Consequential Damages – Buck v. Morrow

1. Consequential Damages – Buck v. Morrow • Two years into 5-year lease of pasture to Buck, Morrow (lessor) breached. • What is the measure of Buck’s contract damages? • What are Buck’s other damages? • Terminology: • General Damages: Refers to the value of what plaintiff lost from the original impact of defendant’s acts. • Consequential Damages: Refers to those damages that can (but do not have to) occur as a consequence of the initial loss.

2. Standards for Consequential Damages – Common Law • Tort: Plaintiff can recover only those damages for which she can show D’s actions are the proximate cause. • Contract: Plaintiff can only recover those losses which are reasonably within the contemplation of the parties as a probable result of the breach. • What facts support Buck’s award of consequentials under this standard?

3. Why does the distinction between general and consequential damages still matter? • Laycock discusses the historical hostility to consequential damages but also notes that if P adequately proves them according to the relevant standard they are readily available. • Why, then, is there any reason to distinguish between consequential and general damages? • Special pleading requirements in FRCP and state analogs • Bargained-for remedies/limitations clauses/damage disclaimers

4. Consequential Damages Under the UCC • UCC 1-305(a) expresses a similar ambivalence to consequential (or incidental) damages as common law. UCC 1-305(a) allows recovery only if such damages are specifically provided for by UCC or other rule of law • BUT every section we discussed last week provides for such damages • Buyer’s Remedies – UCC 2-715 • Buyer gets incidental damages under 2-715(1) and consequential damages under 2-715(2) • What is the difference between the two and why are they treated differently? • Seller’s Remedies – UCC 2-710 • Seller get’s incidental damages but not consequentials (unlike buyer) – why not?

5. Meinrath – Consequential Damages Stemming from Failure to Pay Money • P & D entered “Purchase and Sale Agreement.” D breached agreement by failing to pay certain “bonus compensation” • P seeks $300,000 in bonus compensation (general damages) • P seeks $770,000 in losses of invested capital and decline in the net worth of the businesses as a result of failure to pay the bonus compensation (consequential damages) • What does the court award instead of consequential damages?

6. Meinrath, cont’d • Why do courts refuse to give consequentials for failure to pay money? • Are such damages really more remote and speculative? Were they here? • Is it because money is not unique and is easy to replace? • How easy would it be for Meinrath to get that amount of money from someone else? • Erosion of the rule: • Contracts to loan money • Insurers – bad faith refusal to settle • Majority rule in both instances is that P’s can get consequential damages from initial breach (even though they involve a failure to pay money)

7. Personal Injury Damages • Two kinds of Damages • Economic Harm • Hospital bills, lost wages, etc. • Pain & Suffering • Continuing pain, mental anguish, distress, discomfort, disfigurement, loss of enjoyment of life • What are the rationales for awarding pain & suffering damages? • D should be made to know that their actions have caused harm • P should be given enough money to buy happiness to offset the pain/suffering D has caused

8. Issues re valuation of pain & suffering damages in jury instructions • Since there is no easy method of valuation, how does the jury place an amount on such damages? Usually the fight over this is in jury arguments. • The issue becomes whether P’s attorney can mention dollar amounts to support an argument for an award of damages in their closing arguments. • If so, must that dollar amount be presented as a lump sum figure or can it be presented in a per diem formulation or in some other way?

9. P’s attorney’s argument in Debus (p. 134) if no dollar figure versus a total dollar figure were mentioned: • No dollar figure • My client has suffered greatly from the defendant’s actions causing an enormous pallet of boxed pet food to topple over, injuring her in the process. Ultimately she has suffered a 20 percent disability. Susanne is entitled to recover compensation for this permanent disability for the rest of her natural life. Susanne’s life expectancy from the time of injury is 35 years. When considering your award think about what would be fair compensation for her pain and suffering for the next 35 years. • Total Dollar award: • My client has suffered greatly . . . . Surely my client’s pain and suffering is worth $385,000.

10. P’s attorney’s argument in Debus – asking for a per diem award • My client has suffered greatly from the defendant’s actions . . . What would be fair compensation for pain and suffering? . . . I am going to suggest to you that you award Susanne $30 a day [for her] pain and suffering, mental anguish, and loss of enjoyment of life. That is $10 a day for each one. Now there are 365 days in each year [and her natural life expectancy is 35 years]. • If you multiply 35 times 365, there are 12,775 days. And if you multiply that figure (12, 775) by $30 per day . . . It comes out to $383,250. • What is the purpose of such an argument? • Should courts allow them? Are they somehow worse than a lump sum figure (which virtually every court allows)?

11. Pain & Suffering Arguments – what the states allow • 2 states limit argument to general statements – NO dollar figures allowed at all • 48 states at least allow plaintiff’s counsel to state a lump sum dollar figure in closing argument • Jurisdictions are split on whether to allow “per diem” statements in closing arguments • Missouri does not allow such statements (Faught v. Washam, 329 SW2d 588)