Most people are not familiar with the procedures and requirements relating to the practice of law. That is why when most people hear about the amount of money one party is suing for, they are shocked. You have seen the headline, “Person or Company suing for millions of dollars.” Most people think the individual who brought the lawsuit is asking for way too much money. The phrase frivolous lawsuit is used frequently. After reading this post, I hope you will understand why this amount is generally so high.
A brief overview of a small aspect of civil procedure will help. Every type of civil action has what is called a statute of limitations. A statute of limitations is a time frame in which a lawsuit must be brought. If a lawsuit is not filed within this time frame, then the injured or aggrieved individual will forever be barred from bringing his or her lawsuit. In Tennessee, this time frame is one year from the date of the incident for causes of action for personal injuries.
Unfortunately, most people don’t hire an attorney the day after he or she is injured or damaged. It is usually months after the incident before an attorney comes into the picture. As such, there are usually only a few months, weeks and sometimes days in which a lawsuit must be filed. A good attorney does his or her due diligence and gathers as many facts as possible before filing a lawsuit. Even though the attorney gathered as much information as he or she could, because of time constraints, he or she may have to file a lawsuit still needing additional information. The amount of damages the person has already sustained, and will likely incur in the future, is not fully known. However, Rule 8.01 of the Tennessee Rules of Civil Procedure requires a pleading to set forth a demand for judgment for the relief the pleader seeks. The pleading this rule refers to is called the complaint.
The clause in the complaint that demands the amount of money is called the ad damnum clause. Ad damnum is Latin meaning “for the loss.” Generally, a judgment that exceeds the ad damnum clause is invalid. See Tenn. R. Civ. Pro. 15.02; Cross v. City of Morristown, 1996 WL 605248 (Tenn. Ct. App. October 23, 1996). This rule is based on considerations of fairness because the primary purpose of pleadings is to provide notice of the issues presented to the opposing party and court. See Abshure v. Methodist Healthcare–Memphis Hosps., 325 S.W.3d 98, 103 (Tenn.2010); see also Robert Banks, Jr. & June F. Entman, Tennessee Civil Procedure § 5–4(a) (3d ed. 2009) (“The essential function of the pleadings is simply to give noticeof a claim or defense. History, as Professors Wright and Miller point out, has shown that the pleadings cannot successfully do more.”)
So, if a person sues an individual or company for X amount of dollars, and a jury returns a verdict higher than the X amount of dollars, the person may be limited to the X amount of dollars. The practical effect is that every attorney requests an exaggerated amount of money in the complaint so that the amount the injured individual may recover is not capped. The jury determines how much money a person should recover based on many factors such as the egregiousness of the acts committed and the severity of the injuries and/or losses. No attorney wants to, nor should have to, explain to their client that he or she cannot recover the amount of money the jury awarded him or her because it exceeds the amount demanded in the complaint. In order to avoid this scenario, every attorney requests a somewhat arbitrarily high amount of money.
When the attorney has to file the complaint, not knowing how much damages or losses his or her client has sustained, he or she still has to demand an amount of money for said damages. In order to not get in the way of his or client being made whole, he or she requests an amount of money that is very high. The attorney may demand an amount to be determined by the trier of fact, the jury in most cases, without setting forth a specific amount. However, this generally requires more work for the attorney to amend the pleadings further down the road.
Now, the next time you hear that so-and-so is suing for millions of dollars, hopefully you understand that this is not the amount the client or attorney thinks the claim is worth. The trier of fact determines the amount of damages.