Articles Posted in Damages

Juries are usually told they can award to a successful plaintiff whatever amount they decide is appropriate, however high that number might be. The judge, however, will scrutinize any award of monetary damages to ensure it is supported by the evidence admitted at trial. Courts have a duty to correct a verdict that plainly appears to be unfair or would result in a miscarriage of justice. When it appears to the court that a verdict is unfair in that it is out of proportion to the actual damages sustained, the court has a duty to correct the injustice. (See Gazette, Inc. v. Harris, 229 Va. 1, 48 (1985)). A trial court may set aside a verdict if it shocks the court’s conscience, indicating that the jury was likely motivated by passion or prejudice, or that the jury misconceived or misconstrued the facts or law, or where the verdict is so disproportionate to the injuries suffered as to suggest that it is “not the product of a fair and impartial decision.” (See Edmiston v. Kupsenel, 205 Va. 198, 202 (1964)). Trial courts have the power to order a new trial (Va. Code § 8.01-383), or they may give the plaintiff the option of “remittitur” of the excessive verdict in lieu of a new trial (Va. Code § 8.01- 383.1), permitting him to accept judgment for an amount less than the jury awarded.

When analyzing awards of punitive damages for excessiveness, courts look to a number of factors, including (1) the reasonableness between the damages sustained and the amount of the punitive damages award and the measurement of punishment required; (2) whether the award will amount to a double recovery; (3) the proportionality between the compensatory and punitive damages; and (4) the ability of the defendant to pay. (See Baldwin v. McConnell, 273 Va. 650, 657 (2007)). Punitive damage awards that are grossly excessive can also be unconstitutional in that they violate the Due Process Clause of the Fourteenth Amendment. The Due Process Clause requires consideration of factors such as (1) whether the award bears a reasonable relationship to the award of compensatory damages; (2) the relationship between the punitive damages award and the actual or potential damage that might have been caused by the acts; (3) the grievousness or degree of reprehensibility of the acts; (4) the degree of malicious intent; (5) the ratio of the award to civil or criminal penalties that could be imposed for comparable misconduct; and (6) the wealth of the wrongdoer. (See BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568, 575 (1996)).

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Emotional distress claims are tricky because they are so easily faked. Anyone can assert that they suffered unbearable pain and suffering as the result of a defendant’s wrongful act, regardless of the degree of humiliation actually felt. It’s kind of hard to disprove another person’s subjective emotions. The Fourth Circuit has criticized emotional-distress cases for being “easily susceptible to fictitious and trivial claims” and has warned that awards of emotional-distress damages can be set aside when based solely on the plaintiff’s own conclusory, unsupported, subjective assertions. (See Hetzel v. County of Prince William, 89 F.3d 169, 171-72 (4th Cir. 1996); Price v. City of Charlotte, 93 F.3d 1241, 1250 (4th Cir. 1996)). In Virginia state court, however, the Virginia Supreme Court has clarified that corroborating evidence of emotional injury is not a prerequisite for obtaining such damages. And emotional-distress damages can be substantial.

Not every claim allows for the recovery of emotional-distress damages. In fact, as a general rule, emotional-distress damages are not recoverable absent accompanying physical harm or wanton and willful conduct. (See Fairfax Hosp. By & Through INOVA Health Sys. Hosps., Inc. v. Curtis, 254 Va. 437, 445–46 (1997)). An exception to this rule is where a cause of action exists independently of the emotional distress, such as when compensatory damages are expressly permitted by statute. (See Sea-Land Serv., Inc. v. O’Neal, 224 Va. 343, 354 (1982) (“[W]e have approved the recovery of damages for humiliation, embarrassment, and similar harm to feelings, although unaccompanied by actual physical injury, where a cause of action existed independently of such harm.”) Earlier this month, the Supreme Court of Virginia dealt with such a case and held that emotional distress damages were recoverable even in the absence of monetary damages or physical injuries.

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About a year ago, a disgruntled systems engineer for government contractor Federated IT was sentenced to two years in prison for illegally accessing his former employer’s network systems, stealing critical servers and information, and causing a loss valued at over $1.1 million. In a civil lawsuit against his girlfriend and arising out of much of the same conduct, a former project manager at the same company has been held in default and ordered to pay over $150,000 in damages for breach of fiduciary duty, conversion, and conspiracy.

The facts of the case, which are assumed to be true by virtue of the fact the defendant was held in default for violating a court order, are as follows. Federated IT provides cyber security, information technology, and analytic and operations support services, and managed a contract with the U.S. Army Office of the Chief of Chaplains. Ashley Arrington was a project manager for the Army contract and a direct supervisor of Barrence Anthony, the engineer currently serving a two-year prison sentence. Arrington and Anthony were romantically involved but did not notify Federated IT about the relationship. At some point during Anthony’s tenure, he began to behave insubordinately and failed to show up for work, eventually leading to his termination. He decided to go out with a bang. Among other spiteful acts he was accused of before and after he left, Federated IT alleged he:

  • deactivated all administrator accounts except his own and refused to share the master password with his replacement
  • changed the responsible-party contact information on Federated IT’s Amazon Web Services account to “Anthony Enterprises”
  • modified Federated IT’s Help Desk email address to redirect emails to his personal email account
  • deleted files from a SharePoint project folder, including encryption keys, account information, and network diagram files
  • wiped the hard drive on his work laptop
  • made unauthorized copies of the Army’s servers which contained their Financial Management System
  • attempted thousands of “brute force cyberattacks” against the Chief of Chaplains’ web application system, which necessitated a shutdown of one of Federated IT’s servers.

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Most laws were written before people started texting naked pictures of each other on their phones. No one had heard of so-called revenge porn until around 2010, when the controversial website “Is Anyone Up?” launched, allowing users to upload sexually explicit images of former romantic partners. That site ceased operation just two years after it started, but revenge porn is now more widespread than ever. So widespread, in fact, that several states (Virginia included) have decided that existing laws against copyright infringement, intentional infliction of emotional distress, and bullying were not offering victims sufficient protection. In Virginia, revenge porn is now a crime, as well as a civil cause of action for which legal remedies are available.

Under Virginia Code § 8.01-40.4, victims can sue for compensatory damages, punitive damages, and attorney’s fees. Injunctive relief may also be available. But what kind of financial recovery can vicitms expect to receive? How does one measure the emotional harm suffered as a result of sexual cyberbullying? If you bring a lawsuit and win, will the rewards outweigh the uncomforable and expensive process of open-to-the-public litigation? These are difficult questions to answer because–at least here in Virginia–few (if any) civil actions have been tried to verdict under the new revenge porn statute. But looking to some other jurisdictions may provide a clue as to what kinds of damage awards you might expect here in Virginia.

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So your fiancée broke off your engagement because she fell in love with your best friend and decided she likes him better. On top of that, she won’t return the $20,000 engagement ring you bought her. So the marriage is off, your finances are in shambles, and your (former) best friend is at least partially to blame because he asked your former fiancée on a date when he knew she was already engaged. What legal rights do you have?

Engagements are normally a happy and exciting time for the couple, but not all engagements result in marriage. Circumstances change, sparks fade, and life intervenes. Breakups are never easy, but introducing valuable personal property into the mix complicates things further. Only the most vindictive and bitter ex-boyfriends and girlfriends would demand the return of small gifts exchanged during a relationship, but attitudes change significantly when a $20,000 or $50,000 diamond is at stake. Who gets the ring if the engagement is called off? And what liability does the best friend have for seducing your fiancée?

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If you or your business needs to bring a lawsuit, it’s natural to wonder whether you may be entitled to recover millions of dollars. You read about celebrities winning $115 million against magazines who published unauthorized photos, or you hear about women winning millions of dollars against fast-food chains after spilling hot coffee into their laps. Litigation sounds wonderful, doesn’t it? Short of winning the lottery, how else can someone obtain so much money is so short a time with such a small amount of effort? Well, the people you hear about who have won enormous monetary awards in court (at least those that have been upheld on appeal) generally have one thing in common: they suffered an enormous amount of harm as a result of something truly devastating that was done to them, causing them severe pain, extreme emotional distress, or vast economic hardship. In other words, those winning huge jury verdicts tend to be those who have suffered the most pain. You don’t necessarily want to be that person.

The legal term we use when referring to financial awards obtained in court is “damages,” of which there are essentially two types, compensatory and punitive. Compensatory damages are those designed to compensate a plaintiff for the loss or injury actually suffered as a result of the defendant’s conduct. It includes things like damage to property, personal injuries, physical pain, lost economic expectations, and emotional suffering. Compensatory damages are not supposed to give the plaintiff a windfall, make him rich, or punish the defendant. Rather, they are designed simply to make the plaintiff “whole,” to the extent that can be accomplished. They are designed to put the plaintiff roughly in the same position he was in before the wrong was committed.

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Earlier this month I wrote about the case of a dentist who had sued a consultant for breach of fiduciary duty and failed. The court in that case found that the allegations were insufficient to establish the existence of an agency relationship, and without such a relationship, the consultant owed no fiduciary duty to the dentist. In a similar case between a medical doctor and a consultant, Bocek v. JGA Associates, the trial court reached the same conclusion, but was reversed on appeal, the Fourth Circuit holding that the doctor had proved as a matter of law that the defendants were agents of the doctor and had breached fiduciary obligations by misappropriating a business opportunity for themselves. When the case went back to the trial court, the only issue was to determine the appropriate remedies for the consultants’ breach of fiduciary duty. The latest opinion offers a helpful guide as to the potential remedies available in breach-of-fiduciary-duty cases. What follows is a brief summary of the various forms of relief discussed in the opinion.

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Liquidated damages are damages the amount of which has been agreed upon in advance by the contracting parties. When a contract contains a liquidated-damages provision, the amount of damages in the event of a breach is either specified, or a precise method for determining the sum of damages is laid out. This is often done in situations where the parties agree that the harm likely to be caused by a breach would be difficult or impossible to measure with any precision, so they agree on a figure in advance and dispense with the time and effort that would otherwise be involved in proving compensatory damages at trial. Another benefit often cited is the ability to control exposure to risk that normally is inherent in business litigation.

Fairfax Circuit Court judge Charles J. Maxfield was recently presented with the interesting question of whether to enforce an optional liquidated damages clause, an issue not yet decided by the Virginia Supreme Court. Sagatov Builders LLC v. Hunt involved a sale of real estate. The seller alleged the buyer was supposed to pay a $50,000 deposit but didn’t. The parties’ contract contained the following provision:

If the Purchaser is in default, the Seller shall have all legal and equitable remedies, retaining the Deposit until such time as those damages are ascertained, or the Seller may elect to terminate the contract and declare the Deposit forfeited as liquidated damages and not as a penalty …. If the Seller does not elect to accept the Deposit as liquidated damages, the Deposit may not be the limit of the Purchaser’s liability in the event of a default.

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A plaintiff filing a lawsuit usually wants to demand as much money as possible, both for the intimidation value and because in Virginia state court, you cannot recover damages in an amount greater than what you asked for in the complaint, even if the jury awards it. Plaintiffs are thus often tempted to include demands for punitive damages, which can add as much as $350,000 to a recovery. (Punitives are capped at $350,000 in Virginia). Punitive damages, however, are not available in contract disputes. This creates a situation where the plaintiff’s attorney often tries to craft the complaint in such a way as to make it appear that the defendant not only breached a contract but committed one or more related torts as well, such as fraud, tortious interference with contract, or business conspiracy. Enter the “economic loss rule.”

Designed to maintain the distinctions between contract claims and tort claims, the economic loss rule provides that where the plaintiff is a party to a contract and has suffered only disappointed economic expectations, such as damages for inadequate value, the cost to repair a defective product, or lost profits (as opposed to damage to persons or property), his remedy sounds in contract and not tort. In other words, if the plaintiff did not receive the benefit that he bargained for, his losses will be deemed merely economic and he will not be permitted to recover on a tort theory. An exception would apply if the contract itself was fraudulently induced.
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Virginia’s statute of frauds provides that “[u]nless a …contract…is in writing and signed by the party to be charged or his agent, no action shall be brought…[u]pon any agreement that is not to be performed within a year.” Va. Code Ann. § 11-2(8). A party wishing to assert the statute of frauds as an affirmative defense to a breach of contract action must show that the parties’ oral agreement was within the statute of frauds. The issue is whether the contract as a whole can be fully performed on one side within a year, even through the occurrence of some improbable event. If a court can conjure up some contingency, no matter how unlikely, that would allow either party to completely perform all of its contractual obligations within one year, the statute of frauds will not apply. The United States District Court for the Eastern District of Virginia recently examined this issue in Blue Sky Travel v. Al Tayyar.

Blue Sky purchased airline tickets that Al Tayyar Group (“ATG”) then resold to the Saudi Arabian Ministry of Higher Education (the “Ministry”). The parties orally agreed to share the profits that ATG realized from the re-sales. When Blue Sky sued ATG for breach of contract, ATG asserted the statute of frauds as an affirmative defense arguing that since Blue Sky’s share of the profits could not be calculated until after the end of the calendar year, an oral contract for profit sharing could not have been performed within a year and therefore fell within the statute of frauds.

The court found that the parties’ agreement was premised on ATG receiving orders for tickets from the Ministry and that without an order, Blue Sky would not purchase tickets and the parties would not share any profits. The contract did not obligate the Ministry to order tickets, so it was possible that the Ministry could have decided not to order any tickets in a year or stopped split money.jpgordering tickets at any time such that neither Blue Sky nor ATG would be required to perform. Also, the Ministry contract could have been terminated within a year of the parties’ agreement. Therefore, either or both parties could have completed their performance under the oral agreement within a year without breaching or terminating the agreement. The court held that ATG failed to carry its burden of establishing that the parties’ oral agreement could not have been fully performed by either party within a year, and that the oral contract was therefore outside the statute of frauds.

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