More Bad News from ‘Big Sky Country’

Continuing a troubling trend toward increasingly excessive punitive damages awards in Big Sky Country, Montana’s Supreme Court has upheld a $5 million punitive damages award in connection with an already absurdly inflated compensatory damages award of $1 million.

Mayer Brown partner Evan Tager reports in a blog post that the “plaintiff in McCulley v. U.S. Bank of Montana alleged that the defendant bank offered her a 30-year mortgage loan for acquisition of a condominium, but in fact issued her an 18-month bridge loan. When she could not make the required balloon payment, she had to sell the condo for $40,000 less than the loan balance.

“Alleging that she became suicidal after losing her condo,” Tager’s post continues, “the plaintiff sued and was awarded $1 million in compensatory damages (over three-quarters of which is for emotional distress) and $5 million in punitive damages.  Misapplying the three excessiveness guideposts identified by the U.S. Supreme Court in BMW v. Gore and State Farm v. Campbell, the Montana Supreme Court upheld the full amount of punitive damages.”

Tager’s post concludes with this:

McCulley is contrary to the many cases from other jurisdictions that have refused to allow ratios in the mid-to-high single digits when the compensatory damages are substantial—especially in a case like McCulley involving an isolated incident of comparatively modest reprehensibility. The court may have another opportunity to address excessiveness issues in Kelly Logging, Inc. v. First Interstate Bank, a case in which a Missoula trial judge recently upheld a $16,760,000 punitive award that is close to 60 times the $286,000 compensatory award. One can only hope that the Montana Supreme Court will review the punitive damages in that case with a more searching eye.