Uncertain quantum of damages / New York Law / Application of the uncertainty and restitution doctrines / Inflation adjustment, no/ Interest, yes / Starting point / Interest rate.

'An additional legal doctrine cuts across our deliberation. The fact that the quantum of damages is uncertain does not necessarily dictate their denial. Western Geophysical v. Bolt Associates, 584 F. 2d 1164 (2d Cir.1978). Corbin (Contracts, vol. 5 Sections 992, et seq.) describes the difficulties encountered in determining the damages to be awarded for breach of contract in these Terms:

"The position that one would have occupied if history had been different is purely hypothetical. And yet that is the problem that the trial court and jury are required to solve." (§ 992)

The doctrine of "uncertainty" is considered in Berly Industries v. City of New York, 412 N.Y.S. 2d 589 (1978), and also in MCI Communications Corp. v. ATT, 708 F. 2d 1081 (7th Cir. 1983), where the Court stated:

"Since the Supreme Court has been willing to accept a degree of uncertainty in the calculation of damages, strict proof of what damages have been caused by which acts, has not been required." (p. 1161)

A further legal principle is discussed by L.L. Fuller and William R. Purdue, Jr., in 46 Yale Law Journal (p. 52 et seq.). The doctrine of "restitution" is phrased in Terms of the "value" the plaintiff has conferred upon the Defendant which is nullified by the latter's failure to perform his promised obligation:

"The Court may force the defendant to disgorge the value he received from the plaintiff: The object here may be termed the prevention of gain by the defaulting promisor at the expense of the promisee."

With respect to the distinction between "damages" and "restitution", Corbin states:

"It must not be supposed that in its application by the courts it is always obvious and distinct. Like all other human classifications and borderlines this one is often wavering and blurred." (§ 996)

The restitution concept is embodied in the Restatement on Contracts (N°. 344) which speaks of the plaintiffs "restitution interest" in having restored "to him any benefit that he has conferred on the other party." This measure of damages, however, definitely excludes any compensation for "lost profits" or "expectancy of gain" which, in comprehensive detail, are analyzed in the affidavits of ..., introduced by Claimant.

All in all, the combined guidance of the relevant legal principles, applied in the context of the equitable nature of the norms which govern our task, lead us to conclude that Claimant is entitled to the "restitution" of its May 1979 investment of $X million, without adjustment for inflation over the past ten years, but with interest from the date of the final breach of fiduciary obligations by Defendant on... March 1985. The 1979 dividend of $..., received by Claimant must, for reasons of evident logic and equity, be deducted from the $X million. The net restitution figure is $Y.

Although New York law awards interest of 9% for violations post 25 June 1981, it further stipulates that this statutory provision is not binding in actions of an equitable nature. CPLR sec. 5001. See also, Branson & Wallace, 28 Virginia Journal of International Law (p. 919, et seq.). We exercise the discretion granted by law by establishing an interest rate of 12% per annum, annually compounded.'