Texas insurance lawyers have to read the recent Texas Supreme Court case, J&D Towing, LLC v. American Alternative Insurance Corporation. The facts are set out in the March 3 writing. This is an appeal from the Waco Court of Appeals.
The Court starts out: We begin with first principles. Compensation is the chief purpose of damages awards in tort cases. Indeed, we have long held that the basic reason underlying rules for the ascertainment of damages for any tortious act is a fair, reasonable, and proper compensation for the injury inflicted as a proximate result of the wrongful act complained of. Reasonable and proper compensation must be neither meager nor excessive, but must be sufficient to place the plaintiff in the position in which he would have been absent the defendant’s tortious act. In this way, compensation through actual-damages awards functions as an instrument of corrective justice, an effort to put the plaintiff in his or her rightful position.
Actual damages must be either direct or consequential. Direct damages compensate for a loss that is the necessary and usual result of the tortious act. By contrast, consequential damages, also known as special damages, compensate for a loss that results naturally, but not necessarily, from the tortious act. Although consequential damages need not flow from the act, they must be both forseeable and directly traceable to the act. If the purported consequential damages are too remote, too uncertain, or purely conjectural, they cannot be recovered.