The Ohio Supreme Court’s sanctioning of tort reform resulted in a reduction of damages in Sivit v. Village Green of Beechwood. In the Sivit case, a fire destroyed Building 3 located in Village Green apartments in 2004. An expert determined construction defects in the ceiling of the second floor and the floor above it caused the fire.

Another fire occurred in a different building in the same apartment complex in 2007. An expert concluded the fire started in the space between the ceiling and the floor. The expert found a number of violations of the National Electric Code and an infiltration of water in the building. His conclusion was that faulty electrical wiring contaminated by water caused the fire.

Residents of the building filed a lawsuit against the apartment complex owner and the management company seeking compensation for their damages. The jury awarded $582,146 in compensatory damages and $2,000,000 in punitive damages to the residents. The jury found the apartment complex owner was liable for the damages.

The apartment owner appealed to the Eighth District Court of Appeals which affirmed the judgment. The apartment owner then appealed to the Ohio Supreme Court.

The apartment complex owner argued the statute limiting damages for injuries to persons or property prohibited the residents from recovering punitive damages in an amount more than twice the compensatory damages. The statute only applies to tort actions (injuries to persons or property) and not to contact actions. The residents claimed the apartment owner breached the lease (contract) in addition to being negligent for not repairing the wiring.

The Ohio Supreme Court determined the case was a tort action and reduced the amount of punitive damages. The full case citation is Sivit v. Vill. Green of Beechwood, L.P., 143 Ohio St.3d 168 (2015).

In Sivit, the jury determined the appropriate amount of punitive damages to be awarded. The Supreme Court, following the statute passed by the Ohio Legislature, reduced the amount of punitive damages. The statute passed by the Legislature and the decision by the Ohio Supreme Court finding the statute constitutional deprived the residents in Sivit part of the damages awarded by the jury and lessened the punishment to the apartment owner for failing to maintain the wiring.

The statute overrides the reasoned decision of the jurors in a tort action. This interference with the jury process, however, does not occur in a contract action. If IBM™ sues Xerox™ for breach of contract, no limitation on damages exists and the jury award is not overridden by statute. In the Sivit case, the combined actions of the Legislature and the Court eliminated the right to have a jury determine the amount of punitive damages the jurors believed would punish the apartment owner and deter similar conduct in the future.