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Buterick v. Vazzano

A-2982-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

CONTRACTS; DAMAGES—Reprehensibility of conduct is a factor to be used in setting damages under New Jersey’s Punitive Damage Act.

A jury determined that a seller had duped a buyer into purchasing coin-operated amusement game machines located in restaurants and bars near the New Jersey shore. The buyer claimed that the seller violated the Consumer Fraud Act by misrepresenting the expected income to be generated by the machines. The jury agreed and awarded compensatory damages of $26,000 and punitive damages of $28,500. The trial judge reduced the punitive damages to $7,500 and the buyer appealed. The Appellate Division affirmed. The Punitive Damage Act requires a trial judge, prior to entering an award for punitive damages, to determine: (1) if the amount of the award is reasonable; and (2) if the award of punitive damaged is justified in light of its purpose to punish the offender and to deter him from repeating such conduct. The trial judge, in reducing the punitive damage award, determined that the seller’s conduct was not part of a broad scheme to defraud the public, but rather was an isolated incident by an overreaching seller. Having determined that the seller was unlikely to engage in this type of conduct again, the trial judge found the punitive damages (which were greater than the compensatory damages awarded) to be excessive. The Appellate Division, in affirming the reduction of the punitive damage award, looked to the reprehensibility of the conduct in determining whether the award should stand. The Appellate Division, in a prior case, adopted a hierarchy of reprehensible conduct. Under the hierarchy, acts or threats of violence are the most reprehensible, followed by acts taken in reckless disregard for other people’s health or safety, following by acts of deceit, followed by negligence acts or omissions. The Court agreed that the seller’s conduct was an isolated incident involving a speculative business deal between two experienced businesspeople. Since the seller’s conduct did not rise to the higher levels of reprehensibility, it was not improper for the trial judge to reduce the punitive damage award.

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