Damages in Civil Litigation
An important aspect in any civil lawsuit is the remedy a party can recover for the injury suffered giving rise to the lawsuit. Generally, speaking there are three types of remedies that can be awarded by a court in a civil litigation case including: (1) damage remedies, (2) restitution remedies, and (3) equitable remedies such as declaratory judgments and injunctions.
Damage remedies are a monetary remedy aimed at making the plaintiff whole for his losses. In contrast restitution remedies reflect restoration of something – for example, money paid for services not performed. Lastly, equitable remedies reflect the ability of the court to order a party to perform a particular action – for example, to enjoin a party from committing a particular action such as trespassing or removing property. Often times a party will have multiple options available for choosing a particular remedy in a civil lawsuit. This article focuses only on damage remedies.
Nature of damage remedies
Historically, remedies available in civil litigation have been divided into remedies available in law or equity. Remedies available in law traditionally have a right to a jury trial while remedies available in equity are restricted to a bench trial. In general, damage remedies are remedies available in law, meaning that a plaintiff has a right to have a jury decide the amount of damages she is entitled to. See Dobbs, Dan B. Dobbs Law of Remedies : Damages, Equity, Restitution (2nd Ed.) at § 1.2. St. Paul, Minn.: West Pub. Co., 1993 (hereinafter “Dobbs Law of Remedies”). In essence, the jury is responsible for deciding how much compensation is required to make the plaintiff whole again or how much the plaintiff’s losses are worth. This can be easier said than done since damages often include categories that are not easily quantifiable, such as emotional distress and pain and suffering.
Principles of damage awards
Damages as a remedy is an award in money designed to compensate one who has suffered a legally cognizable injury. As discussed above, damage awards are different from restitution remedies: damages are focused on the plaintiff’s loss due to the injury while restitution is focused on the defendant’s unjust gain.
Some general principles of determining the amount of damages incurred by a plaintiff include:
- General or market damages – which represent the loss in market value of whatever injury the defendant caused. For example, the loss in market value of property the defendant may have damaged.
- Special or consequential damages – which represent additional damages the plaintiff incurred as a result of the injury. For example, rent the plaintiff had to incur where the defendant caused the plaintiff’s property to be uninhabitable.
- Substitution cost damages – which represent the cost of obtaining a substitute for the injury the defendant caused. For example, replacement of a tree in a plaintiff’s yard where the defendant wrongfully cut it down.
- Standardized and pattern damages – which represent damages where a standardized damage rate is applied. For example, the Colorado Consumer Protection Act standardizes damages to a minimum of $500 per violation, unless actual damages are greater.
Dobbs Law of Remedies at § 3.2. Additionally, punitive damages may be awarded in some circumstances; however, punitive damages in Colorado are governed by statute and generally require the circumstances to be egregious enough to demonstrate that the defendant acted with malice, fraud, or willfully and wantonly. C.R.S. § 13-21-102. In general, where the circumstances are sufficient to enough to warrant punitive damages, those damages shall not exceed the award of actual damages. Id.
Offsets and benefits to the plaintiff from the defendant’s acts
In some situations, the defendant’s actions may not only result in harm to the plaintiff, but may also result in some benefit as well. Examples of this include insurance payments made to the plaintiff for physical injuries caused by the defendant, gifts or public benefits the plaintiff receives as a result of the defendant’s actions, and the defendant engaging in some wrongful action that ultimately results in an increase in value of the plaintiff’s property. In some circumstances the defendant will be able to deduct a credit for those benefits while in other circumstances the defendant cannot and the plaintiff will receive a windfall.
Overall, the general rule for benefits received by the plaintiff is that the defendant gets a deduction for direct benefits received, but not for collateral benefits received.
Collateral benefits are those received by the plaintiff from a collateral source – that is, somebody other than the defendant. A defendant receives no deduction from damages owed for benefits received from collateral sources. Common examples of this include medical expenses paid by the plaintiff’s insurance company, which is common in personal injury cases; and public benefits received by the plaintiff, such as unemployment compensation where the defendant caused the plaintiff to lose her job. Additionally, gifts given to the plaintiff to help ease her losses are also considered collateral.
In contrast to collateral benefits, direct benefits are those that result from the defendant’s actions themselves, or that are derived from the defendant or someone who acts on the defendant’s behalf. A defendant will receive a credit for direct benefits attributable to his actions. An example of this includes a defendant who trespasses on a plaintiff’s property and digs a ditch. The defendant may have committed a tort by trespassing on somebody else’s property; however, if the ditch improves the value of the plaintiff’s property the defendant would be entitled to a credit for that improvement. Additionally, there are exceptions and limitations to direct benefit credits:
- Benefits common to the community – if the benefit is common to the community then the defendant is not entitled to a credit. For example, where a factory creates a nuisance for a plaintiff but is also a benefit to the community in the form of creating jobs, the factory is not entitled to an offset for its benefit to the community.
- Benefits to different interests – where the benefit received is different from the interests harmed by the defendant, the defendant will not receive a credit for those benefits. For example, is a defendant falsely imprisons the plaintiff for a month, the defendant will not receive a credit for rent the plaintiff saved while falsely imprisoned.
- Unwanted benefits – where the benefit is unwanted the defendant will not receive a credit. For example, if the plaintiff prefers her land in a swampy condition and the defendant drains it making it more marketable, the defendant will not get a credit for the improved market value since the plaintiff did not want the improvement.
- Causation – benefits not caused by the defendant’s actions are excluded and the defendant is not entitled to a credit for them. For example, where the defendant drills for oil, discovers oil under the plaintiff’s property, but destroys the plaintiff’s house in doing so, the defendant will not get a credit for the increase in value to plaintiff’s property due to the oil discovery since the increase in value stemmed from the discovery of oil, not the destruction of plaintiff’s property.
- Time for valuing plaintiff’s loss – a plaintiff’s loss is generally computed as of the day the injury incurred. Accordingly, a defendant is not entitled to a credit for benefits accrued after the time for valuing plaintiff’s loss. For example, where the defendant sells land to a plaintiff for more than it was worth based on fraudulent representations and the land later appreciates in value because the neighborhood improves, the defendant is not entitled to a credit for the rise in value.
Dobbs Law of Remedies at § 3.8, 8.6.
Plaintiff’s duty to mitigate damages
In addition a defendant receiving credits for benefits to the plaintiff, a defendant may also receive a credit where the plaintiff fails to take steps to mitigate damages. More specifically, a plaintiff is required to make reasonable attempts to mitigate damages such that the plaintiff cannot just stand idly by and watch damages accrue. A specific example of this is in the landlord-tenant context. Where a tenant breaches a lease and moves out, the landlord has a duty to engage in reasonable efforts to find a new tenant – that is, the landlord cannot simply allow the premises to be vacant indefinitely to maximize her damages. Importantly, any costs incurred in mitigating or reasonably attempting to mitigate damages, such as advertising costs to fill the vacancy, are recoverable against the defendant. Dobbs Law of Remedies at § 3.9.
© 2016 J.D. Porter, LLC; Jordan Porter. Denver, Colorado.