Z.D. Howard Company v. Cartwright

Z.D. Howard Company (plaintiff), a car dealer, sold a car to the Cartwrights (defendants), telling them it was new when the dealer knew it had been seriously damaged before the sale. When the Cartwrights stopped making payments, Z.D. sued them. The Cartwrights counterclaimed for fraud (with breach of warranty as an alternative), sought rescission and return of their payments and attorney fees, and later added a punitive-damages claim. The trial court dismissed the punitive-damages request because the case involved a contract. The Cartwrights appealed.

Whether a court may award punitive damages to a party who was fraudulently induced to enter a contract, even though punitive damages are ordinarily unavailable in contract actions.