[The following article was excerpted from John T. Blanchard's law school textbook, California Remedies: Commentary, Materials and Problems (3d ed. ©1997)]

All civil actions arise from "[a]n obligation" or "[a]n injury" or a combination of the two. Of course, an "obligation" arises either from a contract or by operation of law. "Injuries" are either "[t]o property" or "[t]o the person". An injury to "property" is the deprivation of "its owner of the benefit of it" by "taking, withholding, deteriorating, or destroying" the property; all other injuries are to "the person". The definition of injury to property suggests the nature of an award of damage to the injured owner of the property. As a general matter, the potential elements of an award of injuries to the person, dignity and emotions of a person are self-evident.

Any initial exploration of the remedy of "damages" requires review of a few definitions (and the usual caution that cases may be found where the conventional nomenclature is misused). There are four kinds of damage: actual, compensatory or consequential; exemplary or punitive; nominal; and, statutory or penal. "Nominal" damages are exactly what they sound like, damages awarded when a breach of duty has caused no appreciable loss, harm or detriment; as such, this technical triviality (the existence of which may defeat a demurrer or other such proceeding but cannot render a minor controversy major) will generally be ignored in these materials. "Statutory damages" or "penal damages" - the terms are interchangeable - are damages described by statute that are recoverable in addition to (or even in the absence of) other damages; since they arise only in highly specialized circumstances (the broadest of which is in the context of a violation of the Unruh Civil Rights Act) and usually appear only as a supplement to other damage claims, they will also generally be ignored here.

The primary focus here will be on "actual, compensatory or consequential" damages. "Actual damages" and "compensatory damages" - the terms are interchangeable - represent compensation for harm actually suffered; they arise as a natural consequence of the misconduct that is the substantive subject of the complaint. They are subdivided into two additional categories: general damages and special damages. General damages are both a natural consequence of the misconduct (breach of contract or tort) in issue and necessarily result from it. Lost profits in business cases and lost earnings and pain and suffering in tort cases are general damages. Special damage is also a natural consequence of the misconduct in issue but do not necessarily result from it; that is, the misconduct actually resulted in the special damage but would not necessarily do so (instead, they arise from either the nature of the particular injurious act or from the peculiar circumstances of the victim). Lost profits in a tort case and medical expenses are special damages. Special damages must be specifically pleaded in the claimant's pleading (complaint or cross-complaint) in order to be recovered. Consequential damage is more problematic as a definitional matter. The term "consequential damage" is sometimes (perhaps generally) thought to mean "special damage"; this is especially true when construing statutes that prohibit recovery of "consequential damage" in specified circumstances (e.g., Commercial Code §1106). However, the term is also, unfortunately, often used to connote all of the damages - general and special - that are incurred as a "consequence" of the wrongful act.

The most common remedy in litigation is an award of damages. The topic of damages is both simple and complex. The general principles of damage awards

"The most common remedy in litigation is an award of damages."

are quite simple and commonsensical; however, the application of general principles to the myriad of factual situations raised by even commonplace litigation is extremely complex. General principles may be simply stated. However, the "black letter" principles are invariably subject to numerous, important exceptions and qualifications, exceptions and qualifications that sometimes all but subsume the general rule. Thus, it is almost always a mistake to assume that analysis is complete after ascertaining the correct general principle. For purposes of these materials the subject of "damages" is generally divided into three categories: compensatory damages; punitive damages; and other monetary relief.

"Compensatory damages" (general and special) seek to compensate the victim of wrongdoing (contractual or tortious). The most common elements of such awards are obvious: lost profits, costs of repairs, diminution in market value, and "cover" damages for breaches of contract; medical expenses, lost earnings, and compensation (albeit without a precise formula for calculation) for pain and suffering and other emotional distress for tortclaims.

"Punitive damages" seek to punish intentional tortfeasors and to make examples of such transgressors to deter other, like-minded people.

"Other monetary relief" includes awards of attorneys' fees, costs of suit, pre-judgment interest and the like; care must be taken as to this last, "catch all" category because most of these items are not "damages" at all (and, thus, need not be "proved up" as a part of the plaintiff's case-in-chief).

The basic principles of damage awards include:

• Though awards of money damages is substitutional, such awards are intended to be complete. Though one who has suffered a loss because of a breach of contract or either an intentional or negligent tort often cannot truly be "made whole" - that is, placed in a position wholly as advantageous as if the contract had been fully performed or rendered as physically and/or emotionally fit as if the accident had not happened - is the intention of the law to render such claimants as "whole" as is possible with money damages;

• "Damage" or loss is generally an essential element of the claim it seeks to remedy. No complete and actionable cause of action for Breach of Contract exists unless, in addition to the existence of the contract, the plaintiff's performance and the defendant's breach, the plaintiff has also suffered damage or loss as a direct and proximate (legal) result of the defendant's breach; similarly, tortclaims are not generally actionable unless the proscribed intentional or negligent misconduct has (or, in cases of injunctive relief, threatens to) result in harm to the plaintiff.

• Damages for breach of contract are limited to the losses that were reasonably foreseeable by the parties at the time of entry into the contract. Damages for tortclaims are not so limited; the tortfeasor is often said to "take the victim as he finds him". These general principles, more than any others, are subject to qualifications and exceptions that virtually negate the principles themselves.

• Punitive damages and recovery for emotional distress are available only in instances of intentional tortclaims. Thus, in general, a party may not recover damages for emotional upset attributable to a mere breach of contract. However, two types of contracts, insurance policies and employment agreements, have been singled out for special consideration because of the different bargaining positions of the parties and the fact that their breach can be overwhelming to the policyholder or employee; these types of contracts will sometimes support awards of punitive damage and/or compensation for emotional injuries. However, the line distinguishing contract claims and tortclaims is not nearly as bright as is sometimes assumed and the skill of the pleader often determines whether certain elements of damage are recoverable.

• Attorneys' fees are generally not available under the so-called "American Rule", under which the parties pay their own fees (as opposed to the so-called "British Rule", under which the court usually fixes an award of fees in favor of the prevailing party). They are, however, available pursuant to statute and contract under certain limited situations and may be recovered indirectly, as "damages", in certain tortclaims (where the tortious conduct has forced a party to commence or defend a lawsuit - the attorneys' fees expended in the other lawsuit are "damages" in an action based on the tort that forced the suit or defense). Awards of statutorily specified costs of suit (generally not including all of the real costs of suit) are routinely granted. Awards of pre-judgment interest are made if the amount in question was "liquidated" (that is, either certain in amount or capable of being made certain by calculation) and other requirements are met.

The amount of any damage award sought is almost always peculiar to the facts of the underlying misconduct. Thus, these materials will generally focus on the limitations on such awards rather than on their outside limits (such outside limits are defined only by the goal of "complete" relief under the facts and the creativity of counsel).

It is especially important to note that principles of damage awards do not exist in a vacuum; instead, they are largely defined by the substantive law

"Principles of damage awards do not exist in a vacuum; instead, they are largely defined by the substantive law applicable to the underlying claim."

applicable to the underlying claim. Thus, for example, it is said in some legal texts that "plaintiff's breach" is a bar or a defense to an award of damages for breach of contract. In a sense, that assertion is true; but it is also misleading. The idea that "plaintiff's breach" is a "bar or a defense" to an award of breach of contract damages is not some special principle of remedies; instead, it is a part of the substantive law of contracts. Plaintiff's "performance" of all conditions imposed by the parties' contract on the plaintiff is an essential element of the plaintiff's case in an action for breach of contract. If that plaintiff failed to perform all such conditions recovery is not denied because of some special remedies rule; instead, recovery is denied because plaintiff's case-in-chief failed (that is, phrased generally, even if such a plaintiff suffered otherwise compensable damages as a consequence of the defendant's failure of performance, the plaintiff may not receive an award of such damages because plaintiff's own breach excused further performance by the defendant and, thus, justified the defendant's nonperformance).

Similarly, though the victim of a tortclaim may have suffered actual, palpable, and otherwise collectible damage and loss, if a sufficient "intervening cause" exists then a damage recovery against the "target defendant" must be denied; but, as before, it is not denied because of some special principle of remedies (instead, recovery is denied because the victim-plaintiff's case-in-chief failed as to the element of "proximate [legal] causation). The remedy sought may never be divorced, and analyzed separately, from the substantive law applicable to the underlying misconduct.