SC Court of Appeals Reduces Punitive Damages Award in Construction Case

Originally posted on December 12, 2011 by Ryan

Hollis v. Stonington Dev. LLC, No. 4869, 2011 S.C. Ct. App. LEXIS 215 (Aug. 17, 2011).

Two families sued a development company for damages to their jointly owned property.  The Plaintiffs’ land includes two man made ponds built by family members over 50 years ago.  Stonington purchased land upstream from the property to build a residential subdivision.  The Plaintiffs alleged that as a result of the project, they experienced severe flooding, were hindered from accessing their homes, and their ponds were raised four feet due to sediment deposits.  The cost to restore the Plaintiffs’ property was estimated at $250,000.

The Plaintiffs further claimed that the Defendant Stonington violated state and local laws concerning erosion control and runoff, disregarded engineer recommendations, and misled them about its remediation plans.

At trial, the jury returned a verdict for the Plaintiffs in the amount of $400,000 in actual damages and $3.5 million in punitive damages.  Punitive damages are awarded when the conduct of the defendant is particularly egregious.  Stonington appealed this verdict to the SC Court of Appeals, where the punitive damages amount was reduced to $2 million.

The appellate court noted that it has the authority to set an upper limit range for punitive damages while still giving deference to the jury’s determination.  In determining whether a punitive damage award is excessive, courts look to the degree of reprehensibility of the defendant’s conduct, the ratio of compensatory damages awarded, and a comparison of the punitive damages awarded for similar misconduct.

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