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Herman v. Sunshine Chemical Specialties Inc.

Decided: June 30, 1992.

SANDRA HERMAN, PLAINTIFF-RESPONDENT, AND ROBERT HERMAN, HER HUSBAND, PLAINTIFF,
v.
SUNSHINE CHEMICAL SPECIALTIES, INC., A N.J. CORP., CONCORD HARLEY CORP., A/K/A CONCORD CHEMICAL COMPANY, INC., A/K/A HARLEY CHEMICAL CORP., A DIVISION OF CONCORD CHEMICAL COMPANY, INC., DEFENDANTS. PARKER, MCCAY & CRISCUOLO AND GENERAL ACCIDENT INSURANCE COMPANY, INTERVENORS-APPELLANTS



On appeal from the Superior Court of New Jersey, Law Division, Ocean County.

Michels, O'Brien and Havey. The opinion of the court was delivered by Michels, P.J.A.D.

Michels

The opinion of the court was delivered by

MICHELS, P.J.A.D.

We granted leave to Parker, McCay & Criscuolo (Parker-McCay) and General Accident Insurance Company (General Accident) to intervene and prosecute appeals as real parties in interest from that portion of a judgment of the Law Division entered on a molded jury verdict awarding plaintiff Sandra Herman compensatory damages with prejudgment interest in the sum of $397,420 and punitive damages in the sum of $400,000 against defendant Sunshine Chemical Specialties, Inc. (Sunshine Chemical) and from a denial of a post-judgment motion by Sunshine Chemical for a new trial in this personal injury product liability tort action.

Briefly, plaintiff instituted this action against defendants Sunshine Chemical and Concord Harley Corp., a/k/a Concord Chemical Company, Inc., a/k/a Harley Chemical Corp., a Division of Concord Chemical Company, Inc. (Harley) to recover damages for personal injuries sustained as a result of exposure to the product Sun-Clean Concentrate distributed by Sunshine

Chemical. Plaintiff pursued the action on theories of negligence, strict liability and breach of implied and expressed warranties. She sought to recover compensatory and punitive damages. Plaintiff's husband, plaintiff Robert Herman, sued per quod. Prior to trial, plaintiffs settled their claims with Harley and the matter proceeded to trial solely against Sunshine Chemical. At the Conclusion of the proofs, the jury, in answer to special interrogatories, found that Sunshine Chemical's product Sun-Clean Concentrate was defective, that the defect was a proximate cause of the harm to plaintiff, that Sunshine Chemical was negligent and that its negligence was a proximate cause of the harm to plaintiff. The jury also found that Harley knowingly placed in the stream of commerce the defective product Sun-Clean Concentrate and that this was a proximate cause of the harm to plaintiff. The jury then found that, based on comparative fault, Sunshine Chemical was 80% at fault and Harley 20% at fault and that the amount of money to fairly and reasonably compensate plaintiff for the injuries she sustained was $410,000. In addition, the jury awarded plaintiff punitive damages in the amount of $400,000 against Sunshine Chemical. The jury awarded Robert Herman nothing. The trial court thereupon molded the verdict and entered judgment in favor of plaintiff against Sunshine Chemical for $328,000 compensatory damages plus prejudgment interest and $400,000 punitive damages. The trial court denied Sunshine Chemical's motion for a new trial which was based on the grounds that the evidence did not demonstrate willful, wanton or reckless conduct on its part and that plaintiff failed to introduce evidence of its financial worth.

Thereafter, General Accident paid plaintiff the compensatory damage portion of the judgment but refused to pay the punitive damages award. As a result, a partial warrant of satisfaction of the judgment was executed. Sunshine Chemical declined to appeal the punitive damages portion of the judgment and assigned to plaintiff any claim it may have against General Accident and Parker-McCay based on their failure to properly

settle or defend the case. According to the Parker-McCay firm, the punitive damages claim was settled when Sunshine Chemical agreed not to prosecute an appeal of the punitive damages awarded thereby locking in the judgment. Because of a potential conflict of interest presented by Sunshine Chemical's refusal to appeal the punitive damages award and Sunshine Chemical's suggestion of future litigation against both General Accident and Parker-McCay, we granted the latter leave to intervene and appeal from the punitive damages portion of the judgment as real parties in interest. We then consolidated both appeals on our own motion.

I.

Preliminarily, contrary to plaintiff's claim, leave to appeal was properly granted in this case. Rule 4:33-2 provides in relevant part:

Upon timely application anyone may be permitted to intervene in an action if his claim or defense and the main action have a question of law or fact in common . . . . In exercising its discretion the court shall consider whether the intervention will unduly prejudice the adjudication of the rights of the original parties.

Plaintiff, as assignee, has instituted an action against General Accident to recover damages in the sum of $400,000 -- the amount of the punitive damage award, together with interest and attorney fees. According to plaintiff,

The predicate of that lawsuit is that General Accident and its agent, David Parker, failed to properly protect the individual interests of Sunshine Chemical by settling the case within policy limits for a sum of money which would have secured to them a general release including a release for punitive damages.

As a secondary position it is claimed that General Accident through its agents did not provide a timely notice of the pendency of a punitive damages claim and did not provide a properly executed reservation of rights or permit Sunshine Chemical to obtain independent trial counsel in a meaningful fashion.

Despite plaintiff's assertion that General Accident's failure to put $400,000 in escrow (representing the punitive damages award) negates its standing to appeal, General Accident and Parker-McCay have sufficient interest in the present litigation

to warrant their intervention and prosecution of these appeals as the real parties in interest.

II.

We turn now to Parker-McCay's and General Accident's contention that the trial court erred in failing to dismiss the punitive damages claim against Sunshine Chemical because plaintiff failed to present proofs of actual malice or fraudulent or evil motives sufficient to warrant the imposition of punitive damages as a matter of law.

Punitive damages reflect the importation of criminal law principles of punishment into the field of tort law. Prosser & Keeton on Torts § 2, at 9 (5th ed. 1984) (hereinafter " Prosser & Keeton "). Such damages constitute "a sort of hybrid between a display of ethical indignation and the imposition of a criminal fine." Cabakov v. Thatcher, 37 N.J. Super. 249, 259, 117 A.2d 298 (App.Div.1955) (quoting Haines v. Schultz, 50 N.J.L. 481, 484, 14 A. 488 (Sup.Ct.1888)). "An award of punitive damages, by its own terms, is punitive in nature . . . ." Belinski v. Goodman, 139 N.J. Super. 351, 359, 354 A.2d 92 (App.Div.1976). In contrast to compensatory damages, punitive damages serve the "admonitory" function of expressing the "community's disapproval of outrageous conduct . . . ." Fischer v. Johns-Manville Corp., 103 N.J. 643, 657, 512 A.2d 466 (1986). The plaintiff is awarded punitive damages "over and above the full compensation for the injuries, for the ...


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