Section 4.5 Punitive

• Library: Contracts 2016 Supp

3. (§4.5) Punitive

The general rule in Missouri is that punitive damages are not awarded for breach of a contract. See:

· Peterson v. Cont’l Boiler Works, Inc., 783 S.W.2d 896 (Mo. banc 1990)

· Williams v. Kansas City Pub. Serv. Co., 294 S.W.2d 36 (Mo. 1956)

· Ladeas v. Carter, 845 S.W.2d 45 (Mo. App. W.D. 1992)

· Smith v. Am. Bank & Trust Co., 639 S.W.2d 169 (Mo. App. W.D. 1982)

As explained in the Restatement (Second) of Contracts (1981), the purpose of awarding contract damages is to compensate an injured party, not to punish the party in breach or make that party an example to others. Restatement (Second) of Contracts § 359 cmt. a. This rule applies even if the contract breach is intentional, willful, wanton, or malicious. Peterson, 783 S.W.2d at 903. But Missouri courts have carved out two exceptions from the general rule. The first exception is found when the breaching party’s conduct, apart from an intentional breach, amounts to a separate, independent tort. See:

· Peterson, 783 S.W.2d 896

· Williams, 294 S.W.2d 36

· Foster v. Keena,714 S.W.2d 180 (Mo. App. S.D. 1986)

· Ladeas, 845 S.W.2d 45

· Stamps v. Sw. Bell Tel., 667 S.W.2d 12 (Mo. App. E.D. 1984)

· Sands v. R.G. McKelvey Bldg. Co., 571 S.W.2d 726 (Mo. App. E.D. 1978)

This is consistent with the Restatement (Second) of Contracts, which provides that “[p]unitive damages are not recoverable for a breach of contract unless the conduct constituting the breach
is also a tort for which punitive damages are recoverable.” Restatement (Second) of Contracts § 355. The second exception to the general rule against awarding punitive damages for breach of contract is found when the contract breach is coupled with a violation of a fiduciary duty involving a “public” trust. Peterson, 783 S.W.2d 896 (citing Brown v. Coates, 253 F.2d 36 (D.C. Cir. 1958)); Brown v. Mercantile Bank of Poplar Bluff, 820 S.W.2d 327 (Mo. App. S.D. 1991). In cases implicating either exception, the plaintiff bears the burden of proving that punitive damages are warranted. Stenson v. Laclede Gas Co., 553 S.W.2d 309 (Mo. App. E.D. 1977).

Thus, punitive damages have been allowed in a contract action when the breach was accompanied by activity deemed to be fraudulent. Hilderbrand v. Anderson, 270 S.W.2d 406 (Mo. App. S.D. 1954) (involving a scheme to cheat and defraud the seller of an automobile). Similarly, punitive damages have been allowed in an action against a landlord for breach of a lease agreement when the landlord was found to...