In Ainsworth v. Franklin County Cheese Corp., 156 Vt. 325, 592 A.2d 871 (1991), the plaintiff sought punitive damages because of the defendant's refusal to provide severance benefits, as contracted, after it fired the plaintiff.
The Court explained that Clarendon Mobile Homes required that the breach of contract have the "character" of a tort, but not necessarily all the elements of an independent tort. See Ainsworth, 156 Vt. at 331-32, 592 A.2d at 874-75.
The Court also defined the actual malice required for an award of punitive damages in any case:
"Malice is shown by "conduct manifesting personal ill will, evidencing insult or oppression, or showing a reckless or wanton disregard of plaintiff's rights." Malice may be inferred from the nature of defendant's conduct and the surrounding circumstances." Id. at 332, 592 A.2d at 875. In sum, the plaintiff worked as manager of the defendant's cheese plant.
The defendant's president fired him without explanation and induced him to train a replacement and update files on research and development. Only thereafter did the defendant's president disclose in writing that the firing was for specific cause and invoke an employment contract provision that allowed the defendant to deny the plaintiff severance benefits in the case of a termination for cause.
The Court upheld an award of punitive damages because the defendant's president had fabricated grounds for termination to deny severance benefits and did so only after the "plaintiff had worked in good faith to finish up his work and turn over his position to a new manager." Id. at 332, 592 A.2d at 875.