Opinion ID: 3132420
Heading Depth: 3
Heading Rank: 1

Heading: $900,000 Developer’s Fee

Text: The FHA provides that “if the court finds that a discriminatory housing practice has occurred or is about to occur, the court may award to the plaintiff actual and punitive damages.” 42 U.S.C. § 3613(c). The Supreme Court has recognized that a claim for damages brought pursuant to the FHA “sounds basically in tort—the statute merely defines a new legal duty, and authorizes courts to compensate a plaintiff for the injury caused by the defendant’s wrongful breach.” Curtis v. Loether, 415 U.S. 189, 195 (1974); see Meyer v. Holley, 537 U.S. 280, 285 (2003) (“This Court has noted that an action brought for compensation by a victim of housing discrimination is, in effect, a tort action.”). As a result, general tort principles govern the award and calculation of damages in FHA cases. See Meyer, 537 U.S. at 285 (“[T]he [Supreme] Court has assumed that, when Congress creates a tort action, it legislates against a legal background of ordinary tort-related . . . rules and consequently intends its legislation to incorporate those rules.”); Samaritan Inns v. District of Columbia, 114 F.3d 1227, 1234 (D.C. Cir. 1997) (analogizing to general tort principles with respect to an FHA claim for damages brought by a developer). Under general tort principles, compensatory damages are designed to place the plaintiff in a position substantially equivalent to the one that he would have enjoyed had no tort been committed. See Restatement (Second) of Torts § 903, cmt. a (1977); see also Harris v. Standard Accident & Ins. Co., 297 F.2d 627, 631–32 (2d Cir. 1961) (law of torts generally “attempts to put the plaintiff in a position as nearly as possible equivalent to his position 29 12-3775-cv(L) The Anderson Group v. City of Saratoga Springs before the tort”). Because compensatory damages are “intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant’s wrongful conduct,” Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001), courts will not permit recovery when the connection between the claimed loss and the tortious act is speculative or uncertain, see Restatement (Second) Torts § 912, cmt. a (“[T]he recovery of damages for a particular harm is dependent upon proof that the harm occurred as the result of the tortious conduct, and normally the plaintiff can recover damages for the harm only by proving this with the same degree of certainty as that required in proving the existence of the cause of action.”); accord Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 466–67 (2006) (Thomas, J., concurring) (“[T]o recover, a plaintiff must show . . . that the specific pecuniary advantages, the loss of which is alleged as damages, would have resulted, and, therefore, that the act complained of prevented them.” (internal quotation marks omitted)). The seminal case on the issue of speculative damages is Story Parchment Co. v. Patterson Parchment Paper Co., 282 U.S. 555 (1931). There, the Supreme Court articulated a “clear distinction between the measure of proof necessary to establish the fact that [a plaintiff] had sustained some damage, and the measure of proof necessary to enable the jury to fix the amount.” Id. at 562. As to the former, a plaintiff may not recover when “it is uncertain whether such damages resulted necessarily and immediately from the breach complained of.” Id. at 562–63 (internal quotation marks omitted). In other words, the plaintiff bears the burden of showing that the claimed damages are the “certain result of the wrong.” Id. at 562. Once the plaintiff meets this burden, the defendant then bears the risk of uncertainty as to the amount of damages. See id. at 563 (When the tort “is of such a nature as to 30 12-3775-cv(L) The Anderson Group v. City of Saratoga Springs preclude the ascertainment of the amount of damages with certainty, . . . while the damages may not be determined by mere speculation or guess, it will be enough if the evidence show[s] the extent of the damages as a matter of just and reasonable inference, although the result be only approximate.”); see also Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264–65 (1946); Simon v. New Haven Board & Carton Co., 516 F.2d 303, 306 (2d Cir. 1975); Robert Dunn, Recovery of Damages for Lost Profits § 1.3, at 11 (4th ed. 1992) (“While the proof of the fact of damages must be certain, proof of the amount can be an estimate, uncertain or inexact.”). With these principles in mind, we turn to the evidence presented at trial. TAG argues that Willard Anderson’s “uncontroverted testimony” during the 2010 trial established that it “would have received $900,000 in developer’s fees if it had been able to develop the [Spring Run Village]” and that the City’s conduct caused it to lose the opportunity to earn those fees. TAG Reply at 16, 19. Willard Anderson, who was responsible for securing financing for Spring Run Village, testified that most of the financing for the project would have come from “conventional” sources but that financing the affordable housing portion of the project was “somewhat complicated.” Trial Tr. 184. As a result, TAG had been speaking with a consultant named Chris Betts “to determine what [it] need[ed] to apply for lowincome tax credits.” Trial Tr. 184, 186–87. According to Anderson, Betts “anticipated” that TAG would receive a $900,000 developer’s fee from the New York Division of Housing and Community Renewal (“DHCR”) as “part of th[e] tax credit process.” Trial Tr. 442. Anderson knew that the DHCR used a “competitive process” to award the tax credits, but beyond that had only a limited understanding of the contours of that process. 31 12-3775-cv(L) The Anderson Group v. City of Saratoga Springs Trial Tr. 185, 442. It was his “understanding,” based on his conversations with Betts and the DHCR personnel, that TAG had a “good chance of being funded within the next two cycles.” Trial Tr. 369–70. Although he did not know what percentage of applicants succeeded in being awarded tax credits or have any statistics on the “ratio between applications . . . and the actual awarding of tax credits,” Anderson knew that there were “not an awful lot of these [affordable housing] projects” in Saratoga County and that DHCR was “excited about doing a project with Saratoga County.” Trial Tr. 370. As of December 2004, TAG had not formally retained Betts as a consultant or entered into an agreement with Gail Anderson to purchase the land where Spring Run Village was to be located. Trial Tr. 318, 368–69, 443. It also had not applied for the tax credits because it was “in the process of hiring somebody to do a market study, which is one of the requirements under that program.” Trial Tr. 443. Even fully crediting Anderson’s testimony, and viewing that testimony in the light most favorable to TAG, the company failed to demonstrate that the lost fee was the “certain result” of the City’s actions. Our decision in Casella v. Equifax Credit Information Services, 56 F.3d 469 (2d Cir. 1995), which addressed a comparably speculative claim for lost opportunity damages, is illustrative. In that case, the appellant claimed that he “lost the opportunity to take advantage of low mortgage interest rates and low housing prices prevailing during the period” when the defendant’s erroneous report affected his credit score. See id. at 475. In support of this claim, the appellant introduced evidence that he was “actively seeking to purchase a home” and “had sufficient resources” to obtain a mortgage during the relevant period. Id. He did not, however, actually apply for a mortgage or make an offer to purchase 32 12-3775-cv(L) The Anderson Group v. City of Saratoga Springs a home during this time. Id. We held that “in the absence of any evidence that appellant made an offer to purchase property or applied for a home mortgage, the ‘lost opportunity’ damages he alleged were too speculative.” Id. So too here. Although TAG introduced evidence that it was actively preparing to apply for the tax credits under which it may have received the developer’s fee, its failure actually to apply for those credits or even contract for the purchase of Gail Anderson’s land is fatal to its recovery of damages for the “lost opportunity” to obtain the developer’s fee. A survey of similar claims for lost opportunity damages bears out our conclusion. The closest analog we could discover to TAG’s claim that it lost the opportunity to receive the fruits of competitive process are claims brought by contractors seeking damages for lost opportunities to bid on future contracts-claims, which are generally disfavored absent some evidence that the contracts would in fact have been awarded had the plaintiffs been able to bid. Compare Matson Plastering Co. v. Plasterers & Shophands Local No. 66, 852 F.2d 1200, 1203 (9th Cir. 1988) (stating that “courts that have considered the issue of lost profits resulting from the lost opportunity to bid on subsequent contracts have found proof of damages too speculative and uncertain”), and Collier v. Hoisting & Portable Engineers Local Union No. 101, 761 F.3d 600, 603 (10th Cir. 1985) (“[T]he proof of damages [for the lost opportunity to bid on future jobs] was speculative at best in the absence of any effort on the part of plaintiff to obtain any jobs.”), with Fid. Interior Constr., Inc. v. Southeastern Carpenters Reg’l Council of the United Bhd. of Carpenters and Joiners of Am., 675 F.3d 1250, 1265 (11th Cir. 2012) (holding that the plaintiff proved the fact that it was damaged by the lost opportunity to bid on future contracts by introducing evidence that contractors “would have continued to award [the 33 12-3775-cv(L) The Anderson Group v. City of Saratoga Springs plaintiff] work absent the fear of [union] pickets”). Similarly, although Anderson testified in this case that there was a “good chance” TAG would have been awarded the developer’s fee, courts in FHA cases have declined to rely on similar nonspecific predictions to award damages. See, e.g., Silver Stage Partners, LTD v. City of Desert Hot Springs, 251 F.3d 814, 823–24 (9th Cir. 2001) (upholding a district court decision that damages based on an expert’s predicted future change in the applicable tax rate were “too speculative”). Finally, the single FHA case we could locate in which a developer claimed it was injured by the lost opportunity to be considered for an award of discretionary government subsidies rejected that claim as “too speculative to serve as a basis for monetary relief.” Atkins v. Robinson, 545 F. Supp. 852, 889 (E.D. Va. 1982), aff’d 733 F.2d 318 (4th Cir. 1984).