DEFENSE COUNSEL cringe at the thought of damages--whether tort, contract or statutory. After all, clients are not supposed to lose on liability, so why should they have to think about damages?
But our clients occasionally do lose. As few cases are tried, effective settlements require effective damage analyses. Damages usually are the highlight of plaintiffs' cases, so defendants must meet that challenge head on. Defense counsel must learn the theories of damages, not just with some disdain but even more fluently than plaintiffs' attorneys, lest catastrophe follow.
TORT DAMAGE THEORIES
Within the realm of tort-based actions, the vast preponderance of cases involving architects, engineers, contractors and sureties are grounded in negligence, including negligent misrepresentation. The striking feature of the negligence cause of action is that the plaintiff must prove damages or the action fails. Put another way, damages are not presumed or inferred by the existence of liability. Rather, as Section 907, Comment a, of the Restatement (Second) of Torts states, the absence of damages is fatal to the cause of action in negligence.
Parties engaged in construction are, of course, subject to occasional charges of the tort of interference with contract, which are covered by Sections 766, 766A and 776B of the Restatement. For example, a general contractor might bring an action against an engineer under the intentional tort theory so as to avoid the economic loss defense.(1) In this tort, however, the "pecuniary loss resulting to the other from the failure of the third person to perform the contract" is generally measured by contract theories of damages, according to the Restatement. Proof of liability for trespass to land carries with it a presumption of at least nominal damages, according to Sections 163 and 907 of the Restatement. Similarly, defamation in the "per se" category causes damages to be presumed. Damages available in bodily injury causes of action by workers or passersby of a construction site are beyond the territory surveyed by this article. Delay damages usually arise in contract actions.
DAMAGES RECOVERABLE IN TORT
A. Contrasted with Contract
If one were not told that tort and contract law are "supposed to" have separate theories of damages, the purported distinctions learned in law school between the competing theories often would seem not to exist. For example, the Restatement in Section 901, Comment a, points out that the law of torts attempts primarily to restore the injured party to as good a position as held prior to the tort. The substance of many different opinions on tort damages in the construction setting suggests that the "rules" on the proper measure of damages are simply guides and not legalistic formulae to be followed in some sort of arbitrary or inflexible way. Substantial justice is the desired result, rather than legalistic adherence to harsh commandments of the law. Using different words, the Restatement notes that when a loss involves pecuniary injury only, compensatory damages are designed to place the plaintiff in a position substantially equivalent in a pecuniary way to that which he would have occupied had no tort been committed.
Any personal injury lawyer knows that if the fact of damages is apparent, even if without mathematical certainty, awardable damages exist. So too, defense lawyers might concede that property damages occasionally can benefit from that leniency. Nonetheless, defense counsel should be equally ready with common law cases to argue that if the damage is indeed capable of dollars and cents computation, such computation must be supplied lest the proof fail.(2)
As noted above, technical distinctions in the damages recoverable in tort, as compared to contract, may better be left behind in law school. The rules for tort and contract damages might be stated differently, but they are basically the same. …