What You Should Know About Punitive Damages in Small Claims Cases

Punitive damages are damages designed to punish the defendant for outrageous behavior in small claims court — punish him above and beyond the actual monetary loss to discourage him and everyone else from doing such a thing again.

Punitive damages are awarded frequently in intentional tort cases, such as defamation. They’re also sometimes awarded in business situations such as when a bill collector’s actions threaten or harass a debtor.

Say you’ve been out of work for two years and you finally get a new job. Bill collectors have been calling you at all hours of the day and night on a regular basis threatening you with all kinds of dire consequences, including calling your new boss and telling him what a deadbeat you are.

Most states now prohibit such activities and allow you to maintain an action for harassment and collect actual and punitive damages from the harasser.

A common source of punitive damages is when the legislature creates a right to sue in a certain situation and, as part of the law, gives an injured party an additional right to seek damages beyond those actually suffered. So punitive damages are awarded if a business or an individual violates a statute that the legislature passed to restrict those certain behaviors and activities.

In some cases, the court can make the defendant pay treble damages, so you can collect three times the actual damages you suffered because of the defendant’s actions.

Punitive damages aren’t generally awarded in small clams cases because small claims cases don’t usually fit the profile of punitive damage cases. One exception is if the defendant’s actions constituted a deceptive or unfair business practice under the law or if an employer failed to pay wages to an employee.

Typical deceptive practices include the following:

  • Putting the name of a phony corporation on the company’s billhead (paper used for billing, on which corporation name and address is printed)

  • Indicating that the business is properly licensed when it’s not.

  • Engaging in any practice deliberately designed to trick a consumer.

A quick computer search or a call to the agency that licenses the type of business the defendant runs can help you determine whether you can sue for punitive damages.

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