WHAT ARE PUNITIVE DAMAGES?

Punitive damages are intended to punish a defendant in a civil case who acted with malice, and to provide a deterrent to future similar conduct by the defendant. Twenty states, including Texas, have enacted punitive damage reform legislation.

RECENT CASE LAW AFFECTING PUNITIVE DAMAGES

A series of recent United States Supreme Court decisions have defined the standard for imposition of punitive damages.

In State Farm Mutual Insurance Company v. Campbell, 538 U.S. 408 (2003), the Supreme Court applied the guidepost it had previously established in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). The Gore decision directed appellate courts reviewing punitive damages awards to consider the following three factors: (1) the degree of reprehensibility of the defendant's misconduct; (2) the relationship between the actual and potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

In State Farm, the Supreme Court emphasized that, of the three Gore factors, the single most important indicator of the reasonableness of the punitive damage award is the degree of reprehensibility of the defendant's conduct. The Supreme Court then applied the five factors it had previously set forth in Gore to measure the reprehensibility of the defendant's conduct: whether the harm was physical or economic; whether the tortuous conduct evinced an indifference to or reckless disregard for the health or safety of others; whether the conduct involved repeated actions or was an isolated incident; and whether the harm resulted from intentional malice, trickery, or deceit, or mere accident.

The United States Supreme Court heard oral arguments in Phillip Morris v. Williams, Number 05-1256, on October 31, 2006. In Phillip Morris, the Supreme Court will, for the first time, be asked to apply the Gore guideposts to a case involving the death of a plaintiff - a long time smoker who died of lung cancer - rather than a case of merely economic damages. In Phillip Morris, the Oregon Supreme Court upheld the punitive damage award to the family of a deceased smoker more than one hundred times the amount of actual damages. Phillip Morris' appeal presents two questions to the court: (1) whether, in reviewing a jury's award of punitive damages, an appellate court's conclusion that a defendant's conduct was highly reprehensible and analogous to crime can override the Constitution's requirement that punitive damages be reasonably related to the harm to the plaintiff; and (2) whether due process permits a jury to punish the defendant for the effect of its conduct on non-parties. I will provide an overview of the competing arguments in this case and thoughts on future action by the Supreme Court relative to punitive damages.

DEFENDING A COMPANY IN PUNITIVE DAMAGES CASE

Punitive damages often represent a significant, if not the most significant, exposure a company faces in litigation. Dealing with punitive damages must be part of a bigger litigation strategy. It is critical that a company, in conjunction with trial counsel, prepare a comprehensive plan of action to avoid, or minimize, the company's exposure to punitive damages. The plan of action should include discovery and witness selection intended to demonstrate the difference between any mistakes which were made, and conduct which was intended to cause harm. At trial, effort must be made to select jurors who will rationally analyze the evidence, rather than base their findings exclusively on anger or sympathy, to allow a chance for a positive outcome for the company.

INSURABILITY OF PUNITIVE DAMAGES

There is currently no clear guidance from either the Texas Legislature or the Texas Supreme Court on the issue of whether Texas public policy prohibits a liability insurance provider from indemnifying an award for punitive damages imposed on its insured because of gross negligence. Texas appellate courts have long wrestled with the issue, and have reached different conclusions. Some courts have found that parties should be allowed to enter into contracts freely, and ensure that the insurers comply with their contractual obligations. See Am. Intern. Specialty Ins. Co. v. Triton Energy, Ltd., 52 SW.3d 337 (Tex. App. - Dallas, 2001). Other court have found that insuring punitive damages violates public policy, as it defeats the purpose of awarding punitive damages (to punish the wrongdoer and to deter similar behavior in the future), by permitting the wrongdoer to shift the burden of paying the punitive damages to its insurer. See Milligan v. State Farm Mut. Auto. Ins. Co., 940 SW.2d 228 (Tex. App. - Houston, 1997).

The Texas Supreme Court has thus far refused to address the issue of whether punitive damages are insurable. However, the Fifth Circuit Court of Appeals has certified questions concerning punitive damage awards to the Supreme Court of Texas, in a case filed in August 2004, which is currently pending before the Texas Supreme Court. See Fairfield Insurance Company v. Stevens Martin Paving, L.P., 381 F.3d 435 (5th Cir. 2004).


By: Patrick Madden
Patrick Madden is a shareholder with the Dallas law firm Macdonald Devin, P.C. His practice focuses on civil litigation and client counseling on risk management and avoidance. He can be contacted at 214-744-3300.

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Who will care for your children if you should die before their 18th birthday?

A difficult thought, to be sure. It may help to know that you can provide for your children's well-being should such a disaster occur. You can name the person who will be your children's Guardian if you are no longer here, and ensure that they are cared for and receive all the benefits of your estate.

Q: Who needs to choose a Guardian?

A: All parents of children under the age of 18 need to specify a Guardian. California law requires that everyone under the age of 18 be represented by a legal Guardian. Only minor children who are married are excepted from this rule.

Q: What does a Guardian do?

A: A Guardian or Guardians are responsible for:

1) Your children's person

2) Your children's estate

The Guardian of your children's person has responsibility for the care, custody, control, and education of your minor children.

The Guardian of your children's estate is responsible for the management and control of the minor's property. You can nominate one person to be Guardian of person and estate, or choose two different people. This allows you to choose the person who is best able to raise your child, even if they are not the best person to manage the inheritance.

Q: What happens if I don't nominate a Guardian for my child?

A: If you do not nominate a Guardian, and you predecease your minor children, the Probate Court will choose a Guardian for you. The Court appoints a Guardian based on a formula that is defined by State Law. No consideration is given to your wishes unless they are legally specified in writing.

Q: How do I Nominate a Guardian for my child?

A: You can nominate a Guardian in your last will and testament. It is important that your will be coordinated with your other estate planning documents such as a Living Trust, life insurance, retirement plans annuities, etc.

Here are some important steps you should consider when planning for your children's Guardianship:

1. Communicate with your spouse.

This may seem obvious at first, but it can take longer than you expect to arrive at a mutually agreeable decision. It's easier to decide how to distribute your estate than it is to select a Guardian. Take as much time as you need to discuss this decision openly with your spouse so that you are happy with your choice.

2. Communicate with the Intended Guardian.

You may be astounded to find that some nominated Guardians have no idea that they had been chosen until the parents are deceased. This is far too critical a decision to spring on someone at the last minute. After you have decided on a candidate, discuss it with him or her as early as possible.

3. Ensure that your child's Estate is Adequately Funded.

Asking another person, even a family member, to raise your children in your absence is a serious emotional and financial decision. Ensure that you have a living trust, life insurance policy, or other financial arrangement in place. Communicate the financial situation clearly to the potential Guardian, and ensure that they are willing and able to handle the commitment.

4. Ensure that the Guardian of the child's person is able to work closely with the Guardian of their Estate.

It is entirely appropriate to choose one person as the Guardian of Your Child, and another person as Trustee or Guardian of their Estate.

However, make sure that these people are dedicated to working together for your child's benefit.

If there is a family conflict, or some other reason they would not be able to work together, you should consider using a professional (such as a bank trust department or other Professional Fiduciary) to manage the Estate.

5. Seek professional legal help immediately!

Recent studies show that up to 66% of Americans die without a valid will or trust. As a result, the vast majority of Guardianship proceedings take place without any input from the deceased parents. Procrastination is your greatest enemy. Everyone thinks they will live well into their children's adulthood. However, statistics show that this is not always true.

Your children's well-being is too important to leave to chance.

Copyright (c) 2006 Ainer & Fraker, L.L.P.

By: John Erik Fraker, Esq.
John Erik Fraker, Esq., is an estate planning attorney with Ainer & Fraker, LLP, a California law firm specializing in estate planning, small business law and tax. The firm's web site is at http://www.ainerfraker.com. Disclaimer: The information contained in this newsletter is not intended as a source of legal advice. You should not act upon or rely on information in this or any other newsletter without the advice of competent counsel.

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Paying child support is a tremendous responsibility. The payments that are made are distribute to the custodial parents to ensure that their children have what they need to live a comfortable life. There are many cases today being open for establishing child support so the custodial parents may receive assistance from the non-custodial parent in supporting their child/children. There are several things you must do as a custodial parent before you receive child support payments. One, you must establish child support, second, you must locate the non-custodial parent, and if the non-custodial parent refuses to acknowledge the child you must have a paternity test performed. If the non-custodial parent refuses to pay child support once they are determined to be the biological father, then the court will use several method to enforce child support payments. Child support laws have slight differences from state to state, but one similarity that all 50 states do have is that child support must be paid by the non-custodial parent or they may face consequences.

When establishing child support the custodial parents must fill out a applications. When filling out this applications, you must provide as much information about you and the non-custodial parent. Information such as the non-custodial parent's first and last name, social security number, and date of birth. If the custodial parent is receiving any type of assistance from the state or federal government, the application fee may be waived. In some states the child support application fee can run up to twenty five dollars.

Before child support can be awarded, the custodial parent must have the non-custodial parent found. There are several methods used in locating the non-custodial parent. If the custodial parent provides the local child support court office with the social security number of the non-custodial parent, then that would be able to track them down when they are hired at a new job. Providing information about the non-custodial parents friends and family may also prove useful when tracking down the missing parents. Once the parent is located, the local county sheriff will stop by their residence and provide them with child support orders which they would have to sign. The child support orders inform the non-custodial parents that they are being sued for child support and must attend a mandatory court hearing to determine if they are responsible for child support payments and how much they are going to have to pay.

Paternity testing is the procedure where a small bodily fluid sample is extracted from the alleged father and child and a testing is done to see if the samples of fluid are a match. Once the non-custodial parent has been located and summoned to court, the child support administer will ask if a paternity test is necessary. A test would be automatically performed if the non-custodial parent refuses to acknowledge the child/children. Paternity testing is done by taking DNA sample (saliva) of the father and child to see if there is a 99.9% match. Only then will the non-custodial parent be responsible for making child support payments. After the test is done and the samples are taken, you may want to give it two to four weeks before you get any results back. If the father does acknowledge that he is the father, he may sign the birth certificate at the hospital at the time of birth or he can sign a statutory declaration of acknowledgement form. You will need to hire your own lawyer to have any paternity testing performed.

Soon after child support is established and the biological father is acknowledged, the court will order the non-custodial parent to make timely child support payments. If the non-custodial parent refuses to make those payments, the child support enforcement office will be force to use methods in order to motivate the parent to pay. These methods are slightly different from state to state. Most of these methods include passport denial, license suspensions, including driver's, professional and recreational, tax refund interceptions, and sometimes federal prosecution. In the United States there are many child support evaders who will go out of there way to avoid paying child support. These people must be found and prosecuted for not living up to their obligations.

Paying child support can be difficult sometimes, especially if you are laid off from a job or receive a deduction in pay. In most states child support orders are reviewed once every three years to see if modifications are necessary. Child support modifications can also be requested by either the custodial or the non-custodial parent. If a non-custodial parent loses their job or is not making the money that they were making, they can request to have their child support payment reduce. However, if the non-custodial parents receives a promotion and is making a lot more money than before, the custodial parent is able to request modifications to increase the child support payments. Modifications are performed and executed depending on the lifestyle of either parent.

Children are often victims of illness, that is why health insurance is provide for most. In most states in America, when a non-custodial parent is ordered to pay child support they are also responsible for providing health insurance for the child/children. In other states both parents are responsible for providing medial insurance for the child/children. If a non-custodial parent is ordered to pay health benefits for the child/children, it will automatically be garnished for their wages.

Child Support in some states end when the child is 18 years of age are when they graduate from high school, which ever happens last. Some states the child would have to be 19 years of age before any payments are ceased. Child support payments may also be terminated if the child is emancipated form the parents. Once the child reaches the appropriate age, child support payments will not end if there are any arrears that are remaining.


By: Holcy Thompson III
Visit the Child Support Laws Home Page.
I am a parent who is currently paying child support in the state of Texas. My goal is to get information on child support in each state to provide other parents with useful information.

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I read an interesting statistic recently that was published in a well-known online newspaper. According to the article, one out of three otherwise-healthy adults will experience a long term state of disability (due to an accident or illness and lasting a month or longer, with the possibility of being permanent) prior to age sixty.

Upon reading this statistic, I immediately perked up since one out of three odds is fairly high. However, I had little trouble believing the statistic: as a former disability claims examiner, it was once my job to do nothing but evaluate the records of individuals both young and old who had been severely affected by an injury or illness. Most individuals, however, unless they've known someone whose ability to work was profoundly diminished by an impairment, never consider the possibility that they might, at some point, become disabled. Unfortunately, the limiting effects of an accident or disease are closer than many of us would care to know.

So, what does an individual who can no longer work do? Answer: they file for benefits. The next obvious question question, of course, is what kind of benefits? Answer: everything you may possibly be eligible for, incuding workers compensation benefits, short term disability benefits, long term disability benefits, and, last but not least, federal disability benefits.

Federal disability benefits are provided by two programs, both of which are administered by the social security administration. The first program is established under title 2 of the social security act and it is known by many abbrevations and acronyms such as RSDI (retirement, survivors, and disability insurance), DIB (disability insurance benefits), and SSDI (social security disability insurance benefits). However, most individuals simply refer to this program as social security disability, or SSD.

The second disability program that is administered by the social security administration is established under title 16 of the social security act and is known as SSI, which stands for supplemental security income.

How are these two disability programs different? They differ in a number of ways, both in terms of basic eligibility requirements and in terms of intended purpose.

SSI disability is fundamentally a needs-based program. As such, there are certain limiting prerequisites to filing for SSI. The first prerequisite is that a potential SSI claimant cannot have countable assets that exceed two thousand dollars. What are countable assets? They include money in bank accounts, real estate property other than one's home residence, and almost any asset upon which an individual does not rely for the most basic needs, and which can be liquidated fairly easily.

SSI benefits are intended for minor-age children who are disabled and for disabled adults who are not covered for SSD, as a result of insufficient contributions to the disability system via payroll deductions.

SSD, or social security disability, is different. It is not a needs-based program and is treated by the federal government as a form of insurance. In fact, whether or not an individual can apply for SSD depends soley on their insured status. In other words, has the individual worked long enough to earn the minimum number of credits needed to be insured for SSD? Individuals who are insured for SSD benefits are allowed to file for SSD benefits. Individuals who are not insured for SSD may have a disability application taken in the SSI program, assuming that they do not possess assets in excess of the two thousand dollar limit.

SSD and SSI benefits, however, are both administered by the same federal agency, the social security administration. For this reason, disability claims in either program are handled and processed in an identical fashion.

By: Timothy Moore
The author of this article is Tim Moore, who, in addition to being a former food stamp caseworker, medicaid caseworker and AFDC caseworker, is a former disability claims examiner. He publishes a blog on the disability process which is titled the Social Security Disability and SSI blog.

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