No Punitives In Contract Case Without Tort Damages

A discharged employee who won compensatory damages on a contract count and punitive damages on a tort theory was obliged to give up the punitives, according to a new decision by the Ohio Court of Appeals, because the jury did not find any actual tort damages.

In the case, an employee claimed damages for breach of an employment contract, and also made a variety of tort claims, including intentional infliction of emotional distress, intentional interference with contract, and interference with an employment relationship.  The jury found that the contract was breached, and awarded damages against various defendants totaling about $130,000.  It also found that the tortious conduct had caused no injury, but relied on it to impose $500,000 in punitive damages against one defendant.

As a general rule, [wrote the court,] punitive damages are not recoverable in the absence of actual or compensatory damages. . . .

Additionally, under Ohio law punitive damages are generally not recoverable in an action for breach of contract. . . Thus, since the jury only awarded [plaintiff] actual damages against [defendant] on the claim for breach of the merit pay contract and determined that there were no actual damages resulting from [defendant’s] tortious conduct, under the general rules punitive damages would not be available in this case.

Plaintiff argued that there is an exception to this rule, where “the breach of contract is accompanied by a connected, but independent tort involving fraud, malice or oppression.” But that exception doesn’t apply in this case, said the court, because the independent tort itself must have caused some damage before it can lead a court to apply punitive damages to the breach.

Mabry-Wright v. Zlotnik, 2005 Ohio 5619, 2005 Ohio App. LEXIS 5072 (Ct. App. 3d Dist., Oct. 24, 2005).

[Frank Snyder]