MIAMI BUSINESS LITIGATION: PUNITIVE DAMAGES FOR FRAUD

Plaintiffs commonly pursue punitive damages when asserting fraud claims. The purpose of punitive damages is to punish unlawful conduct. State Farm Mut. Auto. Ins. Co. v. Brewer, 191 So. 3d 508 (Fla. 2d DCA 2016). They are available when a defendant commits intentional misconduct or gross negligence. Fla. Stat. § 768.72. Punitive damages are especially relevant in claims involving fraud because the claim necessarily includes intentional misconduct. Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

A plaintiff must move to amend its complaint to include a claim of punitive damages before it can seek discovery on the issue. Id. The amendment will be allowed if the plaintiff makes a “reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery” of punitive damages. Id. Subsequently, at trial, the plaintiff must then prove entitlement to punitive damages by clear and convincing evidence. Id.

So what constitutes a reasonable showing of evidence that provides a reasonable basis for punitive damages? Florida case law provides some guidance. The trial court must “make a preliminary determination of whether a reasonable jury, viewing the totality of proffered evidence in the light most favorable to the movant, could find by clear and convincing evidence that punitive damages are warranted.” Fed. Insurance Company v. Perlmutter, 376 So. 3d 24 (Fla. 4th DCA 2023). The plaintiff’s evidentiary proffer is “merely a representation of what evidence the defendant proposes to present and is not actual evidence.” Estate of Despain v. Avante Group, Inc., 900 So. 2d 637 (Fla. 5th DCA 2005). However, the analytical framework for making the requisite determination is unclear. Some cases hold that the trial court’s sole role is to review proffered evidence and determine whether a jury could return a punitive damages verdict. Estate of Despain, 800 So. 2d 637 (stating trial court must not weigh the evidence in determining a motion to amend to add punitive damages); Perlmutter, 376 So. 3d 24 (same). Other cases hold that the trial court’s role requires a weighing of the evidence to determine credibility of the proffered evidence. KIS Group, LLC v. Moquin, 263 So. 3d 63 (Fla. 4th DCA 2019) (stating that motion to amend to add punitive damages “necessarily requires the court to weigh the evidence and act as a factfinder”).

One case from Florida’s Supreme Court is also somewhat helpful on the issue of punitive damages and fraud because it states that evidence sufficient to establish compensatory damages is also sufficient to create a jury issue on punitive damages. First Interstate Development Corp. v. Ablanedo, 511 So. 2d 536 (Fla. 1987). The Ablanedo decision, however, did not address a party’s request to amend its complaint to add a claim for punitive damages. Rather, the case addressed a trial court ruling stemming from a punitive damages directed verdict ruling. Nonetheless, Ablanedo could arguably be interpreted as creating a standard for amending a complaint to add a claim for punitive damages in fraud cases. If the trial court determines that the proffer of evidence is sufficient for a reasonable jury to award compensatory damages, then, based on Ablanedo, the proffer should also be sufficient for the court to grant a motion to amend and allow the litigant’s punitive damage claim to proceed to trial. Although no Florida court has directly adopted this interpretation, it is a possible conclusion to draw from the case.

Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.