Columns

Best practices in pleading and proving exemplary damages

February 2024

by Jennifer Engelhardt and Chad Engelhardt | Michigan Bar Journal

The drunk driver knew she had ingested too much alcohol to drive safely.¹ She knew that swerving her SUV through rush-hour traffic at a high rate of speed was dangerous. She knew she had alcohol in the car. She knew that running a red light posed a high risk of danger to others. These conditions existed when she crashed her large SUV into an innocent man who was on his way home from work, causing him serious injury.

As the injured man lay trapped in his car waiting for emergency personnel to arrive and extract him from his vehicle using the Jaws of Life, the drunk driver added insult to injury. She got out of her SUV and screamed at the injured man, yelling curses and racial epithets at the trapped and helpless driver. She neither apologized nor took responsibility for her actions. And when the police arrived, she made false accusations about the driver. When proven false by the evidence and eyewitnesses, she proceeded to make similar false statements about the officers.

Compounding his debilitating physical injuries, the innocent man suffered post-traumatic stress because of the drunk driver’s post-crash actions. Once an active and extroverted person, the injured man now suffers nightmares and panic attacks. In addition to the physical and other typical injuries which result from being hit by an SUV, the injured man — who was in no way responsible for the crash — suffers from emotional distress and outrage because of the drunk driver’s post-crash misconduct.

Are ordinary non-economic damages sufficient for this aggravated negligence? Or can additional exemplary damages be awarded with careful pleading and evidentiary development?²

Exemplary damages are a special type of non-economic damages recoverable to a plaintiff for injured feelings. In Michigan, exemplary damages are recoverable as compensation to a plaintiff.³ While often mistaken for punitive damages, exemplary damages differ from punitive damages. Punitive damages are intended to punish the wrongdoer and deter him or her — and others — from similar extreme conduct.⁴ Exemplary damages serve as additional compensation for aggravated injured feelings “where the defendant commits a voluntary act which inspires feelings of humiliation, outrage, and indignity. But the conduct must be malicious or so willful and wanton as to demonstrate a reckless disregard of the plaintiff’s rights.”⁵

As the Michigan Supreme Court explained, “[t]he theory of these cases is that the reprehensibility of the defendant’s conduct both intensifies the injury and justifies the award of exemplary damages as compensation for the harm done the plaintiff’s feelings.”⁶ A defendant’s act must be voluntary for the plaintiff to recover exemplary damages.⁷ Ordinary negligent conduct is not sufficient to justify an award of exemplary damages.⁸

An award of exemplary damages is considered proper if it compensates a plaintiff for the “humiliation, sense of outrage, and indignity” resulting from injuries “maliciously, willfully and wantonly” inflicted by the defendant. The theory of these cases is that the reprehensibility of the defendant’s conduct both intensifies the injury and justifies the award of exemplary damages as compensation for the harm done the plaintiff’s feelings.⁹ While there is some overlap with emotional distress, exemplary damages “pick up where actual damages leave off by in effect compensating the plaintiff for injured feelings attributable solely to the egregiousness of defendant’s conduct.”¹⁰

Some statutes expressly provide for exemplary damages. These include:

MCL 600.2907a (encumbrance of a property in violation of MCL 565.25 without lawful intent with intent to harass or intimidate)
MCL 600.2911 (libel or slander)
MCL 600.2917 (unreasonable force used during false imprisonment, unlawful arrest, assault, battery, libel, slander by a merchant)
MCL 600.2953a (motion picture recording violation)
MCL 600.2954 (civil action by victim of stalking)
MCL 600.2962 (cable theft)

In the right case with the right facts, pleading and proving gross negligence can be an effective pathway to exemplary damages. Allegations of voluntary acts, gross negligence, and exemplary emotional distress damages should be set forth in separate counts in your complaint, distinct from the claims of ordinary negligence and the damages arising out of that claim.¹¹ While pleading in the alternative is allowed under the Michigan Court Rules,¹² precise pleading of distinct exemplary damages will provide clarity and avoid an argument over “double recovery.” A verdict form should likewise delineate between general non-economic damages (including emotional distress) and the more specific exemplary damages.¹⁴

In addition to careful pleading, another key to obtaining exemplary damages is developing a proper record through the testimony of the parties, lay witnesses, and expert witnesses. This is accomplished through eliciting thorough deposition and trial testimony from the plaintiff(s), family members, friends, and, when available, treating physicians, mental health providers, and/or retained experts. Effort should be undertaken to comprehensively question witnesses on the conduct giving rise to the underlying claim as well as the exemplary damages claim. The practitioner is wise to elicit testimony regarding the injured party’s pain, suffering, disability, and emotional distress from the underlying cause of action and then elicit testimony of the additional and exacerbated emotional distress caused by the outrageous or intentional conduct for which exemplary damages are sought. With respect to lay witnesses, MRE 701 allows such testimony including opinions or inferences which are rationally based on the perception of the witness and helpful to a clear understanding of witness testimony or the determination of a fact in issue.

Some argue that exemplary damages are not recoverable in wrongful death actions because they are not expressly identified in the Wrongful Death Act.¹⁵ Others argue that the catchall provision in that act, along with subsequent case law, do afford for such damages.¹⁶

Exemplary damages are not limited to civil litigation in state courts. For instance, they may also be awarded in arbitration under the Uniform Arbitration Act, MCL 691.1701(1), where “the evidence produced at the hearing justifies the award under the legal standards otherwise applicable to the claim.” Likewise, exemplary damages may be available in certain administrative actions.¹⁷

WHAT ABOUT THE CORPORATE PLAINTIFF?

The Michigan Court of Appeals held that under the right circumstances, exemplary damages may be awarded to a corporation for commercial injury. For instance, exemplary damages are available to compensate for possible injury to reputation.¹⁸ Exemplary damages are only available for injuries which cannot be measured or estimated in monetary terms.¹⁹ Quantifiable damages, such as lost future profits or lost employee time, are not recoverable as exemplary damages.²⁰

WHAT IS THE MEASURE OF DAMAGES?

This is a quintessential issue for the trier of fact where the amount is not otherwise set by law or statute. However, if the jury awards exemplary damages in an amount which is unjustifiably excessive, the defendant has the right to petition the trial court for remittitur. Specific to such an award, the Michigan Supreme Court held that “[i]n reviewing damage awards in cases tried to juries, this Court has asked whether the award shocks the judicial conscience, appears unsupported by the proofs, or seems to be the product of improper methods, passion, caprice, or prejudice; if the amount awarded falls reasonably within the range of the evidence and within the limits of what reasonable minds would deem just compensation for the injury sustained, the verdict has not been disturbed.”²¹

Because exemplary damages may not be covered — and are sometimes specifically excluded — under insurance policies, they can expose a party to significant personal exposure. Exemplary damages may not be available in most cases, but it cases in which such damages are legally and factually supported, they can drive settlement or expand the scope of recoverable damages.

“Best Practices” is a regular column of the Michigan Bar Journal, edited by George Strander for the Michigan Bar Journal Committee. To contribute an article, contact Mr. Strander at gstrander@ingham.org.

ENDNOTES

1. This exemplar case is based on an actual matter.

2. For a more complete overview of the legal framework for exemplary damages, see Torts: Michigan Law and Practice ch 19 (Chad D. Engelhardt et al. eds, ICLE 3d ed 2021).

3. Kewin v Massachusetts Mutual, 409 Mich 401, 419; 295 NW2d 50 (1980).

4. 7 Mich Civ Jur Damages § 161 (2013).

5. Jackson Printing Co, Inc v Mitan, 169 Mich App 334, 341; 425 NW2d 791 (1988); Bailey v Graves, 411 Mich 510, 515; 309 NW2d 166 (1981). See also McFadden v Tate, 350 Mich 84, 85 NW2d 181 (1957).

6. Kewin v Mass Mut, 409 Mich 401, 419; 295 NW2d 50 (1980).

7. Detroit Daily Post Co v McArthur, 16 Mich 447, 452 (1868).

8. Veselenak v Smith, 414 Mich 567, 575, 327 NW2d 261 (1982). While not allowing exemplary damages based on the evidentiary record, the Court rejected the argument that medical malpractice defendants were immune from exemplary damages: “The argument that recitation of the Hippocratic oath should raise a conclusive presumption of good faith, thus insulating physicians from any charges of malicious conduct arising out of the physician-patient relationship, flies in the face of legal accountability.” Id. at 572.

9. Kewin, 409 Mich at 419, citing McFadden, 350 Mich at 89.

10. White v City of Vassar, 157 Mich App 282, 291; 403 NW2d 124 (1987).

11. See, e.g., Graves, Point, State Bar of Michigan Negligence Law Quarterly (Fall 2002), pp. 3-4. [https:// perma.cc/YK3A-SQJ7] (website accessed Jan. 11, 2024).

12. It is black letter law that a party may attempt to recover based on alternate theories. See, e.g., VanZanten v H VanderLaan Co, 200 Mich App 139, 141; 503 NW2d 713 (1993). See also MCR 2.111(A)(2)(b).

13. Veselenak, 414 Mich at 575-576.

14. Green v Evans, 156 Mich App 145, 151-152; 401 NW2d 250 (1985).

15. MCL 600.2922. See also Tobin v Providence Hosp, 244 Mich App 626; 624 NW2d 548 (2001).

16. See, e.g., Denney v Kent Cty Rd Comm, 317 Mich App 727; 896 NW2d 808 (2016), where the court held that the word “including” in MCL 600.2922(6) “indicates an intent by the Legislature to permit the award of any type of damages, economic and noneconomic, deemed justified by the facts of the particular case.” See also, Wesche v Mecosta Cty Rd Comm, 480 Mich 75, 89, 746 NW2d 847 (2008) (“The mere fact that our legislative scheme requires that suits for tortious conduct resulting in death be filtered through the so-called ‘death act’ does not change the character of such actions except to expand the elements of damage available.”)

17. See, e.g., Mich Admin Code R 408.9034.

18. Joba Constr Co v Burns & Roe, Inc, 121 Mich App 615, 643; 329 NW2d 760 (1982).

19. Unibar Maintenance Servs, Inc v Saigh, 283 Mich App 609; 769 NW2d 911 (2009).

20. Id.

21. Precopio v Detroit Dep’t of Transp, 415 Mich 457, 465; 330 NW2d 802 (1982).

Jennifer and Chad Engelhardt are partners at Goethel Engelhardt in Ann Arbor. They focus their practice on catastrophic injury cases. In addition to speaking at continuing legal education and law school events, they provide best practice presentations to medical and nursing programs on patient safety and mitigating risk exposure. They are the authors of several chapters and editors of ICLE’s Torts: Michigan Law and Practice, among numerous other publications.