What Happened on Remand: A Big Argument Over Distribution of the Punitive Damages. Sivit v. Village Green of Beachwood, L.P

Update: Read more about what happened on remand here.

Case Background

In October of 2007, a building in the Village Green Apartments in Beachwood was destroyed by fire.  The apartments were owned by Village Green of Beachwood, L.P., and managed by Forest City Residential Management, Inc. (Collectively, Village Green). There had been another fire in another building in the same apartment complex in 2004.

After the 2007 fire, a group of tenants led by Carlos Sivit sued Village Green, claiming negligent construction of the complex and maintaining faulty electrical wiring in violation of the Ohio Landlord Tenant Act.  A jury awarded the tenants compensatory damages of $582,146, 2 million dollars in punitive damages, and attorney fees of a little over a million dollars.

Merit Decision

The issue in this case was whether or not the punitive damages cap codified in R.C. 2315.21(D)(2)(a) applied to the verdict. The Eighth District Court of Appeals held that it did not because the damages arose from the breach of the rental agreement, not from a tort action.  In a unanimous opinion written by Justice Pfeifer, the Supreme Court of Ohio held this to be a tort claim, and that the cap did apply, reversing the appeals court and remanding the case for a re-determination of punitive damages. Read an analysis of the merit decision in the case here.

Remand

Upon remand, the arguing began in earnest. The first issue was what the total amount of the punitive damages should be.  There were ten individual groups of plaintiffs in the case (some were couples, others individuals, but each grouping is one unit) and four subrogated insurance companies. The aggregate amount of compensatory damages awarded to the individual plaintiff groups was $597,147.  The total amount awarded to the subrogated insurance carriers was $171,630.95. The individual plaintiff groups argued that all compensatory damages should be doubled, which would amount to 1,537,555.90 in punitive damages. Village Green argued that only the damages to the individual plaintiff group should be doubled, since the subrogated insurance companies had not sought punitive damages.  That amount would be 1,194,294 in punitive damages. The trial court agreed with the individual plaintiff groups, and set the total amount of punitive damages at 1,537,555.90, plus interest, but did not originally state how that amount should be allocated. That was the next fight. While that argument was going on, Village Green tendered the amount it thought it owed, 1,194,294, plus interest through July 31, 2015, to the Cuyahoga County Clerk of Courts.

Originally all the individual plaintiff groups had argued that each unit should share equally in the award, which meant each of the plaintiff units would receive 153,755.59. But then, one plaintiff unit, the Gruhins, broke off from the others and argued each plaintiff unit should receive twice the amount of its actual individual compensatory damages.  Because the Gruhins had been more seriously injured than some of the other plaintiff units, they would receive 222,466 this way.  This position actually partially aligns the Gruhins with Village Green’s position in the case. Both the Gruhins and Village Green argued to the trial court that making an equal distribution of the punitive damages would exceed the punitive damages cap for seven of the individual plaintiff groups, and thus violate R.C. 2315.21(D)(2)(a).  Doing the calculation in this manner, based on actual compensatory damages, would also mean the total punitive damages would only be 1,194,294, plus interest, as Village Green argued, and continues to argue.  But the Gruhins believe that the total punitive damage should remain at the  1,537,555.90, as set by the trial court before any allocation of the damages, and that Village Green should be ordered to pay the $343,261.90 difference in the two amounts to “the Cleveland Metropolitan Hospital Burn Unit or some other worthy Cleveland-based charitable institution” selected by the court.

On August 31, 2015, the trial court entered an order allocating the punitive damages equally among the individual plaintiff groups, in the amount of $153,755.59 for each unit. This order was appealed separately by the Gruhins and Village Green, and was argued before the Eighth District on March 16, 2016.

Concluding Observations

I wouldn’t be surprised if this case ends up back in the Supreme Court of Ohio.  The case raises interesting questions about the application of the punitive damages cap.  The court considered, but ultimately did not decide, a different cap application issue in 2012 in Ronald Luri v. Republic Services, Inc., et al., The issue there was whether the punitive damages cap  requires a reviewing court to apply the cap separately to  each defendant’s punitive damages award or whether the cap must be applied after combining all separate awards into one.   Read more about that here.

 

 

 

 

 

 

 

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