## Facts

- James B. Batchelor bought a new 1969 Pontiac GTO from Hibschman Pontiac, Inc. after receiving assurances that the dealership’s service department was above average and that management would ensure any problems were corrected.
- Upon delivery, Batchelor discovered multiple defects and, at the service manager’s request, provided a written list of complaints for repairs.
- The dealership repeatedly returned the car with items on Batchelor’s list not repaired, despite representations that the defects had been fixed.
- Batchelor testified the service manager knowingly misrepresented that repairs had been completed when they were not, leading Batchelor to use the car on trips and experience repeated breakdowns and abnormal wear, including after the warranty period expired.
- Batchelor brought the car in for repairs multiple times in the first month of ownership without satisfactory correction of defects.
- After continued disputes over repairs, the dealership told Batchelor to stop returning for service.
- Batchelor sued for compensatory damages tied to the defective sale and service conduct and sought punitive damages based on alleged fraudulent and oppressive post-sale conduct.

## Issues

1. Whether punitive damages are available in a case arising from a sales contract when the defendant’s conduct also supports an independent tort (e.g., fraud, malice, gross negligence, or oppression).
2. Whether the punitive damages award was excessive under Indiana law, requiring remittitur or a new trial limited to punitive damages.

## Decision

- The Indiana Supreme Court held that punitive damages may be awarded in a contract-based dispute when the evidence supports an independent tort involving fraudulent, malicious, oppressive, or grossly negligent conduct.
- The Court concluded the evidence permitted a jury finding that the dealer’s agents knowingly misrepresented repairs and engaged in oppressive conduct beyond a mere breach of contract.
- The Court held the $15,000 punitive damages award, compared to $1,500 in compensatory damages, was excessive under Indiana’s excessiveness review standard.
- The Court vacated the intermediate appellate court’s reversal of punitive damages and remanded for remittitur to a reasonable amount or, if not accepted, a new trial limited to punitive damages.

## Legal Principles

- Punitive damages are generally not recoverable for breach of contract, but may be awarded when the breach is accompanied by an independent tort involving fraud, malice, oppression, or gross negligence.
- A corporation may be liable for punitive damages based on acts and representations of its agents acting within the scope of their employment.
- A punitive damages award may be set aside or reduced as excessive if it appears, on initial review, to be the product of passion, prejudice, or improper considerations and is unreasonable in relation to the compensatory award and the evidence of culpability.
- When punitive damages are supported but excessive, the proper remedy is remittitur or a new trial confined to punitive damages.

## Conclusion

The court allowed punitive damages because the dealer’s post-sale conduct supported an independent tort, but required reduction of the punitive award as excessive, remanding for remittitur or a new punitive-damages trial.


Hibschman Pontiac, Inc. v. Batchelor, 266 Ind. 310, 362 N.E.2d 845 (Ind. 1977)