Why can corporations be sued directly for breach of contract or personal injury claims

Overview

Punitive damages are awarded in addition to actual damages in certain circumstances. Punitive damages are considered punishment and are typically awarded at the court's discretion when the defendant's behavior is found to be especially harmful. Punitive damages are normally not awarded in the context of a breach of contract claim. See e.g. O'Gilvie Minors v. United States 519 US 79 (1996). See also Honda Motor Co. v. Oberg 512 US 415 (1994).

Punitive Damages in Tort Law

In the case of tort liability, courts may choose to apply punitive damages. However, they will typically only do so if the plaintiff can prove that the defendant engaged in an intentional tort and/or engaged in wanton and willful misconduct.

In National By-Products Inc. v. Searcy House Moving Co., the Arkansas Supreme Court found that awarding punitive damages requires evidence that the defendant proceeded intentionally with an unlawful action after knowing that the act was likely to cause injury.

With regard to a principal-agent relationship, courts are reluctant to award punitive damages on the principal for the reckless actions of the agent. One exception to this preference is when the principal encourages or causes the agent’s recklessness.  

Distinguishing Punitive Damages in Contract Law

Some contracts will list certain"liquidated damages" as a consequence of a breach. A court, however, may choose to ignore this clause if the liquidated are actually punitive damages. There is a 2-part test that courts will typically use to determine whether to apply a liquidated damages clause:

1. The agreed damages must be a reasonable forecast of just compensation for the harm that is caused by the breach
2. The harm must be incapable of accurate estimation 

If the clause meets both of these elements, then the court will typically apply the clause, finding no evidence of punitive damages.

Applying Punitive Damages

Courts apply punitive damages in about 5% of verdicts. Recently, courts have begun to evaluate the appropriateness of assigning punitive damages in comparison to the amount of compensatory damages assigned. While the Supreme Court has not assigned a particular test to use when courts consider punitive damages, in State Farm v. Campbell (2003),the Court wrote that lower courts should focus on reprehensibility and acceptable punitive-to-compensatory damage ratios.

Further Reading

For more on punitive damages, see this Yale Law Journal note and this University of Minnesota Law Rview note. 

Suing the Government or a Public Agency

What are government and public agencies?

Government and public agencies are any state or local government office that serves the public, such as:

• The City of Los Angeles
• The County of Los Angeles
• The State of California
• The Metropolitan Transit Authority (M.T.A.)

Can I sue the Federal government in Small Claims Court?

No. Federal government agencies cannot be sued in Small Claims Court, but you can file a Claim For Damages (other DOJ forms). If your claim is denied, contact an attorney for help with filing your case in the U.S. District Court.

Before suing a government agency

Before you can sue the government or a public agency, you must first file a claim for damages with them. You can file a claim if you feel the agency is responsible for causing you injury, damage or loss.

Claim Forms

Get a claim form directly from the government agency responsible for your damage, injury or loss. Here are some helpful links:

City of Los Angeles

County of Los Angeles

State of California

Filing your claim

Take these steps to file a claim with a government agency:

1. Get the agency’s Claim for Damages form. Some are linked above.
2. Fill out the claim form. You must submit the form within 6 months from the date you were injured or your personal property, such as a car or motorcycle, was damaged. If the claim involves a breach of contract or damage to real property, such as your house, you must file the claim within one year from the date it occurred. Submit the claim form by certified mail return receipt requested for proof of delivery. If you return the form in person, get a receipt.
3. After you file your claim, the agency will send you a letter telling you if your claim has been approved for payment or denied.

If your claim is approved

If the agency accepts responsibility for your claim, you will be paid and your claim is settled. You do not need to sue in Small Claims Court.

If your claim is denied

If your claim is denied, you must file a small claims case within 6 months of denial.

If they don’t respond

If the agency does not respond to your claim within 45 days, it is considered denied. You can now sue in Small Claims Court but must do so within 2 years of the date you filed your claim.

Filing your Small Claims case

To sue a government or public entity:

• Fill out an SC-100 Plaintiff’s Claim.
• File your Claim at the proper court venue and pay the filing fee.
• When you file your Plaintiff’s Claim with the court, be sure to bring a copy of the denial letter you received from the agency. If the agency did not respond to you, bring a copy of your claim form and proof of mailing or receipt.
• When you file your small claims case, you will be given a court date and must have a copy of the Plaintiff’s Claim served to the agency.

Court forms are available at California Courts – Forms. Select “Small Claims” from the pull down menu. Forms are also available at the Court Clerk’s office.

County of Los Angeles Department of Consumer and Business Affairs. Last update: Sept. 12, 2022

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