July 15, 2009

Alaska Supreme Court: Punitive Damages Available With Equitable Claims

In a recent decision, Lockhart v. Draper, the Alaska Supreme Court held that punitive damages could be awarded based on an equitable claim if (1) the plaintiff sought equitable relief independent from its claim for punitive damages, (2) the equitable relief was intended to make the plaintiff whole, (3) the plaintiff suffered “substantial damage” and (4) the requirements Alaska’s punitive damages statute, AS 09.17.020, were met. The Alaska Supreme Court affirmed the imposition of punitive damages in Lockhart because the plaintiff sought equitable relief independent of his punitive damages claim, voiding of a fraudulent conveyance, and the fraudulent transfer caused the plaintiff “substantial damage.”

Lockhart is significant in that it permits an award of punitive damages even where no compensatory damages are awarded or sought. While the Alaska Supreme Court recognized that a plaintiff would still have to establish that they suffered “substantial damage” before obtaining punitive damages, those damages do not have to be established to the degree of certainty that would permit an award of compensatory damages. Lockhart thus expands the availability of punitive damages into the realm of equitable claims, and continues the destruction of barrier between equitable claims and legal claims.