According to Hatahley, the fundamental purpose of
compensatory damages is:
• To restore P/injured party to the position they would have
been in but for the D’s/other party’s wrong.
• Aka “rightful position rule”
• Does the lower court just ignore this rule?
What will the Hatahley district court have to do
differently on remand?
• What the DCT did:
• Set value of destroyed horses $395 (based on P’s personal
testimony & trade value w/
other livestock among Navajo)
• Loss of use of horses – valued
livestock, then gave ½ total
diminution of livestock herds
from 1952-57, applied to all Ps
• $3500 pain & suffering to each P
• What DCT will have to do:
Why should courts go to all this trouble?
• Why isn’t a reasonably good faith approximation of damages
enough under the rightful position rule?
• For that matter why can’t a court intentionally award more than
what plaintiff’s lost?
• Example: Why can’t the Hatahley judge award $395 even if he knows
the value of the plaintiffs’ horses is $300?
One-satisfaction rule – corollary to rightful position
rule
 Assume the Hatahley Ps had a contract allowing them to graze
cattle on federal land. If the round-up had occurred without
notice, plaintiffs could have sued for breach of contract in addition
to trespass.
◦ Assume Ps did sue for breach of contract. If Ps were fully
compensated for their losses after suing for breach of contract,
could they later file a lawsuit seeking damages under a trespass
theory?
“Value” as a Measure of Rightful Position – General
Principles
 Overarching principle of all compensatory damage awards is to restore
injured party to their rightful position
 How do we implement “rightful position?”
 Value = the method by which courts measure injury/loss to plaintiffs
 3 most common ways to measure value:
◦ Market value – what a willing B will pay a willing S for property to change hands
◦ Replacement costs – cost of replacing a lost/destroyed/stolen item
◦ Income/capitalization of earning – the sum of money that must be invested to
produce the same income stream from the property before it was destroyed or
damaged
Measuring Value in Tort Cases – Background on Sept.
11th Litigation
 Port Authority (“PA”) entered K to lease Twin Towers and related buildings
to WTCP
◦ PA conveyed 99 year leaseholds re the towers to WTCP
◦ As consideration, WTCP gave (1) a flat payment at closing and (2) a 99
year stream of future rental payments. Present value of the leaseholds is
roughly $2.8 billion
 After 9/11, WTCP sued Aviation D’s claiming WTCP property wouldn’t have
been destroyed but for their negligence. Lawsuit seeks at least $12.3 billion.
◦ Liability is NOT yet established. Decision comes after D’s motion on
whether P’s damages are limited to market value of destroyed property
IF liability is established.
◦ Major questions:
 Can P recover replacement costs or is P limited to market value?
 Can P recover loss of use damages?
In Re Sept. 11th - Market Value v. Replacement Costs
 In a well-functioning market, market value and replacement costs are
generally equivalent. But sometimes replacement costs are significantly
higher than the market value of a damaged or destroyed item.
◦ In what situations does this “nonequivalence” occur?
 What is the In re Sept. 11th court’s rule on whether to award market value
or replacement costs when they are not equivalent?
◦ Why would the court have such a rule?
In re September 11th – Exception to Awarding Lesser
Market Value
 Special Purpose Property (aka “specialty property”)
◦ Property for which there is no discernable market value – i.e., property
which isn’t readily traded in a market
◦ P’s can get replacement costs for specialty property
 Why aren’t the WTCP properties special purpose property?
◦ Weren’t the Twin Towers iconic symbols of NYC? Doesn’t that make
them special?
◦ What if the Washington Monument had been hit? Wouldn’t such an iconic
property be a specialty property?
◦ How are the Towers different from the Washington Monument?
In re September 11th – Loss of Use Damages
 P asked for $3.9 billion in lost rents from tenants due to loss of buildings.
(These are loss of use damages ).
 According to the court, why isn’t P entitled to them?
 Is the court right that P’s will be in their rightful position without them?
◦ Is this consistent with Hatahley?
◦ Would P’s argument be more persuasive if P sought only the 10 years of
rents that it took to rebuild the WTCP properties?
Trinity Church v. John Hancock
• Assume the church had been totally destroyed, what measure of damages
would have been appropriate – market value or replacement costs?
• Why?
• Could Trinity Church build any replacement it wanted?
• E.g., Eight times bigger than the original and of Carrera marble?
BUT Trinity Church wasn’t totally destroyed:
 After the damage, Trinity Church was simply closer to “takedown” (i.e., the
end of its useful life) than before.
 “Angles of distortion” method used to calculate how much of the
church’s useful life was lost. The unusual increase in the church’s
foundational settling was used to calculate damages and the assumption
was that the church will have a lesser useful life than if it were not
damaged.
◦ Has P really been damaged if it is using the church and isn’t planning to
repair the damage until the church is fully at “takedown”?