Opinion ID: 1159025
Heading Depth: 2
Heading Rank: 2

Heading: Corporate Liability for Punitive Damages Based upon Corporate Authorization or Ratification

Text: Since we uphold the trial court's finding that Adams's conduct was culpable and warrants imposition of punitive damages, the next question is whether there is substantial evidence of Pan Am's authorization, ratification, or participation in Adams's conduct to justify the award of punitive damages against Pan Am. All conduct for which the trial court assessed punitive damages against Pan Am apparently arose out of the acts by Adams. It is a well-established rule in New Mexico that a principal may be held liable for punitive damages when the principal has in some way authorized, ratified, or participated in the wanton, oppressive, malicious, fraudulent, or criminal acts of its agent. See Samedan Oil Corp. v. Neeld, 91 N.M. 599, 601, 577 P.2d 1245, 1247 (1978). An employer is liable for punitive damages for the tortious act of an employee acting within the scope of his employment and where the employer in some way participated in, authorized or ratified the tortious conduct of the employee. Newberry v. Allied Stores, Inc., 108 N.M. 424, 431, 773 P.2d 1231, 1238 (1989) (emphasis in original). The district court did not make any specific findings or conclusions regarding whether Pan Am authorized, ratified, or participated in the culpable conduct of Adams. ACC points out, however, that in its findings of fact the district court stated: Pan Am, at all times material hereto, acted through its duly authorized employees, acting within the course and scope of their employment. ACC argues that the phrase acted through its duly authorized employees is synonymous with corporate participation. In addition, ACC assumes that as long as a vice-president of Pan Am received documents informing him of Adams's conduct, that was enough to symbolize corporate participation. Conversely, Pan Am claims that there is no evidence in the record of corporate authorization, ratification, or participation in the culpable conduct by Adams. Pan Am asserts that Adams's misconduct cannot generate punitive damages against Pan Am because although Adams acted within the scope of his employment, independent involvement by the employer through authorization, ratification, or participation is required and is absent here. See id. ACC also claims that an argument can be made that Pan Am's complicity is shown through its acceptance of the benefits of Adams's conduct. A corporation can ratify the acts of its agents by acquiescence in or acceptance of the unauthorized acts. Bank of Santa Fe v. Honey Boy Haven, Inc., 106 N.M. 584, 587, 746 P.2d 1116, 1119 (1987). ACC argues that Calanni, a Pan Am vice-president, received carbon copies of Adams's denial of the contract adjustment yet did nothing to distance Pan Am from the action or to reverse Adams's decision. We note that there is no indication in the record or transcripts that Calanni had knowledge of the circumstances surrounding Adams's decision not to pay ACC or Adams's misconduct in dealing with ACC. Under these circumstances, something more than Calanni's receipt of a document which supposedly represents culpable conduct must be shown to establish corporate complicity through authorization, ratification, or participation and thereby support the punitive damages award against Pan Am. ACC is correct in alleging that Pan Am defended its breach of contract to the very end. Accepting the benefits of a breach of contract, however, is not the same as accepting the benefits of malicious or oppressive conduct or participating in or ratifying that conduct. A simple breach of contract does not, by itself, create a basis for punitive damages without some showing of a culpable mental state or some other evidence of overreaching, malicious, or wanton conduct. Construction Contracting, 112 N.M. at 375, 815 P.2d at 1165. ACC's argument that Pan Am ratified its employees' acts through acquiescence has no merit.