Speculative Damages in Small Claims

[mo42186]

You would have to cite about the wordiest statute out there. There are a lot of issues within that statute.

The bank is not liable for the lien. It's that simple. They had no obligation to disclose it to you as they are not the seller and they are not liable for the lien. There is nothing certain that they even knew of the lien. That was the obligation of the seller to disclose. If the mold wasn't discovered, how do you know they wouldn't have walked up and said: btw, has your agent told you there is a $2k lien that is yours to pay or accept? Then what would you have said?

How do you know they were not aware of the lien, or at least the amount of the lien, until the closing agent started calling around getting figures for closing?

bottom line; unless the bank contractually agreed to pay that lien, it was not theirs to pay. While you argue they had that $2k in the original purchase agreement, it doesn't appear you have anything other than speculation to support that. Even it is was, since it was not their obligation to pay, they simply decided they weren't going to cover it in the new contract.

where is your agent in all of this? or are you going it alone?

Going at this Solo.

 

[justalayman]

Going at this Solo.

that explains a lot.



and be my guest to sue them in small claims court. You do realize that the bank must use a lawyer to represent them, right? Are you going to allow a lawyer to represent them in small claims court? If not, plan on stepping up the ladder to a higher court where you will be expected to comport with the rules of that court. So, unless you are comfortable there, it's time to hire a lawyer. If that happens, you are not in the hole with your suit, even if you win.

Let us know what happens.

 

[mo42186]

that explains a lot.



and be my guest to sue them in small claims court. You do realize that the bank must use a lawyer to represent them, right? Are you going to allow a lawyer to represent them in small claims court? If not, plan on stepping up the ladder to a higher court where you will be expected to comport with the rules of that court. So, unless you are comfortable there, it's time to hire a lawyer. If that happens, you are not in the hole with your suit, even if you win.

Let us know what happens.

One of the ideas behind small claims court is that they cannot get attorney's fees if they win. I'm looking forward to mediation and the hearing. Arguing my case against a lawyer doesn't intimidate me. If nothing else, I create a nuisance to them and eat away at their profits by having BoA send attorneys to a small claims court. I know this case inside and out and believe I can effectively advocate the position that I was unjustly dealt with.

I hope I have some good news to report back in a few weeks.

 

[OHRoadwarrior]

BofA has attorneys on staff who will view this as a break from the monotony of their job. Similar to recess.

 

[justalayman]

You misinterpret what the pre-existing duty rule is. The pre-existing duty rule is what allows the bank to accept whatever they want, as you said earlier. Now, the mortgagor is short the funds and is selling it for less (say, $66k).

No, you misinterpret the pre-existing duty rule. It is not what allows the bank to accept whatever they want. That has nothing to do with it. The pre-existing duty rule would prevent the bank from requiring the current owner from having to pay back more than (using your number) $200k to obtain a release of the security interest on the home. It has nothing to do with you and it is not what allows them to accept whatever they want. It just doesn't apply here at all.

Hence, the pre-existing duty to PAY THE BANK, still exists and me as a short sale buyer am only performing a pre-existing duty passed to me by the mortgagor.

Oh, that's where your huge mistake came in. You are not a successor in contract. Never was. Never will be unless you are assuming the current mortgage loan. Are you assuming the current mortgage loan?

and then, if you go with Tranquility's suggestion of misrepresentation;

what was the banks duty to disclose the lien to you? None that I can see since 1. they are not the owner and 2. they are not liable for the lien. You could actually accept the lien intact. So, did they ever represent they would pay all outstanding liens or encumbrances? If not, there is no false representation.


either accept it as offered or walk away. You won't get anything in court other than the realization of what it feels like to have your ass handed to you. You will lose.

 

[latigo]

What is the name of your state (only U.S. law)? Las Vegas, NV

Hi. Do small courts in NV award speculative damages? Situation:

Entered into contract with seller for short sale of property in Las Vegas. Original price to be $66k. Bank accepted and set their bottom line to be $57k (it's common for the lender to receive less than the contract amount due to the extra costs associated with closing or paying off 2nd liens in short sales / distressed real estate). We did our due diligence and then found mold in the house. We negotiated the price down to $64k and the bank accepted. However, their bottom line went UP to $59k, which is counter-intuitive because they are receiving less total proceeds. We proceed thinking that we're only going to have to come out of pocket $64k regardless. The day before closing, Bank tells us that there is an extra $2k home owners association lien on the property that they will NOT pay and would make us come up with the money or else the transaction would fall apart. We refused. They were just trying to get an additional $2k out of us by allocating to us the lien they originally embedded in the $66k sale price.

We are trying to sue for speculative damages in small claims court for the difference in a successful close on the property and our $64k. Does it sound like we have a case, and if so, is this a remedy that's likely to be awarded by a small claims court?

THANK YOU FOR RESPONSES!

I don’t know why you are talking about being awarded speculative damages, as there is noting speculative about the presence of the HOA lien. But for your general information conjectural and speculative damages are never permitted, neither in the federal system, Nevada or any other state - neither in contract or tort!

See the Nevada Supreme Court case of Lamar Advertising of South Dakota, Inc. vs. Heavy Constructors, Inc., - Case No. 24454 (2008). There, upon citing a controlling South Dakota statute containing (in part) this language:

“No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and their origin.”

the Nevada court then added:

“We also disallow conjectural and speculative damages.”
______________

But again, this universal principal of the law of damages is not at all applicable here simply because by definition your proposed lawsuit versus the bank would not be seeking conjectural or speculative damages - defined as follows:

“Anticipated or prospective loss depending upon conjectural contingencies; alleged injuries or losses that are uncertain or contingent and cannot be used as a basis of recovery for tort or contract actions.”

Moreover, any time contracting parties enter into an agreement lacking awareness of a fact that goes to the marrow of the undertaking – whether it has bilateral or unilateral consequences - the contract can be voided at the option of any party to it.

Refined here to mean that the bank cannot be held to the agreement your propose to enforce (regardless of the choice of forum) short of you being able to prove that the bank was conscious of the HOA lien at the time the agreement was struck.

That is, if in fact any binding agreement with BOA was struck, which seems to a matter of "speculation".

 

[tranquility]

While I agree with latigo as against the seller by the OP, here the OP wants to sue a party he is not in privity with. The contract may need the third party approval of the bank, but the bank is not in a deal with the buyer. I think the key is his last paragraph.

 

[mo42186]

No, you misinterpret the pre-existing duty rule. It is not what allows the bank to accept whatever they want. That has nothing to do with it. The pre-existing duty rule would prevent the bank from requiring the current owner from having to pay back more than (using your number) $200k to obtain a release of the security interest on the home. It has nothing to do with you and it is not what allows them to accept whatever they want. It just doesn't apply here at all.



Oh, that's where your huge mistake came in. You are not a successor in contract. Never was. Never will be unless you are assuming the current mortgage loan. Are you assuming the current mortgage loan?

and then, if you go with Tranquility's suggestion of misrepresentation;

what was the banks duty to disclose the lien to you? None that I can see since 1. they are not the owner and 2. they are not liable for the lien. You could actually accept the lien intact. So, did they ever represent they would pay all outstanding liens or encumbrances? If not, there is no false representation.


either accept it as offered or walk away. You won't get anything in court other than the realization of what it feels like to have your ass handed to you. You will lose.

https://www.waltersanford.com/2010/11/23/a-tale-of-pain-buyers-can-sue-the-listing-agent-in-a-short-sale/

Read this. I know it also says buyer can't sue lender, but again, this is why we're going to small claims court. It's not a slam dunk case, but it's worth a shot.

"Related to the lender, as much as you do not want to hear that answer, under the pre-existing duty rule, an agreement to modify a contract without legal consideration is not valid. Putting this in more clear terms, the lender is owed $350,000 under a contract with a pre-existing duty to pay that lender that $350,000. You, the seller, and/or the buyer are trying to hold the lender accountable for an agreement to take less than is owed to close the sale. However, a basic premise of a contract is money consideration or some sort of consideration. That subsequent agreement, to take less in an existing contract, is not supported by any consideration. The seller is actually going to pay less than the pre-existing duty requires, therefore no consideration, and the lender is going to get less than their existing contract states, no consideration there either. The agreement they have made that they would take less is not enforceable for lack of consideration if they change their mind."

So, yes it is the rule that allows the bank to accept or reject any offer at any time because the short sale is not providing any additional consideration. It has everything to do with it. There's a pre-existing duty for the seller to pay off a mortgage amount of X and the bank doesn't have to honor a contract where it accepts anything less than that. Hence, a short sale is liable to fall apart at any time because of the pre-existing duty that seller has to mortgagee is not supported by additional consideration.

 

[mo42186]

I don’t know why you are talking about being awarded speculative damages, as there is noting speculative about the presence of the HOA lien. But for your general information conjectural and speculative damages are never permitted, neither in the federal system, Nevada or any other state - neither in contract or tort!

See the Nevada Supreme Court case of Lamar Advertising of South Dakota, Inc. vs. Heavy Constructors, Inc., - Case No. 24454 (2008). There, upon citing a controlling South Dakota statute containing (in part) this language:

“No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and their origin.”

the Nevada court then added:

“We also disallow conjectural and speculative damages.”
______________

But again, this universal principal of the law of damages is not at all applicable here simply because by definition your proposed lawsuit versus the bank would not be seeking conjectural or speculative damages - defined as follows:

“Anticipated or prospective loss depending upon conjectural contingencies; alleged injuries or losses that are uncertain or contingent and cannot be used as a basis of recovery for tort or contract actions.”

Moreover, any time contracting parties enter into an agreement lacking awareness of a fact that goes to the marrow of the undertaking – whether it has bilateral or unilateral consequences - the contract can be voided at the option of any party to it.

Refined here to mean that the bank cannot be held to the agreement your propose to enforce (regardless of the choice of forum) short of you being able to prove that the bank was conscious of the HOA lien at the time the agreement was struck.

That is, if in fact any binding agreement with BOA was struck, which seems to a matter of "speculation".

1. We do have very legitimate evidence that BOA was conscious of the HOA lien. Mathematical proof that the difference in bottom line amounts was the HOA lien item.

2. Speculative damages are permissible when damages are certain and the amount is in question. It's arguable whether my case fits into this grey realm, but it's not auto-reject purely on its speculative nature.

 

[OHRoadwarrior]

1. We do have very legitimate evidence that BOA was conscious of the HOA lien. Mathematical proof that the difference in bottom line amounts was the HOA lien item.

2. Speculative damages are permissible when damages are certain and the amount is in question. It's arguable whether my case fits into this grey realm, but it's not auto-reject purely on its speculative nature.

You have no proof. You have conjecture.

 

[justalayman]

mo42186;3092851]https://www.waltersanford.com/2010/11/23/a-tale-of-pain-buyers-can-sue-the-listing-agent-in-a-short-sale/

but that is not the situation you have. Hell, if you want to argue you replace the seller in the lenders pre-existing duty situation, they guess what; YOU OWE THE LIEN just as the seller owes the lien. The lender is not obligated to pay off the lien. It is the sellers obligation and since you want to claim their position, now it is yours.

Read this. I know it also says buyer can't sue lender, but again, this is why we're going to small claims court. It's not a slam dunk case, but it's worth a shot.

Gotta love it. Even you admit it supports my position yet you still feel you have some standing to sue. It doesn't matter if it is small claims or some superior court; if you don't have standing, you don't have standing. Taking it to small claims doesn't magically create some special exception to that.

"Related to the lender, as much as you do not want to hear that answer, under the pre-existing duty rule, an agreement to modify a contract without legal consideration is not valid. Putting this in more clear terms, the lender is owed $350,000 under a contract with a pre-existing duty to pay that lender that $350,000.

You, the seller, and/or the buyer are trying to hold the lender accountable for an agreement to take less than is owed to close the sale.

No. the buyer is not trying to hold the lender accountable for anything. That is between the seller and the lender...


until such time as a contract is executed. Then you have a totally different issue but that is not what you are arguing here. You are trying to slip into this as having standing to sue concerning the contract between the seller and the lender; you don't. The issue in your link is one where the lender attempted to refuse to comply with their contract with the seller and as a third party beneficiary, the buyer would have standing. That is not the issue you are facing though. You are claiming they are obligated to pay a lien that they are not obligated to pay.

However, a basic premise of a contract is money consideration or some sort of consideration. That subsequent agreement, to take less in an existing contract, is not supported by any consideration. The seller is actually going to pay less than the pre-existing duty requires, therefore no consideration, and the lender is going to get less than their existing contract states, no consideration there either. The agreement they have made that they would take less is not enforceable for lack of consideration if they change their mind."

actually you are wrong here as well but I'm not going to bother explaining it since it won't get beyond your skull. It appears to be quite thick.

So, yes it is the rule that allows the bank to accept or reject any offer at any time because the short sale is not providing any additional consideration. It has everything to do with it. There's a pre-existing duty for the seller to pay off a mortgage amount of X and the bank doesn't have to honor a contract where it accepts anything less than that. Hence, a short sale is liable to fall apart at any time because of the pre-existing duty that seller has to mortgagee is not supported by additional consideration.

You have fun with that. You are not a successor in contract so they do not have any duty to you under the pre-existing duty rule. The pre-existing duty rule has nothing to do with the short sale. It only has to do with the original loan contract.

You do realize that in accepting a short sale, all the lender is actually doing is agreeing to release their security interest in exchange for the negotiated amount, right? The original loan contract is not released. The lender (in many states but not all) can actually sue the original borrower for the deficiency if the lender has not waived that right.

There's a pre-existing duty for the seller to pay off a mortgage amount of X and the bank doesn't have to honor a contract where it accepts anything less than that. Hence, a short sale is liable to fall apart at any time because of the pre-existing duty that seller has to mortgagee is not supported by additional consideration.

Oh, now you are really wrong. Just give it up.

 

[justalayman]

mo42186;3092855]1. We do have very legitimate evidence that BOA was conscious of the HOA lien. Mathematical proof that the difference in bottom line amounts was the HOA lien item.

so? Unless you can show they have an obligation to pay the lien, it remains the sellers liability. If you accept the house with the lien intact, it becomes yours. So, now the lien is an issue between you and the seller. The lender has nothing to do with it.

2. Speculative damages are permissible when damages are certain and the amount is in question. It's arguable whether my case fits into this grey realm, but it's not auto-reject purely on its speculative nature.

but you have no damages, real or speculative.

 

[tranquility]

I believe the OP is going to get crushed. I believe that, if the bank cares, he will pay for their attorney for this malicious prosecution. He has no case. Even in his example, the person says he can't sue. Why? "The buyer cannot sue the lender as they do not have a contract with the lender." Period. As I've been saying, the OP is not in privity with the bank. Look up the word mo42186, privity. You can add privity of contract if you don't want to sift through some chaff.

Also, you are completely confusing the concept of consideration here. The pre-existing duty rule says it is not consideration to do something you are already obligated to do. Because of this, a SELLER cannot claim a contract with the bank if the bank promised to accept less in the short sale because that deal for acceptance has no consideration. It does not help you create a contract as a buyer. In fact, as justalyaman has tried to explain, it HURTS any chance for you to claim you reasonably relied on the bank's promise (causing damages). Why? Because of the pre-existing duty rule (aka lack of consideration) the seller could not claim an enforceable contract so you could not rely on it. But, even if you could, you have to prove damages.

How much, in money, were you hurt? Not in time, not in what you thought you might have made, not in crushed dreams of being the next Donald Trump, how much?

This is not that hard even though you think you know the case cold. What you may know is your supposition of the facts. You seem to not even know what your cause of action is.

By the way, what is your cause of action?

 

[mo42186]

but that is not the situation you have. Hell, if you want to argue you replace the seller in the lenders pre-existing duty situation, they guess what; YOU OWE THE LIEN just as the seller owes the lien. The lender is not obligated to pay off the lien. It is the sellers obligation and since you want to claim their position, now it is yours.

Gotta love it. Even you admit it supports my position yet you still feel you have some standing to sue. It doesn't matter if it is small claims or some superior court; if you don't have standing, you don't have standing. Taking it to small claims doesn't magically create some special exception to that.

"Related to the lender, as much as you do not want to hear that answer, under the pre-existing duty rule, an agreement to modify a contract without legal consideration is not valid. Putting this in more clear terms, the lender is owed $350,000 under a contract with a pre-existing duty to pay that lender that $350,000. No. the buyer is not trying to hold the lender accountable for anything. That is between the seller and the lender...


until such time as a contract is executed. Then you have a totally different issue but that is not what you are arguing here. You are trying to slip into this as having standing to sue concerning the contract between the seller and the lender; you don't. The issue in your link is one where the lender attempted to refuse to comply with their contract with the seller and as a third party beneficiary, the buyer would have standing. That is not the issue you are facing though. You are claiming they are obligated to pay a lien that they are not obligated to pay.


actually you are wrong here as well but I'm not going to bother explaining it since it won't get beyond your skull. It appears to be quite thick.

You have fun with that. You are not a successor in contract so they do not have any duty to you under the pre-existing duty rule. The pre-existing duty rule has nothing to do with the short sale. It only has to do with the original loan contract.

You do realize that in accepting a short sale, all the lender is actually doing is agreeing to release their security interest in exchange for the negotiated amount, right? The original loan contract is not released. The lender (in many states but not all) can actually sue the original borrower for the deficiency if the lender has not waived that right.

Oh, now you are really wrong. Just give it up.

The pre-existing duty rule has nothing to do with our purchase agreement between buyer and seller, correct - i never disagreed with that. It allows the lender to reject Buyer's offer (their acceptance of seller's proposal) at any time b/c Seller has not provided additional consideration - he's just paying off less than what is already owed. Aren't we arguing the same point? I think you got caught up in the technicalities of the language when I was just making a point that the pre-existing duty rule is what makes short sales so fickle with lenders. I also cleared up a page or two ago that this claim is not predicated on breach of contract.

You're a pretty aggressive individual. Were you a good real estate agent? btw, did you go to law school?

 

[mo42186]

I believe the OP is going to get crushed. I believe that, if the bank cares, he will pay for their attorney for this malicious prosecution. He has no case. Even in his example, the person says he can't sue. Why? "The buyer cannot sue the lender as they do not have a contract with the lender." Period. As I've been saying, the OP is not in privity with the bank. Look up the word mo42186, privity. You can add privity of contract if you don't want to sift through some chaff.

Also, you are completely confusing the concept of consideration here. The pre-existing duty rule says it is not consideration to do something you are already obligated to do. Because of this, a SELLER cannot claim a contract with the bank if the bank promised to accept less in the short sale because that deal for acceptance has no consideration. It does not help you create a contract as a buyer. In fact, as justalyaman has tried to explain, it HURTS any chance for you to claim you reasonably relied on the bank's promise (causing damages). Why? Because of the pre-existing duty rule (aka lack of consideration) the seller could not claim an enforceable contract so you could not rely on it. But, even if you could, you have to prove damages.

How much, in money, were you hurt? Not in time, not in what you thought you might have made, not in crushed dreams of being the next Donald Trump, how much?

This is not that hard even though you think you know the case cold. What you may know is your supposition of the facts. You seem to not even know what your cause of action is.

By the way, what is your cause of action?

1. Small claims doesn't allow attorney's fees in Nevada.
2. You don't always have to be in privity to have a cause of action
3. $500 (claiming more in lost profits which is possible to be damages)
4. Fraudulent misrepresentation