Many courts read Texas Civil Practice & Remedies Code § 41.003 as permitting an award of exemplary damages for “fraudulent fraud.” In other words, when the jury finds that the defendant committed fraud, a second finding of the same fraud, this time by clear and convincing evidence, authorizes recovery of exemplary damages. But when the defendant’s wrongful act that caused the plaintiff’s damages is fraud, can that same fraud properly be considered as an aggravating circumstance justifying exemplary damages?
The answer, of course, is “no.” Section 41.003′s limitation on exemplary damages requires a finding that the defendant’s wrongful conduct was accompanied by aggravating circumstances. Section 41.003(a) embodies this common law rule, stated in numerous cases decided before Chapter 41 was enacted: “Exemplary damages are recoverable if the injury complained of results from a wrong accompanied by aggravating circumstances of malice, fraud, or gross negligence.” The presence of a wrong accompanied by “aggravating circumstances” has been the basis for punitive damages in Texas since at least 1888.
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