New York Law Review

Tag: Damages Calculation

  • McCurdy v. State, 8 N.Y.3d 231 (2007): Damages for Temporary Easements

    McCurdy v. State, 8 N.Y.3d 231 (2007)

    When the state takes a temporary easement, damages are calculated based on the rental value of the land within the easement plus consequential damages for the unencumbered interior acreage only if access was impossible or the easement demonstrably impeded the property’s highest and best use.

    Summary

    McCurdy owned a vacant parcel of land. The State took a temporary easement for highway reconstruction. McCurdy sought damages for the entire rental value of the property for the easement’s duration, arguing it rendered the property undevelopable. The State argued damages should only cover periods of actual access obstruction. The Court of Appeals held that damages should be based on the rental value of the easement area, plus consequential damages (rental value of remainder) only for periods access was impossible, or if McCurdy proved the easement impeded the property’s highest and best use. Since the State proved the limited obstruction, and McCurdy failed to prove impediment to development, the Court remitted for recalculation of damages accordingly.

    Facts

    McCurdy owned a vacant, unimproved parcel of land with frontage on Montauk Highway. The State permanently appropriated a small slice and acquired a temporary easement for grading during highway reconstruction in 1999. The temporary easement covered the entire highway frontage. The easement reserved to the owner the right to use the property, limited only as necessary for construction and maintenance. McCurdy’s appraiser argued the highest and best use was a medical office building, requiring rezoning and a variance. McCurdy’s dental office was on an adjacent lot.

    Procedural History

    McCurdy sued the State in the Court of Claims. The Court of Claims awarded damages based on the rental value of the entire property for the easement’s duration, relying on Matter of Kadlec v State of New York. The Appellate Division affirmed. The Court of Appeals granted the State leave to appeal.

    Issue(s)

    Whether the proper measure of damages for a temporary easement encumbering a vacant parcel’s entire highway frontage is the rental value of the entire parcel for the easement’s duration, or only for the period of actual obstruction, plus consequential damages if the easement demonstrably impeded the property’s highest and best use.

    Holding

    No, because damages should be awarded based on the rental value of the land encompassed within the temporary easement, plus consequential damages representing the rental value of the unencumbered interior acreage for any period of time when highway access was impossible or the condemnee establishes that the mere existence of the temporary easement did, in fact, impede sale or development of the property for its highest and best use.

    Court’s Reasoning

    The Court relied on Village of Highland Falls v. State of New York, which permitted using hindsight to value a temporary easement. Compensation is not required for a temporary easement if there’s no actual interference with the property owner’s use. Here, the State proved access was only obstructed for 7-10 days. The Court acknowledged the “damage to a property owner caused by uncertainty regarding the condemnor’s intentions,” but the easement’s wording reserved claimant’s right of access. McCurdy failed to show the easement interfered with the property’s marketability or development beyond conjecture. He didn’t apply for rezoning, a highway work permit, or a yard-width variance. The court stated, “If the condemnation award is made after the easement has expired, it makes practical sense to compute the property owner’s actual damages rather than indulging in speculation on the measure of damages claimant could have contemplated at the time of taking.” (quoting Village of Highland Falls). There was no evidence McCurdy attempted to sell or develop the property. Therefore, the Court remitted the case for recalculation of damages based on the limited period of actual obstruction.

  • Brushton-Moira Central School District v. Fred H. Thomas Associates, P.C., 91 N.Y.2d 362 (1998): Date for Calculating Breach of Contract Damages

    Brushton-Moira Central School District v. Fred H. Thomas Associates, P.C., 91 N.Y.2d 362 (1998)

    In a breach of contract action involving defective design or construction, damages are generally ascertained as of the date of the breach, which is typically the completion of the work, and prejudgment interest is calculated from that date.

    Summary

    Brushton-Moira Central School District sued Fred H. Thomas Associates for breach of contract and malpractice related to the installation of defective insulated panels in a school building. The New York Court of Appeals held that damages for the breach should be measured as of the date the cause of action accrued (completion of the work) and not the date of trial, and prejudgment interest should be awarded from that earlier date. This decision reinforces the principle that damages are intended to place the non-breaching party in the same position as if the contract had been performed, and that measuring damages at the time of trial could incentivize a failure to mitigate damages.

    Facts

    The Brushton-Moira Central School District hired Fred H. Thomas Associates as the architect for renovations, including replacing windows with insulated panels, to conserve energy. The architect recommended specific panels that were installed by December 12, 1980. A certificate of occupancy was issued on April 9, 1982. By the summer of 1982, the panels began to deteriorate and allow water penetration.

    Procedural History

    The school district sued the architect for professional malpractice and breach of contract in 1984. The Supreme Court initially dismissed the malpractice claim, finding only economic damages were sought and dismissed the breach of contract claim because the defendant obtained a warranty from the manufacturer. The Appellate Division reversed, granting judgment to the plaintiff on the breach of contract claim and remanding for a trial on damages, measured as of the date of the trial. After a damages trial, the Supreme Court awarded damages measured as of the trial date, less a setoff, plus prejudgment interest from the trial date. The Appellate Division modified, awarding prejudgment interest from April 9, 1982. The architect appealed to the Court of Appeals.

    Issue(s)

    1. Whether, in a breach of contract action for defective design or construction, damages should be measured as of the date of the breach or the date of the trial?

    2. Whether prejudgment interest should be awarded from the date of the accrual of the cause of action or the date of the trial?

    Holding

    1. No, because damages for breach of contract are ordinarily ascertained as of the date of the breach to return the parties to the point at which the breach arose and place the non-breaching party in as good a position as if the contract had been performed.

    2. Yes, because CPLR 5001(b) mandates that interest shall be computed from the earliest ascertainable date the cause of action existed, reflecting that damages are properly ascertained as of the date of the breach.

    Court’s Reasoning

    The Court of Appeals reasoned that the Appellate Division erred in holding that damages should be measured as of the date of the trial. The court stated, “[i]t has long been recognized that the theory underlying damages is to make good or replace the loss caused by the breach of contract.” The goal is to return the parties to the position they would have been in had the contract been performed. The court cited Rodriguez & Co. v Moore-McCormack Lines, 32 NY2d 425, 429, to support the premise that contract damages are ordinarily ascertained as of the date of the breach.

    The Court emphasized that the appropriate measure of damages is the cost to repair the defects as of the date of the breach or, if irreparable, the difference in value between a properly constructed structure and the one actually built. It further explained that CPLR 5001(a) provides that interest shall be recovered upon a sum awarded for a breach of contract, and CPLR 5001(b) mandates that interest be computed from the earliest ascertainable date the cause of action existed. According to the Court, awarding interest from a date other than the accrual date could lead to anomalous results. The court explained, “[i]n view of the clear statutory direction that interest must be computed from the date of accrual, we need not deviate from the general rule that damages should be measured as of that same date.”

    Finally, the Court noted that measuring replacement costs as of the trial date might contradict the duty to mitigate damages. “There would be no incentive to mitigate damages if plaintiff could wait until trial to recover damages measured as of the trial date and, in addition, receive interest from the earlier date of accrual.”

  • Con Edison v. Paul Schultz, 48 N.Y.2d 925 (1979): Recovery for Tampered Electric Meter

    Con Edison v. Paul Schultz, 48 N.Y.2d 925 (1979)

    A utility company is entitled to recover for services used when a customer’s electric meter has been tampered with, even if the utility cannot prove who caused the tampering, but the amount of damages must be properly determined.

    Summary

    This case addresses the issue of liability and damages when an electric meter has been tampered with, and the customer is aware of the tampering. The New York Court of Appeals held that Consolidated Edison (Con Edison) was entitled to recover for the electricity used by the customer (Schultz), regardless of who caused the tampering, because the customer was aware of the situation. However, the Court also found that there was a triable issue of fact regarding the calculation of damages, necessitating a new trial on that specific issue.

    Facts

    Paul Schultz’s electric meter was tampered with. Con Edison claimed Schultz was aware of the tampering. Con Edison brought a counterclaim to recover for the electricity Schultz actually used during the period of the tampering. The test period Con Edison used to estimate damages was at the end of the five-year period during which the meter malfunctioned and was atypical. Schultz’s store hours were 50% greater and the area to be lighted increased eightfold from the beginning to the end of the period.

    Procedural History

    Con Edison brought a counterclaim against Schultz. Schultz demanded a jury trial, and Con Edison did not object, thus agreeing to a jury determination of the amount owed. The lower court directed judgment for Con Edison. The Appellate Division affirmed the judgment regarding liability but modified it concerning damages. The Court of Appeals then reviewed the Appellate Division’s decision.

    Issue(s)

    Whether Consolidated Edison is entitled to recover for services actually used by plaintiff when the plaintiff’s electric meter was tampered with, regardless of who caused the tampering, if the plaintiff was aware of the tampering. Whether there was a triable issue for the jury concerning the amount of damages owed to Consolidated Edison.

    Holding

    1. Yes, because it was undisputed that the plaintiff’s electric meter was tampered with and that the plaintiff was aware of that fact, Consolidated Edison was entitled to recover for the service actually used by the plaintiff, without regard to who caused the tampering.

    2. Yes, because there was a triable issue for the jury concerning the amount of damages due to the propriety of the test period used which was at the end of the five-year period during which the meter functioned improperly and was atypical.

    Court’s Reasoning

    The Court reasoned that because Schultz knew about the tampering, Con Edison was entitled to compensation for the services used, regardless of who was responsible for the tampering. The Court highlighted paragraph 18 of Con Edison’s counterclaim as sufficient pleading for recovery under this theory. The Court found no triable issue regarding liability because the evidence established Schultz’s awareness.

    However, the Court found a triable issue concerning the amount of damages. Schultz demanded a jury trial on the counterclaim, and Con Edison consented by failing to object. The Court noted the test period used to calculate damages was problematic because it occurred at the end of the five-year period of meter malfunction and was atypical due to increased store hours and expansion of the store’s area. Because of these factors affecting electricity usage during the test period, the Court deemed a jury trial necessary to determine the proper amount of damages. The Court stated, “There clearly was a triable issue for the jury concerning amount of damages: the propriety of the test period used which was at the end of the five-year period during which the meter functioned improperly and was atypical, according to plaintiff’s testimony, both as to time (hours the store was open were 50% greater than the rest of the year) and area to be lighted (from the beginning to the end of the period the area of the store increased eightfold).”