Connecticut Light & Power Company v. Jamie LaMarco (2014)

MEMORANDUM OF DECISION

In this matter, the defendant LaMarco drove her car into a CL & P utility pole in East Lyme, Connecticut on December 7, 2010.   This crash caused extensive damage to the electrical distribution system belonging to the plaintiff, CL & P, which is seeking recovery of the costs to repair this damage.

The plaintiff claims that they are entitled to not only the actual direct costs, but also the indirect or so-called overhead costs associated with the time and materials expended in making the necessary repairs.¹  The plaintiff relies on a 1965 Connecticut Circuit Court case, entitled Hartford Electric Light Company v. Beard, 3 Conn.Cir.Ct. 323 (App.Div.1965).

The defendant cites a 1996 Superior Court case, Southern New England Telephone Company v. Henkels & McCoy, Inc., 17 Conn. L. Rptr. 348 (Conn.Super.Ct. Jul. 17, 1996), which held that the plaintiff's overhead expenses and other indirect costs would have been incurred regardless of whether or not “in-house” repairs of property damage had been caused by another party's negligence.   The plaintiff goes on to cite many out-of-state cases which indicate that overhead expenses of whatever type may be recovered as a component of damages in negligence cases.

Neither party cites any current or particularly persuasive cases concerning this issue of overhead expenses as an integral part of a damage award.   The plaintiff goes on to argue that it should not be penalized because they are in a position to make such “in-house” repairs with their own facilities, and do not have to turn to outside contractors, who would charge an overhead expense for any such contracted work.   The plaintiff however makes no distinction between immediate repair work and long-term new construction.

The Court returns to the general proposition that damages arising out of the negligence of a defendant should be fair, just and reasonable compensation for the losses suffered by any such plaintiff and “proved with reasonable certainty.”  Certo v. Fink, 140 Conn.App. 740, 749 (2013).

The plaintiff is seeking in this case overhead expenses apparently both fixed and variable (in excess of 36%) beyond the direct, compensable damages of $9,352.   This Court cannot accept such an overhead surcharge as an element of damages to be awarded.   This Court finds that a reasonable and efficiently managed overhead expense charge relating to the said direct costs of repair under these circumstances should not exceed 10% of such direct costs.

Therefore, judgment enters in favor of the plaintiff in the total amount of $10,287 plus court costs.

BY THE COURT

V. ROCHE, J.

FOOTNOTES

FN1. This Court takes notice that the concept of overhead expense is recognized by generally accepted accounting principles (GAAP) as an element of cost, but not necessarily included in every given project.There are fixed, variable and semi-variable overhead costs that may be included in any “in-house” construction or repair project..  FN1. This Court takes notice that the concept of overhead expense is recognized by generally accepted accounting principles (GAAP) as an element of cost, but not necessarily included in every given project.There are fixed, variable and semi-variable overhead costs that may be included in any “in-house” construction or repair project.

Roche, Vincent E., J.