Punitive Damage Claim Not Alleged in Petition
I have an auto accident case in which the defendant was DUI. No claim for punitive damages in the original petition and the SOL has run. Will I be able to allege a claim for punitive damages at this point?
Answer: You can, but whether you want to is another question. See: Smith v. Warehouse Market, Inc., 1978 OK 125, 586 P.2d 724, 726: "Since (1) in this state a claim for punitive damages cannot be a separate and independent cause of action, but is only incidental or collateral to the claim for actual damages, and (2) the fact, standing alone, that the total amount claimed for damages was increased does not raise the defense of limitations, we hold that the amendment under consideration in the case now before us "relates back to the time when the action was commenced" and is not barred by limitations."
As to whether you want to, you need to be aware that, if you ask for punitives and then settle the case, the IRS can and sometimes will, allocate a percentage of the settlement to punitive damages, which can have disastrous tax consequences to your client since punitive damage are taxable, while bodily injury damages are not. See: Rev. Ruling 85-98, I.R.B. 1985 - 29.5 CCH ¶6609: Where complaint sought specified amounts in compensatory and punitive damages, but settlement was for a lump sum, ratio in complaint would be used to determine amount of punitives in settlement subject to tax; proportionate share of fees and expenses would be allowed as a deduction.
You would also need to consider that any punitives would not be covered by insurance so you may or may not be able to collect them.
Posted on Thu, August 4, 2011
by Sharon Coleman filed under