What is the definition of compensatory damages?
The purpose of tort law in the United States is to restore the plaintiff to the same position they were in prior to the harm that was caused by the tort. While there are a number of potential forms of compensation that courts might award in tort cases, compensatory damages are by far the most typical. Although compensatory damages are frequently sought after, establishing or refuting them may be rather challenging. This article provides a general outline of compensatory damages and shows how lawyers might build a strong case.
When one party’s negligent or reckless actions cause another party’s harm, the injured party may seek compensation in the form of compensatory damages. It is common practice to award compensatory damages, sometimes known as “actual damages,” when a tort case is successful.
What constitutes compensatory damages and how much they can be are matters of local laws and common law. To determine if there are restrictions on the nature and amount of compensatory damages, litigators can consult state legislation.
When it comes to compensatory damages, what sets economic and noneconomic damages apart?
Economic and noneconomic damages are the two main categories of compensation.
Economic compensatory damages
The plaintiff receives financial compensation for losses incurred as a direct result of the tort. “Special damages,” which are economic in nature, consist of:
- Property damage
- Loss of earnings
- Funeral and burial costs
- Healthcare costs
Courts often find these damages to be “objectively verifiable” since they are based on measurable costs, such as receipts, medical bills (in cases where the plaintiff is experiencing bodily pain), and other proof of payment.
Noneconomic compensatory damages
When one party’s tortious behavior causes another to suffer intangible, nonmonetary losses, the goal of these damages is to compensate for those losses. The subjective and immeasurable nature of noneconomic losses, sometimes known as “general damages,” makes them difficult to quantify using paperwork like invoices and receipts. Intangible losses encompass:
- Inconvenience
- Pain and suffering
- Emotional distress
- Impairment of quality of life
- Loss of consortium
Legislation at the state level may place limitations on noneconomic damages due to their subjective nature. These laws are an attempt to level the playing field between the plaintiff’s emotional support and the jury’s purported prejudice. Attorneys handling professional negligence matters, in particular, would do well to familiarize themselves with their state’s statute code, as these caps differ from one jurisdiction to the next.
What is the rule of economic loss?
To a large extent, the economic loss standard eliminates the possibility of claiming tort damages for solely economic losses. The terms “economic damages” and “purely economic loss” are not synonymous. In most cases, when a court uses the phrase “purely economic,” it means that the plaintiff did not suffer any physical or financial harm. The main goal of the economic loss rule is to make sure that a contracting party can’t use a tort action to get more money than they would have gotten from the contract otherwise.
While most US jurisdictions have embraced the economic loss requirement, their structures vary slightly. In applying the economic loss rule, courts differ in the exceptions they permit and the situations in which they impose it, as is typical with the majority of judge-made rules. A number of considerations, including the facts at hand, the dynamics of the parties’ relationship, and any differences between them, will determine the final decision.
Here are a few common situations when the economic loss rule does not apply:
- Contract for services: People in many places use the economic loss rule for goods, but not for contracts for services.
- The rules for integrated products: The economic loss rule doesn’t apply in most states when a faulty product damages other property, unless the faulty component or product is an integral part of a bigger system.
- “Sudden and calamitous” failure: The economic loss theory may not be applicable in some jurisdictions if product damage occurs due to an unexpected and catastrophic incident, such as a truck battery rupturing.
- The independent duty rule: An exception to the economic loss rule that lets a plaintiff get money damages if the wrongdoer owed the victim a duty that goes back to something other than the contract between the parties.
How does one fight for and prove compensatory damages in a court of law?
1. Establishing the extent of harm
It is necessary to show compensatory damages with a majority of the evidence; but, courts have the discretion to impose different burdens of proof, such as reasonable certainty or significant evidence, as the situation demands. Receipts, statements from the claimant or witnesses on the effect of the tort on the plaintiff’s life, and, in some instances, the opinion of an expert witness are usually required to prove compensatory damages. The nature of the harm and the amount of damages sought will determine whether the services of an expert witness are required.
2. Attacking damages
Just like they do with other pieces of plaintiff evidence, defendants attack damages evidence. To do this, one might limit an expert’s testimony or urge that proof of damages be deemed inadmissible by submitting motions in limine, which are pretrial motions.
Additionally, the defendants have the right to cross-examine witnesses, file a “Daubert motion” to exclude or disqualify an expert, and provide conflicting facts and expert testimony on the plaintiff’s injuries and damages.
How do lawyers determine monetary compensation?
The concepts of damages, methodologies of claim estimation, and jury instructions must be considered when either determining the plaintiff’s damages or challenging the defendant’s calculation.
1. Principles of damage
According to the collateral source rule, a tortfeasor cannot exploit the benefits an injured person obtains from unrelated sources to lower the tortfeasor’s responsibility to the injured person.
The theory of avoidable consequences, which governs mitigation, states that a plaintiff who has suffered harm has an obligation to take reasonable measures to lessen the severity of its damages and cannot seek compensation for harm that was preventable.
Negligence affirmative defenses, such as comparative or contributory negligence, can significantly affect the amount of damages a plaintiff can get. In tort cases, the distribution of blame varies among states.
2. Techniques for valuing claims
Valuing intangibles like emotional discomfort is more complicated than adding up economic damages like medical costs and missed pay. When calculating noneconomic damages, two common mathematical approaches are the multiplier technique and the per diem method.
The multiplier technique involves taking the economic damages awarded to the plaintiff and multiplying them by a value between 1.5 and 5. When determining the amount of pain and suffering, the jury will take into account a number of variables, some of which will affect the multiplier.
In certain cases, the number of days an injury generated pain and suffering can be determined by adding up a regular sum charged for each day; this amount is frequently based on a person’s daily pay.
3. Guidelines for the jury
Economic and noneconomic damages can be more easily calculated with the help of jury instructions, which also serve to limit the scope of arguments on the value. Many cases instruct jurors to determine what is “fair and reasonable” in calculating damages for intangibles like “pain and suffering,” but provide no direction on how to do so. In order to win a case, litigants need to be ready to defend the proposed modifications as “fair and reasonable.”
Three Forms of Damages Addressed by Lawsuits
There are three distinct kinds of compensatory damages that a plaintiff in a civil suit might seek.
1. Payment for medical care
The majority of injury claims seek financial compensation to pay for medical expenses incurred as a direct result of the event. Testing and visits to the emergency room may rack up expensive medical expenses fast, even for relatively minor accidents. Extended durations of rehabilitation, critical care, surgery, intensive care unit stays, and hospitalization are all possible outcomes of severe injuries. The wounded person may require continuous medical attention, specialized adapted equipment, and nursing care for the rest of their lives if the injury causes them to be permanently disabled.
To calculate healthcare damages, the plaintiff’s lawyer will keep track of all costs incurred as a result of the injury and may consult with doctors to estimate future bills.
2. Making Up for Lost Earnings
The common outcome of a negligence action is the recovery of lost wages, current as well as future. When someone else’s carelessness causes an injury, the victim may have to miss a few weeks or months of work while they heal. The plaintiff may be able to get compensation for this financial setback from the court.
This also covers any future workdays lost as a result of the accident, such as in the event that the victim is permanently incapacitated and unable to work. Also, if the plaintiff’s injuries make it less likely that they will be able to earn a living wage in the future—for example, if they are unable to grow in their current position—the court may decide to give them damages.
3. Compensation for Mental Anguish
Receipts and a record of income can be used to compute medical expenses and missed earnings. It is more difficult to determine how to award damages for emotional suffering. However, in cases involving personal injuries, these damages might be rather significant. The amount of money won for emotional distress might sometimes outweigh the monetary losses.
A Comprehensive Overview of Emotional Distress Recovery
Both the quantity and the frequency of this form of compensation might differ greatly. For some types of cases, and in certain jurisdictions, there are limits. Consistent with mental suffering are other forms of damages, such as:
- Loss of Companionship: This type of damage is most often seen in wrongful death cases. It helps the family get over the loss of the relationship with their deceased loved one.
- Mental Anguish: Try to give the victim money to make up for the emotional harm the accident caused.
- Anxiety and Stress: Dealing with the aftermath of a serious accident and the subsequent legal action may be a tremendously trying experience. It is possible to seek damages for stress and anxiety in some circumstances provided the plaintiffs’ legal firm successfully demonstrates the impact.
- Negligent Infliction of Emotional Distress: NIED lawsuits differ from conventional emotional distress claims in that recovering damages does not require a physical injury.
Settlements Out-of-Court
The vast majority of cases settle out of court with the parties reaching mutually agreeable terms. All of the parties’ respective legal responsibilities are laid forth in this settlement. The plaintiff often gives up their right to sue in court in exchange for a specified sum of money, which the defendant agrees to pay.
An out-of-court settlement has several advantages over a trial, including significantly reduced legal expenses. Among them are:
- Settlements that happen early on in the process are preferable since they reduce stress compared to trial preparation.
- Greater say over the terms of the settlement, as they would otherwise be subject to the discretion of the trial’s jury or judge.
- The time it takes for a trial and any subsequent appeals to conclude can easily exceed a year.
- Compared to the overwhelmingly public nature of trials, settlement agreements can remain confidential.
Considering the potential drawbacks of settling out of court is important. One major drawback is that in a settlement, the defendant is not required to admit culpability. This may not be a major concern for certain civil action plaintiffs, but for others, it is essential to have an acknowledgment of guilt before they can hold the party responsible accountable. The legal system holds the defendant accountable for what happened when he loses in court.
There is absolutely no pressure on you to take a settlement offer. Whatever your legal options may be—going to trial or settling out of court—you should always work with your lawyer.
Reducing Lawsuit Compensation: The Plaintiff’s Role
The plaintiff could have some personal responsibility for their losses or injuries in some instances. In a court of law, this can have a variety of effects, including lowering or eliminating the amount of compensation that is recoverable.
When the plaintiff bears some responsibility for the accident, the majority of jurisdictions employ the standard of comparative negligence.
Partial-at-fault comparative negligence lowers the compensation value according to each party’s percentage of blame. The opposite is true with contributory negligence, which bars a plaintiff from collecting damages if they are even partially at fault. The only places you’ll see this in use are in the following states: North Carolina, Virginia, Alabama, and DC.
There are statutes in place in some jurisdictions that mandate plaintiffs to do everything that is reasonably possible to lessen the impact of an accident on their mental, emotional, and financial well-being. Such statutes are sometimes referred to as “failure to mitigate damages” statutes.
In most cases, the victim cannot sue the offender for additional damages if they do not take the usual steps to limit their injuries, such as seeking medical attention or going back to work as soon as possible. The courts have the authority to lower a plaintiff’s award in a case if the plaintiff declines to take the initiative to mitigate.
Damages Capped in Court Cases
To shield businesses and individuals from the astronomical sums awarded in these negligence lawsuits, some states’ legislatures have enacted tort reform legislation. Though divisive on a political level, these changes will limit the amount of non-economic damages that defendants can be held to pay in certain personal injury cases. With the help of your civil litigation lawyers, this is a critical factor to think about when estimating the potential compensation for a wrongful death or personal injury case.
