Municipalities are immune from punitive damage awards.

In re Town Highway No. 20 Town of Georgia 2012 VT 17 (Skoglund, J.)

In 1995, John Rhodes, a resident of the Town of Georgia, petitioned his local governing body, the selectboard, to clarify several issues surrounding two roads that bordered his land.  While this case began as a suit over the existence and use of two ancient roads, it grew over time into a test of constitutional guarantees and a saga about abuse of power. After almost fifteen years of litigation, the court found that Rhodes’s request to access his land over town roads had been repeatedly and maliciously frustrated by the Town selectboard in an ongoing attempt to protect the value of a neighbor’s property, a violation of Chapter I, Article 7 of the Vermont Constitution, the Common Benefits Clause.  The court concluded that Article 7 was self-executing and, although it awarded monetary damages for the constitutional violation, it denied punitive damages.    Rhodes claims that the trial court erred in denying his claim for punitive damages given the court’s finding that the selectboard acted in bad faith and with malice, arguing that the Town should be treated like any other corporate entity.  We disagree.

To support an award of punitive damages for a defendant’s intentionally wrongful conduct, a plaintiff must show that the defendant acted with actual malice: that the defendant’s wrongdoing has been intentional and deliberate, and has the character of outrage frequently associated with crime.  Regardless of whether the Town’s actions meet this standard, we hold that, absent a clear legislative directive to the contrary, municipalities are immune from punitive damage awards.

This result is in line with our precedent and that of many of other jurisdictions.  See Willett v. Village of St. Albans, 69 Vt. 330, 38 A. 72 (1897).  The U.S.Supreme Court in  City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-67 (1981) vacated  an award of punitive damages against a city in a federal § 1983 suit because the history and policy behind § 1983 suits did not “support exposing a municipality to punitive damages for the bad-faith actions of its officials.”  Id. at 271. The same policy rationale for limiting punitive damages is persuasive here.   

By their very nature, punitive damages are not meant to reward the injured, but to punish and deter the wrongdoer. The twin aims behind punitive damages—punishment and deterrence—would not be met if they were levied against a municipal corporation for the malicious and wrongful acts of its officers.  Rather than exclusively targeting the wrongdoers, such an award would punish all of the town’s taxpayers. Facing no direct financial hardship, deterrence of individual officials is wanting.   Because the twin aims of punishment and deterrence are not served when punitive damages are levied against a population for the acts of its elected officials, municipal corporations cannot be held liable for punitive damages.