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 other subcontractors, and charged Commercial Painting for a higher level of finish than the subcontract required.

On appeal, Weitz argued that punitive damages were barred under the subcontracts’ waiver of consequential and special damages. The Court of Appeals recognized a split of authority on whether contractual waivers bar fraud claims. Some jurisdictions recognize that “a whisper of fraud can topple the pillars of even the most impregnable contract,” whereas other jurisdictions give force to specific contractual clauses disclaiming reliance on misrepresentations. The Tennessee Court of Appeals did not have to choose either approach because the waiver at issue did not specifically address fraud or misrepresentation and appeared to address contractual rather than tort remedies. The court therefore affirmed the trial court’s judgment on the punitive damages award. A copy of the court’s opinion in Commercial Painting Company, Inc. v. The Weitz Company, LLC, No. W2019-02089-COA-R3-CV (Tenn. Ct. App. Oct. 28, 2026), is available here.