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The National Law Review

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Fraud Claims Not Barred by Contractual Waiver: Tennessee Court Affirms Punitive Damages Award Against General Contractor

The Tennessee Court of Appeals has upheld a punitive damages award against general contractor The Weitz Company, finding that the subcontract’s general waiver of special damages did not bar recovery for intentional misrepresentation. The case arose from construction of a multi-building retirement community in Shelby County, Tennessee. Weitz hired Commercial Painting Company to perform the drywall work. Disputes arose, litigation ensued, and the case tried to a jury in October 2018. The jury awarded Commercial Painting Company compensatory damages of $1,272,952.46 and punitive damages of $3.9 million. The trial court upheld this judgment after noting the jury’s findings that Weitz acted in bad faith that was “intentionally, recklessly, maliciously, or fraudulently such that the conduct was egregious.” The court found Weitz knew the project was eight months behind schedule but did not tell Commercial Painting about the delay, its plans to compress the construction schedule, or its plans to supplement Commercial Painting’s drywall work. Weitz also misrepresented the length of an extension it obtained from the project owner while imposing an unrealistic schedule to earn an early completion bonus. Weitz also “back charged” Commercial Painting for work necessitated by incorrect framing done by another subcontractor, repairs to damage caused by

Shelby County, TN · 19h