Chapter 12-2 Issues of Excessive or Double Recovery

• Jurisdiction: United States

12-2 Issues of Excessive or Double Recovery

12-2:1 Duplicative Damages

A party is generally entitled to sue and to seek damages on alternative theories²¹ but cannot receive a double recovery, i.e. more than one recovery for the same injury.²² Double recovery exists when the same measure of damages is presented to the jury for alternate theories of recovery, such as for Insurance Code violations and DTPA violations. It may be appropriate to submit both theories of recovery in the court's charge, but the Court cannot, when applying the law to the verdict, include the duplicate damage amounts in the judgment.²³ "Appellate courts have applied the one satisfaction rule when the defendants commit the same act as well as when the defendants commit technically differing acts which result in a single injury."²⁴

Not all potentially duplicative damages are so clear. Allowing the jury to assess both lost profits and loss of value of a business for the same contract or business tort injury may result in a double counting of damages²⁵ since anticipated profits are a primary component of the value of a business.²⁶ If the two measures of damage cover two distinct time periods²⁷ or two different markets of the business,²⁸ they are not necessarily duplicative. Business reputation, another significant component of the value of a business, may impact both loss of business reputation and loss of value of the business, but allowing recovery for both constitutes an impermissible double recovery.²⁹ Conversely, a party may simultaneously allege breach of contract and business tort claims (breach of fiduciary duty, intentional interference with a contract, civil conspiracy and exemplary damages) and recover for both the contractual and tort damages when they result from separate and distinct injuries.³⁰

Recovering both benefit-of-the-bargain damages and out-of-pocket damages for the same loss is inconsistent and an impermissible double recovery³¹ because the first measure of damages seeks to affirm the transaction while the second measure seeks to disaffirm it.³² In the same regard, the damage amounts for two theories of recovery such as damages for misrepresentation and breach of contract which rely on benefit-of-the-bargain or out-of-pocket damage models, cannot both be incorporated into the judgment.³³

A potential double counting of damages can arise in property damage cases. When personal property has not been completely destroyed, the proper damage model is either (1) the loss of market value measured by the difference in the immediate preinjury value of the property and the immediate post-injury value before repairs, or (2) damages for cost of repair and loss of use.³⁴ "Generally, a property owner cannot recover both because it would constitute a double recovery, which is prohibited. However, damages for diminished value and damages for cost of repairs are not duplicative if the diminished value is calculated based on a comparison of the original value of the property and the property's post-repair value."³⁵

Allowing recovery for both loss of value and loss of use (measured by cost of replacement) results in duplicate damages if they compensate a party for the same injury (i.e. the value of the property as reflected by the use to which it can be put).³⁶ Conversely, compensating a plaintiff for the cost of repairs and loss of use (often measured by the cost of a replacement whether rented or not³⁷) during the time that the damaged property is out of use is not a duplicate damage award because two separate components of the injury are being compensated.³⁸

12-2:2 Excessive Damages

Separate from duplicative damages, excessive damages can occur when a plaintiff seeks judgment on the larger of two potential measures of damage.

While a plaintiff may submit a case to the jury on alternative theories of recovery and elect judgment on the theory that permits the greatest recovery,³⁹ on a single theory of recovery, a plaintiff may not be entitled to select the measure of damages which will result in the greatest recovery if that measure would constitute an unreasonable or excessive recovery.⁴⁰ This does not mean that a plaintiff is necessarily limited to the lesser of two measures of damage. "We are aware of no case which holds that the amount of recovery for repairs to [a] chattel plus loss of use of a chattel is limited by the fair market value of the chattel prior to the negligent act which caused the dam-age."⁴¹ The rule is best understood as entitling a party to seek full recovery provided the recovery is economically feasible. When, for example, damaged personal property can be repaired, the property owner may recover the reasonable costs of such replacements and repairs as needed to restore the property to its condition immediately prior to the accident without regard to...