The damages a plaintiff seeks to recover from a defendant in litigation typically take the form of either financial harm (which lawyers call “economic loss”) or harm other than financial harm (which lawyers call “non-economic loss”). Non-economic loss includes pain and suffering, inconvenience, emotional stress and impairment of quality of life. A plaintiff’s ability to recover economic loss is generally not limited except by the facts of the case. In contrast, the Colorado General Assembly has imposed statutory limits on a plaintiff’s ability to recover for non-economic loss as described in this article.

Generally, recovery for non-economic loss is limited by statute to $250,000 per defendant. Judges are given discretion to increase recovery for non-economic loss to $500,000 per defendant, but only if the plaintiff presents “clear and convincing” evidence in support of his damages. In medical malpractice cases, non-economic loss is limited to $250,000 per case (not per defendant). These amounts are increased periodically by a statutory formula.

In my April 7, 2010, article titled “Torts are a piece of cake,” I described the process by which a jury in a tort case is tasked with assigning a percentage of liability to each defendant, which is then multiplied by the total amount of damages to determine each defendant’s liability. Except with respect to medical malpractice claims, the statutory limits on non-economic loss discussed in this article are applied after the jury has determined total damages and apportioned liability to each defendant.

For example, let’s say a jury in a personal injury case determines a plaintiff’s total damages are $1 million, of which $500,000 is economic loss and $500,000 is non-economic loss. The jury assigns Defendant A liability of 90 percent and Defendant B liability of 10 percent. In this case, defendant A’s total liability is $450,000 for economic loss (90 percent of the economic loss total) and $250,000 for non-economic loss (90 percent of the total non-economic loss reduced to the statutory limit). Defendant B’s total liability is $50,000 for economic loss and $50,000 for non-economic loss, representing 10 percent of each category of damages. In this example, the effect of the statutory limit on non-economic damages is that the plaintiff will only be able to recover $800,000 even though his total damages are $1 million unless he convinces the judge the evidence was clear and convincing to support a higher non-economic damages award. The statute may permit Defendant A to avoid $200,000 in potential liability.

Colorado permits recovery for “derivative non-economic claims,” which are claims for damages suffered to a person other than the person suffering the “direct or primary” loss. Examples of derivative claims include “loss of consortium” (which is a claim brought by a person’s spouse for damage to the marital relationship), wrongful death, and claims by a person who suffered a near-miss. Derivative non-economic loss claims are limited to $250,000 and also require the plaintiff to present “clear and convincing” evidence in order to recover.

Claims for physical impairment and disability could arguably be classified as non-economic loss because they result in loss to quality of life and cause inconvenience and emotional distress. In practice, these claims are typically classified as causing economic loss (e.g. loss of ability to earn income), which removes them from application of the statutory limits.

If more than one plaintiff sues the same defendant for damages (such as two people in a car accident suing one other driver), each plaintiff can sue for the statutory limit of non-economic loss. This prevents the defendant from receiving a “group discount” for injuring multiple people.

Generally, a plaintiff who sues a defendant for breach of contract can only recover non-economic loss if recovery for such damages is specifically authorized in the contract. This encourages contracting parties to negotiate carefully and assign the risk of loss by specific terms.

We often read in the news about juries assigning large judgments to injured parties for non-economic losses. In Colorado, at least, recovery of non-economic loss is greatly limited by statute.

Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, business law and litigation. He may be reached at (970)468-4953 or Noah@TheKlugLawFirm.com.