that you chose to act.

Some states have capped punitive damages. Some states have said you can’t get punitive damages at all. In Colorado, you can get punitive damages if the person who caused the injury acted in a willful and wanton manner. But the total value of the punitive damages cannot exceed the total amount that you recovered in the compensatory damage category. So you look at in Colorado, if a jury were to give a much larger number in punitive damages than the compensatory damages, then after the verdict, the judge would reduce the award to equal, it’s a second bucket, but to equal an amount no larger than what the compensatory damages are.

These damages are a special type of damages; there’s a limited opportunity to bring them. If you have a situation where you believe somebody acted in a willful and wanton manner, and you have questions about whether one of the elements of damage that you might be able to recover are punitive damages, we’re happy to answer those questions for you at Bachus & Schanker. To learn more about other law topics that can help you feel informed and confident about the law, make sure to check out more videos in this series.

PUNITIVE/EXEMPLARY DAMAGES – FAQs

Punitive damages, also called exemplary damages in Colorado, are an extra category of damages that a victim can receive in a personal injury claim. The damages are not meant to compensate the victim for any kind of loss that they have sustained personally. Instead, they punish the defendant for engaging in extremely dangerous conduct that causes harm.

Punitive damages have two purposes. The first is to punish the defendant for extremely reckless conduct. When conduct rises above negligence, and it is likely to cause harm, these damages are an extra penalty for the defendant. The second purpose is to deter others from engaging in similar conduct so that society is a safer place.

Yes, they are available in Colorado if the plaintiff can prove that the defendant’s actions meet the criteria under the law. If the defendant’s actions are willful and wanton, and the defendant must have realized that their actions were dangerous, the victim may get punitive damages. The victim must properly ask for them and prove the criteria to receive them.

A drunk driving accident may qualify for punitive damages. A person who chooses to get behind the wheel after consuming intoxicants knows that they are engaging in extremely dangerous behavior.

Colorado Revised Statutes § 13-21-1021 is the law for punitive damages. These damages are available if the defendant acts with fraud, malice, or willful and wanton conduct. If the jury awards compensatory damages, they may also choose to award exemplary damages.

Under the law, willful and wanton conduct is purposeful conduct that the defendant must have realized was dangerous. The defendant must do it heedlessly and without regard to the consequences or the rights and safety of others.

The cap on exemplary damages in Colorado is equal to the amount of compensatory damages awarded in the case. The court may increase the award to up to three times actual damages. To increase the amount, the court must find that the defendant repeated their dangerous behavior while the case was pending, or they otherwise aggravated damages while the case is pending.

They are determined based on the egregiousness of the defendant’s conduct. Under Colorado law, they are limited to the amount of compensatory damages awarded in the case. In some states, the net worth or ability to pay the defendant factors into the amount. However, in Colorado, the defendant’s wealth is not a factor in determining a punitive damages award.

No, comparative fault does not offset punitive damages. Even though comparative fault may impact the amount of compensatory damages, the award of punitive damages is not reduced by the amount of comparative fault. Because exemplary damages focus on the defendant’s actions, there is no reduction because of the plaintiff’s conduct. See Lira v. Davis, 832 P.2d 240 (1992)2.

Yes, punitive damages are taxable3. The recipient must report them as “Other Income” on line 8z of their 1040 Form.

Yes, comparative negligence does not prohibit a jury from awarding exemplary damages. If the plaintiff wins their case, it may include exemplary damages. Even if there is shared fault, if the defendant’s conduct meets the criteria of willful and wanton misconduct, comparative negligence does not impact punitive damages. However, compensatory damages may be reduced to account for shared fault.

The court has discretion whether to allow additional discovery on the issue of exemplary damages. After the parties exchange initial disclosures under Colorado Rules of Civil Procedure Rule 264, the court may permit discovery relating to exemplary damages.

Under Colorado law § 13-21-1021, exemplary damages are not part of the initial pleadings. Instead, they are included by amendment after exchanging initial disclosures under Colorado discovery rules.

Yes, the court can reduce an award. If the amount awarded exceeds what is allowed under Colorado law, the court may lower it. In addition, Colorado law allows the court to reduce exemplary damages if the deterrent goal has already been accomplished, if the defendant has stopped the conduct, or if the purpose of the damages has already been served.

Ultimately, the jury decides whether to award exemplary damages and what amount to award. However, in Colorado, the judge also plays a vital role in the process, significantly impacting whether the claim for exemplary damages succeeds. The plaintiff must establish proof of a triable issue. If they do not, the court can dismiss the request without going to a jury. In addition, if the jury awards an amount that exceeds what the state statute allows, the court can reduce it. Under limited circumstances, the judge can also increase an award after the jury verdict.

An attorney can help you understand if you qualify for exemplary damages. They can help you value the amount you may receive and take the proper procedural steps to claim and prove your damages.

Have you been hurt in an accident? Are you wondering if you qualify to claim exemplary damages? Are you looking for a legal team to aggressively fight for you? Bachus & Schanker is ready to help.

SOURCES:

1CRS 13-21-102

2Lira v. Davis, 832 P.2d 240 (1992)

3Internal Revenue Service (IRS). (November 2021). Settlements—Taxability. Retrieved 2 December 2021.

4Colo. R. Civ. P. 26