Damages

Damages are a civil judicial remedy used to monetarily compensate a party forinjuries caused by the wrongful conduct of another, resulting in loss, injury, or other detriment to one's person, property, or rights. Damages are awarded to a plaintiff for losses caused either by a defendant's conduct or to provide a remedy for the breach of a contractual relationship. Damages are sometimes also used to punish outrageous conduct and deter future misconduct. Damages are only one category of remedies; other remedies include restitution (restoring something to its rightful owner); injunctive relief (forbidding a party to do an act); mandamus (requiring a party to do an act); and declaratoryrelief (a judicial decision setting forth the legal rights of respective parties even when no further relief is ordered).
Damages are traditionally awarded in American dollars and are generally madein a single lump-sum payment. The one-time payment is meant to compensate forboth past harms as well as those anticipated in the future. Although makingonly one payment simplifies administration, the amount of the judgement may prove insufficient in six months or ten years. Not only must the award accurately reflect compensation for future harm, it must also include calculations for future inflation and make reductions to present value for payments made now.
Damages are categorized depending upon their purpose. The most commonly employed categories are compensatory, nominal, liquidated, and punitive. Compensatory damages are intended to compensate a party for injury sustained or make good or replace a loss caused by a wrong. Their purpose is to put the plaintiff in the same situation she would have been in had the harm notoccurred. Compensatory damages are not intended to enrich a plaintiff. Nominal damages are damages in name only, a trifling sum awarded to recognize an infringement of rights without resulting substantial loss or injury. Punitivedamages are a penalty used where a defendant's conduct has been particularlyegregious, vindictive, or malicious; they are not compensation for injury. Liquidated damages are those specified in a contract in the event of a breach.
Compensatory Damages: General Damages
Compensatory damages, also called actual damages, are typically broken down into two categories: general and special. General damages arise naturally andlogically from a defendant's conduct or breach of contract. They are the immediate, direct, and proximate result of an injury or breach of contract. General damages are not used to hold a defendant liable for remote consequences flowing from an act or omission. Moreover, they cannot be based upon mere speculation or conjecture, but must be established with reasonable certainty. Theydo not have to be pleaded specially, merely proven at trial. A plaintiff's medical expenses caused by defendant's negligent operation of a motor vehicleis an example of general damages.
In cases involving tortious conduct, foreseeability of harm is generally nota limitation on recovery for general damages. For example, suppose the plaintiff in the above example suffers from some rare condition that significantlyworsens his condition and hampers his recovery. The tortfeasor "takesthe victim as he finds him," and is responsible for the extraordinary medicalcosts. In breach of contract cases, the injured party is entitled to the amount of compensation that will leave her as well off as if the contract had been fully performed.
Compensatory damages that are capable of being estimated in and compensated by money are called pecuniary damages. In assessing general damages in a breach of contract action, a plaintiff might use market reports, expert testimony,comparable sales, or other methods to establish the economic value that hasbeen lost, i.e., the "loss of expectancy" or "loss of bargain." An award fordoctor and hospital expenses for an plaintiff in a personal injury case is also a pecuniary award.
Consequential Damages
Consequential damages (also known as special damages) are another formof compensatory damages. Special damages do not flow directly and immediately from the defendant's act, but from some of the consequences of the act. They must be causally related to the injury and provable with a reasonable degree of certainty. For example, suppose a plaintiff suffered two broken legs asa result of a defendant's negligence. The plaintiff's medical expenses wouldconstitute the general damages. If the plaintiff was a truck driver who was thereafter unable to work for several months, consequential damages would compensate him for his lost income.
As with general damages, the goal of consequential damages is to make the plaintiff whole, and no more. In a tort action, a defendant is liable for all damages, foreseen or unforeseen, which naturally flowed from the misconduct. Incontrast, in a breach of contract case generally the damages must have beenforeseeable at the time the contract was made.
Nonpecuniary Damages for Pain and Suffering and Other Emotional Trauma
Compensatory damages may be imposed for a person's pain and suffering. Theseare called nonpecuniary damages because they are difficult to quantify, but they are nevertheless viewed as legitimate compensation for a legally recognized harm. The trier of fact (the jury or the judge in a non-jury case)employs general experience and a knowledge of the economic and social affairsof life to determine an appropriate award. A plaintiff generally is not limited to recovery for present pain and suffering. Where a plaintiff establishesa reasonable likelihood of experiencing future pain, he may be awarded prospective damages as well. A jury is given significant latitude in determining damages for pain and suffering, and an award will only be overturned in caseswhere the jury has abused its discretion.
Historically, physical injury had to accompany mental suffering, but now mostjurisdictions allow recovery even without physical injury if a defendant's conduct was malicious or willful. Mental pain and suffering, including fright,anxiety, grief, emotional trauma, and other forms of mental suffering may becompensable. It is particularly challenging to measure the injury caused bya defendant's intentional infliction of emotional distress, to determine theeconomic harm caused by a vicious and unlawful slander, or to determine an appropriate amount to compensate someone for a loss of memory or other mental impairment resulting from wrongful conduct.
The judicial system permits recovery of nonpecuniary damages because recoveryof such damages funds attorney fees in contingency cases, where a plaintiffmight otherwise be unable to afford to bring suit. Moreover, it is a way forsociety to express a sense of public sympathy for a grievously injured person. Finally, it is one way for the legal system to set standards of behavior.
Punitive Damages
Punitive damages are a non-compensatory type of damages used to penalize or deter behavior. They are used to punish a defendant who has acted in a willful, wanton, malicious, abusive or other outrageous manner. Punitive damages arealso known as exemplary damages because they make an example of the defendant in order to deter others. Punitive damages are never mandatory and are onlyawarded in addition to an award for compensatory damages. Punitive damages are rarely permitted in breach of contract cases.
Determining an award of punitive damages involves a careful examination of the defendant's conduct and state of mind at the time of the misconduct. Unlikecompensatory damages, evidence of a defendant's worth may be presented whendetermining a punitive damages award. Sometimes, statutes authorize double ortreble damages as a punitive measure. For example, vehicle dealers who alteran automobile's odometer reading must pay treble damages. Other areas wherea damages multiplier is used include antitrust, trademark, patent, and consumer protection statutes.
The constitutionality of punitive damages has been challenged in recent yearson grounds that it violates the Eighth Amendment prohibition against excessive fines or the Fourteenth Amendment's Due Process clause. However, relief from punitive damages via a constitutional challenge has thus far proven to bean elusive avenue of relief. In one case, the Supreme Court upheld a punitivedamages award that was more than 500 times the compensatory award.
When a judge determines that a damages verdict is excessive or inadequate, the judge may reconsider the award without ordering a new trial or the necessity of an appeal. If a judge determines that an award is inadequate, she may order additur, whereby the defendant is ordered to pay a greater sum. Remittitur is a reduction of a jury verdict deemed excessive by the trial judge.
Nominal Damages
Where a plaintiff has suffered an injury caused by defendant's wrongful conduct, but where the plaintiff is unable to establish proof of a compensable loss, nominal damages may be awarded. This is typically a very small sum such asa dollar, and is meant to be symbolic. Nominal damages are usually awarded only after a plaintiff tries but fails to prove compensatory damages in a casewhere a real injury ocurred, or where there has been a technical invasion ofrights or a breach of duty but no substantial loss or injury.
Liquidated Damages
Liquidated damages are sometimes written into a contract by the parties as amethod for assessing damages in the event of a breach. The parties stipulateto the amount, or a formula to determine the amount in situations where precise damages would be difficult to ascertain. Liquidated damages provisions arepermitted only where prospective damages are uncertain or very difficult toestablish; if the parties simply made no attempt to determine the amount of possible damages, a liquidated damages provision may be unenforceable. In addition, a liquidated damages provision will be stricken as void if a court determines that it is in fact penal in nature.
Rules Regarding Avoidable Consequences and Collateral Sources
The plaintiff generally has a duty to minimize special damages, i.e., she cannot recover for damages that could have been avoided by reasonable acts or expenditures. For example, a plaintiff who has been wrongfully discharged fromemployment by the defendant employer has a duty to seek similar employment after the discharge, rather than to sit idly by and allow damages to accumulate. The plaintiff may have a duty to accept similar employment, thereby mitigating her damages. Likewise, a person who suffers personal injury generally hasa duty to seek reasonable medical care.
The collateral source rule means that a defendant shall not be enriched because the plaintiff has received benefits from a source other than the defendantas compensation for injury or breach. For example, a plaintiff injured because of defendant's negligence is entitled to recover from the defendant the full cost of medical services, even if the bills were paid by the plaintiff's relatives or provided free of charge.
Tort Damages Reform and Caps on Damages
Many jurisdictions enacted statutory damages caps on personal injury cases during a tort reform movement in the 1980s. In general, three different types of statutes have been enacted. One type allows full recovery of pecuniary damages, but limits recovery of nonpecuniary losses such as loss of consortium, pain and suffering, or mental distress. Other statutes limit actual pecuniarydamages. These statutes typically apply only to specific categories of defendants, such as health care providers, governmental entities, or alcohol providers. Finally, some jurisdictions impose dual caps, that is, some combinationof the first and second types of statutes.
Some damages caps have been successfully challenged on constitutional groundsas being a denial of due process and equal protection, particularly where damages were capped in favor of an interest group, such as health care providers, and where the statute provided for no substitute manner of compensation.