Pg 11

Question 1

What is a subrogation clause in an insurance contract?

Answer 1

This is when the insurer tries to prevent double recovery with a clause that says if the insurance payoff pays off a claim, then the plaintiff’s claim is transferred to them, so they own it, so any recovery that comes from it goes strictly to the insurance company to repay what they already gave the plaintiff.

Question 2

If a doctor treats a plaintiff, and then the insurance company pays the doctor, if there is a subrogation clause, who owns the claim against the defendant?

Answer 2

The insurance company. So when the defendant pays, that money goes to the insurance company

Question 3

If there’s ever a payment by an insurance company, in order to get extra points on an essay, what is it smart to discuss?

Answer 3

Subrogation clause. “Contracts of insurance frequently have subrogation clauses so that when the insurance company pays off a claim, the claim is then subrogated to the insurance company. So the plaintiff wouldn’t recover the cost of the hospital stay, instead it would go to the insurance company to compensate for what they already paid.“

Question 4

What is the economic loss rule that applies to damages?

Answer 4

Plaintiff cannot recover pure economic loss in negligence or strict liability (this doesn’t apply to intentional torts, personal injury, property damage, or contract damages).

Question 5

If a defendant negligently spills toxins onto his own land and then the neighbour’s land value starts to decline even though it wasn’t injured by the toxins, so the neighbour wants to sue the D for diminished value of the property, can he do this?

Answer 5

No, because of the economic loss rule. He only suffered economic loss from the negligence of the defendant, so he cannot recover

Question 6

Defendant trespasses onto the plaintiff’s land and causes economic loss, can the P different recover with regard to the economic loss rule?

Answer 6

Yes, because the economic loss rule would not apply since this involves trespass, which is an intentional tort. The economic loss rule only applies to negligence and strict liability, not to intentional torts

Question 7

What are examples of economic losses that would be included under the economic loss rule?

Answer 7

• lost profits
  – diminution in value of the property
  – pure financial loss

Question 8

What does it mean that economic loss can be parasitic under the economic loss rule?

Answer 8

There could be a cause of action for negligence or strict liability and the plaintiff also suffered personal injury or property damage plus an economic loss. In this case the plaintiff can recover from economic loss because it is parasitic to or derivative of the personal injury or property damage.

Question 9

What do you do if there has been a defective product as part of a bigger apparatus, and when it malfunctions, it causes damage to the other parts?

Answer 9

Apply the external effects test:

• if the defect came from an accident with external objects: it is treated as property damage
• if the damage was from deterioration or internal breakage, that is economic loss.

This is important for the economic loss rule

Question 10

What can a plaintiff get if he sued for damages for fraud?

Answer 10

Fraud is primarily an intentional tort, so the economic loss rule does not apply.
– CL fraud: plaintiff must plead and prove a false representation by a defendant of a past or present fact, that the defendant knew of the falsity, the representation was material to the transaction, the plaintiff relied on the representation, and the plaintiff suffered actual damage from relying on it
– regular fraud: plaintiff just has to show that the defendant made a material misrepresentation, that the loss was a natural and proximate result of the plaintiff’s reliance on the misrepresentation, the plaintiff did rely, and it caused him to act to his prejudice.

Question 11

What is promissory fraud?

Answer 11

When the plaintiff shows that the defendant never intended to perform his obligation

Question 12

When can nondisclosure be fraud?

Answer 12

If the defendant didn’t disclose a material fact that he had a duty to disclose. That duty could come from statute, fiduciary relationship, partial falsity, superior knowledge, etc.

Question 13

What is fraudulent concealment?

Answer 13

When the defendant actively prevents the plaintiff from discovering true facts

Question 14

What are the two approaches that we should always talk about on an essay for damages?

Answer 14

• (majority): benefit of the bargain measure

– (minority): out of pocket measure

Question 15

What is involved in the majority approach to damages that calls for the benefit of the bargain?

Answer 15

This is the difference between the value of what the plaintiff thought he was getting and the value of what he actually got

Question 16

If a defendant offers to sell plaintiff a book for $75 saying it is signed by the author and worth $100, but he actually forged the signature and the book is only worth $50, and then the plaintiff relied on that and bought the book. If the plaintiff sues under the majority benefit of the bargain approach to damages, what would he recover?

Answer 16

He would recover $50 because he thought he was getting a book worth $100 but he only got one more $50. This is meant to put him in the position he would’ve been in if the representation was true. This usually gives a bigger recovery than out-of-pocket measure

Question 17

What is involved in the minority approach to damages that calls for the out-of-pocket measure?

Answer 17

This is the difference between the contract price and the value of what the plaintiff actually received.

Question 18

If a defendant offers to sell plaintiff a book for $75 saying that it signed by the author and worth $100, but the defendant actually forged the signature and the book is only worth $50, and relying on this, the plaintiff bought the book. If he sues under the minority out-of-pocket measure approach to damages, what would he get?

Answer 18

He would only get $25 because he contracted to buy the book for $75 and he got a book worth $50. This is the better view because it avoids a windfall for the plaintiff. The idea here is just to indemnify the plaintiff

Question 19

If a plaintiff pays the seller $50,000 for a deed to land in reliance on the seller’s statement that it was free of encumbrances, but the seller knew that it was subject to a $15,000 mortgage, and the land with the mortgage was only worth $55,000, and without the mortgage it was worth $70,000, what would be the damages that the buyer could recover under both the benefit of the bargain measure and the out-of-pocket measure?

Answer 19

• benefit of the bargain: plaintiff thought he was getting unencumbered land worth $70,000, but he actually got encumbered land worth $55,000, so the difference is $15,000, and that is what he recovers
  – out-of-pocket: the contract price was $50,000 and we subtract from that the value of what the plaintiff actually got [land worth $55,000], so really the plaintiff gained $5000 and was not hurt by the fraud because he didn’t lose anything out of his pocket. So under this approach he recovers nothing

Question 20

What are all the possible recoveries outside of just the standard measures for damages that you can get for fraud?

Answer 20

– consequential damages [anything foreseeably directly traceable to the fraud]
- pecuniary loss
– emotional distress
– attorney fees
– punitive damages

Question 21

What are nominal damages and what is the purpose?

Answer 21

These are meant to remedy a violation of legal rights because there’s no actual loss or injury. These have to be requested.