FLORIDA BUSINESS LITIGATION: CLAIMS FOR PUNITIVE DAMAGES DO NOT IMPOSE ADDITIONAL BURDENS ON PLAINTIFFS ASSERTING FRAUD CLAIMS

Punitive damages punish and dissuade wrong-doers from committing egregious acts by increasing the damages award to exceed compensable injuries. Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001) (the purpose of punitive damages is to punish and deter future wrongdoing); Engle v. Liggett Group, Inc., 945 So. 2d 1246, 1265 (Fla. 2006) (Punitive damages are calculated by multiplying the compensatory damages award by a number less than 10). A claim for punitive damages is therefore an important weapon in a litigant’s arsenal because it creates liability and risk exposure exceeding the value of the plaintiff’s actual claim. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003) (“The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing for sanctions of double, treble, or quadruple damages to deter and punish.”). Because the incentive to pursue punitive damages in unwarranted circumstances may be too difficult for some to resist, the Florida Legislature developed a heightened pleading standard to assert a claim for punitive damages. See W.R. Grace & Co.–Conn. v. Waters, 638 So. 2d 502, 505 (Fla. 1994) (“We acknowledge the potential for abuse when a defendant may be subjected to repeated punitive damage awards arising out of the same conduct.”). While this enhanced standard may preclude some litigants from asserting punitive damages claims, it is unlikely to affect fraud claims because the pleading requirements for fraud and punitive damages coincide. Peter Mavrick has successfully represented clients in Palm Beach, Broward, and Miami-Dade business litigation and related arbitration proceedings.

A claimant establishes a punitive damage claim with evidence demonstrating the tortfeasor (i.e., the defendant) acted with intentional misconduct or gross negligence. A tortfeasor is liable for punitive damages for engaging in intentional misconduct or gross negligence. Fla. Stat. § 768.72 (2). Intentional misconduct occurs when the tortfeasor knows the conduct is wrongful and has a high probability of injury but proceeds to act anyway. Id. at (2)(a) (“Intentional misconduct” means that the defendant had actual knowledge of the wrongfulness of the conduct and the high probability that injury or damage to the claimant would result”). Gross negligence similarly occurs when reckless or wanton conduct constitutes a conscious disregard for the plaintiff’s rights. Id. at (2)(b) (“Gross negligence” means that the defendant’s conduct was so reckless or wanting in care that it constituted a conscious disregard or indifference to the life, safety, or rights of persons exposed to such conduct”). However, conclusory allegations of intentional misconduct or gross negligence will not sustain a punitive damage claim. Douse v. Boston Scientific Corporation, 314 F. Supp. 3d 1251, 1264 (M.D. Fla. 2018) (Conclusory allegations are insufficient to provide a reasonable basis, and instead “a plaintiff must plead specific acts committed by a defendant”). A pleader must therefore present evidence or make a proffer demonstrating a reasonable basis for the recovery of punitive damages. Compare Fla. Stat. § 768.72 (1) (“No claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant which would provide a reasonable basis for recovery of such damages”) and Fla. R. Civ. P. 1.120 (b) (a claim shall contain “a short and plain statement of the ultimate facts showing that the pleader is entitled to relief”).

This heightened pleading standard for punitive damage claims does not significantly alter what plaintiffs need to plead for fraud claims. Claims asserting fraud must be pled with specificity, regardless of whether punitive damages are sought. In addition, intent is an element of fraud. Fraud is perpetrated by a tortfeasor who, inter alia, intentionally and knowingly makes a false statement about a material fact for purposes of inducing reliance. Johnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985) (providing the elements of fraud). Intent is thus a prerequisite of fraud and must be plead with particularity. Mejia v. Ruiz, 985 So. 2d 1109, 1113 (Fla. 3d DCA 2008) (“Proof of fraud requires proof of intent.”); Cedars Healthcare Group, Ltd. v. Mehta, 16 So. 3d 914, 917 (Fla. 3d DCA 2009) (All elements of fraud must be plead with particularity). A claim for punitive damages therefore does not impose an additional burden on a plaintiff claiming fraud, because fraud already contains an element of intent. Pearlman v. Prudential Ins. Co. of America, Inc., 686 So. 2d 1378, 1382 (Fla. 3d 1997) (“A claim of fraud sufficient to justify compensatory damages is also sufficient to support an award of punitive damages.”). Consequently, a claimant providing evidence of fraud claim automatically satisfies the punitive damages pleading standard. Espirito Santo bank v. Rogo, 990 S0. 2d 1088, 1090 (Fla. 3d 2007) (“When a party has presented sufficient facts in support of a fraudulent inducement claim that would entitle him to an award of compensatory damages, he has also presented sufficient facts that would support a request for punitive damages” because intent in an element of fraud); see also First Interstate Development Corp. c. Ablanedo, 511 So. 2d 536 (Fla. 1987) (“Proof of fraud sufficient to support compensatory damages necessarily is sufficient to create a jury question regarding punitive damages.”); Rappaport v. Jimmy Bryan Toyota of Fort Lauderdale, Inc., 522 So. 2d 1005, 1006 (Fla. 4th DCA 1988) (“Thus, in all cases of fraud the jury is empowered to award punitive damages.”). Plaintiffs with fraud claims should therefore consider asserting punitive damages claims because there is no additional burden of proof. The leverage gained from the liability associated with punitive damages could help plaintiffs reach favorable resolutions in business litigation and other disputes.

Peter Mavrick is a commercial litigation attorney who had successfully represented many clients in business disputes. This article does not serve as a substitute for legal advice tailored to a particular situation.