What are Exemplary Damages?

Exemplary damages are awarded in order to “compensates plaintiffs for humiliation, sense of outrage, and indignity resulting from injustices maliciously, willfully, and wantonly inflicted by the defendant.” McPeak v McPeak (On Remand), 233 Mich App 483, 490, 593 NW2d 180 (1999) A plaintiff who seeks exemplary damages for the defendant’s willful, malicious conduct does not need to present direct evidence of an injury to his or her feelings. “Rather, the question is whether the injury to feelings and mental suffering are natural and proximate in view of the nature of the defendant’s conduct.” McPeak v McPeak (On Remand), 233 Mich App 483, 490, 593 NW2d 180 (1999).

Generally, exemplary damages are awarded to compensate for mental anguish, humiliation, outrage, or increased injury to the plaintiff’s feelings that he or she suffers due to the defendant’s willful, malicious, or wanton conduct or reckless disregard for the plaintiff’s rights. See Peisner v Detroit Free Press, 421 Mich 125, 364 NW2d 600 (1984); Wise v Daniel, 221 Mich 229, 190 NW 746 (1922). Michigan courts do not permit punitive damages except as provided by statute, and exemplary damages are not punitive in nature, Jackson Printing Co v Mitan, 169 Mich App 334, 425 NW2d 791 (1988).

Thus, exemplary damages generally are awarded in the context of intentional torts, slander, libel, deceit, seduction, and other intentional, malicious acts. See Veselenak v Smith, 414 Mich 567, 575, 327 NW2d 261 (1982). In McPeak v McPeak(On Remand), 233 Mich App 483, 593 NW2d 180 (1999), the court interpreted Veselenak to hold that exemplary damages may be awarded in both legal and equitable actions where the plaintiff pleads malicious and willful conduct. In addition, a number of statutes expressly provide for exemplary damages, such as MCL 600.2911 (libel or slander) and MCL 408.488 (wage violation).

Michigan case law on exemplary damages can be confusing. This stems, at least in part, from Michigan’s position that exemplary damages must be viewed as compensation to the plaintiff, not punishment to the defendant. However, it is the defendant’s willful, egregious, or malicious behavior that triggers the availability of these damages. The Michigan Supreme Court itself has acknowledged that exemplary damages, as defined in Michigan, “undoubtedly operate indirectly to punish.” Peisner at 135 n11. Another area of considerable confusion is whether a plaintiff can recover both actual damages for mental anguish and exemplary damages for increased injury to feelings. In Veselenak, the court found that when a plaintiff is entitled to recover for all mental distress and anguish as part of his or her compensatory damages, an award of exemplary damages for injury to feelings is redundant. See also Hayes-Albion v Kuberski, 421 Mich 170, 187, 364 NW2d 609 (1984). Confusion may arise when one also considers the Michigan Supreme Court’s decision in Peisner. That court found that the plaintiff in a libel case could be awarded damages for injury to feelings as part of the actual damages and also exemplary damages for the increased injury to feelings caused by the defendant’s ill will.

In Peisner, the key to recovering exemplary damages in addition to recovering actual damages for mental anguish and suffering was the explicit language in the libel statute providing for exemplary damages. The fact that exemplary damages often arise in the context of certain statutes calls for special care in reading the case law. It is not always clear whether a specific case holding is limited to an interpretation of a particular statute or whether it contains a general rule of law with respect to all exemplary damages. Finally, it is important to distinguish between recovery for emotional distress and injured feelings as part of ordinary damages and recovery for injured feelings as exemplary damages. The two issues are distinct, but they often arise in the same case, and even the courts blur the distinction from time to time.

Exemplary Damages vs. Punitive Damages In Michigan

A unique aspect of Michigan law is that exemplary damages are distinct from punitive damages: Beginning in 1884, the Michigan Supreme Court began to take the position that civil cases only permit an award of damages as compensation and that no award may be made to punish the defendant. Watson v Watson, 53 Mich 168, 18 NW 605 (1884) (seduction action); Stillson v Gibbs, 53 Mich 280, 18 NW 815 (1884) (improper execution). A line of cases following these decisions also took the position that damages may not be awarded to punish. See, e.g., Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 295 NW2d 50 (1980) (insurance contract); Willett v Ford Motor Co, 400 Mich 65, 253 NW2d 14 (1977) (interference with contractual relations); Smith v Jones, 382 Mich 176, 169 NW2d 308 (1969) (personal injury action); McFadden v Tate, 350 Mich 84, 85 NW2d 181 (1957) (assault and battery); McChesney v Wilson, 132 Mich 252, 93 NW 627 (1903) (killing of dog); Haviland v Chase, 116 Mich 214, 74 NW 477 (1898) (trespass to person); Ten Hopen v Walker, 96 Mich 236, 55 NW 657 (1893) (malicious killing of dog); Wilson v Bowen, 64 Mich 133, 31 NW 81 (1887) (malicious prosecution).

In Ross v Leggett, 61 Mich 445, 28 NW 695 (1886), a false imprisonment case, the court examined punitive damages in some detail. The court indicated that actual damages include damages for injuries that would befall any person subjected to the same treatment. For example, any plaintiff in a false imprisonment case would have actual damages due to physical discomfort, shame, mortification, and outrage. Nothing could mitigate the actual damages.

Beyond actual damages, however, there are punitive or added damages that grow out of the wantonness or atrocity of the defendant’s act. If the act is so oppressive that it causes greater shame or publicity, then the damages should be greater because the injury to feelings is greater. Id. at 451. A number of subsequent decisions speak in terms of exemplary damages being “added or increased” damages. In Durfee v Newkirk, 83 Mich 522, 47 NW 351 (1890) (false representations in sale of goods), the court said “increased damages” and “extra compensation” were permitted in certain cases, such as assault, slander, or false imprisonment, where there is aggravation and no exact monetary measure of damages. In Lucas v Michigan Cent RR Co, 98 Mich 1, 5, 56 NW 1039 (1893) (wrongful ejection of passenger from common carrier), the court spoke of damages permitted by an “injury … intensified by the malice.”

In Ford v Cheever, 105 Mich 679, 63 NW 975 (1895) (dram-shop action), the court recognized “added damages” to compensate for injury to feelings. The court in Boydan v Haberstumpf, 129 Mich 137, 140, 88 NW 386 (1901) (dram-shop action), used the phrase “an increased award of damages” to describe an award made in light of the aggravation of injury to feelings by the wantonness of the defendant’s act. In Hink v Sherman, 164 Mich 352, 360, 129 NW 732 (1911) (unlawful sale of liquor to minor), the court referred to “added, increased or aggravated damages.” But see Wise v Daniel, 221 Mich 229, 233, 190 NW 746 (1922) (disapproving trial court’s instructions to jury regarding “added or cumulative damages”).

When Can You Recover Exemplary Damages?

The defendant’s act must be voluntary for the plaintiff to recover exemplary damages. Detroit Daily Post Co v McArthur, 16 Mich 447, 452 (1868). In addition, the defendant’s behavior must be malicious or show a wanton disregard for the plaintiff’s rights. McFadden v Tate, 350 Mich 84, 85 NW2d 181 (1957); Wise v Daniel, 221 Mich 229, 190 NW 746 (1922). Indeed, mere negligence is not enough to justify an award of exemplary damages. Veselenak v Smith, 414 Mich 567, 575, 327 NW2d 261 (1982); Green v Evans, 156 Mich App 145, 401 NW2d 250 (1985). The defendant’s voluntary act must invoke feelings of humiliation, outrage, and indignity. Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 295 NW2d 50 (1980). An otherwise proper act may justify exemplary damages if it springs from ill will or bad faith.

Thus, attorneys at The Lockwood Legal Group probe into motives and conduct when interviewing prospective clients. Searching questions along these lines may reveal conduct that allows our attorneys to justify a demand for exemplary damages. Exemplary damages typically arise in the context of intentional torts, libel or slander, assault and battery, or various statutory violations. An exemplary damages award is appropriate “if it compensates a plaintiff for the humiliation, sense of outrage, and indignity resulting from injustices maliciously, willfully, and wantonly inflicted by the defendant.” McPeak v McPeak(On Remand), 233 Mich App 483, 490, 593 NW2d 180 (1999). What is an Increased Injury to Feelings? The most commonly cited description of exemplary damages appears in Wise v Daniel, 221 Mich 229, 233, 190 NW 746 (1922): If a cow kicks a man in the face the consequent physical hurt may equal that from a kick in the face with a hob-nailed boot, but the “cussedness” of the cow raises no sense of outrage, while the malicious motive back of the boot kick adds materially to the victim’s sense of outrage. If a man employs spite and venom in administering a physical hurt he must not expect his maliciousness to escape consideration when he is cast to make compensation for his wrong.

Thus, exemplary damages are designed to compensate for incremental injury to feelings that stems from the increased outrage, humiliation, and distress that the defendant’s egregious behavior has caused. The following words and phrases have been used in Michigan cases to describe injured feelings justifying exemplary damages: aggravation, annoyance, atrocity, discomfort, disgrace, exclusion from society, feelings of oppression, happiness destroyed, humiliation, inconvenience, indignation, insult, insulted honor, mental anxiety, mental suffering, mortification, neglect, outrage, scorn, shame, sorrow, vexation, worry, wounded pride. The mere existence of such injuries does not justify exemplary damages; the injuries must be coupled with evidence of the defendant’s ill will or malice. Cadillac Vending Co v Haynes, 156 Mich App 423, 402 NW2d 31 (1986), vacated on other grounds, 428 Mich 904, 406 NW2d 830 (1987). When it comes to exemplary damages in tort cases, it is not sufficient that the tort be committed intentionally; an award of exemplary damages is justified only when the defendant’s conduct is malicious or so willful and wanton that it demonstrates a reckless disregard for the plaintiff’s rights. Smith v Ely, 470 Mich 893, 683 NW2d 145 (2004) (breach of fiduciary duty and silent fraud resulting in unjust enrichment); Bailey v Graves, 411 Mich 510, 309 NW2d 166 (1981) (assault and battery); Getman v Mathews, 125 Mich App 245, 335 NW2d 671 (1983) (tortious interference with business relations); Will v Department of Civil Serv, 145 Mich App 214, 377 NW2d 826 (1985), aff’d in part and rev’d in part on other grounds, 428 Mich 540, 410 NW2d 749 (1987), aff’d, 491 US 58 (1989) (civil rights action under 42 USC 1983). For the same reason, it is also not sufficient to show that the tort was the result of negligence. Veselenak v Smith, 414 Mich 567, 327 NW2d 261 (1982) (medical malpractice); Law Offices of Lawrence J Stockler, PC v Rose, 174 Mich App 14, 436 NW2d 70 (1989) (legal malpractice). When malice is established, exemplary damages are recoverable for tortious interference with potentially advantageous economic relations (Joba Constr Co v Burns & Roe, Inc, 121 Mich App 615, 329 NW2d 760 (1982)), malicious conduct causing a decrease in the value of personal property (Rinaldi v Rinaldi, 122 Mich App 391, 333 NW2d 61 (1983)), malicious prosecution in the name of another without consent (Camaj v SS Kresge Co, 426 Mich 281, 393 NW2d 875 (1986)), and libel (Peisner v Detroit Free Press, 421 Mich 125, 364 NW2d 600 (1984)). Exemplary damages are not recoverable in a wrongful-death action. Fellows v Superior Prods Co, 201 Mich App 155, 506 NW2d 534 (1993). Contract/Insurance Cases:

Damages for emotional distress may be recoverable only when the emotional distress is a foreseeable consequence of breaches of contracts involving cherished rights, dignities, or emotional issues such as marriage or childbirth. Id. at 416; Stewart v Rudner, 349 Mich 459, 84 NW2d 816 (1957). Specific Pleading is Required: Items of special damages that are claimed must be specifically stated. MCR 2.112(I). Therefore exemplary damages must be specifically pleaded to be recovered. Law Offices of Lawrence J Stockler, PC v Rose, 174 Mich App 14, 436 NW2d 70 (1989); Fleischer v Buccilli, 13 Mich App 135, 163 NW2d 637 (1968). But see Smith v Jones, 382 Mich 176, 207, 169 NW2d 308 (1969) (Justice Adams, in separate concurring opinion, stated that plaintiff’s allegation of gross negligence and mental suffering, without mentioning exemplary damages in pleadings, was sufficient notice in auto collision case).

Whether the plaintiff may amend the complaint shortly before trial to add a claim for exemplary damages is within the discretion of the trial court. Sherrard v Stevens, 176 Mich App 650, 440 NW2d 2 (1988). Often, the cause of action giving rise to the exemplary damages claim will also require a specific pleading. In a contract case, a party claiming exemplary damages must plead the requisite purposeful tortious conduct. Valentine v General American Credit, Inc, 420 Mich 256, 362 NW2d 628 (1984). If the claim is based on fraud, the circumstances constituting fraud must be pleaded with particularity in accordance with MCR 2.112(B)(1). Van Marter v American Fid Fire Ins Co, 114 Mich App 171, 318 NW2d 679 (1982). The standard of proof for both the conduct or motive and injury to feelings is a preponderance of the evidence. Poledna v Bendix Aviation Corp, 360 Mich 129, 140, 103 NW2d 789 (1960). The plaintiff is the only person needed to testify about injury to his or her feelings; no doctors need testify about this particular type of mental injury. The jurors must take a broad, commonsense view of the case and determine, as accurately as possible, a fair amount. Raynor v Nims, 37 Mich 34, 35 (1877). The Michigan cases do not state clearly whether losses other than injury to feelings must be shown before an exemplary damages award is permitted. The general rule is that damages other than nominal damages need not be shown before exemplary damages are permitted. Rogers v Loether, 467 F2d 1110 (7th Cir 1972), aff’d, 415 US 189 (1974); see Annotation, Sufficiency of Showing Actual Damages to Support Award of Punitive Damages—Modern Cases, 40 ALR 4th 11. This rule comes from jurisdictions that punish by means of punitive damages. The rule should be no different when the purpose is to compensate. To support a claim for injury to feelings, the plaintiff must first prove an invasion of a legally cognizable right of the person or property but not other actual damages. Cases involving personal injuries, false imprisonment, defamation, and interference with contractual relations all support a claim for exemplary damages. A mere insult made by a stranger, short of slander, should not support an exemplary damages award.

To recover exemplary damages, sufficient evidence must be presented to support a finding of malicious action or outrageous conduct. Will v Department of Civil Serv, 145 Mich App 214, 377 NW2d 826 (1985), aff’d in part and rev’d in part on other grounds, 428 Mich 540, 410 NW2d 749 (1987), aff’d, 491 US 58 (1989) (civil rights action under 42 USC 1983). Evidence must also be presented about injury to the plaintiff’s feelings or some other indignity or humiliation suffered by the plaintiff. Absent such evidence, an award of exemplary damages will be vacated because it was intended to punish rather than to compensate. Jackson Printing Co v Mitan, 169 Mich App 334, 425 NW2d 791 (1988) (fraud); Birkenshaw v Detroit, 110 Mich App 500, 313 NW2d 334 (1981) (criminal contempt for violating injunction). In evaluating an exemplary damages award, the court must consider whether the mental injury was the natural and probable result of the defendant’s conduct. Friend v Dunks, 37 Mich 25, 30 (1877) (dram-shop action). Thus, an award of exemplary damages may be reduced if it is remote or fanciful. Id. at 31. The trial court may modify an award that is greater or lesser than the evidence will support, based on objective consideration. Palenkas v Beaumont Hosp, 432 Mich 527, 443 NW2d 354 (1989).

Another issue that can arise is whether the plaintiff’s negligent conduct should offset or reduce the amount of exemplary damages awarded. In Vining v Detroit, 162 Mich App 720, 413 NW2d 486 (1987), the court held that the comparative negligence doctrine applies to all tort actions in which the defendant’s conduct falls short of intentional acts. Thus, if the claim for exemplary damages is predicated on willful and wanton misconduct (often referred to as gross negligence), the comparative negligence doctrine applies. If the defendant’s conduct is intentional rather than negligent, comparative negligence does not apply. Presumably, a municipal corporation may be liable for exemplary damages in an appropriate case. Alexander v Detroit, 392 Mich 30, 219 NW2d 41 (1974). It is important to have a skilled attorney representing you to obtain adequate compensation for your injury.

If you think you have been injured by another’s mallus or reckless behavior, contact us immediately for a free consultation. Feel free to call us as well.