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Handicapped Children's Education Bd. v. Lukaszewski, 332 N.W.2d 774 |
Wisconsin Supreme Court |
1983 |
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Chapter |
20 |
Title |
Contract Remedies |
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Page |
745 |
Topic |
The Expectation Interest |
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Quick Notes |
A speech therapist tried to get out of her contract with the school system, because she found a better job. Damages for breach of an employment contract include the cost of obtaining other services equivalent to that promised. |
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Book Name |
Contracts Cases, Discussion, and Problems. ISBN: 978-0-7355-7069-6. |
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Issue |
o Can a damages be award to obtain cost of performance from someone else of greater value? Yes. |
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Procedure |
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Trial |
o The trial court ruled that Luka had breached her contract and awarded the Board $ 1,249.14 in damages ($ 1,026.64 for breach of contract and $ 222.50 for costs) |
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Appellant |
o Affirmed, but reversed the damages. |
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Supreme |
o Reversed the appellants court decision to reverse the trial courts award damages. |
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Facts |
Reason |
Rules |
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o Pl - Handicapped Children's Education Bd o Df - Lukaszewski What happened? o Luka was hired by the board to serve as a speech therapist for the spring term. o At that time she was commuting 45 miles. o Later she was offered a contract for the following year for $10,760. o In August she was offered a position from Wee Care Day Care Center. o She told the boards director she wanted to resign and submitted her letter of resignation. o The board refused her. o The boards attorneys wrote a letter to Luka to perform and to the Day care to not interfere with performance. o She returned back to the school. o After meeting with the board of director she became quit upset and made an appointment that afternoon with the doctor. Medical Doctor Not Relevant o Her blood pressure was 180/100. o The Doctor said it would not improve UNLESS the problem was removed. o The again wrote a letter of termination with the doctors note enclosed. Action Breach Contract o It suffered damage in the amount of the additional compensation it was required to pay Lukas replacement for the 1978-79 school year ($ 1,026.64). o The trial court ruled that Luka had breached her contract and awarded the Board $ 1,249.14 in damages ($ 1,026.64 for breach of contract and $ 222.50 for costs). |
Appellate Court Reasoning o Although the Board had to pay more for Lukaszewski's replacement, by its own standards it obtained a proportionately more valuable teacher. o Therefore, the court of appeals held that the Board suffered no damage from the breach.
Damage Recovery o An employer may recover damages from an employee who has failed to perform an employment contract. o Damages in breach of contract cases are ordinarily measured by the expectations of the parties. o The nonbreaching party is entitled to full compensation for the loss of his or her bargain -- that is, losses necessarily following from the breach which are proven to a reasonable certainty and were within contemplation of the parties when the contract was made. o Damages for breach of an employment contract include the cost of obtaining other services equivalent to that promised but not performed, plus any foreseeable consequential damages.
Undisputed o As a result of the breach, the Board hired a replacement at a salary exceeding what it had agreed to pay Lukaszewski. o There is no question that this additional cost ($ 1,026.64) necessarily flowed from the breach and was within the contemplation of the parties when the contract was made. Luka Arg Not Damaged o Lukaszewski argues that the Board was not damaged by this expense. o The amount a teacher is paid is determined by a salary schedule agreed upon by the teachers' union and the Board. o The more education and experience a teacher has the greater her salary will be. o Presumably, then, the amount of compensation a teacher receives reflects her value to the Board.
Luka Arg Received a more valuable teacher o Lukaszewski argues that the Board suffered no net loss because, while it had to pay more for the replacement, it received the services of a proportionately more valuable teacher. Luka Arg Better Position Arg o Accordingly, she maintains that the Board is not entitled to damages because an award would place it in a better position than if the contract had been performed.
Wisconsin Supreme Court o We disagree. o Lukaszewski and the court of appeals improperly focus on the objective value of the services the Board received rather than that for which it had bargained. o Damages for breach of contract are measured by the expectations of the parties.
Board Expectations o The Board expected to receive the services of a speech therapist with Lukaszewski's education and experience at the salary agreed upon. o It neither expected nor wanted a more experienced therapist who had to be paid an additional $ 1,026.64 per year. o Lukaszewski's breach forced the Board to hire the replacement and, in turn, to pay a higher salary. o Therefore, the Board lost the benefit of its bargain.
Additional Value Was Imposed o Any additional value the Board may have received from the replacement's greater experience was imposed upon it and thus cannot be characterized as a benefit. o We conclude that the Board suffered damages for the loss of its bargain in the amount of additional compensation it was required to pay Lukaszewski's replacement.
Hiring Rules o This is not to say that an employer who is injured by an employee's breach of contract is free to hire the most qualified and expensive replacement and then recover the difference between the salary paid and the contract salary. o An injured party must take all reasonable steps to mitigate damages. o Therefore, the employer must attempt to obtain equivalent services at the lowest possible cost.
Holding o The Board immediately took steps to locate a replacement. Only one qualified person applied for the position. o Having no alternative, the Board hired this applicant. Thus the Board properly mitigated its damages by hiring the least expensive, qualified replacement available.
o We hold that the Board is entitled to have the benefit of its bargain restored. o Therefore, we reverse that portion of the court of appeals' decision which reversed the trial court's damage award. |
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Class Notes |
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In Freud, we dont want to give him both the royalties and publishing cost.
In this case, they were forced to find a replacement.
What about the new girl make this more problematic? She had more teaching experience, which requires more money.
Df Arg: You are getting more value.
Hiring Rules o This is not to say that an employer who is injured by an employee's breach of contract is free to hire the most qualified and expensive replacement and then recover the difference between the salary paid and the contract salary. o An injured party must take all reasonable steps to mitigate damages. o Therefore, the employer must attempt to obtain equivalent services at the lowest possible cost.
The distinct had no choice, the new better girl was our only alternative.
Holding o The Board immediately took steps to locate a replacement. Only one qualified person applied for the position. o Having no alternative, the Board hired this applicant. Thus the Board properly mitigated its damages by hiring the least expensive, qualified replacement available
HYPO What if the did not hire a substitute. o The department says if you do not have a speech therapist, then we will fine you. o Then they turn to Luka and say we have to hire a more expensive person or get suck with the fine.
What is they had two candidates? o A little more value. o A little less value. o Both are attractive applicants. o The board decides to hire them both. o If the higher one is picked, then she will owe money. o If the lesser one is picked, then nothing would be owed. o However, this will go to the trier of facts.
You can say this might be an efficient breach.
New Salary: $13,000 Old Salary: $10,000 Diff: $3,000
Damages: $1,249 Has Left: $1,751. Everybody benefits!!! |