As every board-certified personal injury trial lawyer knows, there are times when the intent behind a civil offense is more than mere carelessness.
If you suspect your case involves malicious, fraudulent, or grossly negligent behavior, you should rely on the knowledge and experience of a qualified Houston personal injury attorney.
So, what are punitive damages?
In a civil lawsuit, there are different types of damages you might pursue in a personal injury case. Punitive damages are a type of exemplary damages.
Courts can only award exemplary damages when they first award compensatory damages.
Why?
Exemplary damages are not awarded to compensate the person injured. Instead, the purpose of punitive damages is punishment for the defendant’s conduct. Additionally, punitive damages are meant to act as deterrence against similar behavior in the future.
The injured person receives the benefit of a punitive damages award, but the intention is to teach the wrongdoer a lesson.
Insurance policies may not provide coverage for punitive damages, but even if they do, public policy may still prohibit the use of insurance to pay punitive damage awards.
Again, punitive damages go beyond what the plaintiff receives.
Punitive damages are the court’s way of punishing the defendant on behalf of the community by enacting a monetarily harsh judgment to deter that party or any other from performing the same actions.
3 Key Elements for Punitive Damage Awards
In Texas civil cases, punitive damages are awarded when the plaintiff and their personal injury attorney can demonstrate negligence by the defendant.
What does this mean?
This means the at-fault party acted carelessly or failed to take action to prevent harm to others. According to the Texas Civil Practice and Remedies Code, the plaintiff must produce evidence showing the defendant’s state of mind through clear and convincing evidence (a higher standard than preponderance of the evidence).
The plaintiff must demonstrate the defendant intended harm by one of the following three elements:
1. Fraud
It can be challenging to show clear and convincing evidence that a person purposely defrauded one or more individuals without a highly skilled personal injury lawyer working on your case. The kind of fraud that can result in punitive damages involves establishing the defendant had a willful intent to deceive.
Unless you are able to show the deception occurred and directly led to your physical, emotional, or financial harm, it is unlikely the court will award exemplary damages.
Fraud can come in many forms and may involve both state and federal charges, depending on whether the actions cross state lines.
For example, someone selling knock-off replicas of a luxury item as the real thing in Houston likely won’t lead to punitive damages. However, a diet supplement company that sells its products online and ships through the U.S. Postal Service, causing consumers to get sick or die, may very well face substantial exemplary damages.
2. Malice
In Texas, “malice” is used to describe the defendant’s specific intent to cause harm to the person injured. Malice is more than a general disregard for the safety of others. It is more directed and personal for the victim.
In instances involving domestic violence, attempted murder, or other extreme charges, the defendant may face criminal charges and go to prison. However, the criminal trial does not repay the victim.
Instead, malice and the associated criminal conviction could be used to support a request for punitive damages in your civil personal injury lawsuit. Your attorney can demonstrate the defendant’s specific malice and actions toward you.
3. Gross Negligence
Gross negligence is an act or failure to act involving a reckless disregard of risk for harming others.
Actions or inactions that involve an extreme degree of risk create more than a possibility of serious injury, which a reasonable person would understand is the likely result.
The plaintiff must show evidence about the nature of the risk, as well as how the wrongdoer fully appreciated how serious the risk was and consciously chose to engage in the behavior anyway.
Returning to our diet supplement example, if the manufacturer or distributor was aware that the pill’s ingredients were dangerous and still chose to sell them, they could be found guilty of gross negligence.
Another example:
If a trucking company knowingly hires drivers with past histories of truck accidents, drinking and driving, or recklessness behind the wheel, they may face exemplary damages for gross negligence if their drivers repeatedly cause harm.
A Recent Ruling on Punitive Damages in Texas
The Texas Supreme Court recently addressed a gross negligence claim arising from a car accident.
The defendant driver was a high school student who hit the plaintiff pedestrian as he turned right from a parking lot onto the street. There was evidence the driver had been going too fast in the parking lot and only slowed briefly before turning onto the street.
The driver admitted to only looking to the left before pulling out and did not see the plaintiff approaching from the right.
In overturning the appellate court’s finding of gross negligence, the high court found that while the defendant’s driving behavior was certainly thoughtless, careless, and risky (ordinary negligence), it did not rise to the extreme degree of risk necessary for gross negligence.
The possibility of injury existed, but a reasonable person would not have anticipated injury was likely to occur as a result of the driver’s conduct.
While the victim in a personal injury case may be eligible for compensatory damages, remember that the idea behind punitive damages is to enact further punishment for the community.
They are intended to protect the rest of society on top of repaying the individual victim. Therefore, the court must consider the degree to which a party’s actions were grossly negligent, malicious, or fraudulent. They also examine similar cases and whether those courts awarded exemplary damages.
How Can a Plaintiff Justify a Request for Punitive Damages in Texas?
The burden of proof for the plaintiff rests on the preponderance of the evidence for their compensatory claims, but if they wish to request that the court consider punitive damages, the bar is much higher. To show clear and convincing evidence requires planning with a personal injury attorney before the trial begins. Your lawyer must work diligently during the discovery phase to collect all relevant evidence showing malice, gross negligence, or fraud.
They must also be able to show the court that the defendant had a “culpable mental state” and intended to cause harm, either to the victim directly or to someone through their actions. Demonstrating a person’s intent or state of mind can be extremely challenging, and your lawyer may subpoena the defendant’s texts, phone records, and other materials to persuade the judge and jury.
In addition, your attorney must build the most robust case possible to convince each member of the jury of the defendant’s actions and state of mind. In Texas, the Civil Practice and Remedies Code on damages states that the jury’s decision about awarding punitive damages must be unanimous. If even one person votes against awarding exemplary damages, the court cannot issue an award beyond compensatory payment.
Evidence the Court Considers When Determining the Amount of Punitive Damages
Once the plaintiff has presented clear and convincing evidence, the court will also consider other important factors to determine the size of the exemplary damage award. This includes evaluating the following:
- The nature of the wrong
- The character of the conduct
- How much blame the wrongdoer deserves
- The situation and sensibilities of the people involved
- How the conduct offends the public’s sense of justice and propriety
- The net worth of the wrongdoer
In cases where the victim’s injuries are difficult to diagnose, or it’s unclear just how detrimental they are, such as traumatic brain injuries, the court may grant a larger award. The damage amount may also be higher if the amount of non-economic damage (the pain and suffering) is substantial, the plaintiff requires round-the-clock care for life, or the defendant’s actions were egregious.
Texas Statutory Limitations on Punitive Damage Awards
Punitive damages are intended to punish a person or entity for wrongdoing and send a message to deter others from engaging in similar conduct. Juries have discretion when determining the amount of punitive damages and awards, which can be many times greater than the amount of compensatory damages.
This has led a few states to prohibit punitive damages in personal injury claims and others to limit the amounts that can be awarded. In Texas, exemplary damages are limited to the greater of:
- Double the amount of economic damages plus non-economic damages up to $750,000 or
- $200,000
Members of the jury are not allowed to know there are statutory limitations on punitive damages when they determine an award.
Examples of When the Punitive Damages Cap May Not Apply
The limits on punitive damages do not apply when the claimed conduct is also a felony. Also, the cap may not apply when the wrongdoer has ‘done something horrible’ that does not meet the definition of a felony but is nonetheless shocking to the conscience.
The Texas Tribune reported on a case involving the parents of a student killed in the Sandy Hook shooting versus conspiracy theorist Alex Jones, who claimed the shooting was a hoax.
A Texas district court judge chose to enforce the jury’s $45.2 million award of punitive damages instead of following the statute and limiting the award using the $4.1 million award of compensatory damages.
The district court’s decision is currently in the appellate court as of February 2024. None of the punitive damages have been paid yet, so it remains to be seen if the law will allow for exceptions to the statutory limitations on punitive damage awards.
More Information About Punitive Damages in Personal Injury Cases
Because the burden of proof is so high and the jury’s decision must be unanimous, it’s rare that a case receives an exemplary damage award. In fact, only about 3-5% of personal injury cases involve a punitive damage decision, according to a study published by Cornell Law School. However, even if the court applies a punitive award, very few plaintiffs are successful at recovering that money.
If your attorney successfully secures payment from the defendant, your next question may be whether the money is taxable. Punitive awards are often in the millions and even billions, and the tax burden could be quite high. In most cases, the Internal Revenue Service (IRS) collects taxes under the category of “Other Income,” with some exceptions.
As far as state tax goes, Texas doesn’t have a state income tax, so you would only pay a portion to the federal government.
Find Out if You’re Entitled to Punitive Damages
The complexities of a personal injury case can be overwhelming without professional training, something you do not need as an additional burden while you’re trying to recover from your injuries.
At Dax F. Garza, P.C., we offer free initial consultations for anyone who has been harmed by another party’s negligence. Regardless of how small or large your case is, we stand ready to evaluate the strength and value of your claim. We work tirelessly to craft a powerful case designed to win the jury to your side and secure the compensation and justice you deserve.
Don’t fight insurance companies or defense lawyers on your own. Instead, rely on us to assess your claim and determine if exemplary damages are appropriate. To learn more about your legal options, schedule a free case review with Dax F. Garza, P.C.
