Punitive Damages in Fraud Lawsuits and other Business Lawsuits

Plaintiffs may only seek punitive damages in a tort lawsuit, such as fraud lawsuit.  Punitive damages are not recoverable in a simple breach of contract lawsuit.

Moreover, recovery of punitive damages in a tort case hinges upon the plaintiff’s ability to prove by “clear and convincing” evidence that the defendant acted with “oppression, fraud or malice ” —

• “Malice” exists if the defendant intended to cause you injury, or willfully and consciously disregarded your safety.
• “Oppression” exists if the defendant caused you cruel and unjust hardship in conscious disregard for your rights.
• “Fraud” exists when the defendant commits intentional misrepresentation, deceit, or concealment of a material fact in order to deprive you of property, rights, or to cause you injury — so, if you can prove your underlying fraud lawsuit, you may receive punitive damages as long as you can sustain the higher “clear and convincing” standard.

In breach of contract cases, however, no matter how egregious the defendant’s actions – and even if they breached the contract willfully, oppressively, or maliciously, the plaintiff cannot recover punitive damages.

Note, however, that contract and tort cases are not mutually exclusive.  There are plenty of situations where the defendant’s conduct may cause the plaintiff to sue for both a breach of contract and a several torts, such as conversion, fraud, defamation, and/or trade secret misappropriation.  While punitive damages are not recoverable via the breach of contract claims, plaintiffs may seek such damages in their joined tort claims.