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Damages - Consequential Damages

plaintiff defendant punitive injury

Consequential damages (also known as special damages) are another form of 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 as a result of a defendant's negligence. The plaintiff's medical expenses would constitute 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. In contrast, in a breach of contract case generally the damages must have been foreseeable 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. These are 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 affairs of life to determine an appropriate award. A plaintiff generally is not limited to recovery for present pain and suffering. Where a plaintiff establishes a 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 cases where the jury has abused its discretion.

Historically, physical injury had to accompany mental suffering, but now most jurisdictions 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 be compensable. It is particularly challenging to measure the injury caused by a defendant's intentional infliction of emotional distress, to determine the economic 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 recovery of such damages funds attorney fees in contingency cases, where a plaintiff might otherwise be unable to afford to bring suit. Moreover, it is a way for society 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 are also known as exemplary damages because they make an example of the defendant in order to deter others. Punitive damages are never mandatory and are only awarded 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. Unlike compensatory damages, evidence of a defendant's worth may be presented when determining a punitive damages award. Sometimes, statutes authorize double or treble damages as a punitive measure. For example, vehicle dealers who alter an automobile's odometer reading must pay treble damages. Other areas where a damages multiplier is used include antitrust, trademark, patent, and consumer protection statutes.

The constitutionality of punitive damages has been challenged in recent years on 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 be an elusive avenue of relief. In one case, the Supreme Court upheld a punitive damages 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 as a 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 case where a real injury ocurred, or where there has been a technical invasion of rights 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 a method for assessing damages in the event of a breach. The parties stipulate to the amount, or a formula to determine the amount in situations where precise damages would be difficult to ascertain. Liquidated damages provisions are permitted only where prospective damages are uncertain or very difficult to establish; 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 from employment 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 has a 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 defendant as 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 pecuniary damages. 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 combination of the first and second types of statutes.

Some damages caps have been successfully challenged on constitutional grounds as 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.

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