Introduction
Under New York law, can an arbitrator lawfully award statutory treble damages against the State or its political subdivisions?
New York prohibits punitive damage awards in suits against the State and its political subdivisions, including of course, towns. See Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 N.Y.2d 382, 386 (1987). Public funds are available only to compensate for damages suffered because the key “justifications for punitive damages—punishment and deterrence—are hardly advanced when applied to a governmental unit.” Sharapata v Town of Islip, 56 N.Y.2d 332, 338 (1982).
This prohibition on punitive damage awards is also based on the precept that the sovereign’s liability extends no farther than its waiver of immunity. As the New York Court of Appeals—New York’s highest Court—said in Sharapata, “we hold today that the waiver of sovereign immunity effected by section 8 of the Court of Claims Act does not permit punitive damages to be assessed against the State or its political subdivisions.” 56 N.Y.2d at 334.
But assuming treble damages are punitive in nature, can an arbitrator’s award imposing punitive damages be vacated because it violates New York public policy? Recently before the Court, in Matter of Rosbaugh v. Town of Lodi, 2025 NY Slip Op 01406 at *1 (N.Y. Mar. 13, 2025), was the question whether an arbitrator’s treble damages award against the Town of Lodi (the “Town”), made under New York Real Property Actions and Proceedings Law (“RPAPL”) § 861, was punitive in nature and thus contrary to New York public policy. The Court said the answer is yes and held the award must be vacated.
One might expect that Rosbaugh would have discussed briefly New York arbitration law authorizing vacatur of awards that violate public policy but it did not. The focus of the decision was instead on whether the Court could, without violating New York public policy, impose on and enforce against the Town any judgment imposing an RPAPL 861 treble damage remedy, irrespective of whether the judgment resulted or would result from: (a) a plenary, judicial trial on the merits; or (b) a summary proceeding to enter judgment on an arbitration award imposing that remedy. Because the prohibition applies to any suit against the state or its subdivisions, whether on the merits or to confirm an arbitration award, it was arbitration neutral and it did not necessarily require a meaningful discussion of arbitration law to hold that the award had to be vacated.
But perhaps the Court downplayed the arbitration law aspects of the decision because it thought doing otherwise might inadvertently encourage more public-policy challenges to the confirmation of arbitration awards than the law warrants. The line between what may be an egregious mistake of law—which is ordinarily not subject to New York Civ. Prac. L. & R. (“CPLR”) Article 75 review—and a violation of an important New York public policy—which can be a basis for vacatur of an award, see Associated Teachers of Huntington, Inc. v. Bd. of Educ., 33 N.Y.2d 229, 235-36 (1973)— can sometimes be blurry. The Court may have wanted to downplay arbitration law to avoid encouraging award challengers from unnecessarily, and erroneously, seeking vacatur of awards based on unreviewable legal errors which, while serious, do not amount to violations of “so strong a public policy as to require vacating an award. . . .” 33 N.Y.2d at 231-32.
Also left undiscussed was how New York arbitration law provided an independent, alternative ground on which the courts might have vacated the award. Under New York arbitration law—but not the Federal Arbitration Act—arbitrators to not have the power, and cannot be empowered by agreement, to award punitive damages. See Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 357, 359-60 (1976); see also Mastrobuono v. Shearson Lehman Hutton Inc., 514 U.S. 52, 62-64 (1995) (discussing difference between New York law and the FAA concerning arbitrability of punitive damages).
In Rosbaugh, the party who challenged the treble damage award was a municipality, which had a strong, sovereign-immunity-based public policy argument against the assessment of punitive damages. But had the Town been a private person, then it would, it seems to the author, have had at least a basis to argue that for the reasons explained by the Court in Rosbaugh, the treble-damage award had to be vacated under Garrity because of its punitive nature.
Background and Procedural History
Plaintiffs were landowners who owned land abutting one side of a dirt road in upstate New York. They had trees on their property, some of which apparently overhung the road, which was owned and maintained by the Town. The Town claimed that the trees were interfering with the right-of-way.
Presumably concluding that the trees were within the right-of-way, the Town proceeded to hire a tree service company to remove or trim them The company trimmed or cut down 55 trees that were on the plaintiff’s property. Plaintiff sued the Town and the company seeking, among other remedies, treble damages under RPAPL 861(1).
Ultimately the parties agreed to submit their dispute to arbitration. The arbitrator found for the plaintiffs, awarding three-times the “‘stumpage value’ of the damaged or destroyed trees.” 2025 NY Slip Op 01406 at *1 (quotations in original). The trial court upheld the award and a divided panel of the Appellate Division, Fourth Department, affirmed.
New York’s highest court said “[t]he sole issue on appeal is whether treble damages under RPAPL 861 are punitive in nature , making them unavailable in a suit against a municipality.” 2025 NY Slip Op 01406 at *1. It concluded that they were punitive and that the award had to be vacated. See 2025 NY Slip Op 01406 at *3.
Whether Statutory Treble Damages are Punitive Depends on the Intent of the Legislature
As a general rule, treble damages are considered to be punitive but the Court analyzes the “statute. . . to determine whether the legislature intended the treble damages to function punitively.” 2025 NY Slip Op 01406 at *2 (citing Matter of Regina Metro. Co., LLC v New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332, 385 (2020); parenthetical quotation omitted).
RPAPL 861’s Treble Damages Remedy
RPAPL 861 states:
[i]f any person, without the consent of the owner thereof, cuts, removes, injures or destroys . . . tree[s] or timber on the land of another . . . an action may be maintained against such person for treble the stumpage value of the tree or timber or two hundred fifty dollars per tree, or both and for any permanent and substantial damage caused to the land or the improvements thereon . . . .
See 2025 NY Slip Op 01406 at **1-2 (quoting RPAPL 861(1)).
“[S]tumpage value” is “the current fair market value of a tree as it stands prior to the time of sale, cutting, or removal. . . .” RPAPL 861(3); see 2025 NY Slip Op 01406 at *2. The statute authorizes certain valuation methods and makes treble damages the default remedy. See 2025 NY Slip Op 01406 at *2.
It contains, however, a proviso—we’ll call it the “good faith exception”—which can reduce a treble damage award to either stumpage value, a $250 per tree assessment, or both, provided that the defendant acted in good faith: “if the defendant establishes by clear and convincing evidence, that when the defendant committed the violation, he or she had cause to believe the land was his or her own, or that he or she had an easement or right of way across such land which permitted such action, or he or she had a legal right to harvest such land, then he or she shall be liable for the stumpage value or two hundred fifty dollars per tree, or both . . . .” RPAPL 861(2); see 2025 NY Slip Op 01406 at *2 (quoting RPAPL 861(2)). Note that the “good faith exception” does not excuse a defendant from responsibility for damages, but instead protects a defendant from treble damages, limiting recovery to actual damages or something akin to them. See 2025 NY Slip Op 01406 at *2 (citing Halstead v. Fournia, 160 A.D.3d 1178, 1182 (3d Dep’t 2018)).
The treble damages in Rosbaugh were determined as follows. First, an arborist assigned to each tree a value, which ranged from less than $100.00 at the low end to over $5,000 at the high end. That yielded a total stumpage value of $48,349.00. Second, that amount was trebled, yielding a treble damage award against the Town in the amount of $145,047.00. See 2025 NY Slip Op 01406 at *2
In addition to treble damages, the award included “remedial measure costs and [an amount representing] the value of pre-cut wood removed from the property. . . .” The arbitrator concluded that there was no evidence of “mental anguish” or of any loss of the real property’s value.
The Decisions Below
The Town applied to vacate the award but the trial court denied the application and confirmed the award. The trial court held “that, because the treble damages did not require a finding of ‘actual malice or a wanton, willful or reckless disregard for plaintiffs’ rights,’ they were not punitive in nature. . . .” 2025 NY Slip Op 01406 at *2.
The Appellate Division, Fourth Department affirmed but two justices dissented. The majority held that the statutory treble damages “were. . . intended to capture elusive compensatory damages, including ‘the intrinsic value of a tree in its natural state—such as its environmental, historical and aesthetic qualities—which can be substantially greater to a landowner than the mere marketable lumber value.’” 2025 NY Slip Op 01406 at *2 (quoting Appellate Division decision, 225 A.D.3d 1314, 1315 (4th Dep’t 2024)).
The dissenting justices would have held that the treble damages were punitive and could not, consistent with New York law, be assessed against the Town. They rejected the argument that the treble damage remedy was intended to be compensatory because that interpretation of the statute would be unreasonable. If the treble damages provision was merely compensatory, then the “good faith exception” would make little sense. The dissent explained it would “be unreasonable to read the statute as intending that ‘owners of trees cut down by trespassers who harvest trees in good faith should not be made whole and instead receive only one-third of the market value of the trees’. . . .” 2025 NY Slip Op 01406 at *2 (quoting 225 A.D.3d at 1317 (Whalen, P.J. and Lindley, J., dissenting).
Because two justices dissented, the Town’s appeal to New York’s highest Court was as of right. See CPLR 5601(a).
The Court of Appeals’ Reversal of the Decisions Below
The Court reversed the trial court and Appellate Division below because “the structure and the history of this statute show that the treble damages it authorizes are meant to punish those who do not act in good faith and are punitive.” 2025 NY Slip Op 01406 at *3. The Court’s opinion makes three key points.
First, while at common law punitive damages ordinarily “requires a showing akin to ‘actual malice or a wanton, willful or reckless disregard of plaintiffs’ rights[,]” and while treble damages under RPAPL 861 require no such showing, statutory damages may be punitive based on conduct that is different and “less culpable.” 2025 NY Slip Op 01406 at *2-3. The Court said that, in Welch v Mr. Christmas, 57 N.Y.2d 143, 150 (1982), “this Court cited RPAPL 861 as an example of a statute authorizing such damages based on different criteria than traditionally applied in an action at common law. . . .” 2025 NY Slip Op 01406 at *2-3. While acknowledging that proposition was dictum, the Court said “the conclusion that the legislature intended the treble damages in RPAPL 861 to be punitive is correct.” 2025 NY Slip Op 01406 at *3.
Second, the “good faith exception” demonstrates that the treble damage remedy was intended to be punitive. Agreeing with the Appellate Division dissent, the Court said “it is unreasonable to read the statute in a way that allows the defendant’s state of mind — a showing the defendant acted in good faith — to reduce a recovery merely intended to make the plaintiff whole.” 2025 NY Slip Op 01406 at *3. “Rather,” said the Court, “the plain reading of the text is that treble damages, punitive in nature, are mitigated by the good faith of the defendant.” Id.
Third, the history of the statute demonstrates that the treble damage remedy was intended to be punitive. The Court examined the history of RPAPL 861’s predecessor statutes, and explained that the “earliest” of them, “enacted more than two centuries ago, contained provisions for treble damages with a corresponding good faith mechanism for reducing [the recovery] to single damages. . . .” 2025 NY Slip Op 01406 at *3 (citations, explanatory parentheticals, and quotations omitted). “A consistent theme of punishment and deterrence[,]” explained the Court, “runs throughout the statute’s legislative history.” This includes the comments of the Assistant Commissioner of the New York State Department of Environmental Conservation, made in 2003, when the most recent version of the statute was enacted:
‘Current penalties are not high enough to deter the illegal taking of timber . . . . This legislation, by increasing the penalties to allow for treble the stumpage value, will provide for greater deterrence for the knowing offender while at the same time promote more diligence and care on the part of legitimate timber harvesters to prevent inadvertent trespass and timber theft [and] this legislation will make it easier for timber theft victims to recover damages.’
2025 NY Slip Op 01406 at *3 (quoting Letter from State Dep’t of Environmental Conservation, Sept 24, 2003, Bill Jacket, L 2003, ch 602 at 14).
Concluding that RPAPL 861’s treble damage remedy was punitive and could not lawfully be imposed on the Town, the Court reversed the Appellate Division’s order, with costs, and directed “the petition to vacate the award granted in part in accordance with. . . [the Court’s] opinion.” 2025 NY Slip Op 01406 at *3.
For another post about a New York Court vacating an award for, among other things, violation of public policy, see here.
Contacting the Author
If you have any questions about this article, arbitration, arbitration-law, or arbitration-related litigation, then please contact Philip J. Loree Jr., at (516) 941-6094. PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has 35 years of experience representing a wide variety of corporate, other entity, and individual clients in matters arising under the Federal Arbitration Act, as well as in insurance- or reinsurance-related, and other, matters.
To watch arbitration-related videos or webinars in which Mr. Loree has participated, click here.
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Tags: 861, actual malice, Appeal as of Right, Appellate Division, Arborist, Award Vacated, Compensatory, Department of Environmental Conservation, Deterrence, Dissenting Justices, Fourth Department, Garrity, Good Faith, Legislative History, Lodi, Lumber, Lyle Stuart, Mastrobuono, New York Court of Appeals, Public Policy, Punitive Damages, Real Property Actions and Proceedings, reckless disregard, Rosbaugh, RPAPL, Stumpage, Treble Damages, Trees, wanton, willful
