Remedies Outline
I. Compensatory Damages: put P in the position he would be in but for D’s wrong.
a. US v. Hatahley-> US claims horses were trespassing. Gvt agents took Indian horses w/out notice and sold them to glue factory. Indians wanted horses back- impossible so court must give substitutionary relief. Courts attempted to value loss of value, loss of use, and pain and suffering.
i. Loss of value=the actual value of the horses. (direct damage)
1. Gen Rule for Harm to Property-> market damages/market value.
a. what a willing buyer & seller would exchange.
i. note: In this case court refused to say that horses are unique due to training bc they could be traded w/other Indian tribes
ii. Loss of Use= Consequential. Must show proximate cause.
iii. Pain and Suffering= Consequential. Must be measured by an individual P.
iv. Key Points: NO double recovery, can debate value, look at individual harm- what did this particular D inflict on this particular P?
b. Harm to Property
i. Gen rule: Market value
1. Exceptions:
a. Market value is too difficult to calculate.
b. Market value would create an injustice
i. Examples
1. : person who lost has to replace a function and it costs more to replace the function than the market value
2. Property depreciates over time.
ii. US v. 50 Acres-> Gvt condemned 50 acres of a landfill so city purchased new land to be used (113 acres.) FMV of 50 acres is $250k, new plant costs $750k. Court awarded only FMV of $250k, not the replacement cost.
1. If gvt is required to pay $750, the city will get a windfall resulting in injustice to gvt.
a. courts lean toward objective value- want to make substitutionary relief as close to specific relief as possible. P deserves to be put back into their rightful position but in the cheapest way possible.
2. Depreciation:
3. RULE: Under eminent domain you are only entitled to the market value of the actual property
a. no consequential damages
i. states can alter this rule (FL does)
b. EXCEPTIONS: Should deviate from FMV if:
i. Component Parts
1. a good is a piece of a larger integrated system
a. if this is shown you get actual replacement cost instead of market value.
b. Helps avoid economic waste
ii. No Market or Special Use Property
1. situations in which the loss says there’s no market are exceedingly rare. In this situation you can’t get market value and you are not given a replacement rule.
a. substitute rule is dictated by facts and circumstances of the case. Must convince judge of a dollar amount
iii. Trinity Church v. John Hancock-> Church has been slowly deteriorating but when they built Hancock building it made the church deteriorate much faster. Church is still standing and useable but the church is going to have to be replaced at some point in the future. Church wants to recover for diminution in value.
1. Special Use Property -> market value exception
2. Church convinces judge that it should be awarded the hypothetical cost to replace the church
a. theory is that the church would have eventually settled and must be taken down. Hancock building reduced takedown time- Church lost 40% of its life.
3. The court held that church was entitled to be compensated for the reasonable costs of restoring church to the condition it was in prior to the excavation, as church’s method of damage assessment, based upon a percentage of reconstruction cost, was consistent with the depreciated-cost-of-reconstruction standard applicable to special purpose property cases.
c. Value as the Measure of the Rightful Position
i. Decatur Count Ag-Services Inc v. Young-> D was supposed to spray insecticide on P crops but did so negligently and ruined all of P’s crops. Upon harvest, crop could sell for $7, but if you wait they sold for $10. P always waited and sold for $10.
1. Issue: At what time do you value the harm?
a. Gen Rule-> value at the time of the harm. BUT in crops, there is no value at time of harm bc they are only seeds.
b. For Agricultural Cases-> Value at time of harvest
2. Methods of Calculating Fluctuating Markets
a. time of the wrong
b. highest value between the time of the wrong and the time of the trial
c. highest value between the time she learned of the loss and a reasonable time thereafter in which she could have replaced the securities.
3. Here court measures value at time of harvest bc they don’t want P speculating on the market at the expense of the D.
d. Reliance and Expectancy Damages
i. Contracts-> generally get expectancy damages but can choose either
1. Expectancy will almost always incorporate reliance
a. Will choose reliance if
i. too expensive or speculative to prove expectancy
ii. your expectancy is negative
1. losing K (limited by the law)
2. Excessive expectancy results in a windfall for P
ii. Neri v. Retail Marine Corp-> P wanted to buy a boat and put down $4250 deposit. P then wanted to rescind the contract. D refused to refund the deposit even though he was able to sell the boat 2 months later to another person.
1. D argues that they would have sold the boat anyway so he would have sold 2 boats instead of 1. In mean time, D had to pay to store boat.
2. 2 ways to award damages in this case
a. Reliance: give P cost of boat storage. This is the position P would have been in were the K never made.
b. Expectancy: Give P full price of K. This puts P in the rightful position had K been fully performed
emedies provided in K do not achieve their intended purpose?
iv. Gen Rule: Consequential losses constitute a recoverable item of damage in the event of a breach by a seller.
v. Court allowed contractual exclusion of consequential damages. Uniform Commercial Code did not require the invalidation of an exclusion of consequential damages when limited contractual remedies failed of their essential purpose.
b. Tests:
i. test for limiting the remedy is: does it fail its essential purpose?
1. if so-> expectation damages if you also have a separate consequential damages provision
a. up to the judge
ii. test for limiting the liability/damages is if the disclaimer is unconscionable
1. if so, then judge van void whole K, cross out the provision, or rewrite K
2. Over-liquidated Damages
a. Gen Rule: law will not enforce a liquidated damage provision that is deemed to be a penalty
i. can’t have enforceable “penalty clause”
ii. Enforced if it is a reasonable approximation of damages at times of K, or it is difficult to calculate actual damages.
b. Ashcraft & Gerel v. Coady-> C was a lawyer at AG. C tried to sabotage the firm which breached his employment K. District court required him to pay liquidated damages to firm.
i. So long as the amount agreed to by the parties prior to the breach is REASONABLE, the court will uphold the provision.
ii. Here- reasonable bc as attorney got promoted and learned more about the firm, liquidated damages increased. Termination for cause would be disruptive and create considerable losses for firm.
3. Under-liquidated Damages
a. Northern Illinois Gas Co v. Energy Cooperative Inc-> Nig and EC has a K to buy gas. Prices went down so NIG breached K. EC sues for the difference between the K price and the market price.
