Generally, the cost expectancy measure of damages allows an injured party to recover damages equal to the cost of obtaining reasonable substitute performance. The cost expectancy measure will usually be permitted only if it yields an amount less than the market value measure.[1]
There are essentially two general situations where the cost expectancy measure is applied under Nevada law: (i) where the performing/ servicing party is prevented from completing its performance;[2] and (ii) where the performing/ servicing party fails to complete its performance.[3]
Moreover, there are two major types of expectancy damages: (a) general damages; and (b) special damages. Although it is categorized separately, a plaintiff can recover both general and special expectancy damages in the same case if no double recovery results for the injured party.[4]
[1] See Dobbs, § 12.2(2) at 30-35 (“Cost of substitute performance must be justified on the ground that it is less than the market measure, or that it is likely to provide an accurate measure of the expectancy”).
[2] Fuller v. United. Elec. Co., 70 Nev. 448, 451-52, 273 P.2d 136, 137 (1954); Bradley v. Nev.-Cal.-Or. Ry., 178 P. 906, 908 (Nev.1919); Cheyenne Const., Inc. v. Hozz, 102 Nev. 308, 312-13, 720 P.2d 1224, 1227 (1986).
[3] Kirkpatrick v. Temme, 98 Nev. 523, 654 P.2d 1011 (1982); see also Cheyenne Const., Inc., 102 Nev. at 312, (simultaneously awarding damages to both a contractor who was prevented from performing, and a property owner for the cost of completion where that same contractor failed to complete the performance).
[4] See Dobbs, § 12.2(2) at 38-39.
