Boise Dodge v. Clark

Idaho Supreme Court · Contracts

ContractsPunitive damagesFraud and deceitCorporate liabilitypunitive damagescontract and tort overlapfrauddeceit

Facts

Boise Dodge sold Clark a 1966 Dodge Monaco after salesmen described it as a "new" car, even though its odometer had been rolled back from 6,968 miles to 165. The written sales agreement marked the car as a demonstrator, but Clark testified he focused only on the figures and had been told the mileage reflected normal driving around the premises. Boise Dodge's general manager admitted he knew the odometer had been set back when the car was sold, and the service manager testified the general manager had ordered the setbacks on demonstrator cars. The jury found Boise Dodge was owed the contract balance but also found Clark suffered $350 in breach-of-contract damages and awarded $12,500 in punitive damages.

Issue

Whether punitive damages were properly submitted to the jury and awarded against Boise Dodge. This included whether a corporation could be held liable for punitive damages based on acts of its agents, whether punitive damages were available where the claim was framed in contract, and whether the amount awarded was excessive or the product of passion and prejudice.

Rule

A corporation is liable for punitive damages for acts of its agents when corporate management participated in, authorized, or ratified the wrongful conduct. In Idaho, punitive damages may be assessed in contract actions when fraud, malice, oppression, or other sufficient reason is shown, and the award must bear some reasonable relation to actual damages, though no fixed mathematical ratio applies. In setting punitive damages, relevant considerations include the culpability of the conduct, deterrent effect, the defendant's motives, the degree of calculation involved, and the extent of disregard for the rights of others.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeview Outfitters, a Wyoming corporation in Cheyenne, sold Nora Patel a camping trailer under a sales contract stating it had never suffered water damage. A salesperson made that representation even though the company’s operations manager had reviewed repair records showing major prior flooding and approved the sale anyway. Nora proved $2,000 in compensatory damages for the trailer’s diminished value.

May punitive damages be imposed against the corporation?

Explanation. The majority rule applied here permits punitive damages against a corporation when corporate management participated in, authorized, or ratified the wrongful conduct. Knowledge by a managing officer who allows the sale to proceed is enough to attribute the fraud to the corporation. The rule is not that every employee’s act automatically creates punitive liability, and the existence of a contract does not bar punitive damages where fraud is sufficiently shown.