OSUNA GONZALEZ Y ASOCIADOS, S.C.
ABOGADOS - ATTORNEYS AT LAW
A Mexican Law Firm Specializing in Cross-border Dispute Resolution and Arbitration
Mexican Supreme Court Recognizes Punitive Damages and orders Mayan Palace to Pay $2.4 million dollars in a Wrongful Death Case
by Alejandro Osuna
On February 26 of 2014, the First Chamber of the Mexican Supreme Court issued a historic decision recognizing punitive damages as part of the compensation that a Mexican Court may award to the victims of a serious tort.
The background to the decision is as follows: In September 2010, a young man by the name of Angel Sinué traveled to the City of Acapulco to stay at the Mayan Palace Resort to enjoy the Mexican Independence Day Holiday. Angel and his friends were kayaking in resort’s artificial lake when his kayak turned over. Unfortunately, an underwater water pump that had not received maintenance for many years had caused the artificial lake to become electrified. Twenty minutes would pass before resort employees would shut down the electricity to allow for Angel to be rescued from the pool. Unfortunately, by the time he was removed, Angel had no vital signs.
Angel’s parents sued in court seeking compensation for moral damages. The concept of moral damages is specific type of injury to one’s self esteem, affections, relationships, etc., and shares some similarities to pain and suffering under the common law system. During the past few years, the Mexican Supreme Court and the Federal Judiciary had been removing the caps to compensation for moral damages, which in many states are still limited to one third of monetary damages. The Federal Judiciary has consistently ruled that the cap is unconstitutional because it does not allow for just compensation, and because moral damages can be suffered regardless if any other type of injury is caused. The Mexican Supreme Court had also ruled that the purpose of damages is to bring things to the status quo ante, and if this is impossible, a court may order an indemnity to be paid as compensation for the injury caused.
What is novel about the Mayan Palace decision is that the Mexican Supreme Court has formally introduced the common law concept of punitive damages into the Mexican legal system. The majority of the First Chamber of the Mexican Supreme Court found that “just compensation” should compensate the victim in a manner to satisfy her need to see the requirements of justice satisfied. Compensation should also have a dissuasive effect as a means to deter future illicit behavior. It is worth noting that the decision cites US law review articles discussing punitive damages.
In its analysis, the First Chamber of the Mexican Supreme Court found that the payment of reparations would simply cause tort feasor to become unjustly enriched, the rational being that negligent conduct is often times the result of avoiding the cost of complying with certain duties. Additionally, that punitive damages seek to prevent similar events from occurring in the future, particularly with regard to those businesses that have an obligation to protect the life and physicaly integrity of their clients.
The Test to Determine the Propert Quantume of Compensation
The Mexican Supreme Court proposes a two-step approach to determine the quantum of compensation for moral damages:
A) The Qualitative Aspect
As part of this first step, a court is required to analyze the type of injury caused. In the Mayan Palace case, the victims claim was they had suffered psychological harm as a result of the loss of their only son, as was evidenced by various psychological evaluations performed on the plaintiffs.
As second aspect of this first test is that the court be ascertained of the existence of harm and its severity. In the instant case, the First Chamber found that it is unquestionable that the loss of a son produced an emotional injury.
B) The Monetary Aspects
The third aspect of this first step is to consider the proper monetary compensation. In the Mayan Palace case, the Court found that psychological therapy for three years would be required, and that the cost for both parents, would be of $259,000 pesos (approximately $20,000 US Dollars).
Regarding the defendant, the First Chamber found that it had a high degree of responsibility, not just to the victim, but to other guests staying at the resort, and that it had placed other guests staying at the resort at risk because of its negligent conduct. The First Chamber also considered that the resort did not have any sort of protocols in place to address emergency situations such the one in which a guest lost his life, as evidenced by the fact that it took over twenty minutes before he electricity was shut down, and the first-aid was provided by other guests. The First Chamber further noted that even after the victim had been removed from the artificial lake, another twenty minutes would transpire before he would be taken to the resorts infirmary. The First Chamber further took into account that the doctor employed at the resort did not even accompany the victims to the hospital, and that the in-house medic failed to advise the paramedics that the victim had no vital signs.
The Firsth Chamber found that the high economic status of the tort-feasor was to be taken into account, the severity of the injury and the negligent behavior of the operator should cause that the quantum of the indemnity be equally severe, and ordered that the amount of $30,000,000 pesos ($2.4 million dollars) where to be paid out to the plaintiffs.
Though the decision was voted by all the justices of the First Chamber, two separate opinions were issued questioning the insufficient guidelines for future cases, and for having incorporated punitive damages as a part of the notion of just compensation when these should be extraordinary in nature, in cases that involving gross negligence.
The Mayan Palace decision will likely invite for litigation in Mexico in those cases involving tort (responsabilidad civil), which had been relatively scarce because the amounts involved had historically been low. Tort victims and their lawyers would have typically used the criminal system as a means to obtain reparations from tort feasors, since often times torts can also be classified as criminal conduct. Unfortunately, the Mexican criminal justice system is often used to extort money in bogus cases. The shift from criminal to civil litigation, and the potential to obtain punitive damages opens the door for an active practice in the field of tort litigation in Mexico.
Other ramifications is that enforcing foreign judgments in Mexico (particularly from the United States) that have a punitive damages element has now been made easier. There had been a historic concern that only compensatory damages and not punitive damages were enforceable, but the Mexican Supreme Court has now opened the door and clarified the issue regarding their enforceability to a great extent.
The majority opinion in Spanish can be dowloaded here.
Copyright, 2015, Osuna González y Asociados, S.C. All rights reserved.