Attorney general to defend cap on court awards

HELENA, Mont. (AP) -- Montana's attorney general intends to defend the state's $10 million limit on the punitive damages a judge or jury can award an individual after a district judge ruled the cap is unconstitutional.

The notice filed with the Montana Supreme Court on Tuesday says Attorney General Tim Fox will intervene in a constitutional challenge of the cap, which is the lesser of $10 million or 3 percent of a defendant's net worth.

Punitive damages are awarded by a judge or jury to set an example and punish a defendant.

District Judge Kurt Krueger of Butte ruled earlier this month the limit is "capricious." For a defendant of substantial wealth, it's not enough to be a deterrent that would prevent future wrongdoing, he said.

Krueger's ruling came upholding a $52 million jury award against Comerica Inc. for reneging on a 2008 agreement with a Butte-based office supply company.

The company, Masters Group International Inc., is now asking the Supreme Court to affirm that the state law setting the cap is unconstitutional. Without the high court weighing in on the issue, judges in other districts across the state might not necessarily use Krueger's ruling as precedent.

Attorney general spokesman John Barnes declined to say why Fox disagreed with Krueger's ruling.

"This is simply our notice of intent. Our arguments will be presented when we file our brief," Barnes said.

Comerica gave the startup company a $9.5 million line of credit in 2006 and later lent Masters another $1 million.

In 2008, as the company was planning to expand, Comerica reversed its promise to continue its financial relationship and told the company to find a new lender, Masters officials said in a statement.

Comerica also lied when it said Masters could not use part of the $2.25 billion the bank received in federal bailout funds, the company said.

Comerica seized the company's accounts when it tried to negotiate a new line of credit, effectively putting Masters out of business, the company said.

Comerica, which denied any wrongdoing, is appealing both the verdict and the award.