The "loss of chance" doctrine of damages for breach of contract.

• Author: Sturgess, Robert H.

The Florida Supreme Court held in 1984 that a theory of recovery for "loss of a chance" to survive predicated on alleged medical malpractice is not actionable in Florida. (1) The "loss of chance doctrine" is, however, a viable predicate for damages in a contract action. This article will summarize the history of the loss of chance doctrine and conclude that Florida not only has accepted the doctrine outside the tort context, but also has expanded it beyond its Restatement (Second) of Contracts' foundation. (2) "[C]ounsel in this country seem seldom to have made this argument." (3)

History

In Taylor v. Bradley, 39 N.Y. 129 (1868), the court was faced with a contract breached by a landowner who reneged on a promise to allow a farmer to use the land. The judge asked and answered, "[if a plaintiff] is deprived of his adventure, what was this opportunity which the contract had apparently secured him to worth? [His] damages are what he lost by being deprived of his chance of profit. (4) The doctrine of "loss of chance" or "loss of a chance" was thereby introduced into America's common law.

Decades later, a British court echoed the doctrine in Chaplin v. Hicks, 2 K.B. 786 (1911). In Chaplin the plaintiff was a semifinalist in a beauty contest. The promoter of the event breached the contract by failing to notify the plaintiff of the time and place of the competition. The jury awarded damages in the amount of one fourth of the lowest prize. The court indicated the chance of winning had value which could be assessed by the law of averages.

In 1931 the U. S. Supreme Court held in Story Parchment Co. v. Paterson Parchment Paper Company, 282 U.S. 555,563 (1931), that when the plaintiff's inability to calculate damages to a reasonable certainty is a result of the defendant's wrongdoing, "the risk of uncertainty should be thrown upon the wrongdoer instead of upon the injured party." (5) The U. S. Supreme Court's decision in Story Parchment crosses paths with the loss of chance doctrine by citing and quoting Taylor with approval.

In Story Parchment, the Supreme Court held that to deny an injured party the right to recover damages that clearly arise from the breach because it is of a kind that cannot be measured with certainty would allow wrongful acts to be profitable. (6) The Court further explained that no part of the loss should be left upon the injured party simply because the defendant's wrongful act prevented the precise amount from being fixed. (7)

In Bangor Punta Operations, Inc. v. Universal Marine Co., Inc., 543 F.2d 1107 (5th Cir. 1976), the 11th Circuit Court of Appeals (then the Fifth Circuit) confirmed and restated its prior holdings that

[i]n a case such as this, where the wrong is of such a nature as to preclude exact ascertainment of the amount of damages, plaintiff may recover upon a showing of the extent of the damages as a matter of just and reasonable inference, although the result may be only an approximation. The wrongdoer may not complain of the inexactness where his actions preclude precise computation of the extent of the injury. (8)

Although clearly defined damages are preferable, when the injured party can come before the factfinder and introduce evidence tending to show damages, a probable estimate of the amount in controversy will be allowed by inferential proof. (9) When considering the reliability of an expert's opinion regarding damages, "[i]t is well settled that the evidentiary basis for a court's ruling on damages need only be 'sufficient to enable a court ... to make a fair and reasonable approximation." (10)

Following Taylor and Chaplin, the loss of chance doctrine subtly moved forward with approval through American treatises (11) and case law (12) over the decades. The doctrine appears to have landed most firmly in the Restatement (Second) of Contracts, [section] 348 (3) (1981), which states, "If a breach is of a promise conditioned on a fortuitous event and it is uncertain whether the event would have occurred had there been no breach, the injured party may recover damages based on the value of the conditional right at the time of the breach."

The comment to this portion of the Restatement explains,

d. Fortuitous event as condition. In the case of a promise conditioned on a fortuitous event, a breach that occurs before the happening of the fortuitous event may make it impossible to determine whether the event would have occurred had there been no breach. It would be unfair to the party in breach to award damages on the assumption that the event would have occurred, but equally unfair to the...