California Attorney's Guide to Damages

Learn how to quickly evaluate a case and determine the appropriate range of damages in actions across many practice areas. Includes discussion of the taxability of settlements and judgments.

Contract
Real estate seller/buyer
Labor
Landlord/tenant
Injury to property
Intellectual property infringement and misappropriation
Tax aspects

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Overview
Selected Developments
Authors
Table of Contents
OnLAW System Requirements
Filing Instructions
Page List
Specifications

Learn how to quickly evaluate a case and determine the appropriate range of damages in actions across many practice areas. Includes discussion of the taxability of settlements and judgments.

Contract
Real estate seller/buyer
Labor
Landlord/tenant
Injury to property
Intellectual property infringement and misappropriation
Tax aspects

Selected Developments

December 2022 Update

The current update includes changes that reflect recent developments in case law, legislation, court rules, and jury instructions. Summarized below are some of the more important developments included in this update since publication of the 2021 update.

Contract

Economic loss rule. In Sheen v Wells Fargo Bank, N.A. (2022) 12 C5th 905, the California Supreme Court declined to extend economic loss rule exceptions to a case involving a negligence claim on a loan modification application. The court held that a lender owes no duty sounding in general negligence principles to “process, review and respond carefully and completely to” a borrower’s loan modification application. See §1.15.

Arbitration clauses. In Quach v California Commerce Club, Inc. (review granted Aug. 24, 2022, S275121, opinion at 78 CA5th 470, to remain published and citable until further order), the court concluded that the plaintiff failed to demonstrate prejudice resulting from party-directed discovery and associated costs for purposes of satisfying the heavy burden required for a waiver of arbitration. See §1.16.

Interest. In Soleimany v Narimanzadeh (2022) 78 CA5th 915, the court held for the first time that for a note secured by a deed of trust on real property, in the absence of a legal interest rate specified in the note—including a note with a void usurious rate—the default prejudgment interest rate is 7 percent, under the California Constitution. See §1.20.

Attorney fees. In City of Los Angeles Dept. of Airports v U.S. Specialty Ins. Co. (2022) 79 CA5th 1039, the court upheld the trial court’s reasonable conclusion that there was no prevailing party for a CC §1717 fee award. See §1.26.

In United Grand Corp. v Stollof (2022) 74 CA5th 62, the court held that a defendant who tendered payment of a default judgment before the default judgment was vacated, and necessarily before the defendant filed an answer in the case, was a prevailing party under CC §1717(b)(2). See §1.26.

In Pulliam v HNL Automotive Inc. (2022) 13 C5th 127, the California Supreme Court held that where state law provides for attorney fees against a holder of a consumer credit contract, nothing in the Federal Trade Commission’s Holder Rule (limiting a debtor’s recovery in claims against a seller or its assignee) prevents their award to the full extent provided by state law. See §§1.30, 1.30A.

Labor

Federal preemption and jurisdiction. In Columbia Export Terminal, LLC v International Longshore and Warehouse Union (9th Cir 2022) 23 F4th 836, the Ninth Circuit held that a federal Racketeer Influenced and Corrupt Organizations Act claim was preempted or precluded by the LMRA. See §3.2.

Rehabilitation Act of 1973. The U.S. Supreme Court held in Cummings v Premier Rehab Keller P.L.L.C. (2022) 596 US ___, 142 S Ct 1562 that emotional distress damages are not available under §504 of the Rehabilitation Act of 1973 (29 USC §794). See §3.30.

First Amendment rights and political activity. In Kennedy v Bremerton Sch. Dist. (2022) 597 US ___, 142 S Ct 2407, the U.S. Supreme Court restated the appropriate test for determining a public employee’s rights to free speech, and concluded that the employer’s stated interest did not outweigh the employee’s interests in free speech, in the case of a public employee praying “quietly” on a public school football field. See §3.80.

Meal and rest periods. In Ferra v Loews Hollywood Hotel, LLC (2021) 11 C5th 858, the court held that “regular rate of compensation” under Lab C §226.7(c) encompasses all nondiscretionary payments, not just the regular hourly wage rate. See §3.88A.

In Naranjo v Spectrum Sec. Servs., Inc. (2022) 13 C5th 93, the California Supreme Court held that Lab C §226.7 missed-break premium pay constitutes wages subject to the Labor Code’s timely payment and reporting requirements and, therefore, “it can support section 203 waiting time penalties and section 226 wage statement penalties where the relevant conditions for imposing penalties are met.” Further, the applicable prejudgment interest rate on a Lab C §226.7 claim for unpaid premium pay is 7 percent, which is the default interest rate under the California Constitution where no statute specifies a higher rate. See §3.88A.

Landlord/Tenant

Statutes of limitations. Rule 9 of the California Rules of Court Emergency Rules Related to COVID-19, which tolled certain statutes of limitations from April 6, 2020, to October 1, 2020, sunsetted on June 30, 2022, by its own terms, but the sunset did not nullify the effect of the tolling of the statutes of limitations. See §§4.8, 4.21, 4.27, 4.34, 4.47, 4.55, 4.57, 4.59, 4.61, 4.64, 4.77, 4.82, 4.85, 4.105.

Legislative developments related to COVID-19. The COVID-19 Tenant Relief Act (CCP §§1179.01–1179.07) took effect August 31, 2020, to address the economic impact of the COVID-19 pandemic, and has been amended multiple times since its enactment. See, e.g., Stats 2021, ch 2 (SB 1); Stats 2021, ch 5 (AB 81); Stats 2021, ch 27 (AB 832); Stats 2022, ch 13 (AB 2179). Notably, the COVID-19 Tenant Relief Act prohibits local jurisdictions from extending the time period for tenants to repay COVID-19 rental debt beyond August 31, 2023. CCP §1179.05(a)(2)(C). Additionally, the 1-year statute of limitations applicable under CCP §1161(2) is tolled for any time period during which a landlord was prohibited from serving a notice demanding COVID-19 rental debt. CCP §1179.05(c). Accordingly, tenants may be liable for the entire sum of back rent from March 1, 2020, through June 30, 2022, by or even before August 31, 2023. CCP §§1179.05(a)(2)(C), (c). Note that the COVID-19 Tenant Relief Act is scheduled for repeal on October 1, 2025. CCP §1179.07. Counsel should consult the latest statutory and case developments in this fast-moving area of law. For additional discussion of the COVID-19 Tenant Relief Act and the COVID-19 Rental Housing Recovery Act, see California Eviction Defense Manual (2d ed Cal CEB) and California Landlord-Tenant Practice (2d ed Cal CEB). See §4.86.

Attorney fees. Until October 1, 2025, CCP§871.11 limits attorney fees that may be awarded by a court in any action to recover COVID-19 rental debt. See §§4.96, 4.109.

Injury to Property

Blockage of Air, Light, or View. In Kahn v Price (2021) 69 CA5th 223, the court held that a tree view obstruction constituted a continuing nuisance and violated the San Francisco Tree Dispute Resolution Ordinance. See §5.11.

Encroachment. Romero v Shih (review granted Aug. 10, 2022, S275023, opinion at 78 CA5th 326, to remain published and citable until further order) is currently under review by the California Supreme Court to determine whether the trial court correctly found the existence of an implied easement under the facts, where the appellate court concluded that the subject encroachment was not de minimus or necessary to protect the public health or safety or for essential utility purposes. See §5.19.

Preliminary injunction. In Chase v Wizmann (2021) 71 CA5th 244, a preliminary injunction mandating the relocation of air conditioning and pool equipment was upheld due to constant violations of municipal ordinance decibel levels. See §5.26A.

Punitive damages. In Siry Inv. v Farkhondehpour (2022) 13 C5th 333, the California Supreme Court held that a plaintiff may recover treble damages and attorney fees under Pen C §496 when property “has been obtained in any manner constituting theft,” referring to the unambiguous language of Pen C §496(a), endorsing the analysis of Bell v Feibush (2013) 212 CA4th 1041 and Switzer v Wood (2019) 35 CA5th 116. See §5.38.

Fire suppression liability. In Presbyterian Camp & Conf Ctrs., Inc. v Superior Court (2021) 12 C5th 493, the California Supreme Court ruled that Health and S C §§13009 and 13009.1 incorporate the common law theory of respondeat superior, such that a corporation can be held liable for the cost of suppressing fires that its agents or employees negligently or unlawfully set or allowed to escape, affirming the court of appeal’s decision, and disapproving Department of Forestry & Fire Protection v Howell (2017) 18 CA5th 154. See §5.54.

Intellectual Property Infringement and Misappropriation

Prejudgment interest. In Kaufman v Microsoft Corp. (Fed Cir 2022) 34 F4th 1360, the court held that the defendant had failed to show prejudice for purposes of denying the plaintiff prejudgment interest, despite the plaintiff’s 5-year delay in filing suit. See §6.14.

About the Authors

Robert M. Cassel (chapter 3), B.A. 1956, University of Michigan; J.D. 1961, University of California, Berkeley, School of Law. Mr. Cassel practices in the Law Offices of Robert M. Cassel, Mill Valley, and has specialized exclusively in management labor and employment law since 1962. He has served on the Management Advisory Panel of the National Labor Relations Board Advisory Committee on Agency Procedure, and has been Program Chairman of the American Bar Association Subcommittee on Equal Employment Opportunity. Mr. Cassel has lectured and written extensively on labor law and is a contributing editor of CEB’s California Business Law Reporter.

David Dimitruk (chapter 2), B.A. 1973, California State University, Fullerton; J.D. 1976, Western State University School of Law. Mr. Dimitruk is a sole practitioner in Irvine, specializing in real estate transactions and litigation. He has lectured for CEB on the subject of real property remedies and has authored chapter 3 of California Real Property Remedies and Damages (2d ed Cal CEB), on which a portion of chapter 2 of this book is based.

Jane L. O’Hara Gamp (chapter 2), B.A., Santa Clara University; J.D. 1985, Santa Clara University. Ms. Gamp is currently the Administrative Dean at San Francisco Law School. Formerly, she specialized in professional liability defense litigation. She is also both a mediator and an arbitrator with the American Arbitration Association for personal injury, professional liability, real property, contract, and employment disputes. She has authored chapter 4 of California Real Property Remedies and Damages (2d ed Cal CEB), on which a portion of chapter 2 of this book is based.

Victor B. Harris (chapter 1), B.S. 1968, University of California, Berkeley; J.D. 1972, Harvard Law School. Mr. Harris practices law in the Law Offices of Victor Harris, in San Rafael, maintaining a litigation and transactional practice focusing on commercial finance, including creditor’s rights, equipment leasing, asset-based lending, and secured transactions. He is the Secretary-Treasurer of the United Association of Equipment Leasing and is a member of its Board of Trustees.

Leo E. Lundberg, Jr. (chapter 6), B.S. (cum laude) 1978, California Lutheran University, Thousand Oaks; J.D. (cum laude) 1986, Loyola Law School, Los Angeles. Mr. Lundberg practices law at The Soni Law Firm in Pasadena, maintaining a practice in intellectual property litigation, insurance coverage litigation representing insureds, and general business litigation.

Stephen L. R. McNichols (chapter 5), B.A. 1965, Pomona College; J.D. 1968, University of California, Berkeley, School of Law. A partner with McNichols, Randick, O’Dea & Tooliatos in Pleasanton, Mr. McNichols specializes in real property and business litigation. His practice involves a wide variety of legal work, including negotiating, drafting, and litigating business and real estate contracts, and litigating and resolving complex commercial, real estate, land use, construction, landslide and subsidence, business tort, intellectual property, partnership, and corporate disputes. He has authored chapter 11 of California Real Property Remedies and Damages (2d ed Cal CEB), on which a portion of chapter 5 of this book is based. He is also a frequent contributor to the CEB Real Property Law Reporter. See, in particular, Revisiting Mangini: Should the Burden of Proof in Contamination-Nuisance Cases Be Re-examined?, 25 Real Prop L Rep 3 (Apr. 2002).

Myron Moskovitz (chapter 4), B.S. 1960, University of California, Berkeley; J.D. 1964, University of California, Berkeley, School of Law. Mr. Moskovitz specializes in appellate practice and landlord-tenant law and is currently Professor of Law at Golden Gate University, San Francisco. He was the Chief Attorney for the National Housing Law Project and Chairman of the California Commission on Housing and Community Development. He has contributed to California Eviction Defense Manual (Cal CEB), of which he is one of the original authors, and California Landlord-Tenant Practice (Cal CEB), on which a portion of chapter 4 of this book was based.

Surjit P. Soni (chapter 6), B.S. 1974, University of Toronto; J.D. 1984, University of Miami. Mr. Soni is the principal of the Soni Law Firm, Pasadena, specializing in intellectual property litigation. Some of his major cases include Atlantic Mut. Ins. Co. v J. Lamb, Inc. (2002) 100 CA4th 1017, Dreamwerks Prod. Group, Inc. v SKG Studio (9th Cir 1998) 142 F3d 1127, and Refac Intern., Ltd. v Hitachi, Ltd. (Fed Cir 1990) 921 F2d 1247. He has spoken and written extensively, contributing to, among other books, Competitive Business Practices (Cal CEB) and Civil Procedure Before Trial (3d ed Cal CEB).

C. Darrell Sooy (chapter 2), B.S. 1966, University of California, Berkeley; J.D. 1969, University of California, Hastings College of the Law. Mr. Sooy is the senior managing director of Tobin & Tobin, San Francisco, emphasizing financial institutions, real property, and secured transactions. Some of his major cases include Lazzareschi Inv. Co. v San Francisco Fed. Sav. & Loan Ass’n (1971) 22 CA3d 303 and Fox & Caskardon Fin. Corp. v San Francisco Fed. Sav. & Loan Ass’n (1975) 52 CA3d 484. He has lectured extensively and contributed to California Real Property Sales Transactions (Cal CEB) and California Real Estate Finance Practice (Cal CEB).

Robert W. Wood (chapter 7), A.B. 1976, Humboldt State University; J.D. 1979, University of Chicago. Mr. Wood, of the California, New York, District of Columbia, Montana, Wyoming, and Arizona Bars, practices tax law in San Francisco with Robert W. Wood Professional Corporation. He is certified as a Specialist in Taxation, former Chair of the Taxation Law Specialization Commission, and former Vice Chair of the Executive Committee of the California State Bar Tax Section. He is also qualified as a Solicitor in England and Wales. A central part of Mr. Wood’s national and international practice is advising lawyers, accountants, and litigants concerning the tax aspects of litigation payments and recoveries, and appropriate tax planning and documentation of settlement agreements. He also regularly represents taxpayers before the IRS and the courts. In addition to 28 other tax books, he is the author of Taxation of Damage Awards and Settlement Payments (2d ed 1998) (2001 supplement), published by the Tax Institute, as well as hundreds of articles dealing with the tax treatment of litigation recoveries. He speaks nationally on this topic to accountants, lawyers, and businesspeople.

About the 2022 Update Authors

Victor B. Harris (chapter 1), B.S. 1968, University of California, Berkeley; J.D. 1972, Harvard Law School. Mr. Harris, now retired, maintained a litigation and transactional practice focusing on commercial finance, including creditors’ rights, equipment leasing, asset-based lending, and secured transactions. He served as the President of the United Association of Equipment Leasing during 2006 and as a member of its Board of Directors for several years.

C. Darrell Sooy (chapter 2), B.S. 1966, University of California, Berkeley; J.D. 1969, University of California, Hastings College of the Law. Mr. Sooy is a member of the board of directors at Weintraub Tobin, San Francisco. His practice emphasizes financial institutions, real property, and secured transactions. Some of his major cases include Lazzareschi Inv. Co. v San Francisco Fed. Sav. & Loan Ass’n (1971) 22 CA3d 303 and Fox & Caskardon Fin. Corp. v San Francisco Fed. Sav. & Loan Ass’n (1975) 52 CA3d 484. He has lectured extensively and contributed to California Real Property Sales Transactions (Cal CEB) and California Real Estate Finance Practice (Cal CEB).

Randy Sullivan (chapter 5), B.A. 1999, University of California, Santa Barbara; J.D. 2003, Santa Clara University School of Law. Mr. Sullivan is a partner at Patton Sullivan & Brodehl LLP in Pleasanton, where he focuses on major real estate and complex business litigation. He is an experienced trial lawyer in complex litigation in both state and federal courts. Mr. Sullivan’s clients include a wide variety of individual and corporate businesses and real property owners, investors, developers, financial institutions, mortgage brokers, real estate brokers, directors and officers, and technology companies. He has served as co-chair of the Real Estate Sales and Brokerage Subsection of the Real Property Section of the California State Bar (2010–2012) and is past chair of the Alameda County Bar Association’s Real Property Executive Committee. He currently serves on the Board of Directors for the Contra Costa Bar Association’s Real Estate Section.

Robert W. Wood (chapter 7), A.B. 1976, Humboldt State University; J.D. 1979, University of Chicago. Mr. Wood, of the California, New York, District of Columbia, Montana, Washington, Wyoming, Texas, and Arizona Bars, practices tax law in San Francisco with Wood LLP. He is a Certified Tax Specialist and a former Chair of the Taxation Law Specialization Commission of the California Board of Legal Specialization, and former Vice Chair of the Executive Committee of the California State Bar Tax Section. He is also qualified as a solicitor in England and Wales. A central part of Mr. Wood's national and international practice is advising lawyers, accountants, and litigants concerning the tax aspects of litigation payments and recoveries, and appropriate tax planning and documentation of settlement agreements. He also regularly represents taxpayers before the IRS and the courts. In addition to numerous other tax books, he is the author of Taxation of Damage Awards and Settlement Payments (5th Ed 2021), published by the Tax Institute, as well as hundreds of articles dealing with the tax treatment of litigation recoveries. He speaks nationally on this topic to accountants, lawyers, and businesspeople.

Contract

Victor B. Harris

I. INTRODUCTION 1.1
II. ANALYSIS OF CONTRACT DAMAGES PROBLEMS
- A. Negotiation and Drafting Stage 1.2
  - 1. Improving Amount of Recovery 1.3
  - 2. Limiting Amount of Recovery 1.4
  - 3. Venue and Arbitration Clauses 1.5
- B. Handling Potential or Actual Breach Situations Before Litigation 1.6
  - 1. When Performance Will Continue
    - a. Notice of Breach and Demand for Performance 1.7
    - b. Protection of Security Interests 1.8
    - c. Avoidance of Future Breach 1.9
    - d. Avoidance of Aggravation of Damages 1.10
    - e. Documentation 1.11
  - 2. When Performance Will Not Continue
    - a. Notice of Claim and Protection of Security Rights 1.12
    - b. Analysis and Proof of Client’s Recoverable Damages 1.13
  - 3. Alternative or Supplemental Remedies 1.14
  - 4. Alternative or Supplemental Causes of Action 1.15
- C. Litigation Checklist 1.16
III. POSSIBLE ITEMS OF RECOVERY
- A. Measure of Damages
  - 1. Controlling Civil Code Provisions 1.17
  - 2. Rule of Hadley v Baxendale: General and Special Damages 1.18
- B. Specific Items Recoverable
  - 1. Loss of Profits and Benefits 1.19
  - 2. Interest 1.20
  - 3. Attorney Fees
    - a. General Rule 1.21
    - b. Right to Reciprocal Recovery of Attorney Fees (CC §1717) 1.22
      - (1) Examples of Recovery Under CC §1717 1.23
      - (2) Recovery of Attorney Fees Under CC §1717 by Strangers to Contract 1.24
      - (3) Recovery of Attorney Fees by Attorney Litigants and “In-House” Counsel Under CC §1717 1.25
      - (4) Determination of Prevailing Party Under CC §1717 1.26
      - (5) Limits of CC §1717 1.27
      - (6) Award of CC §1717 Attorney Fees in Arbitration 1.28
      - (7) Procedure for Recovery Under CC §1717 1.29
    - c. Recovery Under Statutes Other Than CC §1717 1.30
    - d. Recovery of Attorney Fees in Actions Against Holders of Consumer Credit Contracts 1.30A
    - e. Recovery for Bad Faith Breach of Contract and Breach of Fiduciary Duty 1.31
    - f. Recovery Under “Tort of Another” or “Third Party Tort” Doctrine 1.32
  - 4. Expert Witness Fees 1.33
  - 5. Exemplary and Nominal Damages
    - a. General Rule 1.34
    - b. Exemplary Damages May Be Available in Cases Involving Breach of Insurance Contract or Existence of Independent Tort 1.35
    - c. Exemplary Damages Not Available for Bad Faith Denial of Contract’s Existence 1.36
    - d. Proof of Defendant’s Financial Condition 1.37
  - 6. Mental Distress or Physical Suffering 1.38
  - 7. Loss of Goodwill 1.39
IV. LIMITATIONS ON AMOUNT OF DAMAGES
- A. Uncertain and Speculative Damages 1.40
- B. Mitigation of Damages 1.41
- C. Liquidated Damages
  - 1. Validity and Scope 1.42
  - 2. In Public Contracts 1.43
  - 3. Liquidated Damages as “Processing Charges” and “Late Fees” 1.44
- D. Disclaimer of Warranties 1.45
- E. Disclaimer and Limitation of Damages 1.46
V. SPECIFIC BREACH SITUATIONS; RULES AND APPROACHES TO CONTRACT DAMAGES
- A. Total Failure to Perform 1.47
- B. Partial Performance 1.48
- C. Delay in Performance 1.49
- D. Defect in Performance 1.50
- E. Prevention or Obstruction of Performance 1.51
- F. Failure to Pay Money 1.52
- G. Breach of Employment, Service, or Agency Contracts 1.53
  - 1. Foley v Interactive Data Corp. 1.54
  - 2. Cases After Foley v Interactive Data Corp. 1.55
- H. Damages for Unauthorized Services 1.56
- I. Breach of Insurance Contracts
  - 1. Breach of Covenant of Good Faith and Fair Dealing 1.57
  - 2. Examples 1.58
- J. Breach of Contracts to Negotiate Agreements 1.59

Real Estate Seller/Buyer

David Dimitruk

Jane L. O’Hara Gamp

C. Darrell Sooy

I. INTRODUCTION 2.1
II. ESSENTIALS OF DAMAGES ACTION
- A. Nature of Action; Jurisdiction; Venue
  - 1. Legal or Equitable Nature of Action 2.2
  - 2. Jurisdiction 2.3
  - 3. Venue 2.4
- B. Establishing Breach 2.5
- C. Inadequacy of Remedies 2.6
- D. Selection of Remedies 2.7
III. SELLER’S BREACH
- A. Buyer’s First Steps After Seller’s Breach 2.8
- B. Buyer’s Damages
  - 1. General Damages Under CC §3306 2.9
  - 2. Damages for Breach Other Than Failure to Convey Title 2.10
  - 3. Prejudgment Interest 2.11
  - 4. Attorney Fees 2.12
  - 5. Punitive Damages; Emotional Distress 2.13
- C. Seller’s Defenses 2.14
IV. BUYER’S BREACH
- A. Purchase Agreement and Installment Land Contract Distinguished 2.15
- B. Breach of Purchase and Sale Agreement 2.16
  - 1. Seller’s Remedies
    - a. First Steps After Breach 2.17
    - b. Disposition of Deposit
      - (1) General Considerations 2.18
      - (2)  No Liquidated Damages Clause
        
        (a)  Failure of Condition  2.19
        
        (b)  Buyer’s Breach  2.20
      - (3)  Liquidated Damages
        
        (a)  Agreements Executed Before July 1, 1978  2.21
        
        (b)  Agreements Executed on or After July 1, 1978  2.22
        
        (i)  Residential Real Property  2.23
        
        (ii)  Nonresidential Real Property  2.24
    - c. Seller’s Damages
      - (1) General Damages Under CC §3307 2.25
      - (2) Effect of Market 2.26
      - (3) Discounting Price to Cash Equivalent 2.27
      - (4) Proof of Damages 2.28
      - (5)  Special Damages
        
        (a)  Resale Expenses  2.29
        
        (b)  Broker’s Commission  2.30
        
        (c)  Other Expenses  2.31
  - 2. Buyer’s Defenses and Offsets
    - a. Antideficiency Bar 2.32
    - b. Other Defenses and Offsets 2.33
V. ELEMENTS OF FRAUD 2.34
- A. Damages When Buyer Is Victim
  - 1. Three Rules 2.35
  - 2. Measure of Damages Compared 2.36
  - 3. Actual Value Means Market Value
    - a. Proving Market Value 2.37
    - b. Use of Opinion Testimony 2.38
    - c. Methods of Establishing Value 2.39
  - 4. Additional Damages 2.40
    - a. Labor 2.41
    - b. Repairs and Improvements 2.42
    - c. Expenses 2.43
    - d. Lost Profits 2.44
    - e. Personal Injuries and Emotional Distress 2.45
    - f. Interest 2.46
    - g. Punitive Damages 2.47
    - h. Attorney Fees 2.48
  - 5. Fraud by Fiduciaries 2.49
  - 6. Damages Versus Equitable Remedies 2.50
- B. Damages When Seller Is Victim
  - 1. Same Remedies and Defenses 2.51
  - 2. Special Lost Profits Rule 2.52
  - 3. Statutory Protection for Sellers of Residential Real Property 2.53
- C. LITIGATION CONSIDERATIONS IN FRAUD ACTIONS
  - 1. Setoff 2.54
  - 2. Mitigation 2.55
  - 3. Rents 2.56
  - 4. Selling Property; Involuntary Foreclosure 2.57
  - 5. Contract Performance 2.58
  - 6. Consumer Recovery Account 2.59
VI. INSTALLMENT LAND SALE CONTRACTS 2.60

Labor

Robert M. Cassel

Barbara A. Lawless

I. ACTIONS UNDER FEDERAL STATUTES
- A. Labor Management Relations Act of 1947
  - 1. Purpose and Structure 3.1
  - 2. Federal Preemption and Jurisdiction 3.2
  - 3. Unfair Labor Practices 3.3
  - 4. Procedure 3.4
  - 5. Awards to Employees
    - a. Partial Shutdown to “Chill Unionism” 3.5
    - b. Discrimination by Employer for Union Activity
      - (1) Restoration of Position and Back Pay 3.6
      - (2)  What Constitutes Back Pay
        
        (a)  Inclusions  3.7
        
        (b)  Exclusions  3.8
        
        (c)  Reductions  3.9
        
        (d)  Period for Which Allowed  3.10
        
        (e)  Burden of Proof  3.11
        
        (f)  NLRB Rules on Back Pay  3.12
      - (3) Back Pay Calculated on Quarterly Basis 3.13
      - (4) Back Pay Under IRCA 3.13A
      - (5) Successor Employer 3.14
    - c. Employer’s Refusal to Bargain 3.15
    - d. Employer Domination of Union 3.16
    - e. “Runaway Shops” 3.17
    - f. Unlawful Unilateral Activity 3.18
  - 6. Employer and Union Liability 3.19
  - 7. Awards to Employers
    - a. Union’s Refusal to Bargain 3.20
    - b. Damage Actions Under §303 of LMRA 3.21
    - c. Actions for Breach of Collective Bargaining Agreement
      - (1) When Federal Law Applies 3.22
      - (2) Measure and Proof of Damages 3.23
- B. Labor-Management Reporting and Disclosure Act of 1959 3.24
  - 1. Compensatory Damages 3.25
  - 2. Attorney Fees 3.26
  - 3. Punitive Damages 3.27
  - 4. Elections 3.28
  - 5. Cause of Action Against Employer 3.29
- C. Rehabilitation Act of 1973 3.30
- D. Americans with Disabilities Act of 1990 3.31
- E. Railway Labor Act 3.32
  - 1. Major and Minor Disputes 3.33
  - 2. Back Pay 3.34
  - 3. Attorney Fees 3.35
- F. Sherman and Clayton Antitrust Acts 3.36
  - 1. Examples 3.37
  - 2. Employers Exempt 3.38
- G. Fair Labor Standards Act of 1938 3.39
  - 1. Exemptions 3.40
  - 2. Remedies 3.41
  - 3. Defenses 3.42
  - 4. Gender Discrimination 3.43
  - 5. Examples 3.44
  - 6. Statute of Limitations 3.45
- H. Age Discrimination in Employment Act 3.46
- I. Veteran’s Reemployment Rights 3.47
- J. Title VII of Civil Rights Act of 1964
  - 1. Prohibition of Discrimination in Employment 3.48
  - 2. Back Pay Awards 3.49
    - a. Back Pay Formula 3.50
    - b. Back Pay Defined 3.51
    - c. Bona Fide Offers of Employment 3.52
    - d. Duplicate Pay 3.53
    - e. Front Pay 3.54
    - f. Mental Distress Damages 3.55
    - g. Prejudgment Interest 3.56
    - h. Good Faith 3.57
    - i. Equivalent Employment 3.58
    - j. Unemployment Benefits 3.59
  - 3. Seniority 3.60
  - 4. Exemplary Damages 3.61
  - 5. Attorney Fees 3.62
  - 6. Civil Rights Act of 1991 3.63
  - 7. Civil Rights Acts of 1866 and 1871 3.64
- K. Employee Retirement Income Security Act 3.65
  - 1. Preemption of State Law 3.66
  - 2. Coverage 3.67
  - 3. Reporting and Disclosure 3.68
  - 4. Damages 3.69
  - 5. Remedies 3.70
  - 6. Attorney Fees 3.71
  - 7. Punitive Damages 3.72
  - 8. Measure of Damages 3.73
  - 9. Breach by Fiduciary 3.74
- L. Walsh-Healey Act 3.75
- M. Davis-Bacon Act 3.76
- N. Federal Employee Protections
  - 1. Federal Service Labor Management Relations Act 3.77
    - a. Employees’ Grievances 3.78
    - b. Back Pay and Attorney Fees 3.79
  - 2. First Amendment Rights and Political Activity 3.80
  - 3. Privacy 3.81
II. ACTIONS UNDER CALIFORNIA STATUTES
- A. Labor-Management Relations 3.82
- B. Agricultural Labor Relations Act 3.83
- C. Restraint of Trade Under Cartwright Act 3.84
- D. Use of State Funds for Anti-Union Activities 3.84A
- E. Timely Payment of Wages 3.85
  - 1. Collective Bargaining Agreements 3.86
  - 2. Wage Periods 3.87
  - 3. Vacation Benefits 3.88
  - 4. Meal and Rest Periods 3.88A
  - 5. Berman Hearing 3.89
  - 6. Enforcement 3.90
  - 7. Labor Code Private Attorneys General Act of 2004 3.90A
- F. Indemnity for Work-Related Expenses or Losses 3.91
- G. Illegal Termination of Employment 3.92
  - 1. Statutory Wrongful Termination Claims 3.93
  - 2. Public Employee Termination 3.94
  - 3. Damages for Wrongful Termination
    - a. Contract Damages 3.95
    - b. Tort Damages 3.96
  - 4. Exhaustion of Administrative Remedies 3.97
  - 5. Additional Damages Claims in Wrongful Termination Cases 3.98
  - 6. Privacy Rights 3.99
- H. Equal Pay, Minimum Wage, and Overtime Pay Provisions 3.100
- I. Miscellaneous Statutes
  - 1. Solicitation of Employees by Misrepresentation 3.101
  - 2. Misrepresentation Concerning Former Employee 3.102
  - 3. Interference With Employees’ Political Activities 3.103
  - 4. Commission Contracts by Out-of-State Employers 3.104
  - 5. Fair Employment and Housing Act Damages 3.105
III. DAMAGE AWARDS IN ARBITRATION UNDER COLLECTIVE BARGAINING AGREEMENTS
- A. Arbitration Favored by Courts 3.106
- B. Computation of Damages 3.107
- C. Union or Employee Grievances 3.108
- D. Employer Grievance: Violation of Express or Implied No-Strike Commitment 3.109

Landlord/Tenant

Myron Moskovitz

Diana D. Sam

I. SCOPE OF CHAPTER 4.1
II. AGREEMENT TO EXECUTE LEASE
- A. Prospective Landlord’s Breach
  - 1. Measure of Damages
    - a. General Damages 4.2
    - b. Special Damages 4.3
    - c. Attorney Fees 4.4
    - d. Exemplary Damages 4.5
    - e. Interest 4.6
  - 2. Burden of Proof 4.7
  - 3. Statute of Limitations 4.8
- B. Prospective Tenant’s Breach 4.9
III. LANDLORD’S BREACH
- A. Measure of Damages for Breach of Duty to Deliver Possession
  - 1. General Damages 4.10
  - 2. Proof of Rental Value 4.11
  - 3. Special Damages 4.12
  - 4. Attorney Fees; Interest; Exemplary Damages 4.13
- B. Breach of Covenant of Quiet Enjoyment
  - 1. What Constitutes Breach 4.14
  - 2. Measure of Damages
    - a. General Damages
      - (1) Actual or Constructive Eviction 4.15
      - (2) Interruption of Tenant’s Beneficial Enjoyment 4.16
    - b. Special Damages 4.17
    - c. Attorney Fees and Interest 4.18
    - d. Exemplary Damages 4.19
  - 3. Breach of Quiet Enjoyment as Tort 4.20
  - 4. Statute of Limitations 4.21
- C. Forcible Entry or Detainer
  - 1. Nature of Action 4.22
  - 2. Measure of Damages
    - a. General Damages 4.23
    - b. Special Damages 4.24
    - c. Exemplary Damages 4.25
    - d. Attorney Fees; Interest; Nominal Damages 4.26
  - 3. Statute of Limitations 4.27
- D. Breach of Lease Covenants
  - 1. Award of General and Special Damages 4.28
  - 2. Covenant Against Competition 4.29
  - 3. Covenant to Repair 4.30
  - 4. Covenant to Build 4.31
  - 5. Covenant to Pay for Improvements 4.32
  - 6. Attorney Fees; Exemplary Damages; Interest 4.33
  - 7. Landlord’s Defenses 4.34
- E. Breach of Statutory Duty to Repair
  - 1. Civil Code §§1941–1942 4.35
  - 2. Retaliatory Eviction 4.36
  - 3. Housing Codes 4.37
- F. Breach of Warranty of Habitability
  - 1. Availability of Damages 4.38
  - 2. Statutory Damages; Abatement 4.39
  - 3. General Damages
    - a. Difference in Value or Percentage Reduction 4.40
    - b. Discomfort and Annoyance 4.41
  - 4. Special Damages 4.42
  - 5. Punitive Damages 4.43
  - 6. Costs and Attorney Fees 4.44
- G. Disconnecting Utility Services 4.45
- H. Wrongful Withholding of Tenant’s Personal Property
  - 1. Tenant’s Remedies 4.46
  - 2. Statute of Limitations 4.47
- I. Landlord’s Violation of Local Rent Control Ordinance
  - 1. Damages for Rent Overcharges 4.48
  - 2. Damages for Unlawful Evictions 4.49
  - 3. Attorney Fees 4.50
  - 4. Liability of New Owner 4.51
- J. Security Deposits
  - 1. In General 4.52
  - 2. Landlord’s or Landlord Successor’s Retention of Deposit 4.53
  - 3. Attorney Fees and Interest 4.54
  - 4. Statute of Limitations 4.55
IV. TENANT’S BREACH
- A. Use of Property for Illegal Purposes
  - 1. Damages 4.56
  - 2. Statute of Limitations 4.57
- B. Use for Other Than Intended Purpose
  - 1. Obligation and Damages 4.58
  - 2. Statute of Limitations 4.59
- C. Waste
  - 1. Damages 4.60
  - 2. Statute of Limitations 4.61
- D. Breach of Statutory Duty to Repair 4.62
- E. Breach of Lease Covenants
  - 1. Damages for Breach 4.63
  - 2. Statute of Limitations 4.64
  - 3. Rent Covenant
    - a. Obligation and Damages 4.65
    - b. Interest 4.66
  - 4. Covenant to Remain in Business 4.67
  - 5. Covenant to Improve 4.68
  - 6. Covenant to Repair 4.69
  - 7. Covenant Against Assignment or Subletting 4.70
  - 8. Covenant to Surrender 4.71
  - 9. Covenant to Surrender in as Good Condition as Received 4.72
  - 10. Covenant to Pay Taxes 4.73
  - 11. Covenant to Insure 4.74
- F. Wrongful Removal of Fixtures
  - 1. General Damages 4.75
  - 2. Exemplary Damages 4.76
  - 3. Statute of Limitations 4.77
- G. Termination for Tenant’s Breach or Abandonment
  - 1. Definition of Abandonment 4.78
  - 2. Measure of Damages
    - a. Termination of Lease (CC §1951.2) 4.79
    - b. Continuation of Lease (CC §1951.4) 4.80
    - c. Liquidated Damages; Equitable Relief; Nonexclusivity of Remedies 4.81
    - d. Statute of Limitations 4.82
- H. Holding Over After Lease Expiration
  - 1. Election to Treat Tenant as Trespasser 4.83
  - 2. Holdover Tenant’s Liability to New Tenant 4.84
  - 3. Statute of Limitations 4.85
- I. Unlawful Detainer
  - 1. Back Rent 4.86
  - 2. Damages Caused by Unlawful Detainer 4.87
  - 3. Prejudgment Interest 4.88
  - 4. Costs
    - a. Awarded to Prevailing Party 4.89
    - b. Allowable Costs and Expenses 4.90
    - c. Procedure for Claiming Costs 4.91
    - d. Limitations on Costs 4.92
  - 5. Attorney Fees
    - a. Basis for Recovery 4.93
    - b. Determining Who Is Prevailing Party
      - (1) Party Recovering “Greater Relief” 4.94
      - (2) Effect of Dismissal 4.95
    - c. Limits on Recovery by Prevailing Party 4.96
    - d. Determining Amount of Fees 4.97
    - e. Fees for Services Before Complaint Filed 4.98
    - f. Award of Fees Against Successors in Interest 4.99
    - g. Attorney Fees on Appeal 4.100
    - h. Procedure for Claiming Fees 4.101
      - (1)  Basis of Award Governs Procedure
        
        (a)  Contractual Attorney Fees  4.102
        
        (b)  Statutory Attorney Fees  4.103
      - (2) Time Limits for Claiming Attorney Fees 4.104
    - i. Statute of Limitations 4.105
V. MISCELLANEOUS DAMAGE FACTORS
- A. Liquidated Damages 4.106
- B. Proof of Damages 4.107
- C. Mitigation 4.108
- D. Attorney Fees 4.109
- E. Expert Witness Fees 4.110
- F. Costs 4.111
- G. Certainty of Damages 4.112
- H. Nominal Damages 4.113
- I. Damages Nondischargeable in Bankruptcy 4.114

Injury to Property

Stephen L. R. McNichols

I. SCOPE OF CHAPTER 5.1
II. NUISANCE
- A. General Definition 5.2
- B. Nuisance Per Se 5.3
- C. Categories of Nuisance Under CC §3479 5.4
  - 1. Objective Standard Under CC §3479 5.5
  - 2. Balancing Equities Required Under CC §3479 5.6
  - 3. Exception for Activities Expressly Authorized by Statute 5.6A
- D. Public Nuisance
  - 1. Definition 5.7
  - 2. Standing 5.8
- E. Private Nuisance
  - 1. Definition 5.9
  - 2. Threat of Future Injury 5.10
  - 3. Blockage of Air, Light, or View 5.11
- F. Nuisance That Is Both Public and Private 5.12
- G. Distinction Between Temporary or Continuing Nuisances and Permanent Nuisances
  - 1. Importance of Classification for Selection of Remedies 5.13
  - 2. Factors 5.14
  - 3. Election by Plaintiff 5.15
  - 4. Courts’ Preference for Continuing Nuisance 5.16
III. TRESPASS
- A. Definition 5.17
- B. Distinction Between Nuisance and Trespass 5.18
IV. ENCROACHMENT 5.19
V. REMEDIES AND DAMAGES FOR PUBLIC NUISANCE 5.20
VI. DAMAGES AND OTHER REMEDIES FOR PRIVATE NUISANCE AND TRESPASS 5.21
- A. Equitable or Legal Action? 5.22
- B. Jurisdiction 5.23
- C. Venue 5.24
- D. Right to Self-Help 5.25
- E. Injunction 5.26
  - 1. Preliminary Injunction 5.26A
  - 2. Injunctive Relief for Nuisance and Trespass 5.26B
  - 3. Injunctive Relief for Encroachment 5.26C
- F. Tort Measure of Damages 5.27
  - 1. Continuing Nuisance 5.28
  - 2. Permanent Nuisance 5.29
  - 3. Continuing Trespass 5.30
  - 4. Permanent Trespass 5.31
- G. Injury to Products of Real Property 5.32
- H. Damage, Destruction, or Removal of Fixtures or Personal Property 5.33
- I. Injury to Persons 5.34
- J. Lost Profits 5.35
- K. Attorney Fees 5.36
- L. Prejudgment Interest 5.37
- M. Punitive Damages 5.38
- N. Statutory Limitations on Recovery 5.39
VII. DEFENSES
- A. Comparative Fault 5.40
- B. Statutes of Limitations and Repose
  - 1. Public Nuisance and Trespass 5.41
  - 2. Private Nuisance and Trespass 5.42
    - a. Permanent Nuisance and Trespass 5.43
    - b. Continuing Nuisance and Trespass 5.44
    - c. “Improvement” as Continuing Nuisance 5.44A
    - d. Special Rules for Pollution Cases 5.45
- C. Laches 5.46
- D. Coming to Nuisance 5.47
- E. Consent 5.48
- F. Balancing Equities 5.49
- G. Due Care 5.50
- H. Use Consistent With Applicable Zoning 5.51
- I. Separation of Powers and Statutory Immunity 5.52
- J. Scope of Injunction 5.53
VIII. RELATED ACTIONS 5.54

Intellectual Property Infringement and Misappropriation

Leo E. Lundberg, Jr.

Surjit P. Soni

I. PATENT INFRINGEMENT
- A. Statutory Basis for Damages and Statute of Limitations 6.1
- B. Lost Profits 6.2
  - 1. Requirement of Causation in Fact 6.3
  - 2. Panduit Causation Test 6.4
  - 3. Measure of Lost Profits 6.5
  - 4. Lost Profits for Patented Products 6.6
  - 5. Lost Profits for Unpatented Products 6.7
  - 6. Entire Market Value Rule 6.8
  - 7. Price Erosion Damages 6.9
  - 8. Absence of Established Royalty Rate 6.10
  - 9. Factors That Serve as Basis for Reasonable Royalty Rate 6.11
  - 10. Georgia-Pacific Factors 6.12
- C. Willful Infringement Damages 6.13
- D. Prejudgment Interest 6.14
- E. Attorney Fees 6.14A
II. COPYRIGHT INFRINGEMENT
- A. Statutory Basis for Damages and Statute of Limitations 6.15
- B. Actual Damages 6.16
  - 1. Loss in Value of Copyrighted Material 6.17
  - 2. Value of Use 6.18
  - 3. Plaintiff’s Lost Profits
    - a. Lost Revenue as Result of Infringement 6.19
    - b. Plaintiff’s Costs Must Be Deducted to Determine Lost Profits 6.20
- C. Defendant’s Profits 6.21
  - 1. Gross Revenues Attributable to Infringement 6.22
  - 2. Deductible Expenses 6.23
  - 3. Apportionment of Profits Between Infringing and Noninfringing Elements 6.24
- D. Statutory Damages 6.25
- E. Costs and Attorney Fees 6.26
- F. Prejudgment Interest 6.26A
- G. Damages Under Digital Millennium Copyright Act (DMCA) 6.27
- H. Illegality No Defense to Damages 6.27A
III. TRADEMARK INFRINGEMENT
- A. Lanham Act and Statute of Limitations 6.28
  - 1. Defendant’s Profits 6.29
  - 2. Plaintiff’s Damages 6.30
    - a. Treble Damages and Punitive Damages 6.31
    - b. Statutory Damages for Counterfeit Marks and for Violation of 15 USC §1125(d)(1) 6.31A
    - c. Prejudgment Interest and Attorney Fees 6.32
- B. California Trademark Law 6.33
IV. TRADE SECRET MISAPPROPRIATION AND STATUTE OF LIMITATIONS 6.34
- A. Actual Damages 6.35
- B. Unjust Enrichment 6.36
- C. Reasonable Royalty 6.37
- D. Punitive Damages 6.38
- E. Attorney Fees 6.39
V. REMEDIES FOR MISAPPROPRIATION UNDER OTHER COMMON LAW THEORIES
- A. Possible Preemption of Claims Not Based on CUTSA 6.39A
- B. Fraud (Deceit) Damages and Statute of Limitations 6.40
  - 1. Lost Profits as Additional or Consequential Damages for Nonfiduciary Claims 6.41
  - 2. Lost Profits for Claims Against Fiduciaries 6.42
- C. Conversion Damages and Statute of Limitations 6.43
- D. Restitution Based on Quasi-Contract/Unjust Enrichment 6.44
  - 1. General Measure of Restitution for Quasi-Contract/Unjust Enrichment 6.45
  - 2. Restitution for Lost Profits Attributable to Property 6.46
  - 3. Constructive Trust Remedy
    - a. Nature of Constructive Trust Remedy 6.47
    - b. Constructive Trust and Quasi-Contract Claims Based on Unjust Enrichment 6.48
    - c. Property Subject to Constructive Trust 6.49
VI. CHECKLIST: SUGGESTED DISCOVERY 6.50
VII. REQUIRED FACTUAL BASIS FOR OPINIONS OF EXPERTS
- A. Federal Rules of Evidence
  - 1. Permitted Basis for Expert’s Opinion 6.51
  - 2. Procedure for Establishing Foundation of Expert Testimony 6.52
  - 3. Application of Reliable Data Requirement 6.53
- B. California Evidence Code
  - 1. Permitted Basis for Expert’s Opinion 6.54
  - 2. Need to Establish Foundation 6.55
  - 3. Procedure for Establishing Foundation 6.56
  - 4. Application of Reliable Data Requirement 6.57
VIII. INSURANCE AS SOURCE FOR COLLECTION OF DAMAGES 6.57A

Tax Aspects

Robert W. Wood

I. IMPORTANCE OF TAX RULES IN TERMINATION OF LITIGATION
- A. Role of Taxation in Litigation 7.1
- B. Real Effects on Position of Parties 7.2
II. DISTINCTION BETWEEN SETTLEMENTS AND JUDGMENTS 7.3
- A. Reference to Underlying Claim: Origin of Claim 7.4
  - 1. Origin of Claim 7.5
  - 2. Sale or Exchange for Capital Treatment 7.6
- B. Lost Profits 7.7
- C. Harm to Capital Assets 7.8
- D. Involuntary Conversions 7.9
- E. Gain on Sale of Residence 7.10
- F. Reference to Basis of Capital Assets 7.11
- G. Goodwill 7.12
- H. Personal Physical Injuries 7.13
- I. Back Pay 7.14
III. CLASSIFYING OTHER RECOVERIES 7.15
- A. Income Subject to IRC §61 7.16
- B. Continued Reference to Underlying Claims 7.17
IV. RECOVERIES FOR BUSINESS INJURIES
- A. Lost Profits 7.18
- B. Damage to Goodwill and Other Capital Recoveries 7.19
- C. Timing of Income 7.20
- D. Distinction Between Business Injuries and Personal Injury Damages [Deleted] 7.21
V. CHARACTER OF PAYMENTS: REFERENCE TO UNDERLYING TRANSACTION 7.22
- A. Types of Lost Profit Recoveries 7.23
  - 1. Noncapital Recoveries 7.24
  - 2. Commission Income 7.25
  - 3. Income Versus Nontaxable Bequest 7.26
  - 4. Miscellaneous Lost Profit Recoveries 7.27
- B. Fraud, Misrepresentation, and Breach of Fiduciary Duty Claims
  - 1. Fraud Claims 7.28
  - 2. Breach of Fiduciary Duty Claims 7.29
  - 3. Securities Fraud in Reorganization 7.30
  - 4. Operation of Tax Benefit Rule 7.31
  - 5. Compensation for Damages Causing Additional Federal Income Tax 7.32
  - 6. Recovery for Breach of Covenant Not to Compete 7.33
  - 7. Patent Infringement Damages 7.34
  - 8. Discharge of Debt 7.35
VI. TAXATION OF VARIOUS BUSINESS RECOVERIES
- A. Recoveries Involving Stock 7.36
  - 1. Patent Infringement Actions 7.37
  - 2. Recoveries Under Liquidated Damages Provisions 7.38
- B. Miscellaneous Business Injuries
  - 1. Presumption of Lost Profits Recovery 7.39
  - 2. Recoveries Under Contract Rights 7.40
  - 3. Proving Capital Asset Status and Basis 7.41
  - 4. Allocating Among Claims 7.42
  - 5. IRA Contributions 7.43
  - 6. Involuntary Conversions 7.44
  - 7. Settlement Versus Judgment 7.45
  - 8. Cases Settling on Appeal 7.46
  - 9. Semantics and Other Issues Involving “Interest” 7.47
  - 10. Antitrust Recoveries 7.48
- C. Tax Treatment of Recovered Attorney Fees 7.49
  - 1. Contingent Fees Generally Income to Plaintiffs Under Banks 7.49A
  - 2. Fees Deductible in Certain Unlawful Discrimination Cases 7.49B
  - 3. Alternative Minimum Tax Considerations 7.49C
  - 4. Avoiding Fee Income and Seeking Deductions 7.49D

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Filing Instructions for California Attorney's Guide to Damages

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PRACTICE AREA	Civil Litigation & Torts
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California Attorney's Guide to Damages

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California Attorney's Guide to Damages

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