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Reviving punitive damages claims for victims of 1994′s Northridge earthquake didn’t violate constitutional prohibitions against ex post facto laws, a California appeal court ruled Wednesday. The 2nd District Court of Appeal unanimously rejected claims that punitive damages are akin to criminal penalties for purposes of ex post facto analysis, making it unconstitutional to revive them in a civil setting. Woodland Hills-based 21st Century Insurance Co. had taken issue with Code of Civil Procedure �340.9, enacted by the state Legislature in 2000 to revive certain time-barred insurance claims, including punitive damages for bad faith. The law, which adds a year to the statute of limitations, was passed in response to charges of rampant mishandling of insurance claims after the 6.7 quake in Southern California. The company was sued by James and Jobeth Schwartz, who alleged breach of contract and bad faith after the insurer denied their claim. In moving for summary judgment, 21st Century argued that the ban on ex post facto laws isn’t confined to criminal penalties, but also applies to civil remedies that equate to punishment. A Los Angeles County Superior Court judge denied the request. The 2nd District affirmed Wednesday, with Justice H. Walter Croskey holding that state civil codes, not penal codes, provide for punitive damages. “While it is true that punitive damages are imposed in order to punish defendants,” he wrote, “they have not been considered punishment in a criminal or penal sense.” Croskey also pointed out that punitive damages are “enforced by civil actions. We can conceive of no stronger indication that a statute was intended to establish civil proceedings than that it, in fact, established civil proceedings.” Justices Joan Dempsey Klein and Patti Sue Kitching concurred. The three justices acknowledged, however, that the state of the law in regard to the retroactivity of punitive damages seems in flux. They pointed to Peterson v. Superior Court, 31 Cal.3d 147, a 1982 California Supreme Court ruling that clearly held that punitive damages are a civil penalty not subject to the ex post facto prohibitions. But in 2002, the same court opined in Myers v. Philip Morris, 28 Cal.4th 828 — a case involving tobacco company immunity — that the retroactive imposition of punitive damages “might violate the constitutional prohibition against ex post facto laws.” Myers cited a 1994 U.S. Supreme Court opinion that raised similar concerns. Neither case, however, resolved the constitutional question, so the 2nd District found Peterson controlling. North Hollywood attorney Bernie Bernheim, who represented the Schwartzes, was pleased with the decision. “I really don’t see what all the fuss is about,” he said. “I was fully expecting the court’s decision to come out as it did, since it has long been California and federal law that criminal protections, such as the ex post facto doctrines, do not apply to civil remedies, such as punitive damages.” Kent Keller, a partner in Los Angeles’ Barger & Wolen who represented 21st Century, said he was “interested” to see the court concede a conflict between the Peterson and Myers cases. He said that “would seem to invite a review by the Supreme Court,” but wasn’t sure his clients would seek one. Several insurers, as well as the Association of California Insurance Companies and the American Insurance Association, filed amicus curiae briefs with the court to bolster 21st Century’s position. Attorney General Bill Lockyer, representing Insurance Commissioner John Garamendi as an amicus, sided with the Schwartzes. “Simply put,” San Francisco-based Deputy AG Anne Burr wrote, “Section 340.9 cannot be viewed as penal legislation because it is neither punitive in intent, nor does it infuse the government with authority to inflict criminally based ‘punishment.’” The ruling is 21st Century Insurance v. Superior Court (Schwartz), 05 C.D.O.S. 2743.

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