Atlando Holdings, LLC f/k/a Mindis Acquisition Corporation (MAC) sued the accounting firm of BDO Seidman, LLP for negligent misrepresentation in connection with MAC's 1993 purchase of Mindis Corporation. On appeal following a jury trial and a jury verdict for $44 million in favor of MAC (the 1999 trial), the Supreme Court of Georgia held that the trial court had used the wrong measure of damages. BDO Seidman, LLP v. Mindis Acquisition Corp., 276 Ga. 311 ( 578 SE2d 400) (2003) ( Mindis II). The case was then retried on the issue of damages only (the 2005 trial), and the jury awarded MAC zero damages. MAC now appeals.
BARNES, Judge. In BDO Seidman, L.L.P. v. Mindis Acquisition Corp., 276 Ga. 311 ( 578 S.E.2d 400) (2003), the Supreme Court reversed Division 4 of our decision in Mindis Acquisition Corp. v. BDO Seidman, LLP., 253 Ga. App. 360 ( 559 S.E.2d 111) (2002), in which we affirmed the trial court's rulings denying BDO Seidman's motion in limine and refusing to give its requested charge on the proper measure of damages, and held that "a new trial utilizing the proper measure of damages is required." BDO Seidman, supra, 276 Ga. at 313.
Moreover, "the amount of damages awarded for negligent misrepresentation is measured by an 'out-of-pocket' standard," rather than a benefit-of-the-bargain standard. BDO Seidman, LLP v. Mindis Acquisition Corp., 276 Ga. 311, 311, 578 S.E.2d 400, 401 (2003) (citing Restatement (Second) of Torts § 552B). "The out-of-pocket measure of damages is consistent with Georgia's general measure of damages in negligence cases, which seeks to place the injured party in the same place it would have been had there been no injury or breach of duty."
Georgia law permits the recovery of certain types of economic losses in an action, such as this, where the plaintiff alleges professional negligence resulting in a misrepresentation. See BDO Seidman v. Mindis Acquisition Corp., 276 Ga. 311 , 311-312 (1) (578 SE2d 400 ) (2003). Georgia has adopted the rule, enunciated in Restatement (Second) of Torts § 552, that
John Thurmond & Assoc.v. Kennedy, 284 Ga. 469, 668 S.E.2d 666 (2008). See BDO Seidman v. Mindis Acquisition Corp. 276 Ga. 311(1), 578 S.E.2d 400 (2003); Redman Dev. Corp. v. Piedmont Heating, etc., 128 Ga.App. 447, 197 S.E.2d 167 (1973). Moreover, this Court has long considered diminution in value to be an element in determining the proper measure of damages to real property.
Moreover, as the Atlantic Geoscience Court explained, "Our Supreme Court has explained that this type of loss is measured by an ‘out-of-pocket’ standard, not a ‘benefit-of-the-bargain’ standard." 799 S.E.2d at 246 (citing BDO Seidman, LLP v. Mindis Acquisition Corp. , 276 Ga. 311, 312-313 (1), 578 S.E.2d 400 (2003) ). It is undisputed that Plaintiffs received full refunds for their attempted purchases and therefore experienced no "out-of-pocket" losses.
The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is a legal cause, including (a) The difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) Pecuniary loss suffered otherwise as a consequence of the plaintiff's reliance upon the representation.BDO Seidman, LLP v. Mindis Acquisition Corp., 276 Ga. 311, 578 S.E.2d 400, 401 (2003). Defendants argue that “uncollected premiums” or “increased risk” on the insurance contract are not out-of-pocket losses.
"In [ Robert ,] this Court first recognized a claim for negligent misrepresentation and adopted the liability standard set forth in section 552 of the Restatement (Second) of Torts." BDO Seidman, LLP v. Mindis Acquisition Corp. , 276 Ga. 311, 311-312 (1), 578 S.E.2d 400 (2003). Under the standard adopted in Robert ,
See also John Thurmond & Assoc. v. Kennedy, 284 Ga. 469(1), 668 S.E.2d 666 (2008). In a negligence action, “an out-of-pocket measure of damages is commensurate with the culpability of the tortfeasor, who acted negligently, rather than intentionally or maliciously. [Cit.]” BDO Seidman v. Mindis Acquisition Corp., 276 Ga. 311, 312(1), 578 S.E.2d 400 (2003). “ ‘The rationale of damages, as in this case, is to compensate the plaintiff and not to unreasonably burden the defendant beyond the point of compensating the plaintiff.’ ”
John Thurmond & Assoc. v. Kennedy, 284 Ga. 469, 668 S.E.2d 666 (2008). See BDO Seidman v. Mindis Acquisition Corp., 276 Ga. 311(1), 578 S.E.2d 400 (2003); Redman Dev. Corp. v. Piedmont Heating, etc., 128 Ga.App. 447, 197 S.E.2d 167 (1973). Moreover, this Court has long considered diminution in value to be an element in determining the proper measure of damages to real property.