Remedies
Reading Assignments
For 8/27, read pages 16-27 in the Casebook. Keep in mind the following questions:
In re September 11th Litigation
This reading reflects problems regarding value as a measure of rightful position.
Specifically, it involves valuation when determining compensatory damages in tort. The
court faces three questions on a motion. Liability has not been established but if it is
eventually established, the court must decide: (1) can plaintiffs (WTCP) get replacement
costs or is their recovery limited to the market value of the WTCP properties; (2) If
market value is used, what is the appropriate way to measure it; (3) can plaintiffs recover
lost rental income (loss of use damages) in addition to replacement/market value
recovery?
1. In a functioning market, market value and replacement costs should be the same.
a. When market value and replacement costs are NOT the same, what does the
September 11th litigation tell us is the preferred method of valuing plaintiff’s
loss?
b. Why do courts have such a rule?
c. In what situations will market value and replacement costs diverge? Why do
they diverge here?
2. Why isn’t the WTCP property “specialty property?” Do you agree with the court?
3. How should the court measure the WTCP properties’ market value? What does the
court say about the contention that it should use the $2.8 billion figure?
4. Note that the WTCP was also not allowed to recover loss of use damages from lost
rental incomes either. Does this plus an award of market value but WTCP back in its
rightful position?
Trinity Church
1. Assuming that the church in Trinity Church had been totally destroyed, what
valuation method would that court have found appropriate to measure rightful
position – market value or replacement costs? Why?
2. If the church were destroyed and was allowed to use replacement costs as the
appropriate measure, can the congregation replace it with anything it wants (e.g.,
exotic stones and woods, etc?)? Can it replace as an exact duplicate? What problems
are likely to arise with replacement?
3. The church wasn’t destroyed; it was damaged. But it’s still standing and usable. Has
the church congregation/ownership really been hurt at all? Should it recover
anything? Why or Why not?
4. Trinity Church involves a dispute over whether the damages involved should be
reduced to present value.
a. Present value generally is defined as the amount of money which if invested
today will produce a stream of payments sufficient to compensate plaintiff
for future pecuniary loss resulting from present injury.
b. Why did the court refuse to use it here?
5. Lawyers, judges and juries often have to calculate present value of damages awards.
A simple problem will illustrate the basic mechanics. It can be a LOT more
complicated than this but I just want you to know the general idea on calculations.
See if you can figure out the present value of Linduh’s operation using the following
information:
a. Assume that Linduh was reasonably severely injured by Buzz in an auto
accident. Linduh has had several operations for which Buzz’s insurance
has agreed to compensate her. But Linduh’s doctors tell her she will need
another operation in 7 years to finally repair the damage. It is estimated
that the cost of this operation will be $100,000 in seven years.
b. The insurance company has agreed to give Linduh the present value of
that future $100,000 operation. Use the present value table on p. 795-97
and assume Linduh invests the money she is awarded so as to receive a
3% return. How much money must Buzz’s insurance company pay Linduh
now in order for her to have $100,000 in 7 years (or what is the present
value of $100,000 using these assumptions)?