Claim for negligence

Negligence is a tort with four elements:

1. a duty of reasonable care
2. breach of that duty
3. causation
4. resulting damages

Plaintiff must prove all four of these elements to recover on a claim for negligence

Note: Courts also use negligence to stand for a failure to live up to the standard of care (element #2); to say that a def. is negligent can mean he/she failed to exercise reasonable care

Students often confuse the two - DON'T BE THAT STUDENT! - a tort of negligence needs the four elements and the concept of negligence has to do with the breach of the standard of due care. So, a person can be negligent without satisfying the requirements for a claim of negligence (for example, if no damages are a result of the breach)

Morrow v. First National Bank of Hot Springs (a.k.a., the mysterious case of the coin collection)

Morrow v. First National Bank of Hot Springs
Supreme Court of Arkansas,
261 Ark. 568, 550 S.W. 429 (1977)

Justice George Rose Smith delivered opinion

Facts:

• Plains. Morrow and Goslee collected coins and stored substantial part of them at Morrow's house
• Morrow built special cabinets to house coins and had locks in place to thwart burglary attempts
• 1969 insurance rates start to climb, plains. begin to look for large safety deposit boxes, none are available in Hot Springs
• Morrow discusses problem w/ employees of bank on numerous occasions
• Summer 1971, bank moves to new bldg which will have boxes, which plains. reserve
  
• Bank employee promises to contact Morrow when boxes are available
• Sept. 4, house is burglarized
  
• Through a loan application, bank had knowledge coins were worth at least $12,000
• Morrow learns boxes were available Aug. 30, plains. immediately move rest of coins to bank boxes
• Nearly 3 yrs later, plains. bring suit against bank to recover losses
  
• arguing clause on ticket requires Shutes to bring suit in FL court

Issue: Does the employee's promise pass the tacit agreement test?

Holding: No. Bank's bare promise to notify the plains. did not amount to a tacit agreement that the bank would be liable in the event the promised notice was not given.

Reasoning:

• Mere notice is not sufficient to impose on the party who breaks a contract damages arising by special circumstances
• Where damages are so large as to be out of proportion to the consideration agreed to be paid for services rendered, it raises doubts as to whether or not the party would have assented to such liability had it been called to his/her attention at the making of the contract, unless the consideration to be paid to show liability was assumed (is it worth it to accept liability for $32,000 when you are only getting $75?)
• tacit agreement rule
• Plains. argue could be a tort - Prosser points out that a breach of contract is not treated as a tort for failure to act (nonfeasance) but rather when there is an affirmatively wrongful act (misfeasance)
  

Judgment: Affirmed

Hector Martinez and Co. v. Southern Pacific Transportation Co. (a.k.a., where's that darn dragline)

Hector Martinez and Co. v. Southern Pacific Transportation Co.
United States Court of Appeals, Fifth Circuit,
606 F.2d 106 (1979)

Justice Vance delivered opinion

Facts:

• District ct granted Southern Pacific's motion for dismissal under Rule 12(b)(6) for delay damages
  
• held that such damages are special and that Martinez failed to allege carrier had any notice of the possibility of such damages should there be a breach of the contract
  
• Martinez appeals trial court's dismissal of his claim for losses resulting from delay and damage in transportation by carrier (def.)
• Feb. 11,1974, Martinez's agent delivered 2400 Lima Dragline Model 66 to Penn Central RR for shipment from New Philadelphia, Ohio to Eagle Pass, TX
• Dragline loaded onto 5 RR cars and single uniform bill of lading, describing dragline as "used strip mining machinery and parts" was issued by Penn Central, listing Martinez's agent in Eagle Pass as consignee
• Dragline delivered in Eagle Pass on 4/2/74; Martinez pays $14,467 to make "reasonable repairs" because dragline was damaged in transit (not completed until June 1974)
• Martinez alleges delay damages in amount of $117,600 bec. dragline out of service from March 1 to June 20 (when cars should have arrived to when repairs were finished); sum includes dragline's fair rental value during this period
• Martinez filed claim per the bill of lading and then sues Southern Pacific for damages
  
• sought recovery for cost of repairs
• refund of certain demurrage or storage charges assessed by S.P. and paid at the time of delivery
• sought compensation for wrongful deprivation of the dragline's use during periods of delay in transit and repairs

• Martinez and S.P.RR settled first two when S.P.RR filed motion to dismiss on third claim
• S.P.RR files Rule 12(b)(6) motion to dismiss the third claim for loss of use, arguing bec. damages are special, they are not recoverable absent notice of the possibility of such damages
• Trial ct denies motion on condition Martinez amend complaint, Martinez doesn't amend complaint, district ct grants S.P.'s motion to dismiss
  

Issue:
Can the plain. recover delay damages for the dragline's fair rental value (i.e., for loss of use)?

Holding: Yes, special notice is only required when it is not obvious the delayed item has value

Reasoning:

• Two types of delay loss, delay in transit and delay that resulted from damage during transit (while dragline was being repaired)
• When Martinez settled his claim for damage to the dragline, he also settled part of the third claim that had to do with the duration of time the dragline was being repaired
  

Court says:

• Common law seeks to protect def. from unforeseeable large losses to plain., which could be "paralyzing to commerce"
  
• Looks to Hadley v. Baxendale to assess the reasonable foreseeability of the plain.'s injury when the contract was entered into
  
• general damages are awarded only if injury were foreseeable to a reasonable man and that special damages were awarded only if actual notice were given the carrier of the possibility of injury
  
• in Hadley, wasn't obvious that part was instrumental in having an operable machine; in this case, the entire machine is out of commission
• the machine has "use value"
  
• use value may equal the rental value of the equipment or may be an interest value (usually interest at the market rate on the value of the machine)
• Martinez is entitled to present claim to a jury
• general rule doesn't require plain. to show the harm suffered was the MOST foreseeable of possible harms

Judgment: Reversed, and remanded for trial on claim for damages resulting from delay in shipment; Ct affirms district ct's decision to dismiss claim for damages resulting from the delay during repair

RESTATEMENT (SECOND) OF CONTRACTS
§UNFORESEEABILITY AND RELATED LIMITATIONS ON DAMAGES

(1) Damages are not recoverable for loss that the party in breach did not have reason to foresee has a probably result of the breach when the contract was made.
(2) Loss may be foreseeable as a probable result of a breach because it follows from the breach
(a)in the ordinary course of events, or
(b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know
(3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in circumstances justice so requires in order to avoid disproportionate compensation.

Hadley v. Baxendale (a.k.a., the shaft)

Hadley v. Baxendale
In the Court of Exchequer,
9 Ex. 341, 156 Eng. Rep. 145 (1854)

Justice Crompton delivered opinion

Facts:

• May 11, crank shaft broke and mill work stopped
• May 13, broken crank shaft sent to Greenwich (where manufacturer of product resided, Messrs. Joyce & Co.) to serve as a model for construction of new crank shaft, using carrier service Pickford & Co.
• plaintiff's servant told clerk "shaft must be sent immediately"
• def.'s advised shaft would be delivered to Greenwich the following day

• Delivery delayed because of neglect; plaintiff's didn't recv new shaft for several days, working of mill was stopped
• Plaintiff claimed damages of ₤300 for lost business and wages paid to idle employees
• Def.'s denied making any promises and paid ₤25 to the ct to satisfy any liability for their negligence
• Plaintiff's entered a nolle prosequi* in regards to first count and claimed amount paid to ct was insufficient to satisfy their claim
• Jury returned w/ a verdict for ₤25 damages beyond what had already been paid to ct
• Whateley (attrny for def.) obtained a rule nisi** for a new trial, on grounds of misdirection
• Keating and Dowdeswell (attrnys for plain.) showed cause
  

Issue:
Should plaintiff be able to recover lost profits?

Holding: No. Judge should not have told jury to include loss of profits when estimating damages

Reasoning:

• Consult Sedgwick on the Measure of Damages, rule adopted for this case, ample evidence that def.'s knowledge of situation would cause him to foresee damages that might be suffered by plain. because of his (the def.'s) actions
  
• Def. knew about potential loss of profit (damages) because of all of the info presented when crank shaft originally brought in to be sent out for repair
• Complete compensation not to be awarded, per Sedgwick, "the object is to discriminate between that portion of the loss which must be borne by the offending party and that which must be borne by the sufferer" - a division of loss, if you will
• When two parties have contract which one breaks, damages the other party ought to recv bec. of said breach should be such "as may fairly and reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it"
• In this case, loss suffered by plain. not likely to have been reasonably contemplated by def. because def. could have considered the plain. had other shafts or that there might have been other reasons for shut-down of mill, etc.
• Loss did not "flow naturally from breach" and there were no special circumstances
  

Judgment: New trial, with rules on how the judge should instruct the jury to award damages

*nolle prosequi - entry made on record where prosecutor or plaintiff declares that he/she will proceed no further; used in civil and criminal cases

**rule nisi - an order to show cause, meaning the ruling is absolute unless the party to whom it applies can show cause why it should not apply

Tongish v. Thomas (a.k.a. sunflower seeds!)

Tongish v. Thomas
Supreme Court of Kansas,
51 Kan. 728, 840 P.2d 471 (1992)

Justice McFarland delivered opinion

Facts:

• April 1988, Tongish enters contract with Decatur Coop Assoc (Coop), agreeing to grow 160 acres of sunflower seeds to be purchased by Coop at $13 per hundredweight for large seeds and $8 per hundredweight for small seeds; crop to be delivered in increments of 1/3
  
• Coop had contract to deliver seeds to Bambino Bean & Seed, Inc., with only anticipated profit being the handling fee
• Oct. & Nov. Tongish delivers seeds
• Dispute in Jan. 1989 over amount of dockage fees charged against Tongish's seeds; resolved by Coop issuing addtl. check to Tongish reflecting a lower dockage charge
• Due to short crop, bad weather, and other factors, market price of sunflower seeds in Jan. 1989 was double that set forth in Tongish/Coop contract
• Jan. 1989, Tongish notifies Coop he would not deliver any more seeds
• Tongish goes on to sell seeds to Danny Thomas ($20 per...) recvng $5,153.13 more than the Coop contract price
• Thomas paid for 1/2 the seeds, Tongish files suit to collect balance, Thomas pays and is dismissed from action
• Coop intervenes in action, seeking damages for Tongish's breach of contract
• Damages awarded to Coop $455.51, the computed loss of handling charge / Coop appeals
• Ct of Appeals reversed district ct and remanded case to district ct to determine and award damages pursuant to K.S.A. 84-2-713
  

Issue:
Whether or not should use UCC K.S.A. 84-1-106 or K.S.A. 84-2-173 when computing damages for breach of contract for nondelivery of contracted-for seeds (i.e., whether the buyer is entitled to its actual lost profit or the difference between the market price and the contract price).

Also, when two remedies (one specific, one general) are available, which option prevails?

Holding: Should use 84-2-713 when computing damages

When there are two conflicting statutes, one dealing generally and one specifically with a subject, the specific statute controls unless it appears the legislature intended to make the general act controlling. / Kansas Supreme Ct said to read both and try to "harmonize" the two.

Reasoning:

• Ct adopts portion of the analyses and rationale of the Ct of Appeals
  
• K.S.A. should prevail as the more specific statute according to statute rules of construction
  
• in situations where the buyer has made a resale contract for the goods, which the seller knows about, it may be appropriate to limit 2-713 damages to actual loss but does not want to reward seller for bad faith breach of contract
  
• may not reflect actual loss to a buyer, it encourages a more efficient market and discourages the breach of contracts
• damages computed under K.S.A. encourage the honoring of contracts and market stability
  

Judgment: Affirmed Ct of Appeals judgment / judgment of district court is reversed

***SALES CONTRACTS: THE UNIFORM COMMERCIAL CODE***

§1-106. Remedies to be liberally administered
(1) The remedies provided by this Act shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neighter consequential or special nor penal damages may be had except as specifically provided in this Act or by other rule of law

§2-712. "Cover"; Buyer's procurement of substitute goods

§2-713. Buyer's damages for non-delivery or repudiation
(1) Subject to provisions of teh Article with respect to proof of market price (Section 2-723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (Section 2-715), but less expenses saved in consequence of the seller's breach.
(2) Market price is to be determined as of the place for the tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
§2-715. Buyer's incidental and consequential damages

§2-717. Deduction of damages from the price

J.O. Hooker & Sons v. Roberts Cabinet Co. (a.k.a. who wants these stupid cabinets anyway?)

J.O. Hooker & Sons v. Roberts Cabinet Co.
499 U.S. 585 (1991)

Justice P.J. Prather delivered opinion

Facts:

• 1991, Hooker served as general contractor for renovation of residence owned by Bessemer Public Housing Authority (BPHA) in Bessmer, AL
  
• BPHA had option to keep or salvage fixtures that needed to be torn out during renovation
  
• If BPHA wanted to keep, Hooker would remove cabinets and move them to location provided by BPHA
• If BPHA wanted to salvage, cabinets would become property of Hooker after he removed them
  
• Hooker subcontracted to Roberts Cabinet Co.
  
• Roberts contract required him to "furnish cabinet tops, plastic laminates on walls...per plans and specs for the price listed below" and also provided that "the price includes the cost of tear-out...old cabinets and installation of new cabinets"

• Roberts informed Hooker underestimated cost of job and demanded an addtl $23,000, which Hooker argued had no choice but to pay given time constraints of job
• Dispute arose over who was responsible to dispose of cabinets as BPHA req'd in gen. contract
• Roberts contends not obligated, Hooker argued that "as per specs and plans" language incorporated language between gen. contract (Hooker and BPHA)
• Dec. 18, 1991, Hooker faxes Roberts on advice from lawyer that their contract was null and void, offering to buy cabinets that were already constructed from Roberts
• Parties unable to reach an agreement, Roberts files suit against Hooker alleging Hooker breached subcontract agreement w/ Roberts after he'd started
• Nearly a year later (Dec. 10, 1992), trial is held to determine damages suffered by Roberts as a result of Hooker's actions
• Jury awarded $42,870 in damages to Roberts
• Jan. 1993, trial ct denied Hooker's motion for a new trial or remittitur of the jury's verdict and Hooker files an appeal
• contract in question should be interpreted in context of Article 2 of the UCC, Miss. Code Ann. §75-2-101 et seq., bec' transaction involved was for the sale of goods, namely cabinets
• sites no authority for this and Roberts does not address the issue
  
• No Mississippi cases directly on this point, ct finds case did involve sale of goods but dispute related to performance of services and delegation of duties per contract
• Roberts originally requested $51,309.29 in damages; cross-examination shows figure overestimated lost profits, damages requested lowered to $43,050.95
• Hooker disputes including storage of cabinets, administrative cost, and lost profits
• Hooker unsuccessfully argues 26% profit expected by Roberts is out of line with industry standards (sort of)
• Also some dispute over the daily manufacturing output of Roberts' factory, and what should be included in lost profits - Hooker wants 4-day shut down only but isn't really successful with this line of argument either; per ct, bids are rarely require exact proof as to what costs and profits would have been and Hooker compares his profits as a gen. contractor to those by Roberts as a manufacturer/subcontractor (implying that maybe if Hooker had brought in other figures by folks in Roberts' line of work, he might have been able to sway the ct in regards to what was reasonable for Roberts to expect for profits from the job?)
  

Issue:
1. Does Article 2 of the UCC apply to mixed transactions that include both goods and services?

2. Is Roberts able to get damages for storage of cabinets and administrative costs and lost profits?

Holding: 1. In a mixed transaction, whether or not the contract should be interpreted under UCC or general contract law depends on nature of the contract and upon whether the dispute in question primarily concerns goods furnished or the services rendered under the contract - this case doesn't concern cabinets manufactured but refusal of Roberts to assume duties which Hooker contractually obligated itself to perform

2. Roberts not able to receive damages related to storage costs, can only recover for expenses it would not have incurred but for Hooker's breach; Roberts expenses in paying Kevin Roberts were same whether or not Hooker breached contract so Roberts is entitled to damages for administrative costs

Ct's purpose re: lost profits is to put the injured party (Roberts) in as good a position as he would have been in but for the breach; jury was correct in using expectation damages to award lost profit expenses to award; this was "entirely proper" Yay!

Reasoning:

• Roberts already had space in storage, did not have to rent more space or pay more because he was using space already rented, also using said space did not create a need to rent addtl space to store items for other jobs
• allowing recovery of storage costs would place Roberts in better position that if contract was completed
• Reasonable to assume subcontractor (Roberts) included in his bid estimate the cost of salaries, which he is req'd to pay his employees
• 22 AmJur2d "Damages" §45 -
  

  Contract damages are ordinarily based on the injured party's expectation interest and are intended to give him the benefit of the bargain by awarding him a sum of money that will, to the extent possible, put him in as good a position as he would have been in had the contract been performed.

Judgment: Affirmed on condition of remittitur; if remittitur refused, reversed and remanded for a new trial on damages only

Sullivan v. O'Connor (a.k.a. professional entertainer (or Private Dancer!))

Sullivan v. O'Connor
Supreme Judicial Court of Massachusetts,
363 Mass. 579, 296 N.E.2d 183 (1973)

Justice Kaplan delivered opinion

Facts:

• Plaintiff rec'd jury verdict of $13,500 against def. for breach of contract for operation on plaintiff's nose
  
• Plaintiff alleges doc entered contract to perform nose job that would "enhance her beauty and improve her appearance"
• Surgery performed failed to achieve promised results, result of surgery was disfigurement and deformity, pain in body and mind, and subjected her to other damage and expense
• Case tried by jury, which returned a verdict for plaintiff on contract count and for def. (doc) on negligence count
• Def. said two surgeries to fix but plaintiff had to undergo three and appearance was worsened because of it (permanently disfigured)
• Plaintiff did not show change in appearance resulted in loss of employment
• Payments paid to plaintiff covering def.'s fee and hospital expenses were $622.65
• Def. excepted to judge's refusal of a charge that the plaintiff could not recover for pain and suffering connected with third operation or for impairment of the plaintiff's appearance and associated mental distress
• Plaintiff excepted to judge's refusal of request to charge that the plain. could recover the difference in value between promised nose and nose after operations
• plaintiff waives exception and others made by her in case the court overrules the def.'s exceptions
  

Issue:
Did the judge err in allowing the jury to take into account anything but the plaintiff's out-of-pocket expenses?

Should plaintiff be able to recover for pain and suffering connected with third operation and for impairment of plain.'s appearance and assoc. mental distress?

Was there a contract? And if so, was it breached and what measure of damages can be applied?

Holding: Def.'s exceptions fail. Plaintiff not confined to recovery of her out-of-pocket expenditures; also entitled to recover for worsening of her condition, and for pain and suffering and mental distress involved in third operation. Items compensable on either an expectancy or reliance view

Reasoning:

• Suggested that agreements between docs and patients by which doc undertakes to effect a cure or to bring about a given result should be declared unenforceable on grounds of public policy, but there are many decisions recognizing and enforcing such contracts, and law in MA has treated them as valid
  
• Docs can seldom in good faith promise specific results, therefore it is unlikely that physicians of even average integrity will in fact make such promises
• Statements by physicians may be transformed in minds of patients to become firm promises, particularly when disappointed w/ results
• Law has taken middle road - allowing actions based on alleged contract, but insisting on clear proof
• Instructions to jury may include this requirement and point to complexity of operation as bearing on probability that a given result was promised
• For breach, recovery limited to restitution seems too meager and expectancy recovery may well be excessive
• Apply a reliance measure to present facts, using that formula in special situations
• No general rule barring seeking to obtain pain and suffering as part of damages in breach of contract
• When contract calls for an operation on the plain., physical psychological injury may be expected to occur
• suffering or distress resulting from breach going beyond what expected and agreed upon, should be compensable on same ground as the worsening of the patient's condition because of breach (could get p&s for having to undergo third surgery but not first two as those were expected and agreed upon)
  

Judgment: Affirmed, jury instructions were appropriate

Nurse v. Barnes (§347 Damages)

Nurse v. Barns
King's Bench
Sir T. Raym 77 (1664)

Facts:

• Def. agreed to let plaintiff use iron mills for 10l. for six months
• Iron mills only worth 20l. per annum
• Damages were 500l. due to loss of stock laid in
  

Issue:
Can special damages be awarded?

Holding: Yes. Jury not bound to only give 10l. but also all the special damages (i.e., the loss and including incidental damages caused by breach)


RESTATEMENT (SECOND) OF CONTRACTS
§347. MEASURE OF DAMAGES IN GENERAL

Subject to the limitations...the injured party has a right to damages based on his expectation interest as measured by
(a) the loss in value to him of the other party's performance caused by its failure or deficiency, plus
(b) any other loss, including incidentals or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform

McGee v. U.S. Fidelity & Guaranty Co.

McGee v. U.S. Fidelity & Guaranty Co.
U.S. Court of Appeals, First Circuit
53 F.2D 953 (1931)

Circuit Court Justice Anderson delivered opinion

Facts:

• October 1925, George Hawkins brought suit against McGee
• First trial, jury disagreed (?)
• Second trial, court directed a verdict for defendant on first count but denied motion as to second count
• Result of second trial was a verdict for Hawkins for $3000 / Dr. McGee saved numerous exceptions (?)
• Motion before Judge Scammon set aside on grounds that damage was excessive
• Ruling was reversed by NH cout (Hawkins v. McGee, 84 N.H. 114, 146 A. 641.)
• FINALLY! Brings us to current case where doc sues ins. co. claiming they are liable to reimburse him under policy
• Before third trial, McGee notifies ins. co. that claim could be adjusted to $1400, that they can go forward at own risk but if he pays $1400 to settle, he is coming after them for reimbursement
• Company refuses
• McGee settles with Hawkins and brings suit against ins. co. for $1400 plus attorney's fees
  
• Court found if he's entitled to recover, he is entitled to $4,248.48

Issue:
Did policy of insurance company extend to cover "special" contract that was arranged by plaintiff, requiring a payout if the contract was breached?

Holding: Court ruled that the policy in question did not extend to such special contract

Reasoning:

• Issue as submitted by Judge Scammon to jury was whether or not McGee made a special contract and if he did so did he fail in its performance
• Jury found there was a special contract made and doctor failed to perform
• Expenses sought to be recovered resulted from findings of jury that special contract existed and not because of "malpractice, error or mistake" in treatment
  

Judgment: For the defendant, affirmed