It’s always the plaintiff’s burden to establish its damages by competent evidence. A court will not presume that damage exists.
This principle was on display recently in Espenschied Transport Corp. v. Fleetwood Servs., Inc., 2018 UT 32. In this case, a truck owned by Espenschied struck and killed Kimball Herrod. Espenschied thought it was covered by insurance. It wasn’t. Espenschied’s insurance broker (Fleetwood) had failed to list the offending truck on the necessary schedule, even though Espenschied had asked it to do so. Id. ¶ 5. Herrod sued Espenschied, and eventually settled. Under the settlement, Espenschied stipulated to entry of a $1.1 million judgment and assigned to Herrod its rights to sue and collect from Fleetwood for breach of contract and negligence in failing to follow its instruction to list the truck on the schedule. They did this because Espenschied was defunct with no assets other than its claims against Fleetwood. Id. ¶¶ 6-7.
But, when Espenschied (represented by Herrod’s attorneys) sued Fleetwood, the case failed. “[T]he district court determined that Espenschied had suffered no actual damages” because Fleetwood was, “at most, a contract breacher and would only be obligated to pay what Espenschied actually had to pay which was zero dollars.” Id. ¶ 8 (quotation simplified). On appeal, Espenschied argued out that entry of the $1.1 million judgment against it was damage—notwithstanding that it had no assets and could never pay down the judgment. The Utah Supreme Court affirmed the district court and rejected Espenschied’s argument, explaining:
[E]ntry of the judgment itself may constitute real harm for which an insurance agent or broker may be held liable. See Steele v. Hartford Fire Ins. Co., 788 F.2d 441, 450 (7th Cir. 1986) (“[E]ven an unexecuted judgment can cause an injury, present or future, that can be monetized.”). But this real damage does not exist in a vacuum, and we will not presume it exists. Instead, it is up to the plaintiff to establish that it has suffered harm that can be monetized, such as harm to its credit rating or reputation, loss of business opportunities, or even being forced into bankruptcy.
Id., ¶28.
This is another reminder that if you’re going to sue for damages, you have to be able to show that damage exists.
David Tufts