A claim for legal malpractice has been made, and damages in a commercial setting are alleged. How does one prove them, what are the rules and what is the difference between general and consequential damages? In Electron Trading LLC v Perkins Coie LLP 2019 NY Slip Op 33019(U) October 9, 2019
Supreme Court, New York County Docket Number: 652178/2018 Judge O. Peter Sherwood gives an explanation.
“The law in New York is well settled that in order to obtain lost profits for breach of contract, plaintiff must prove the extent of such damages “with a reasonable degree of certainty” Calif Dairies, Inc. v Penn Station News Corp., 262 AD 2d 193, 194 (1st Dept 1999). However, as Electron argues, there is a distinction to be made between (1) lost profits that are general damages
and (2) lost profits that are consequential or special damages (see, e.g. Am List Corp. v US. News & World Rpt., Inc., 75 NY 2d 38, 42 ). In the former case (which Electron claims is properly pleaded here), such damages may be recovered so long as plaintiff demonstrates a sable foundation
for a reasonable estimate. In the latter case (which defendants assert applies), consequential damages must be demonstrated with reasonable certainty. Electron also argues that it has sufficiently pleaded that it could have recovered lost profits even as consequential damages.
“A party may not recover damages for loss profits unless they were within the contemplation of the parties at the time the contract was entered into and are capable of measurement with reasonable certainty” Ashland Mgt. Inc. v Janien, 82 NY2d 395, 403 (1993). The first requirement is a rule of foreseeability (see id). The second requirement “does not require
absolute certainty … It requires only that damages be capable of measurement based upon known reliable factors without undue speculation” id “[I]n the case of a new business seeking to recover
loss of future profits [as here], a stricter standard is imposed because there is no experience from which lost profits may be estimated with reasonable certainly and other methods of evaluation may be too speculative” id, at 404. ”