Nicholas Cage is being sued for fraud. 

Red Curb Investments alleges that Nicholas Cage failed to repay a $5 million loan.  A loan is a contract where Party A agrees to lend money to Party B.  In exchange, Party B agrees to repay the money on a certain day.  When Party B fails to repay the money, he has breached the loan contract.  Now, you may be asking yourself, if Cage breached his agreement– why o why—are they suing him for fraud? That is a very good question, astute reader. 

The rationale lies in the damages that are available in court following a breach of contract compared to fraud.    In Pennsylvania, the plaintiff in a breach of contract lawsuit is only entitled to her actual damages and any consequential damages that she can prove.  Consequential damages can range from loss of profit to loss of product.  Punitive damages are not permitted in a breach of contract action.  However, the plaintiff in a fraud lawsuit is entitled to punitive damages which are not related to the plaintiff’s actual losses.  Punitive damages are designed to deter the defendant from future similar bad acts.  While Pennsylvanian law does not offer a formula to calculate punitive damages, it is often a function of the defendant’s financial abilities. 

Therefore, it appears that Red Curb is seeking punitive damages or an amount greater than their actual and consequential damages. 

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Sharmil McKee | Business Attorney | blog@mckeeoffice.com