Punitive Damages in North Carolina

March 31, 2023 | - News & Insights

Litigation risk is one of the primary operating concerns for many companies in North Carolina. While effective risk management strategies can help to alleviate some of those concerns, the prospect of multimillion-dollar judgments and settlements always looms. Punitive damages — those designed not to compensate victims but to punish defendants — are controversial but still awardable under North Carolina law. While state law limits the amount of punitive damages courts may award, potential defendants should nonetheless know what punitive damages are and how they work. If you are facing a potential punitive damages award, an experienced North Carolina personal injury attorney can help you mount a strong defense. 

Damages Available in Personal Injury Cases 

There are two major categories of damages available in North Carolina personal injury claims: compensatory damages and punitive damages. Compensatory damages can be further distinguished into economic damages and non-economic damages. 

Compensatory damages are designed to compensate the plaintiff in a personal injury action for the damages they allegedly suffered due to the defendant’s conduct. Economic damages include: 

  • Lost wages
  • Lost earning capacity 
  • Property damage
  • Past and future medical expenses
  • Out-of-pocket expenses

Non-economic damages are designed to compensate the plaintiff for more subjective damages that cannot be as easily quantified as economic damages, such as: 

  • Pain and suffering
  • Disfigurement
  • Loss of consortium 
  • Loss of enjoyment of life 
  • Reputational damage

Punitive damages are not intended to compensate plaintiffs. Rather, they are designed to punish defendants with the aim of deterring such behavior by others in the future. They typically are awarded in cases where the defendant’s conduct is especially egregious or even intentional. Punitive damages are awarded on top of compensatory damages, which can significantly increase the damages burden for defendants. 

Types of Cases in Which Punitive Damages May Be Awarded

North Carolina’s punitive damages statute is found in Chapter 1D of the North Carolina General Statutes. Under North Carolina law, punitive damages may be awarded only if the claimant proves that the defendant is liable for compensatory damages and that one of the following aggravating factors was present and was related to the injury for which compensatory damages were awarded: 

  • Fraud
  • Malice 
  • Willful or wanton conduct

The plaintiff bears a high burden of proof when seeking punitive damages. To obtain punitive damages, a plaintiff must prove one of the above aggravating factors with clear and convincing evidence — a higher standard than the preponderance of the evidence standard used in negligence cases. While a preponderance of the evidence means that it is more likely than not that a fact or event occurred, clear and convincing evidence must convince the fact finder that the contention is highly and substantially more likely to be true than untrue. 

Fraud, Malice, and Willful or Wanton Conduct Defined 

A plaintiff seeking punitive damages may allege any of the three aggravating factors above. When alleging fraud, the plaintiff generally must show that the defendant made a false representation or concealment of a material fact with the intention of deceiving the plaintiff and that the deception caused harm to the plaintiff. Malice refers to a sense of personal ill will toward the plaintiff that incited the defendant to engage in conduct that caused harm to the plaintiff. Willful or wanton conduct is conduct undertaken with a conscious and intentional disregard of and indifference to the safety of others, which the defendant knows or should know is reasonably likely to result in harm. 

Factors Courts Consider in Awarding Punitive Damages

Courts have discretion in determining whether to award punitive damages and the amount to be awarded, if any. When evaluating claims for punitive damages, courts may consider the following factors:

  • The reprehensibility of the defendant’s motives and conduct
  • The likelihood, at the relevant time, of serious harm
  • The defendant’s awareness of the probable consequences of their conduct
  • The duration of the defendant’s conduct
  • The actual damages suffered by the claimant
  • Any concealment by the defendant of the facts or consequences of its conduct
  • The existence and frequency of any similar past conduct by the defendant
  • Whether the defendant profited from the conduct
  • The defendant’s ability to pay punitive damages 

For more detailed information about how North Carolina courts evaluate punitive damages claims, please contact a North Carolina personal injury attorney

Punitive Damages Caps and Other Limitations on Punitive Damages

Some states place limits on the amount of punitive damages a plaintiff may be awarded, including North Carolina. Punitive damages in North Carolina may not exceed three times the amount of compensatory damages or $250,000, whichever is greater. If the trier of fact returns a verdict for punitive damages in excess of that amount, the court will reduce the award to the maximum amount allowable. Furthermore, the court may award reasonable attorneys’ fees against a plaintiff who files a claim for punitive damages that the plaintiff knows to be frivolous or malicious. The damages cap does not apply in cases of claims of punitive damages arising from the defendant’s operation of a motor vehicle under the influence of drugs or alcohol. 

Punitive damages also may not be awarded solely on the basis of vicarious liability for the acts or omissions of others. These types of claims typically arise against corporations when one or more of the corporation’s employees has engaged in tortious conduct. Punitive damages may only be awarded against a person if that person has directly participated in the conduct giving rise to the aggravating factor or if the officers, directors, or managers of the corporation participated in or condoned the conduct. 

Fight Claims for Punitive Damages With Help from a North Carolina Personal Injury Attorney 

Punitive damages add another layer of litigation risk on top of compensatory damages. And even with damages caps in place, an award of punitive damages can cause significant harm to a company’s reputation. The best way to fight claims of punitive damages is to hire an experienced personal injury attorney. To get started, please contact the North Carolina personal injury attorneys at Harris, Creech, Ward & Blackerby by calling 252-638-6666 or using our online contact form.

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Harris, Creech, Ward & Blackerby, P.A.

325 Pollock Street, PO Drawer 1168,
New Bern, NC 28563

Tel: 252-638-6666
Fax: 252-638-3542

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