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Damages in a Commercial Context Richard G DAMAGES IN A COMMERCIAL CONTEXT RICHARD G. MUNZINGER El Paso, Texas Scott, Hulse, Marshall, Feuille, Finger & Thurmond, P.C. State Bar of Texas 27TH ANNUAL ADVANCED CIVIL TRIAL COURSE August 25-27, 2004 - Dallas September 22-24, 2004 – Corpus Christi November 10-12, 2004 - Houston CHAPTER 30 The author wishes to acknowledge the contributions of Chantel Crews and M. Gus Pick, Thomas R. Erickson, Morgan L.W. Hazelton, Henry J. Paoli, R. Duane Frizell, Oscar Javier Ornelas, Jose Luis Carbonell, Casey S. Stevenson, and Katari Buck. These attorneys provided significant assistance towards the completion of this paper. Richard G. Munzinger is a shareholder with the law firm of Scott, Hulse, Marshall, Feuille, Finger & Thurmond, P.C., El Paso, Texas. He was born in El Paso, Texas, September 22, 1938; is a graduate of the University of Texas (B.A., 1950; LL.B., 1966); College of the State Bar of Texas and admitted to the bar, 1966, Texas; U.S. District Court, Western District of Texas and U.S. Court of Appeals, Fifth Circuit; U.S. Supreme Court. He currently is a member of the Supreme Court Advisory Committee and has been a lecturer for the State Bar of Texas for many years. 641912 v2 Damages In A Commercial Context Chapter 30 TABLE OF CONTENTS I. INTRODUCTION....................................................................................................................................... 1 II. BREACH OF CONTRACT ........................................................................................................................... 1 A. General Damages v. Special Damages .................................................................................................... 1 B. Pleading Damages ................................................................................................................................ 1 C. Proving Damages................................................................................................................................. 1 1. Cause in Fact ............................................................................................................................... 1 2. Foreseeability ............................................................................................................................... 2 3. Certainty...................................................................................................................................... 2 D. Benefit-of-the-bargain........................................................................................................................... 3 1. Service Contracts ......................................................................................................................... 3 a. Real Property Services ........................................................................................................... 3 b. Personal Services .................................................................................................................. 3 c. Substantial Performance......................................................................................................... 4 2. Sales Contracts............................................................................................................................. 4 a. Seller’s Breach...................................................................................................................... 4 b. Buyer’s Breach...................................................................................................................... 5 E. Viability of Certain Types of Damages For Breach of Contract.................................................................. 5 1. Lost Profits.................................................................................................................................. 5 2. Mental Anguish............................................................................................................................. 6 3. Liquidated Damages ...................................................................................................................... 7 4. Nominal Damages ......................................................................................................................... 8 5. Exemplary Damages...................................................................................................................... 8 6. Attorney’s Fees ............................................................................................................................ 9 7. Reliance Recovery ........................................................................................................................ 9 8. Quantum Meruit ........................................................................................................................... 9 F. Repudiation or Anticipatory Breach of Contract....................................................................................... 9 G. Promissory Estoppel ...........................................................................................................................10 III. COVENANTS NOT TO COMPETE ............................................................................................................10 A. Damages Recoverable .........................................................................................................................10 B. Liquidated Damages for Covenants Not to Compete................................................................................11 C. Exemplary Damages in Covenants Not to Compete.................................................................................12 IV. USURY.....................................................................................................................................................13 A. Statutory Usury & Remedies ................................................................................................................13 1. Statutory Usury ...........................................................................................................................13 2. “Interest”....................................................................................................................................13 3. Civil Penalties ..............................................................................................................................14 a. No Agreement Between the Parties to Charge Interest..............................................................14 b. Agreement Between the Parties to Charge Interest at a Specified Rate.........................................14 c. Debtor Remains Liable on Principal Amount If Interest Charged or Received Is Less Than Twice the Legal Rate............................................................................................................................15 d. Usury Involving a Charge and Receipt Exceeding Two Times the Maximum Legal Rate ...............15 4. Attorney’s Fees ...........................................................................................................................16 5. Criminal Penalties.........................................................................................................................16 6. De Minimis Violations...................................................................................................................16 7. Opportunity to Cure.....................................................................................................................16 B. Common Law Usury Remedies ............................................................................................................17 C. Federal Preemption .............................................................................................................................17 V. COMMON LAW FRAUD ...........................................................................................................................17 A. Direct Damages ..................................................................................................................................17 1. Out-Of-Pocket Damages ..............................................................................................................18 i Damages In A Commercial Context Chapter 30 a. Related To Loans..................................................................................................................19 b. Related To The Purchase Of Land..........................................................................................19 c. Related To Service Contracts.................................................................................................19 d. Related to Joint Ventures .......................................................................................................21 e. Related To Construction Contracts .........................................................................................21 f. Related To Futures Contracts.................................................................................................21 g. With Respect To The Sale Of Goods ......................................................................................21 h. Relating To Leases................................................................................................................22 i. Related To Purchase Of Stock/Companies...............................................................................22 j. Where Benefit-of-the-Bargain Damages Are Difficult or Impossible
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