The Colorado Supreme Court, in a ruling issued on March 27, 2017 following a petition for re-hearing, enforced the requirement that a plaintiff seeking to raise an exemplary damages claim must first demonstrate with evidence that the defendant engaged in sufficiently egregious conduct. The Court’s decision in Ferrer v. Okbamicael confirms that mere allegations will not meet this substantive burden.
In Ferrer, the plaintiff suffered injury when a taxicab driven by the defendant struck her as she walked across a street. After initially raising negligence allegations, the plaintiff later moved to amend her complaint to add an exemplary damages claim. In support of her motion, the plaintiff asserted that the defendant was driving in excess of the speed limit, was talking on a cell phone at the point of the collision, and had violated regulatory limits on the number of hours a taxi driver could drive in a single shift. The trial court considered this evidence, but ruled that the plaintiff had failed to set forth prima facie proof of a triable issue of exemplary damages, as Colorado statute requires.
On appeal, the plaintiff argued that the trial court erred by failing to view her allegations in the light most favorable to the plaintiff. The Colorado Supreme Court rejected that contention, holding that trial courts need only allow exemplary damages claims where the plaintiff has presented “sufficient evidence of willful and wanton conduct.” Trial courts have discretion to deny requests to add exemplary damages claims where the evidence does not meet the standard. According to the Colorado Supreme Court, the trial court acted within its authority to deny the plaintiff’s motion for leave when it determined that the proffered evidence to support the punitive damages claim required “a lot of leaps of faith and a lot of connecting of inferences.” Although three justices dissented on another issue raised by the plaintiff, the Court unanimously affirmed the trial court’s denial of the motion for leave to amend and add an exemplary damages claim.
The ruling in Ferrer upholds the notion that Colorado defendants enjoy a substantive legal right not to be subject to exemplary damages claims and ensuing discovery regarding net worth and related financial information until the trial court finds that there is a reasonable evidentiary basis for recovery of exemplary damages. Trial courts must do more than rubber stamp a plaintiff’s motion for leave to add a punitive damages claim – they should closely scrutinize the proffered evidence. When that evidence does not demonstrate that the defendant’s actions rose to the level of willful and wanton conduct, the trial court may properly deny the plaintiff leave to add the punitive damages claim.
Colorado’s statutory requirement that trial courts conduct a meaningful review of the evidence before allowing a plaintiff to assert a punitive damages claim reflects the Colorado legislature’s concern that some plaintiffs abuse the litigation system by raising exemplary damages claims to threaten defendants with the specter of extreme damage awards, even though no evidence existed to support such claims. This evidentiary hurdle that would-be punitive damages claimants must overcome is therefore bound up with Colorado’s policy of deterring frivolous assertions of entitlement to exemplary damages. Making a showing of proof fulfilling Colorado’s exemplary damages standard is no small matter. Few situations involve actions so egregious and so malicious that they can be described as “willful and wanton” and warrant punishment. The Colorado Supreme Court’s ruling in Ferrer ensures that this statutory requirement continues to provide a meaningful check against frivolous or abusive exemplary damages claims.