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Punitive Damages Above Statutory Cap Allowed for Fraud Against Other Shareholder
Description Jury found shareholders engaged in fraud against a fellow shareholder and awarded actual damages plus $650,000 punitive damages, which is above the statutory cap. The higher award stood because the cap does not apply in case of intent to harm.
Topic Business Organizations
Key Words Fraud, Punitive Damages, Punitive Damage Cap
C A S E   S U M M A R Y
Facts McDaniel, a heavy equipment owner, was an initial shareholder in J&J Landfill, Inc. with James and Jerry Elliott, the other shareholders, who contributed land to J&J to create a landfill. After McDaniel did all the site preparation, the Elliotts told him the corporation was being shut down and that he was to get off their land. McDaniel sued the Elliotts and J&J, and was awarded actual damages plus $650,000 punitive damages for intentional fraud. The appeals court capped the punitive damages at $250,000 under a Georgia statute. McDaniel appealed.
Court of Appeals Decision Reversed. The cap does not apply in this case because under the statute punitive damages may be awarded when there is clear and convincing evidence that "the defendant's actions showed willful misconduct, malice, fraud, wantonness, oppression, or that entire want of care which would raise the presumption of conscious indifference to consequences." That condition was met in this case, but Georgia courts are hereby notified that to avoid the $250,000 cap, the jury must have a separate finding of specific intent to cause harm.
Citation McDaniel v. Elliott, 1998 WL 151507 (Sup. Ct., Ga.)
497 S.E. 2d 786 (Sup. Ct., GA., 1998)

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