Mulcahy LLP granted permission to pursue punitive damages


Court Grants Mulcahy LLP Permission To Pursue Punitive Damages Against Safeguard Business Systems And Deluxe Corporation

By Mulcahy LLP on November 02, 2016

An Idaho State Court granted Mulcahy LLP’s motion to amend the complaint to add claims for punitive damages against defendants Safeguard Business Systems, Inc. and its parent company Deluxe Corporation.

Unlike many other jurisdictions, in Idaho, a party seeking to recover punitive damages must first obtain permission from the court to amend the complaint to include a prayer for relief seeking punitive damages. See I.C. § 6-1604(2). To obtain permission, the moving party must first show the court that it has “a reasonable likelihood of proving facts at trial sufficient to support an award of punitive damages.” Id.

On September 21, 2016, after more than two years of contentious litigation, Judge Steven Hippler granted Mulcahy LLP’s motion on behalf of distributors Thurston Enterprises, Inc. and T3 Enterprises, Inc. to file a Fourth Amended Complaint to pursue punitive damages against both Safeguard and Deluxe for claims involving breach of contract, tortious interference, and fraud in the inducement.

According to Judge Hipper’s 27-page order granting the motion, “there is a reasonable likelihood that [Thurston Enterprises] could prove by a preponderance of the evidence that Safeguard – primarily through [its General Counsel Michael] Dunlap – acted oppressively, fraudulently, maliciously or outrageously; through an extreme deviation from reasonable standards of conduct and with an understanding of, or disregard for, its likely consequences.” (Order, p. 22.)

Likewise, Judge Hippler found that the distributors had “presented evidence that Deluxe masterminded the entire process, including the offending ‘resolution’ activities, which appear to be not meant to compensate [the distributors] for violations, but to wear them down in forcing the unfair and uninformed dispossession of [the distributors’ contract] rights.” (Order, p. 23.)

“[T]he evidence demonstrates that Deluxe knowingly placed Safeguard in a competitive position with [the distributors] and compelled Safeguard to breach [the distributors’ contract] rights.” (Order, p. 24.)

A copy of the Judge Hippler’s order, in its entirety, can be viewed by clicking the link on the right.

Trial in the case is scheduled to start in Boise, Idaho the week of November 28, 2016.

Mulcahy LLP attorneys are certified experts in California franchise law. We can be reached at (949) 252-9377. Our boutique litigation firm provides legal services to franchisors, manufacturers and other companies in the areas of antitrust, trademark, copyright, trade secret, unfair competition, franchise, and distribution laws.

Disclaimer: While every effort has been made to ensure the accuracy of this article, it is not intended to provide legal advice as individual situations will differ and should be discussed with an experienced franchise lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.





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