Pennsylvania Nat. Mutual Cas. Ins. Co. v. Edmonds
(United States District Court, Southern District Alabama, March 3, 2010)
This action involved the misappropriation of hundreds of thousands of dollars by an employee of an Alabama metal fabricating company. The insurer paid the claim and received an assignment from the company to pursue the losses. Employee-defendant never appeared and the insurer filed a motion for default judgment against the employee for approximately $570,000, including $150,000 in punitive damages.
Despite the court’s acknowledgment of the insurer’s meticulous evidentiary submission as to the total damages causes by the misappropriation, it only awarded a portion of the damages due to a discrepancy between the complaint and the damages sought. Specifically, the court noted that a default judgment is confined to the specific factual allegations delineated in the Complaint; it does not grant a blank check to recover from the defaulting defendant any losses it ever suffered from whatever source. Rather, it is strictly confined to the fraudulent acts set forth in the pleadings. Thus, the court held that while there is evidence of more significant total losses, the complaint does not demand relief for the other forms of theft revealed in subsequent investigations, including theft of petty cash, travel advances etc. Thus, the court was forced to subtract these amounts from the total award.
While the court reduced the award based on the allegations in the pleadings, the court also awarded $150,000 in punitive damages, as the evidence demonstrated that defendant methodically and systematically abused her position of trust to divert the company’s income stream and bankroll her personal expenditures for more than five years. Under the circumstances, the Court agreed that the insurer was entitled to an award of punitive damages as an appropriate deterrent.
A copy of the decision is attached here. Case provided courtesy of Lexis
Paul Steck and Tom Segalla
https://www.goldbergsegalla.com/attorneys/Steck.html
https://www.goldbergsegalla.com/attorneys/Segalla.html