Tennessee court upholds $3.9 million in punitive damages against Weitz for misleading its drywall sub

The fight dates to December 2004, when Commercial Painting signed on for drywall work at a Shelby County retirement community made up of several buildings for $3,222,400, later raised by change orders to $3,315,189. Weitz paid 12 of 17 pay applications. Commercial Painting sued in 2006, and a jury in October 2018 found Weitz liable for intentional misrepresentation. The judgment of $8,359,863.83 included $1,272,952.46 in compensatory damages, $3.9 million in punitive damages, interest and attorney's fees, according to the opinion.

The trial court found that before the subcontract was signed, Weitz knew the job was eight months behind and planned to compress the schedule and bring other crews onto the drywall, and told the sub none of it. Weitz later gave a false length for the extension the owner granted, while pushing a schedule aimed at an early-completion bonus of $8,597 a day for up to 45 days. It back-charged Commercial Painting for repairs caused by other trades and for a finish level above what the contract called for, and withheld more than half a million dollars.

Weitz argued that item 11.6 of the subcontract, which waives indirect, special and consequential damages, barred the punitive award. Writing for a three-judge panel, Judge Jeffrey Usman said the clause did not mention fraud or misrepresentation and read as a limit on contract remedies, so it did not reach damages for a tort. The court added that parties can limit fraud damages only with specific language.

This was the fifth time the case reached the appeals court. The Tennessee Supreme Court ruled in 2023 that the economic loss doctrine did not block the fraud claim and later sent the waiver question back. The panel charged appeal costs to Weitz and returned the case to the Shelby County Chancery Court.