LAW 512-001 – Torts II

Damages


There are three basic types of money damages in torts:

  1. Nominal Damages

    Nominal damages consist of a small sum of money (often one dollar) awarded to the plaintiff in order to vindicate rights, make the judgment available as a matter of record in order to prevent the defendant from acquiring prescriptive rights, and carry a part of the costs of the action. The actual amount is unimportant, as long as it is trivial.

  2. Compensatory Damages

    Compensatory damages are intended to represent the closest possible financial equivalent of the loss or harm suffered by the plaintiff, to make the plaintiff whole again, to restore the plaintiff to the position the plaintiff was in before the tort occurred.

    This is done with money. All losses must be translated into a dollar value to compensate the plaintiff.

    There are two types of compensatory damages:

    1. Special Damages

      Special damages are compensatory damages awarded over economic losses, such as:

      • Past and future medical expenses
      • Past and future lost wages
      • Loss or impairment of earning capacity
        • This means one cannot do the job that he wants to anymore, even if his new job does not pay less.

      Future costs must consider:

      1. Inflation
      2. Interest
      Reduce to Present Value

      An award for future damages must be awarded as a definite lump sum amount set at the time of the judgment.

      There are three ways of reducing to present value:

      1. Inflation-discount method
        • Accounts for interest and inflation separately.
      2. Real interest method
        • Sets a flat interest rate approximating the practical rate.
        • Based on the principal that overpaying the plaintiff is better than underpaying him.
      3. Total offset method
        • Says that interest and inflation will cancel each other out and just pays the actual awarded amount.
    2. General Damages

      General damages are compensatory damages awarded over non-economic harms, such as:

      • Pain & suffering
      • Mental anguish
      • Loss of function or appearance
      • Loss of enjoyment of life

      With general damages, it is not necessary to reduce to present value.

      Sometimes general damages are calculated using the "per diem" method, which says to multiply what such harm for a short period of time should be compensated for by the length of time that the plaintiff must endure the harm, i.e. their life expectancy.

    Compensatory damages are not taxed, although a minority of jurisdictions award lost wages based on what the plaintiff's post-tax income would have been.

  3. Punitive Damages

    Punitive damages are an additional sum, over and above the compensation of the plaintiff, awarded in order to punish the defendant, to make an example of him, and to deter him and others from engaging in similar tortious conduct.

    Because they are made to punish, they are focused on the behavior of the defendant, not the plaintiff.

    The state can limit how much of a punitive damages award a plaintiff will receive.

    Punitive damages are taxed.

    The majority says that punitive damages cannot be recovered against a defendant's estate.

    Punitive damages are usually limited to a single digit multiple of the compensatory damages. State Farm v. Campbell.

    The majority allows evidence of the defendant's wealth to be admitted for punitive damages.

    Most jurisdictions have "clear and convincing" as the standard of proof for establishing entitlement to punitive damages. This is a higher standard than the usual preponderance of the evidence.

    The majority and the Restatement Third permit employers to be liable for punitive damages for their employees if:

    1. The principal authorized or ratified the act,
    2. The principal was reckless in employing or retaining the employee, or
    3. The employee was employed in a managerial capacity and was acting in the scope of employment

The majority also recognizes separate derivative claims like loss of consortium just for being married to the injured.

Wrongful Death

Wrongful death is a cause of action allowing some form of recovery for the death of another due to tortious conduct.

Every state has a wrongful death statute, creating a cause of action for wrongful death.

While all states ordinarily allow recovery for injuries to viable unborn children later born alive, not all allow wrongful death actions for children who died before being born. (Illinois allows wrongful death actions to be brought for children killed before becoming viable.)

Wrongful death actions allow the beneficiaries of the deceased to recover the losses suffered by them.

Beneficiary

A spouse is always considered a beneficiary. An unmarried cohabitant is always considered not a beneficiary.

Some states consider domestic partners to be beneficiaries.

Children are beneficiaries in the majority of states.

Step-children are not in the majority of states.

Some states require children born out of wedlock to be dependencies of the deceased.

Parents are usually only beneficiaries if a child dies without a spouse or children.

The next-of-kin is a beneficiary in some states if he can show a financial loss.

The damages in a wrongful death action are set by statute and usually based on the pecuniary (economic) injury resulting to the beneficiary by the death.

  • This is usually measured by determining the monetary contribution that the decedent would have made during his lifetime to the beneficiary, and it may include the market value of services the decedent would have made during his lifetime to the beneficiary.
    • If there are multiple beneficiaries, the monetary contribution that the decedent would have made to each beneficiary is added up with the others'.
    • The expected lifetime is the shorter of the decedent's and the beneficiary's, as they would have had to have overlapped for the decedent to have provided the beneficiary with benefits.
  • The minority uses loss to the decedent's estate.
  • Typically funeral expenses are included.

Most jurisdictions recognize that the economic loss suffered by a child that loses his parent includes loss of training, education, guidance, and nurture in addition to economic loss.

When a minor child dies, states are split as to whether or not to allow non-pecuniary losses. Pecuniary losses can be substantial and are never capped, but many states allow non-pecuniary losses as well, although sometimes with a cap.

A slight majority allows punitive damages in a wrongful death action.

Survival Statute

A survival statute provides that a cause of action for personal injury survives the death of the plaintiff, defendant, or both by allowing claims to be brought by or against decedents' estates.

Conscious pain and suffering, lost wages, and hospitalization costs prior to a wrongful death are usually recoverable under a survival action.

Remittitur

Remittitur is when the judge reduces damages to below what the jury awarded.

Remittitur can be granted when the award:

  1. Falls outside the accepted range
  2. Is a result of passion or prejudice
  3. Shocks the judicial conscience
Additur

Additur is when a judge increases a jury's damage award. It is very rare and does not exist in federal court.

The American Rule is that the prevailing party does not get attorney's fees unless provided by statute or contract.

  • Bringing or maintaining a frivolous lawsuit often is a statutory exception.

Defendants usually pay their attorneys by the hour.

Structured Settlement

A structured settlement is a settlement that is paid out as an annuity instead of a lump sum.

Property Damage

Damages for physical damage to property are the market value of the property if it was destroyed or converted and the difference in value if it was only damaged.

Market Value

Market value is what a ready, willing and able buy would pay on the open market.