California Civil Jury Instructions (CACI)
1922. Seller's Damages for Sale or Exchange of Property
If you decide that [name of plaintiff] has proved [his/her/its] claim against [name of defendant], you also must decide how much money will reasonably compensate [name of plaintiff] for the harm. This compensation is called “damages.”
[Name of plaintiff] must prove the amount of [his/her/its] damages. However, [name of plaintiff] does not have to prove the exact amount of damages that will provide reasonable compensation for the harm. You must not speculate or guess in awarding damages.
The following are the specific items of damages claimed by [name of plaintiff]:
1. The difference between the fair market value of the property at the time of sale and [the amount that [name of plaintiff] received] [or] [the fair market value of what [name of plaintiff] received in exchange for the property];
2. Amounts that [name of plaintiff] reasonably spent in reliance on [name of defendant]’s [false representation/failure to disclose/promise] if those amounts would not otherwise have been spent in the sale or exchange of the property;
3. Loss of use and enjoyment of the property from [insert beginning date] to [insert end date], to the extent that [name of defendant]’s [false representation/failure to disclose/promise] was a substantial factor in causing that loss of use and enjoyment of the property;
4. Profits or other gains from [insert beginning date] to [insert end date], that [name of plaintiff] might reasonably have earned by use of the property if [he/she] had kept it; and
5. Any additional damage arising from the particular transaction.
Directions for Use
This instruction should be tailored to fit the facts and evidence in the particular case: “If the seller parts with title and elects to forego his right of rescission and sue for damages only, then of course subdivisions (a)(2) and (a)(3) of section 3343 do not apply and should not be given by the trial court (unless, as here, the contract itself creates such rights). In each case in which a seller of property is defrauded by a buyer, the trial court will have to examine the circumstances of the particular case and decide whether the questioned portions of section 3343 do or do not apply.” (Channell v. Anthony (1976) 58 Cal.App.3d 290, 317 [129 Cal.Rptr. 704].)
The first element of this instruction should be modified in cases involving promissory fraud: “In cases of promissory fraud, the damages are measured by market value as of the date the promise was breached because that is the date when the damage occurred.” (Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 145—146 [135 Cal.Rptr. 802].)
For an instruction on lost profits, see CACI No. 3903N, Lost Profits (Economic Damage).
Sources and Authority
- Civil Code section 3343 provides:
(a) One defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction, including any of the following:
(1) Amounts actually and reasonably expended in reliance upon the fraud.
(2) An amount which would compensate the defrauded party for loss of use and enjoyment of the property to the extent that any such loss was proximately caused by the fraud.
(3) Where the defrauded party has been induced by reason of the fraud to sell or otherwise part with the property in question, an amount which will compensate him for profits or other gains which might reasonably have been earned by use of the property had he retained it.
(4) Where the defrauded party has been induced by reason of the fraud to purchase or otherwise acquire the property in question, an amount which will compensate him for any loss of profits or other gains which were reasonably anticipated and would have been earned by him from the use or sale of the property had it possessed the characteristics fraudulently attributed to it by the party committing the fraud, provided that lost profits from the use or sale of the property shall be recoverable only if and only to the extent that all of the following apply:
(i) The defrauded party acquired the property for the purpose of using or reselling it for a profit.
(ii) The defrauded party reasonably relied on the fraud in entering into the transaction and in anticipating profits from the subsequent use or sale of the property.
(iii) Any loss of profits for which damages are sought under this paragraph have been proximately caused by the fraud and the defrauded party’s reliance on it.
(b) Nothing in this section shall do either of the following:
(1) Permit the defrauded person to recover any amount measured by the difference between the value of property as represented and the actual value thereof.
(2) Deny to any person having a cause of action for fraud or deceit any legal or equitable remedies to which such person may be entitled.
- “As they apply to damages for fraud, subdivisions (a)(2) and (a)(3) of section 3343 are limited to recovery of damages by sellers of real property, while subdivision (a)(4) deals with purchasers of real property.” (Channell, supra, 58 Cal.App.3d at p. 309, footnote omitted.)
- “Before 1935 the California courts had no statutory mandate on the measure of damages for fraud. While the ‘benefit of the bargain’ measure of damages was generally employed, on occasion California courts sometimes applied the ‘out of pocket’ rule when the ‘loss of bargain’ rule was difficult to apply or would work a hardship on plaintiff or defendant.” (Channell, supra, 58 Cal.App.3d at p. 309, footnote omitted.)
- “The 1971 amendment to section 3343 took the form of an addition to the ‘out of pocket’ rule. The statute had previously permitted recovery of ‘additional damages,’ but the 1971 amendment enumerated specific types of consequential damages which are included within the term ‘additional damages.’ ” (Channell, supra, 58 Cal.App.3d at p. 312, footnote omitted.)
- “[T]he legislature clearly ruled out by the 1971 amendment any recovery of damages for fraud measured by the traditional ‘loss of bargain’ formula.” (Channell, supra, 58 Cal.App.3d at p. 313, footnote omitted.)
- “[O]ut of pocket” loss under section 3343 is “the difference between what [plaintiffs] received for their property and the fair market value of the same at the time of the transfer.” (Channell, supra, 58 Cal.App.3d at p. 314.)
- “[N]othing in section 3343 as amended . . . requires that a plaintiff show ‘out-of-pocket’ loss (i.e., an amount by which the consideration paid exceeded the value of the property received) in order to be entitled to any recovery for fraud in a property transaction.” (Stout v. Turney (1978) 22 Cal.3d 718, 730 [150 Cal.Rptr. 637, 586 P.2d 1228].)
- “In the absence of a fiduciary relationship, section 3343 governs the measure of damages in fraudulent property transactions.” (Croeni v. Goldstein (1994) 21 Cal.App.4th 754, 759 [26 Cal.Rptr.2d 412].)
- “In the case of a seller . . . the defrauded victim is entitled to recover not only the difference between the actual value of that with which he parted and the actual value of that which he received (out-of-pocket) but also any additional damage arising from the particular transaction including any of the following: 1. amounts expended in reliance upon the fraud; 2. amounts compensating for loss of use and enjoyment of the property due to the fraud; and 3. an amount which would compensate him for the profits or other gains by the use of the property had he retained it.” (Channell, supra, 58 Cal.App.3d at p. 312, internal citation omitted.)
- “What that time span [for damages for lost use and lost profits] should be would be determined by the peculiar circumstances of the particular case before the court and should present no insurmountable difficulty for a court in fixing a reasonable period contemplated by the statute.” (Channell, supra, 58 Cal.App.3d at p. 317, footnote omitted.)
- “To recover damages for fraud, a plaintiff must have sustained damages proximately caused by the misrepresentation. A damage award for fraud will be reversed where the injury is not related to the misrepresentation.” (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1252 [1 Cal.Rptr.2d 301], internal citations omitted.)
- “Mental distress is not an element of damages allowable under Civil Code section 3343.” (Channell, supra, 58 Cal.App.3d at p. 315, internal citations omitted.)
6 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 1714—1716
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.23 (Matthew Bender)
23 California Forms of Pleading and Practice, Ch. 269, Fraud and Deceit (Matthew Bender)
10 California Points and Authorities, Ch. 105, Fraud and Deceit (Matthew Bender)