Opinion ID: 2054217
Heading Depth: 2
Heading Rank: 4

Heading: Relevance of Actual Damages During the Period Between Date of Breach and Trial

Text: As to the first question, there is no flaw in using actual damages for the period between breach and trial, without a discount, and then calculating the present value of future damages by discounting them only to the date of trial. Normally, any discounting for the earlier, actual damages period should be offset by crediting the lessor with interest to compensate for the pretrial period of delay in receiving the judgment. See Deakle, 756 F.2d at 833-34; In re Air Crash, 644 F.2d at 645-46; Taylor, 686 S.W.2d at 217. A wrongful death case helps explain why this is true. In In re Air Crash, the jury was instructed to calculate the present value of all damages as of the date of death, rather than as of the date of trial a year later, because the evidence gave life expectancy and income estimates as of the date of death. See In re Air Crash, 644 F.2d at 643. The court stressed, however, that the award would be unduly low without an adjustment for the delay between the date of death (as of when damages were ascertained) and the date of trial (when a recoverable judgment was entered). See id. at 644. The court accordingly concluded that, in order to adjust an award that represents `present value at date of death' when it is actually received at the date of judgment, the factfinder must add one year of `interest' to `present value of death' in order to reverse the extra year of discounting (assuming, as we do, that the `interest rate' and `discount rate' are the same). Id. The court continued: [T]he reasons for augmenting these pastlosses are exactly the same as those for discounting future losses.... [I]f it be only fair to discount sums paid now on account of future loss which would not be due until some years in the future, ..., it is, by the same token, inequitable not to make appropriate compensation for delay in discharging the obligation. Id. (quoting Moore-McCormack Lines, Inc. v. Richardson, 295 F.2d 583 (2d Cir.1961), cert. denied, 368 U.S. 989, 82 S.Ct. 606, 7 L.Ed.2d 526 (1962)); see Deakle, 756 F.2d at 833 (same). The Supreme Court has cited and applied the In re Air Crash analysis in an action for damages under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 904. See Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523, 103 S.Ct. 2541, 76 L.Ed.2d 768 (1983) (lost wages for permanent disability). The Court opined that, rather than calculating pretrial and post-trial damages separately in such cases, [i]t is both easier and more precise to discount the entire lost stream of earnings back to the date of injurythe moment from which earning capacity was impaired. The plaintiff may then be awarded interest on that discounted sum for the period between injury and judgment, in order to ensure that the award when invested will still be able to replicate the lost stream. Id. at 538 n. 22, 103 S.Ct. at 2551 n. 22 (citing In re Air Crash, 644 F.2d at 641-46); see Deakle, 756 F.2d at 833. [17] The United States Court of Appeals for the Eleventh Circuit, in Deakle, emphasized that, for the Supreme Court's approach in Pfeifer to work, the discount rate and the interest rate applied to the period between injury and judgment, should be the same. See Deakle, 756 F.2d at 833; In re Air Crash, 644 F.2d at 644 & n. 19. It follows from this case law that if damages are calculated from the date of injury or, as in the present case, from the date of breachreflecting a discount for the period before trial as well as for the period thereafter, that discounted value, in order to approximate actual damages, must be augmented by crediting the plaintiff with interest for the period between breach and trial (judgment); otherwise, there will be no compensation for the delay in receiving damages for that pretrial-period. Because the interest rate theoretically should be the same as the discount rate, see In re Air Crash, 644 F.2d at 644, those two factors, once applied, cancel each other out. [18] Accordinglywith one significant exceptionthe result of calculating total damages from the date of breach, as § 12.4 requires, see supra note 12, will be the same as if the factfinder calculated actual damages, without a discount, for the period from breach to trial, and then calculated future damages discounted to the trial date. The exception is this: If actual market conditions during the period between breach and trial materially differ from those used to calculate damages as of the date of breach, actual and estimated damages may significantly differ for that perioda possibility to which we now turn.