On May 25, 2023, Justice Masley of the New York County Commercial Division issued a decision in Thompson v. Nelson, 2023 NY Slip Op. 31807(U), holding that a plaintiff had failed to meet the heavy burden for an award of punitive damages, explaining:
As to punitive damages,
because the standard for imposing punitive damages is a strict one and punitive damages will be awarded only in exceptional cases, the conduct justifying such an award must manifest spite or malice, or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that the conduct may be called wilful or wanton . . . Punitive damages may only be awarded if defendant’s acts were, wanton and reckless or malicious. Punitive damages may be awarded for conduct that represents a high degree of immorality and shows such wanton dishonesty as to imply a criminal indifference to civil obligations.
Punitive damages are not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights. However, to obtain punitive damages for breach of fiduciary duty in a tort case, plaintiff was not required to allege that defendant’s conduct was directed to the general public.
Plaintiff asserts that punitive damages are appropriate here because Nelson induced plaintiff to send the investment funds to Nelson’s attorney escrow account. While plaintiff’s contract is with Streamteam, not Nelson, plaintiff testified that Nelson said that she was Streamteam’s attorney. Plaintiff states that Nelson’s conduct was reported to the U.S. Attorney’s Office in the Southern District for review and possible criminal action. However, referral to the U.S. Attorney is not evidence that a crime was committed, and the court cannot make that determination on this record. Further, plaintiff’s allegation that she was directed to wire the investment funds into Nelson’s attorney escrow account without more does not rise to a level of exceptional misconduct. There are no allegations or evidence that Nelson’s actions were maliciously, wantonly, or with a recklessness that betokens an improper motive or vindictiveness or has engaged in outrageous or oppressive intentional misconduct or with reckless or wanton disregard of safety or rights. Rather, plaintiff’s testimony and documentary evidence that Nelson directed the investment funds into her attorney escrow account may give rise to a disciplinary inquiry.
As to improper motive, it was asserted on the record that defendants preyed upon plaintiff because she is a widow. Plaintiff failed to offer any evidence of such predatory behavior. While plaintiff testified that she had known Nelson for some time, plaintiff did not testify as to when they met or the circumstances. The attorney’s statement that plaintiff was preyed upon does not make it so. Moreover, that argument seems to have been abandoned in plaintiff’s papers.
(Internal quotations and citations omitted).