Punitive damages are not recoverable for breach of contract in Ohio.

This Ohio Supreme Court decision involving a dispute between an insurance agent and an insurer has potential implications for claims alleging breach of insurance contracts and breach of the duty of good faith and fair dealing. The court held that punitive damages are not recoverable in a breach of contract action. However, when a breach of contract involves conduct that also constitutes a tort, punitive damages may be awarded for the tort if there are separate damages arising therefrom, but not for the breach of contract, and any punitive damages award is subject to the statutory limitation on punitive damages imposed by R.C. 2315.21. The court stated, “A party to a contract does not breach implied duty of good faith and fair dealing by seeking to enforce the agreement as written or by acting in accordance with its expressed terms, nor can there be a breach of the implied duty unless a specific obligation imposed by the contract is not met.”

While this decision did not involve an insurance contract—it was a dispute between an agent and an insurer over an agency agreement—it may have implications in insurance coverage disputes, where punitive damages are often sought for breach of the duty of good faith and fair dealing between an insured and an insurer. Arguably, the decision limits the damages available to an insured in such a case. It remains to be seen whether this decision will significantly impact insurance coverage and bad faith litigation.

_{Case Law Alerts, 2^nd Quarter, April 2018}

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