Practice point: When a claim sounds in fraud, the measure of damages is governed by the "out-of-pocket" rule, which states that the measure of damages is indemnity for the actual pecuniary loss sustained as the direct result of the wrong. In other words, damages are calculated to compensate plaintiffs for what they lost because of the fraud, not for what they might have gained in the absence of fraud.
Student note: A claim of actual injury or damage is an essential element in any claim of fraud.
Case: Connaughton v. Chipotle Mexican Grill, Inc., NY Slip Op 00273 (1st Dept. 2016)
Here is the decision.
Tomorrow's issue: Sanctions, and frauds on the court.
