## Facts

- An automobile dealer sold the buyers a 1970 Ford Torino financed through a promissory note and installment contract.
- The dealer sued to recover an unpaid balance on the note after an alleged default.
- The buyers admitted executing the note and contract but filed a cross-petition seeking rescission and damages, alleging they were induced to contract by material misrepresentations.
- The buyers alleged they purchased the car believing it was new, but it had been heavily damaged before delivery, and the dealer knew of the damage.
- In the alternative, the buyers alleged breach of express and implied warranties and sought the difference between the value as delivered and as warranted, plus a small repair amount paid to the dealer.
- The buyers amended their cross-petition to add a claim for punitive damages based on alleged knowing misrepresentations and concealment intended to induce the purchase.
- The trial court sustained the dealer’s demurrer to the punitive-damages portion of the amended cross-petition, treating the dispute as contractual and therefore not supporting exemplary damages.

## Issues

1. Whether allegations that a sales contract was procured by fraudulent misrepresentations and concealment state an independent tort claim permitting punitive damages, even though the dispute arises from a contract.

## Decision

- The Oklahoma Supreme Court reversed the order sustaining the demurrer to the punitive-damages claim and remanded.
- The court held the amended cross-petition sufficiently alleged fraud in the inducement—an independent tort—rather than only breach of contract.
- Because the pleading stated a tort claim, punitive damages were legally available if the buyers proved fraud and the required culpability at trial.

## Legal Principles

- Exemplary damages are generally unavailable for claims arising purely from breach of contract under Oklahoma law.
- Punitive damages may be recovered when the conduct connected to a contractual relationship constitutes an independent, willful tort, including fraud.
- Fraudulent inducement may be shown by material misrepresentation or concealment of fact, knowledge of falsity (or concealment), intent to induce reliance, reliance, and resulting damages.
- In a sale of goods, a party induced to contract by material misrepresentation may pursue fraud remedies in addition to ordinary contract remedies, including rescission and damages.

## Conclusion

Because the buyers alleged that the dealer knowingly misrepresented and concealed the vehicle’s condition to induce the sale, the claim sounded in fraud rather than only contract, making punitive damages potentially recoverable and rendering the demurrer improper.


Z.D. Howard Co. v. Cartwright, 537 P.2d 345 (Okla. 1975)