Punitive damages are available in tort claims such as fraud, intentional infliction of emotional distress, interference with contract or prospective economic advantage, and in some employment lawsuits to name a few. This guide discusses the pitfalls to avoid when stating the amount of punitive damages, and how you state the amount of punitive damages you are seeking if the defendant defaults.
IT’S IMPROPER TO ALLEGE THE AMOUNT OF PUNITIVE DAMAGES IN A COMPLAINT.
Failure to allege in the complaint the amount of punitive damages sought (Civ.C. § 3295(e)) is improper because this “is not reasonably calculated to apprise the defendant of potential financial liability for punitive damages if judgment is taken by default." (Wiley v. Rhodes (1990) 223 CA3d 1470.) And also because the rule prevents plaintiff from using exaggerated demands for punitive damages for publicity or other improper purposes.
Although it is improper to allege the amount of punitive damages in the complaint, one case holds that such allegations may satisfy due process despite the violation of Civil Code section 3295. (Cummings Med. Corp. v. Occupational Med. Corp. of America, Inc. (2nd Dist. 1992) 10 CA4th 1291, 1297–1298.) In Cummings, the cross-complaint specified $2 million in punitive damages. Cross-defendant argued the statement of punitive damages in the cross-complaint violated Civil Code section 3295(e). Relying on Uva v. Evans (1978) 83 Cal.App.3d 356, Cummings allowed punitives because “defendant admits receiving actual notice of the punitive damages sought it would be a travesty of justice, much less logic, to hold defendant did not have actual notice." Uva appears to contradict an earlier Supreme Court decision in Schwab v. Rondel Homes, Inc. (1991) 53 Cal.3d 428. But in relying on Uva, the Cummings court said “the court in Schwab, was clearly aware of Uva v. Evans and had the opportunity to disapprove it but did not." (Cummings at 1298, fn. 7.) Cummings reduced the punitive award to $598,300 based on the evidence.
I do not recommend following Cummings because another court might disagree and because there is better way to do it—personally serve a Statement of Damages before default. The only time I would argue Cummings is if you have a default judgment with punitives, and you were arguing against defendant’s motion to set aside judgment. But don’t take the risk of not serving a Statement of Damages.
If defendant defaults, the maximum amount you can get is the amount you request. Code of Civil Procedure section 580 provides, “The relief granted to the plaintiff [by way of a default judgment] cannot exceed that which he shall have demanded in his complaint...." But “the plaintiff shall give notice to the defendant of the amount of special and general damages sought to be recovered ... before a default may be taken...." (CCP § 425.11.) So how do you ask for punitive damages so you can take a default? You state the amount of punitive damages you are seeking in a separate “Statement of Damages" using Judicial Council Form CIV-050. (See below for a link to the free form.)
JUDICIAL COUNCIL FORM CIV-050 OR CREATE YOUR OWN PLEADING?
You should not create your own Statement of Damages on pleading paper because Judicial Council form CIV-050 is mandatory. But here's a trap. According to the Orange County Superior Court, you cannot use Form CIV-050 to request punitive damages. (See http://www.occourts.org/forms/local/l1006.pdf.) And a practice guide published by the Continuing Education of the Bar (CEB) states that you can use the form of the functional equivalent of section 425.115(b). (California Civil Procedure Before Trial, 4th ed § 38.43.)
But my opinion is that the Orange County Superior Court and the CEB practice guide are incorrect for 5 reasons: (1) CCP section 425.12 states that the judicial council shall develop a form for section 425.11 (damages) and section 425.115 (punitive damages); (2) The bottom right corner of CIV-050 cites to section 425.115 which applies to punitive damages. This suggests that the Judicial Council intended the form to apply to section 425.115 for punitive damages; (3) the language required by section 425.115 is identical to the language in Form CIV-050. This is yet another indication that the Judicial Council intended the form to apply to section 425.115 for punitive damage; (4) Form CIV-050 states in the lower-left corner that the form is mandatory; and (5) A person who serves a statement of punitive damages pursuant to section 425.115 "shall be deemed to have complied with Sections 425.10 and 580 of [the Code of Civil Procedure] and Section 3295 of the Civil Code." (CCP, § 425.115(d).) So if you create a Statement of Damages on pleading paper you risk your paper being rejected by a diligent-filing clerk.
YOU ARE LIMITED TO THE AMOUNT OF PUNITIVE DAMAGES IN YOUR STATEMENT OF DAMAGES
If the defendant answers, you are not limited to the amount of punitive damages you can recover at trial. (CCP § 425.115(c).) But on a default, you are limited to the amount of punitive damages stated in your Statement of Damages. And you must provide evidence to justify the amount you are seeking. (See Cummings, supra—reducing a $2 million punitive request to $598,300 based on the evidence.)
YOU MUST SERVE THE STATEMENT OF DAMAGES BEFORE ENTRY OF DEFAULT
The request for punitive damages must be served on defendant “before a default may be taken if the motion for default judgment includes a request for punitive damages." (CCP § 425.115(f).) This has been interpreted to mean a notice of request for punitive damages is timely “at any time before default is entered." (Electronic Funds Solutions v. Murphy (2005) 134 CA4th 1161, 1178.)
The statute does not authorize or prohibit serving a statement of damages simultaneously with the summons and complaint. This might be a good tactic where defendant is likely to default because it will avoid the necessity of serving them twice. But at the time of this guide, there is no known authority approving simultaneous service and it may be contrary to the purpose of Civil Code section 3295. In Electronic Funds Solutions, plaintiffs served their notice of punitive damages concurrently with their motion for terminating sanctions. Because service occurred before the entry of default, the notice of punitive damages was timely. (Electronic Funds Solutions at 1178.) But Electronic Funds Solutions involved a terminating sanction, not a default. The defendant had already filed an answer to the complaint. So what do you do? You can take your chances. Or the safest practice is to separately serve it by personal service before you take a default.
THE STATEMENT OF DAMAGES MUST BE PERSONALLY SERVED.
The Statement of Damages must be personally served for defendants who have not yet appeared in the action. (CCP § 425.115(g).)
After the defendant does not timely respond to the complaint, the safest practice is to then personally serve the defendant with a Statement of Damages using Judicial Council Form CIV-050. If you end up taking a default, you are taking an unnecessary risk if you state the amount of punitive damages in the complaint or if you concurrently serve the Statement of Damages with the complaint.