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Overgaard v. Johnson

Court of Appeal of California, Fifth Appellate District

March 31, 1977

Civ. No. 2773

Opinion

 [*822]  [**413]   Appellant Flaming, a real estate salesman employed by appellant Johnson, a real estate broker, negligently failed to notify the  [*823]  Donnys, buyers of farm property in Madera that the property being purchased from the respondents Overgaard contained less vineyard acreage than that stated in the sales documents. The buyers subsequently recovered damages in the sum of $ 29,000 from respondent Overgaard, the sum apparently being the difference between the sales price and the market price of the property being sold. Respondent in this case sued the appellants for negligence seeking the entire $ 29,000 plus attorney fees and costs incurred in the Donny/Overgaard suit. The trial judge found appellants to have been negligent [***2]  and awarded damages in the amount sought. The facts are not contested. Appellants concede that the trial court did not err in the finding of negligence, but contend that damages should be limited to attorney fees and costs incurred in the Donny/Overgaard suit. CA(1a)(1a) The trial judge determined the measure of damages to be the benefit of the bargain. Both parties agree that the proper measure of damages is Civil Code section 3333, but disagree as to what measure of damages is provided by that code section. 1

Part of the difficulty in analysis of the law in this type of case arises out of a veritable gallimaufry of confusing rules gleaned from different types of actions. Some of these cases are based on contract,  [***3]  others on fraud (actual or constructive) and still others on unjust enrichment (disgorging of secret profits). The rules of these cases are then misinterpreted or applied to inappropriate fact situations. As hereinafter discussed the Use Note to BAJI No. 12.57 contributes to the disarray. We often look upon the out of pocket rule and the benefit of the bargain rule as being the sole antagonists on the battlefield of damages when at times neither is truly applicable. Consequently, it is easily understood how a trial judge could use an incorrect measure of damages.

To avoid confusion, it may be useful to define the two terms. "] Benefit of the bargain" is the difference between the actual value of what plaintiff has received and that which he expected to receive. "] Out of pocket" is the difference between the actual value received and the actual value conveyed. (See BAJI Nos. 12.56 and 12.57 (5th ed. 1975 pocket pt.) pp. 128-131.)

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68 Cal. App. 3d 821 *; 137 Cal. Rptr. 412 **; 1977 Cal. App. LEXIS 1368 ***

SHIRLEY LOUISE OVERGAARD et al., Plaintiffs and Respondents, v. BRUCE B. JOHNSON et al., Defendants and Appellants

Prior History:  [***1]  Superior Court of Fresno County, No. 163500, Hollis G. Best, Judge.

Disposition: The judgment is reversed and the matter is remanded for retrial on the issue of damages.

CORE TERMS

damages, benefit of the bargain, cases, measure of damages, fiduciary, stock, actual value, trial court, trial judge, broker

Torts, Negligence, General Overview, Contracts Law, Types of Damages, Compensatory Damages, Real Property Law, Brokers, Discipline, Licensing & Regulation, Contract Interpretation, Fiduciary Responsibilities, Governments, Fiduciaries, Breach, Affirmative Defenses, Fraud & Misrepresentation, Intentional Torts, Breach of Fiduciary Duty, Remedies, Damages, Civil Procedure, Appeals, Reviewability of Lower Court Decisions, Preservation for Review, Negligent Misrepresentation