Tennessee Court Upholds $3.9 Million Punitive Award Against Contractor Despite Waiver
Tennessee Court of Appeals ruled contract waivers don’t block punitive damages for fraud.
Why it matters: This decision clarifies that contractual waivers of consequential damages do not bar punitive damages for fraud or misrepresentation. It sets an important legal precedent for construction and commercial contract disputes involving bad faith conduct.
- Tennessee Court of Appeals upheld $3.9 million in punitive damages against The Weitz Company.
- Dispute involved drywall work on Shelby County retirement community with eight-month delay.
- Weitz misrepresented project schedule and unfairly charged subcontractor for others' rework.
- Court held damage waivers don’t apply to fraud claims, confirming punitive damages award.
- Judge Jeffrey Usman stated the waiver ‘does not bar punitive damages for misrepresentation.’
The Tennessee Court of Appeals upheld a $3.9 million punitive damages award against The Weitz Company, a general contractor, in favor of Commercial Painting Company, a subcontractor. The case involved drywall work on a multi-building retirement community project in Shelby County, Tennessee (NatLawReview).
The jury awarded $1,272,952.46 in compensatory damages plus $3.9 million in punitive damages after finding Weitz acted intentionally, recklessly, or fraudulently. The trial court agreed, noting Weitz’s conduct was egregious.
At issue was Weitz’s false representation of the project schedule. Weitz failed to disclose an eight-month delay and enforced unrealistic deadlines—partly to earn an early bonus. Additionally, Weitz unfairly charged Commercial Painting for rework caused by other subcontractors and demanded a higher finish level than contractually agreed (NatLawReview).
On appeal, Weitz argued the subcontract’s waiver of consequential and special damages barred punitive damages. The court disagreed, finding the waiver didn’t explicitly cover fraud or misrepresentation claims and only limited contractual remedies, not tort-based claims.
Judge Jeffrey Usman wrote, “The contractual waiver does not bar punitive damages awarded pursuant to the misrepresentation claim.” The ruling underscores limits on damage waivers and reinforces protections against fraudulent conduct in construction contracts.
By the numbers:
- $3.9 million — punitive damages awarded against Weitz Company
- $1,272,952.46 — compensatory damages awarded to subcontractor
- Eight months — project delay undisclosed by Weitz