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Chancery Clarifies Distinction Between General and Special Damages

By Francis G.X. Pileggi

Pharmaceutical Produce Development, Inc. v. TVM Life Science Ventures VI, L.P., C.A. No. 5688-VCS (Del. Ch. Feb. 16, 2011).

Short Overview
This is a somewhat unremarkable decision involving alleged breaches of contract and fraud--except for its clarification of the distinction between "general damages" and "special damages".

Noteworthy Legal Analysis
The parts of this 18-page decision that make it noteworthy are the helpful discussions that clarify the differences between  and among 'general damages' as compared to 'special damages' and consequential damages.

In connection with denying a motion to dismiss, the Court cites to several treatises and many court decisions from several jurisdictions to address the claim that certain of the damages that were sought in the complaint were barred by the terms of an agreement between the parties.  After explaining the essential differences between general and special damages, the Court concluded that 'the parties and the authorities seem to agree that consequential and special damages are in large part synonymous.'  See footnotes 41 through 45.

The Court also quoted from a Judge Cardozo opinion which explained that:  'At the root of the problem is the distinction between general and special damages as it has been developed in our law.  There is a need to keep in mind that the distinction is not absolute, but relative.  To put it in other words, damage which is general in relation to a contract of one kind may be classified as special in relation to another.'  See footnote 47.

The bottom line is that at the early stage of the proceedings, the Court explained that it was inappropriate to make a dispositive categorization of alleged damages on a motion to dismiss, on the rational basis that 'it would not be expected that the pleadings would set forth the amount of information necessary to formulate nice opinions on such issue.'  Rather, the pleadings are merely required to provide sufficient notice as to the damages that are being claimed, as opposed to distinguishing between various classifications of damages.

 

Full post as published by Delaware Corporate and Commercial Litigation Blog on March 01, 2011 (boomark / email).