Money Damages

Question 1

What are money damages?

Answer 1

Money damages are a type of substitutionary relief – the money substitutes for the thing that has been lost or damaged.

Question 2

What are the (4) types of money damages?

Answer 2

Compensatory, Presumed, Nominal, Punitive

Question 3

What are compensatory damages?

Answer 3

Compensatory damages are designed to provide “compensation for the injury caused to Plaintiff by Deft’s breach of duty” and put the Plaintiff back in her rightful position.

Question 4

What are presumed damages and what are they most used for?

Answer 4

Presumed damages are a subset of compensatory damages, typically obtained when Pl seeks compensation for an injury that’s likely to have occurred but difficult to establish.

Question 5

What are nominal damages?

Answer 5

Nominal damages are symbolic damages, which are granted in lieu of compensatory damages and which serve as a validation of Pl’s rights. You cannot recover nominal damages in negligence suits. Sometimes nominal damages trigger punitive damages.

Question 6

What are punitive damages?

Answer 6

Punitive damages are designed to punish Deft for wrongdoing, and available only where Deft has committed a tort. Requires (3) elements: (1) Parasitic to compensatory damages; (2) Tort claim, not K; and (3) State of Mind

Question 7

How can Plaintiff collect money damages if Deft refuses to comply?

Answer 7

There are (4) main ways Plaintiff can collect:

1) Execution (Pl asks sheriffs to seize Deft’s personal property and sell it to satisfy Pl’s judgment)
2) Turnover Statutes (Req’s Deft to turn over intangible property not easily reachable through other methods)
3) Attachment (Freezes Deft’s assets to maintain status quo – can be in form of TRO/PI)
4) Garnishment (Asking 3rd party to redirect $$$ in Pl’s direction - often bank/employer)

Question 8

Execution

Answer 8

One way for Plaintiff to recover money damages if Deft won’t comply. Plaintiff can ask sheriffs to seize Deft’s personal property and then sell it at an action to satisfy the judgment.

Question 9

Turnover statutes

Answer 9

One way Pl can collect money damages where Deft is not cooperating. Req’s Pl to turn over intangible property that’s not easily reachable by other means - often IP, etc.

Question 10

Attachment

Answer 10

One way Pl can recover money damages against Deft when Deft refuses to comply. Order (often in the form of TRO/PI) which freezes Deft’s assets to maintain status quo.

Question 11

Garnishment

Answer 11

One way Pl can recover money damages from Deft if Deft refuses to comply. Pl basically asks 3rd party (most often Deft’s bank or employer) to pay them directly.

Question 12

Pecuniary damages

Answer 12

AKA special damages – damages that have a discernible, quantifiable monetary amount attached to them. (Ex: Medical bills, bodily harm, property damage, lost wages)

Question 13

Non-pecuniary damages

Answer 13

AKA general damages – damages which don’t typically have a discernible, quantifiable monetary value attached to them. There are (5) main types of non-pecuniary damages: Loss of enjoyment of life, Loss of earning capacity, Pain & suffering, Loss of society, Loss of Services

Question 14

Pain and suffering

Answer 14

Pain and suffering includes emotional or mental distress. A trial court may reject jury award if it is against the “great weight of evidence” or “shocks conscience.” Additionally, the award must be consistent with prior awards.

Question 15

Earning capacity

Answer 15

Different than loss income. Loss in earning capacity is the loss in the ability to earn future earnings, not current lost wages. Loss in earning capacity is difficult for courts to calculate.

Question 16

Loss of services

Answer 16

Compensating for the loss of services provided by the deceased. Sometimes a service can actually be pecuniary and exempt from non-pecuniary caps. Doesn’t really apply to elderly or young kids.

Question 17

Loss of society

Answer 17

Loss of society is the loss of the ability to interact with person, care, affection, protection, and social connection.

Question 18

Loss of consortium

Answer 18

Type of loss of society between a husband and wife – loss of services/sexual relations

Question 19

Hedonic loss/loss of enjoyment of life

Answer 19

Awarded where pain and suffering is not available. Where P&S is available, Courts may award for “loss of joy” instead to avoid double recovery. Generally rejected for wrongful death cases because it places a purported value on life.

Question 20

Survival action

Answer 20

A survival action is brought by the decedent’s estate and seek to receive losses until the time of death and premised on torts that do not cause death.

Question 21

Wrongful Death Statute

Answer 21

Brought by a close relative of the decedent. Most statutes only allow for pecuniary losses, such as funeral and burial expenses, loss of support, loss of services, and loss of society.

Question 22

Measuring pecuniary losses/special damages

Answer 22

A loss’s value is the monetary worth of the loss, generally measured at the time of the loss. When choosing a measure, Courts tend to prefer FMV, but will focus on equilibrium and choosing the practical solution based on the evidence. There are no caps on pecuniary damages.

Question 23

Tools for measuring pecuniary/special damages

Answer 23

MR PRUD: FMV, Replacement costs, Personal/sentimental value, Repair costs, Use value, Diminution

Question 24

FMV

Answer 24

The price that a willing buyer would pay a willing seller. Preferred remedy for most courts. Consider endowment effect and depreciated value.

Question 25

Replacement costs

Answer 25

The price you’d need to pay to replace the loss on market, where ‘market’ is the forced sale under pressure (not necessarily ideal!)

Question 26

Personal/sentimental value

Answer 26

The price an individual personally places on loss due to sentimental/emotional reasons. Generally not allowed, except for items like trophies, wedding rings, etc.

Question 27

Repair costs

Answer 27

Amount it takes to repair damages. Important to take into consideration that repair costs are often inefficient and thus unfair to Deft – just because you have repair costs doesn’t necessarily mean you can recover them.

Question 28

Use value

Answer 28

Refers to loss of the use of property – different focus here than with other measures in that we’re concerned not with the loss itself, but with what you used the item for. Can be awarded alongside other measures.

Question 29

Diminution in value

Answer 29

Change in value caused by the legal wrong.

Question 30

Collateral Source Rule

Answer 30

Re: tort damages. Payments/benefits given to Plaintiff by other sources (friends, family, insurance, etc.) are generally not credited against Deft’s liability, even where they cover all/part of the loss. Rationale here is that Deft should not be allowed to benefit from Plaintiff’s resources.

Question 31

Measuring non-pecuniary or general damages

Answer 31

Law aims to ensure that awards are not too subjective or arbitrary. In other words, Courts make sure award doesn’t “stand too much against the weight of the evidence” or “shock the conscience.” There are often caps on non-pecuniary losses.

Question 32

Remedies for excessive non-pecuniary damages

Answer 32

Remittur (for excessive awards) or additur (for inadequate awards) after award is compared to Excessiveness Standard

Question 33

Excessive Standard

Answer 33

Standard for measuring non-pecuniary damages. Is the jury verdict reasonable and supported by evidence, or is it so large as to “shock the conscience”? Is the verdict a result of passion and prejudice by the jury?

Question 34

K compensatory damages

Answer 34

K compensatory damages are primarily economic damages only. A breach of K is usually strictly a business issue, and we’re not as sympathetic for Plaintiff’s non-economic pain and suffering unless there’s related bodily injury. Two kinds of K compensatory damages – general and consequential.

Question 35

General damages (K law)

Answer 35

General damages refer to the loss of the value of the Deft’s performance under the K. They arise directly from the loss.

Question 36

Consequential damages

Answer 36

Consequential damages are secondary to the loss and are more specific to Plaintiff’s particular circumstances. These types of damages include loss of profit, harm to business reputation, loss of operating venue, etc. Limited by three factors (see below).

Question 37

Expectation interest/damages

Answer 37

The plaintiff’s expectation interest operates by giving the Plaintiff the benefit of the bargain by being putting Plaintiff in the position as if the contract had been performed. Main way of calculating is FMV - K price + any incidentals or consequentials

Question 38

Benefit of the bargain

Answer 38

In some circumstances, B may be entitled to the difference between FMV and K price in light of breach (with K’s pertaining to items) and incidental/consequential damages.

Question 39

Reliance interest/damages

Answer 39

The plaintiff’s reliance interest is what costs Plaintiff incurred by relying on K and operates by putting the plaintiff in the position as if the contract was never made.

Question 40

Breach of real property K’s

Answer 40

Seller of Real Property: In the event of a breach by the buyer, the seller is entitled to the benefit of the bargain, which is calculated as (1) the loss on the resale, plus (2) incidental losses due to the breach, minus (3) savings (if any).

Buyer of Real Property Minority Rule (CA): In California and other minority jx, non-breaching party in a real property K can’t receive benefit of bargain unless breaching party acted in bad faith. Under this rule, the non-breaching party can recover the amount paid to another property, investigative costs, and cost of reasonable improvements (if applicable).

Question 41

How to measure K damages

Answer 41

Loss in value due to party’s failure to perform (FMV - K) + any incidental or consequential damages caused by breach + any other costs/losses Deft avoided by failing to perform

Question 42

Pre-judgment interest

Answer 42

One of the losses a Plaintiff may have suffered is the ability to gain interest on money that went into the K. Usually Courts will use simple calculations to figure out a $$$ amount of this.

Question 43

Post-judgment interest

Answer 43

Interest that you would’ve gotten on your damages from the moment they should be awarded to the moment they’re actually received. Always recoverable, pursuant to statutes.

Question 44

Liquidated damages provision

Answer 44

If parties agree in K to liquidated damages provision and it’s a reasonable estimate of actual damages, then they don’t need to move forward with figuring out what the value is/use judicial resources to do so.

Question 45

Efficient breach

Answer 45

As a general rule of economics, where a party wants to breach a K, and both parties would walk away better off in light of the breach, then we should let that happen because it’s economically efficient.

Question 46

Seller breaches (K’s under UCC)

Answer 46

OPTION #1 → Cancel, get money back, and obtain cover (actually make a purchase)
Example → A and B enter into a K to buy a car. B makes a $1k deposit. Later, A breaches. K price was $20k. B makes a reasonable cover and buys a car for $22k. B entitled to $1k deposit refund and $2k cover difference from K price.

OPTION #2 → Cancel, get money back, and obtain market damages (no purchase made)
Example → A and B enter into a K to buy a car. B makes a $1k deposit. Later, A breaches. K price was $20k. K price for the car was $20k and FMV of car is $24k. B entitled to $1k deposit refund and $4k FMV difference from K price.

In very limited circumstances, buyer may be entitled to specific performance

Question 47

Buyer breaches (K’s under UCC)

Answer 47

RESALE → (Resale – K price) + incidentals – savings if any

MARKET PRICE → (K – FMV) + incidentals – savings if any

ACTION ON THE PRICE → When the buyer fails to pay for goods as they are due, and either the buyer keeps the goods or the goods are lost or damaged after the risk of loss has passed to the buyer, seller can recover K price + incidentals – savings

Question 48

Limiting consequential damages

Answer 48

It’s critical to categorize damages as general or consequential because while there are no limitations on general damages, there are limits on consequential damages. For a plaintiff to receive consequential damages, the plaintiff must prove the damages are: (1) foreseeable; (2) certain; and (3) unavoidable.

Question 49

K foreseeability vs. tort foreseeability

Answer 49

K foreseeability: Did Deft have knowledge or notice or should have known of Plaintiff’s special circumstances at time of K formation?

Tort foreseeability: Proximate cause is the test for determining whether the damages were foreseeable. (Recall Thin-Skulled Plaintiff Exception!)

Question 50

Thin Skulled Pl Exception

Answer 50

A thin-skulled Plaintiff has a particular weakness or susceptibility that can increase the damages as a result of the Deft’s actions. Under this doctrine, the weakness causing the increased damages are foreseeable irrespective of the Deft’s knowledge. Extent of harm is irrelevant, so long as type was foreseeable.

Question 51

Certainty (current injury/loss)

Answer 51

Second element Pl needs to prove in order to avoid limitation on consequential damages. Plaintiff must prove the amount of losses with reasonable certainty. Reasonable certainty requires the Plaintiff: (1) prove that it is reasonably certain or probable that it suffered a loss but for the Defendant’s conduct, meaning not speculative; and (2) provide the jury with evidence that the amount of its loss can be established with reasonable certainty.

Question 52

Certainty (future damage/losses)

Answer 52

Majority All or Nothing Rule: To justify a recovery for future damages the law requires proof of a reasonable certainty that they will endure in the future. This proof shall be greater than fifty percent (50%) or recovery is barred.

Minority Proportionality Rule: If a plaintiff can present evidence that a defendant’s malpractice, to a reasonable degree of medical certainty, proximately caused the increased risk of harm or loss chance of recovery, compensation should reflect the low probability of occurrence.

Question 53

Unavoidability

Answer 53

If Plaintiff could’ve taken certain steps to avoid injury, then shouldn’t be entitled to damages. Plaintiff-focused req. Plaintiff may not recover damages for any losses that could reasonably have been avoided after the harm resulted.

Question 54

Specific performance under UCC

Answer 54

i. Buyer’s right to Specific Performance (Goods): Under UCC §2-716, a buyer enjoys a right to specific performance if (1) the goods are unique or in other proper circumstances. (2) Specific performance may include terms and conditions as to payment of the price, damages, or other relief as the court may deem just. (3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods or the circumstances reasonably indicate that such effort will be unavailing or if the goods have been shipped under reservation and satisfaction of the security in them has been made or tendered. (Note* Professor says there is nothing to foreclose a Seller from Specific Performance).
1. Lan Systems, Inc. v. Netscout: The court denied a UCC §2-715 specific performance remedy where the court found the software was not unique, which was required by the statute.
ii. Land Contracts (Monetary Damages Inadequate): Generally, the preferred remedy in land contracts is specific performance or injunction. Land is always unique, and damages are difficult to calculate because of the personal, subjective value. See Walgreen Co. v. Sara Creek Property Co., 966 F.2d 273 (7th Cir. 1992) (finding a permanent injunction to ensure the parties performed in accordance with the contract was appropriate because damages were difficult to calculate due to the location and the time left on the lease).

Question 55

General v Consequential damages under UCC

Answer 55

General damages: Value of lost K measured by either (1) replacement cost; (2) market value; or (3) diminution in market value. Recoverable by both buyer and seller.

Consequential damages: Any loss resulting from general/particular requirements or needs of which the seller at the time of K had reason to know and which could not reasonably be prevented by cover or otherwise. Consequential damages include personal injury/property damage resulting from breach of warranty. Only recoverable by buyer.