Title: The Corner v. Pinnacle, Inc.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

The Corner v. Pinnacle, Inc.1995 WY 192907 P.2d 1281Case Number: 95-11Decided: 11/21/1995Supreme Court of Wyoming
THE CORNER d/b/a The Other Corner,

Appellant 
(Defendant)

 
v. 

PINNACLE,

INC., 
d/b/a Games Plus,

 
Appellee (Plaintiff).

  

Appeal 
from the District Court of Laramie County, Edward L. Grant, 
J.

  

  Bernard E. Cole and Donald A. Cole of 
Cole & Cole Law Firm, Cheyenne, 
for appellant.

   Douglas G. Madison and Brandin Hay of 
Dray, Madison & Thomson, P.C., 
Cheyenne, for appellee.

   Before GOLDEN, C.J., and THOMAS, 
MACY, TAYLOR, and LEHMAN, JJ.

  THOMAS, Justice. 

[¶1]         
  The sole issue in this case 
is the proper method of computing damages 
for the breach of a contract to lease coin-operated machines. 
The Corner, Inc. d/b/a The Other Corner (The Corner) leased 
a jukebox, a pool table, an electronic dartboard, and two vending 
machines from Pinnacle, Inc. d/b/a Games Plus (Pinnacle) but, 
within a few days, The Corner repudiated the lease agreement. 
The breach of the lease agreement was conceded, and the 
sole issue at trial was the proper amount of damages. The Corner 
asserts that damages were awarded under a provision of the lease 
providing for gross profit as liquidated damages, which is an 
inappropriate way of arriving at damages. Pinnacle contends the 
damages were properly computed by arriving at net profits through 
a formula that reduced the payments due under the lease by 
expenses the lessee would have incurred had the contract been performed. 
With one exception, we hold the trial court properly computed 
the damages in this case, and the damages are supported by 
sufficient evidence. The judgment entered by the trial court is 
remanded for the entry of a judgment in the correct 
amount.

[¶2]         
  The Corner asserts the 
following issues in its Brief of the Appellant:

    Whether the liquidated 
damages clause as stated in   the contract between the parties is 
enforceable or whether 
it is void as a penalty and not reflective of   appellee's actual 
damages?

    What are the damages as set 
forth under the Uniform Commercial 
Code?

The 
Brief of Appellee Pinnacle, Inc. sets forth a single 
issue:

    Did the District Court 
correctly determine the   damages Pinnacle, Inc. sustained as a 
result of The Corner's 
breach of its Personal Property Lease   Agreement?

[¶3]         
  The Corner's business is a 
cocktail lounge and a package liquor store 
in which entertainment is provided for patrons in the form of 
music and games. Pinnacle's business is providing coin-operated 
vending machines to businesses like The Corner. On September 
9, 1993, The Corner and Pinnacle executed a contract (Agreement) 
pursuant to which Pinnacle leased to The Corner a compact 
disc jukebox, a pool table, an electronic dartboard, a new 
cigarette/candy vending machine, and one used cigarette vending 
machine. The term of the Agreement was three years and gave 
Pinnacle "the exclusive right to maintain and operate coin-operated 
equipment" at The Corner. The Agreement was to become 
effective upon installation of the equipment which, subject 
to availability, was to be installed no later than fourteen 
days after the Agreement was signed.

[¶4]         
  The consideration for the 
jukebox furnished by Pinnacle was $65 per 
week. The consideration for the pool table was a down payment of 
$400 and a payment of $250 per month to Pinnacle for twelve months. 
It then provided that The Corner would have the option of purchasing 
the pool table for $1 after the first twelve months of the 
lease, and then would pay $75 per month for a "Maintenance, League 
Service agreement" with Pinnacle. The consideration for the 
dartboard was an equal division of the proceeds, and for the cigarette 
machines the consideration provided for ten percent of the 
gross income to The Corner with the balance to Pinnacle.

[¶5]         
  The provision with respect 
to damages reads:

    6. If the Location [The 
Corner] shall breach any   provision of this Agreement, the 
Operator [Pinnacle] shall 
be entitled to recover as damages, all of the   profits which it would otherwise have 
earned during the 
term remaining as of the breach of this Agreement. 
Those future gross profits shall then become 
immediately due and payable by the Location.  The 
Operator's expenses are fixed and its damages shall 
not be reduced by its expenses, or any part thereof, 
or by any amounts that it may earn from other 
locations. In calculating the loss of profits,   it shall be assumed that the average 
weekly profits earned 
by the Operator prior to the breach would have continued 
during the remaining term of the Agreement.    However, the loss of profits shall not 
be less than the 
minimum weekly commission provided for herein, if such 
has been stated in paragraph 2. If legal action shall 
be instituted by either party to enforce the terms 
or conditions contained herein, then the prevailing 
party in any such action shall be entitled   to recover from the other the reasonable 
attorneys fees 
and costs incurred.

[¶6]         
  On September 13, 1993, The 
Corner advised Pinnacle it did not intend 
to continue with the Agreement. The principals met on September 
14, 1993 to discuss this repudiation but, later that day, 
The Corner advised Pinnacle it intended to persist in its repudiation. 
Pinnacle was able to place the dartboard in another location, 
but was unsuccessful in finding locations for any of the 
other equipment. Some three months later, Pinnacle brought this 
action against The Corner in which it alleged breach of contract 
and damages under paragraph six of the Agreement for lost 
profits, reasonable attorney fees and costs, all consequential 
damages, and other relief the court might deem proper. 
The Corner admitted breach of the contract and contested only 
damages.

[¶7]         
  At trial, Pinnacle produced 
evidence to the effect it had ordered 
new equipment consisting of the compact disc jukebox, the pool 
table, an electronic dartboard, and a cigarette machine, and that 
it planned to install a second cigarette machine it already owned. 
Pinnacle's evidence included separate statements of 
its potential revenues and the expenses it would have incurred during 
the term of the lease with respect to each machine. It relied 
upon the lease provisions for the consideration for the jukebox 
and the pool table and, with respect to the dartboard and the 
cigarette vending machines, it based its damages upon the records 
from The Corner showing the revenue from such devices for the 
prior year. Pinnacle's evidence of damages was summarized in its 
Exhibit C, which is attached as the Appendix to this opinion.  While 
Pinnacle deducted the imputed direct expenses relating to the 
leased equipment, it did not deduct any of its overhead expenses.

[¶8]         
  At 
trial, The Corner elicited testimony with respect to certainaspects of Pinnacle's costs and the mitigation of its 
damages. Pinnacle did return the pool table and the jukebox to itssupplier, but it was assessed a restocking fee of $650. 
Pinnacledid not have to pay the $1,850 price of the pool table nor 
the$4,500 price of the jukebox. It did place the electronicdartboard, costing $1,850, at a different location. 
Pinnaclecanceled the order for the new cigarette machine prior toshipment, and it incurred no costs with respect to that 
machine. The Corner presented no evidence about revenues and 
expenses, butit 
did assert the damages claimed were unfair and 
unreasonable.

[¶9]         
  Pinnacle presented evidence of attorney fees in the amount of$2,401.73. The court reduced that amount by eliminating 
fivecharges, which it determined were unrelated to the 
dispute. Ultimately, it awarded attorney fees of $1,476.71. In thejudgment, the trial court reduced the computed damages from$19,786.45 to its present value and added attorney fees for 
atotal judgment in favor of Pinnacle in the amount of 
$18,861.43. The 
Corner appeals from that judgment.

[¶10]         In its brief, The 
Corner attacked paragraph six of theAgreement, which provided for liquidated damages but, atargument, it conceded this paragraph was not used to 
determinedamages. It abandoned its argument that the Agreement 
provision"that all expenses are fixed and that damages shall not bereduced by expenses, or any part thereof * * * is 
absolutelyfalse and so outrageous, that the Appellee ignored its owncontract * * *." Pinnacle contends it did not seek any 
liquidateddamages from The Corner, and paragraph six has significance 
onlyto 
establish its right to attorney fees.

[¶11]         The essential 
premise for the argument The Corner presents isthe usual rule that the remedy for breach of contract is 
theaward of damages sufficient to place the plaintiff in the 
sameposition as he would have attained had the contract been 
fullyperformed, 
less any proper deductions. BHP Petroleum Co., Inc. v. 
Okie, 836 P.2d 873 (Wyo. 1992). This concept of damages isincorporated in Wyoming's Uniform Commercial Code (U.C.C.) 
WYO. STAT. §§ 34.1-1-101 to -10-104 (1991). Section 
34.1-2.A-528(b),relating to leases, specifically provides that damages 
should"put a lessor in as good a position as performance would 
have." The Corner's contention is that Pinnacle is placed in a 
betterposition than it would have attained had the Agreement beenperformed because Pinnacle was allowed to recover costs andexpenses it did not incur. The Corner contends that, in 
effect,it 
was penalized because it repudiated the Agreement.

[¶12]         In its complaint, 
Pinnacle did pray for damages calculatedunder paragraph six of the Agreement, but the testimony at 
trialand Exhibit C did not follow that approach. When the 
provision inthe Agreement that damages shall not be reduced by expenses 
iscompared with the testimony and exhibits pertaining to thecalculation of damages, it is clear Pinnacle did reduce 
itsprofit calculations by the expenses it did not incur 
because ofThe Corner's breach, with one exception. Pinnacle invoked 
theAgreement to provide the lease consideration for the 
jukebox, thepool table, and the preventive maintenance and league costs 
"asoutlined in the contract." In its Exhibit C, it deducted 
expensesfor each of the five machines. Counsel clearly stated at 
trialthat Pinnacle did not rely on paragraph six for 
damagecalculations, but argues it calculated damages in 
accordance withparagraph two of the Agreement.1  
 In light of these disparatepositions and the concession by Pinnacle, we hold that 
there was no request for, nor did the trial court award liquidated damages 
underparagraph six. Pinnacle reduced its damages by its 
expenses, andThe Corner did not suffer any penalty because of the 
applicationof paragraph six.

[¶13]         The next contention 
by The Corner deserves closer scrutiny. Itsposition is that the damages awarded did not reflect 
Pinnacle'strue losses because Pinnacle calculated depreciation for 
thejukebox and the pool table for the three-year period of 
theAgreement. The Corner contends Pinnacle should have 
deducted thecost of the jukebox and pool table as expenses because 
thosemachines were returned to their supplier, and Pinnacle 
wascredited with that amount less the restocking fee. Because 
of themanner in which the damages for the pool table were 
calculated,we hold that Pinnacle should have deducted the cost of the 
pooltable rather than depreciation, but we sustain the trial 
court'sjudgment in all other respects.

[¶14]         The U.C.C. is "in 
large part a reformulation and restatement ofthe law merchant * * *." Park 
County Implement Co. v. Craig,397 P.2d 800, 802 (Wyo. 1964). In Locks v. Wade, 36 N.J. Super. 128, 114 A.2d 875, 877 (1955) (citations omitted), the 
courtapplied the law merchant to the calculation of damages in 
anaction for breach of the lease agreement for an 
automaticphonograph, and it said:

    An illustration with figures may 
make this more   
graphic. If the agreed rental under the lease amounts to $2,040, the cost of installation and of 
furnishing   
records and parts to $500, and the depreciation on   
the jukebox over the period of the lease to $700, the lessor stands to make $840 on the deal. If 
another   
customer presents himself, the lessor will buy another jukebox, which he is entitled to enter on 
his books at cost and depreciate in the same way as 
he   
does with the first. Thus, if he makes the same agreement with the second customer, he will 
make another $840 on the second lease. If the first 
lessee   
repudiates his agreement, the purchase of an additional machine will of course, be 
unnecessary, because the first machine can be leased to the 
second   
customer. In such a situation, under defendant's theory, the lessor would receive as damages for 
this repudiation only the $2,040 rental agreed on 
under   
the first lease, less the $2,040 rental for the same machine under the second lease, or nothing. 
This would leave the lessee only the $840 profit he 
will make under the second lease; whereas had the 
first lessee lived up to his bargain the lessor's 
profits would have been $840 on each of two leases, 
or $1,680.

    We conclude that the proper 
measure of damages here is the difference between the contract price and 
the cost of performing the first contract, as the 
court apparently held below. In the case of realty which (unlike 
the jukebox) is specific and not to be duplicated on 
the market, the lessor could not properly lease it 
to another for the same period unless the first 
lease were broken or terminated. In such a case the 
lessor should not be awarded two profits merely because 
of the first lessee's default.

    So in general we may say that 
gains made by a lessor on a lease entered into after the breach 
are not to be deducted from his damages unless the 
breach   
enabled him to make the gains. The recoverable damages in the case of a contract are such as 
may reasonably be within the contemplation of the 
parties   
at the time of the contract * * *; and with that in view, we should not in the present case deny 
lessor the benefit of his bargain.

See also Seaboard Music Co. v. Germano, 24 Cal. App. 3d 618, 101 Cal. Rptr. 255 (1972); Weiman v. 
Butterman, 124 Ill. App.2d 246, 260 N.E.2d 321 (1970); Double D 
Amusement Co. v. Hawkins,20 Utah 2d 395, 438 P.2d 811 (1968).

The essential formula adopted for the measure of damages is 
thedifference between the contract price and the imputed 
directcosts of performing that contract.

[¶15]         We are satisfied 
the same result pertains under Wyoming'sU.C.C. Article 2.A governs transactions involving leases, 
andincorporates legal rules and tenets which were part of the 
commonlaw, in particular, that of bailments for hire. WYO. STAT. 
§§34.1-2.A-101 to -532. Article 2 on sales generally provides 
themodel for the provisions of Article 2.A relating to 
remedies. Theprovisions for remedies of a lessor in the event of a 
repudiationby a lessee are set forth in WYO. STAT. § 34.1-2.A-523 
(emphasisadded):

    (a) If a lessee wrongfully 
rejects or revokes acceptance of goods or fails to make a payment 
when due or repudiates with respect to a part or 
the whole, then, with respect to any goods involved, 
and with respect to all of the goods if under 
an installment lease contract the value of the 
whole lease contract is substantially impaired 
(section 34.1-2.A-510), the lessee is in default under 
the   
lease contract and the lessor may:

      (i) Cancel the lease 
contract (section 34.1-2.A-505(a));

      (ii) Proceed 
respecting goods not identified to the lease contract (section 34.1-2.A-524);

      (iii) Withhold 
delivery of the goods and take possession of goods previously delivered 
(section 34.1-2.A-525);

      (iv) Stop delivery of 
the goods by any bailee (section 34.1-2.A-526);

      (v) Dispose of the goods and recover 
damages (section 34.1-2.A-527), or retain 
the goods and recover damages (section 
34.1-2.A-528), or in a proper case recover rent (section 
34.1-2.A-529);

      (vi) Exercise any other rights or pursue 
any other remedies provided in the 
lease contract.

    (b) If a lessor does not fully 
exercise a right or obtain a remedy to which the lessor is entitled 
under subsection (a), the lessor may recover the 
loss resulting in the ordinary course of events from 
the lessee's default as determined in any 
reasonable manner, together with incidental damages, 
less expenses saved in consequence of the 
lessee's default.

    (c) If a lessee is otherwise in 
default under a lease contract, the lessor may exercise the 
rights and pursue the remedies provided in the 
lease contract, which may include a right to cancel 
the lease. In addition, unless otherwise provided in 
the lease contract:

      (i) If the default substantially impairs 
the value of the lease contract to the 
lessor, the lessor may exercise the rights and 
pursue the remedies provided in subsection (a) 
or (b); or

      (ii) If the default 
does not substantially impair the value of the lease contract to the lessor, 
the lessor may recover as provided in subsection (b).

[¶16]         The disposition of 
the goods by the lessor is provided for in WYO. STAT. § 34.1-2.A-527 (emphasis added):

    (a) After a default by a lessee 
under the lease contract of the type described in   section 
34.1-2.A-523(a) or 34.1-2.A-523(c)(i) or after the lessor refuses to deliver or 
takes possession of goods (section 34.1-2.A-525 
or 34.1-2.A-526), or, if agreed, after other default 
by a lessee, the lessor may dispose of the 
goods   
concerned or the undelivered balance thereof by lease, sale, or otherwise.

    (b) Except as otherwise provided 
with respect to damages liquidated in the lease agreement 
(section 34.1-2.A-504) or otherwise determined pursuant to   
agreement of the parties (sections 34.1-1-102(c) and 34.1-2.A-503), if the disposition is by 
lease agreement substantially similar to the original 
lease   
agreement and the new lease agreement is made in good faith and in a commercially reasonable manner, 
the lessor may recover from the lessee as damages 
(1) accrued and unpaid rent as of the date of 
the commencement of the term of the new lease 
agreement, (2) the present value, as of the same date, of 
the total rent for the then remaining lease term of 
the original lease agreement minus the present value, 
as of the same date, of the rent under the new 
lease   
agreement applicable to that period of the new lease term which is comparable to the then remaining 
term of the original lease agreement, and (3) 
any   
incidental damages allowed under section 34.1-2.A-530, less expenses saved in consequence 
of the lessee's default.

    (c) If 
the lessor's disposition is by lease agreement that for any reason does 
not qualify for treatment under subsection (b), or 
is by sale or   
otherwise, the lessor may recover from the lessee 
as if the lessor had elected not to 
dispose of the goods and section 34.1-2.A-528 
governs.

    (d) A subsequent buyer or lessee 
who buys or leases from the lessor in good faith for value as a 
result of a disposition under this section takes the 
goods   
free of the original lease contract and any rights of the original lessee even though the lessor fails 
to comply with one [1] or more of the requirements 
of   
this article.

    (e) The lessor is not accountable 
to the lessee for any profit made on any disposition. A lessee who 
has rightfully rejected or justifiably revoked 
acceptance shall account to the lessor for any excess over 
the amount of the lessee's security interest 
(section 34.1-2.A-508(e)).

The provisions of WYO. STAT. § 34.1-2.A-528, referred to in 
WYO. STAT. § 34.1-2.A-527(c), with respect to the damages of the 
lessor are:

    (a) Except as otherwise provided 
with respect to damages liquidated in the lease agreement 
(section 34.1-2.A-504) or otherwise determined pursuant 
to   
agreement of the parties (sections 34.1-1-102(c) and 34.1-2.A-503), if a lessor elects to retain the 
goods or a lessor elects to dispose of the goods and 
the   
disposition is by lease agreement that for any reason does not qualify for treatment under 
section 34.1-2.A-527(b), or is by sale or otherwise, 
the   
lessor may recover from the lessee as damages for a default of the type described in section 34.1-2.A-523(a) or 34.1-2.A-523(c)(i), or, if 
agreed, for other default of the lessee, (1) accrued 
and unpaid rent as of the date of default if the 
lessee   
has never taken possession of the goods, * * *, (2) the present value as of the date determined 
under clause (1) of the total rent for the then 
remaining lease term of the original lease agreement minus 
the present value as of the same date of the market 
rent at the place where the goods are located computed 
for   
the same lease term, and (3) any incidental damages allowed under section 34.1-2.A-530, less 
expenses saved in consequence of the lessee's default.

    (b) If 
the measure of damages provided in subsection (a) is inadequate to put 
a lessor in as good a position as performance 
would have, the   
measure of damages is the present value of 
the profit, including reasonable 
overhead, the lessor would have made from full 
performance by the lessee, together with any incidental 
damages allowed under   
section 34.1-2.A-530, due allowance for 
costs reasonably incurred and due credit 
for payments or proceeds of disposition. 
(Emphasis added.)

We are satisfied that the provisions of this statute apply 
to determine the damages resulting from the repudiation of the 
lease by The Corner.

[¶17]         We find this 
pertinent statement as to when profit is the measure of damages in 3A WILLIAM D. HAWKLAND & 
FREDERICK H. MILLER, UNIFORM COMMERCIAL CODE SERIES § 2A-528:03, at 
1102-03 (1993) (footnotes omitted, emphasis added):

    The principal measure of recovery 
provided by section 2A-528 is the difference between the 
market rent and the contract rent together with 
incidental   
damages. This measure is designed to result in a recovery that approximates the value of the 
lessor's bargain. Sometimes, however, this formula, 
which   
subtracts the market rent from the contract rent does not afford an adequate basis upon which to 
measure the value of the lessor's bargain. In these 
cases,   
the lessor is permitted to compute damages for qualified defaults by proving loss of 
expected profits.

    A simple illustration of a 
situation in which damages based upon the difference between the 
market and contract rent do not make the lessor whole is 
one in which the subject of the lease involves goods 
that lease under a standard lease contract. For 
example, suppose that an automobile dealer leases a car to 
a lessee for $7,500, which is the standard 
lease offered by this dealer for this car; that the 
lessee repudiates the deal and refuses to take possession 
of the car, or pay, and that the lessor then 
releases the same car to another customer for $7,500. In 
this case, the lessor would not want to use the rule 
of section 2A-527 to measure damages, because there 
is no difference between the release rent and 
the contract rent. Nor would the dealer want to use 
the rule for damages stated in section 2A-528(1) 
[WYO. STAT. § 34.1-2.A-528(a)], for there also would 
seem to be no difference between the market and 
contract rents. This might suggest that the 
lessor has not been injured by the repudiation, 
but the lessor has lost a profit because of the 
default if another car   
could have been leased to the second customer; 
that is, if the lessee had not 
defaulted, the lessor would have leased two cars instead of 
one. Stated differently, if it is assumed that 
the lessor has an unlimited supply of cars, the 
lessee's default costs the lessor a lease, because no 
matter how many cars the lessor may lease in a given 
period, the lessor would have leased one more had the 
lessee not defaulted. This arguably should be 
equally true if the dealer could have sold another 
car to the second   
customer, because the recovery is not for the 
profit on the second transaction; that 
profit exists. The point is that the second 
transaction should not be made possible by the lessee's 
default; the absence of   
that circumstance is what demonstrates a loss to 
the lessor. See Comment 2 to 
section 2A-529. Any economic consequence resulting from a 
dissimilarity in the transactions can be adjusted by due credit 
as provided in section 2A-528(2) [WYO. STAT. 
§ 34.1-2.A-528(b)].2

[¶18]         This case fits that 
analysis. Pinnacle produced evidence that "there are a limited number of locations versus a virtually 
unlimited amount of equipment." The analogy to the example 
concerning the leasing of cars is clear. Any other 
transactions or mitigation, including re-leasing, by Pinnacle, would fit 
because those transactions might have occurred if The 
Corner had performed. The Corner's repudiation did not make those 
transactions possible. We hold that, in an instance such as 
this, the lessor has no duty to endeavor to mitigate damages by 
re-leasing the equipment because its damages remain the 
same. It still loses the benefit of its bargain under the lease.

[¶19]         Clearly, WYO. STAT. 
§ 34.1-2.A-528(a) does not afford an adequate basis for measuring Pinnacle's damages. That 
formula subtracts the market rent from the contract rent and, 
potentially, would leave Pinnacle with no damages. The 
result deprives Pinnacle of the profit provided in the lease with 
The Corner and does not leave it in as good a position as it 
would have attained if the Agreement had been performed. That is the reason for the 
provision in WYO. STAT. § 34.1-2.A-528(b); it is to be 
invoked "[i]f the measure of damages provided in subsection (a) is 
inadequate to put a lessor in as good a position as 
performance would have * * *."

[¶20]         We turn to The 
Corner's argument that Pinnacle is required to deduct as expenses the full costs of the jukebox, $4,500, 
and the pool table, $1,850, rather than as calculated depreciation 
for the Agreement's three-year period. Pinnacle's evidence 
established it had applied a useful life of twenty years to 
the jukebox and the pool table, and that it deducted as 
expenses depreciation of $675 on the jukebox and $277.50 on the pool 
table. We perceive the useful life Pinnacle applied to the 
jukebox was indeed generous as far as The Corner was 
concerned, and we find no error in that computation.

[¶21]         We are satisfied, 
however, that Pinnacle should have deducted the cost of the pool table in arriving at its damages. The 
damages for the pool table were computed as though the 
option to purchase at the end of the first twelve months had been 
exercised by The Corner. The damages for the second and third years 
of the lease were reduced to $75 per month for the maintenance and 
league servicing contract. Since the damages were computed 
in that way, the cost of the pool table ($1,850) should have 
been credited against these damages rather than the smaller 
amount of depreciation ($277.50). This adjustment would increase the 
damages for the lease of the pool table by $277.50 and 
decrease those damages by $1,850. This leaves a net loss of profits 
for the pool table of $1,670 instead of the $3,242.50 reflected 
in Exhibit C. We will remand the case for the trial court to 
effect that adjustment in the amount of damages to be reduced to 
the present value.

[¶22]         The Corner contends 
Pinnacle also should be required to deduct overhead expenses it did not incur. The language of our 
statutes is clear, and it provides, "the measure of damages is the 
present value of the profit, including 
reasonable overhead * * *." WYO. STAT. § 34.1-2.A-528(b) (emphasis added). The provision is 
so stated because the drafters of the U.C.C., as it was 
adopted in Wyoming, recognize a difference between the effect of fixed 
and variable costs. WYO. STAT. § 34.1-2.A-528(b) is a somewhat 
revised version of WYO. STAT. § 34.1-2-708(b) regarding 
sales.  WYO. STAT. § 34.1-2.A-528, comment 4. A treatise explains 
that, to bridge the gap between new cases of leased equipment 
[decided under WYO. STAT. § 34.1-2.A-528] and those decided under 
existing law regarding sales [WYO. STAT. § 34.1-2-708(b)], the 
process will be predictable:

  
It thus seems likely that, at least initially, the courts will resolve any interpretative 
difficulties presented by the lessor's profit formula by 
referring to the voluminous case law that deals with 
the seller's profit formula. For example, "lost 
volume"   
lessors and those left with incomplete goods as a result of the lessee's default will no doubt 
be allowed ready access to the profit formula in 
Section   
2A-528(2).

2 ROY RYDEN ANDERSON, DAMAGES UNDER THE UNIFORM COMMERCIAL 
CODE §

15:14, at 24-25 (1992) (footnote omitted).

[¶23]         In 1 ROY RYDEN 
ANDERSON, DAMAGES UNDER THE UNIFORM COMMERCIAL CODE § 2:10, at 20-21 (1992) (footnote omitted, emphasis 
added), relating to the recovery of overhead under the profit 
formula of the sales provision of the U.C.C., § 2-708(2), the concept 
is explained in this way:

    The profit formula of Section 
2-708(2) includes a dichotomy of expenses. The formula provides for 
a recovery by the seller of overhead expenses 
but requires the seller to account to the buyer 
for "expenses saved." The distinction is between 
fixed expenses or "overhead," which are by definition 
not saved by the breach (e.g., utilities, 
management salaries, and other fixed costs of doing 
business), and expenses which are "variable" in that they 
are attributable only to the breached contract and may 
be saved if not incurred prior to the breach 
(e.g.,   
labor, materials, and expenses of transportation attributable to the breached contract). 

    Clearly, if the expenses are 
saved the defendant buyer should be credited with the savings; 
otherwise the seller will receive a windfall. The 
important point is that overhead expenses, which by definition are 
fixed and do not vary from contract to contract, are 
not saved when a buyer breaches. That an aggrieved 
party,   
whether or not his action is governed by the Code, is entitled to recover such fixed expenses is now 
well settled by the cases. The clearest discussion of 
the   
proposition remains that of Judge Staley in Vitex Mfg. Corp., Ltd. v. Carbitex 
[sic] Corp.  [377 F.2d 795 (3d Cir. 1967)]. If a seller were not allowed 
to   
recover from the buyer the percentage of the fixed overhead expenditures attributable to the 
breached contract, the profitability of the seller's 
remaining sales transactions would be unfairly reduced. 
Assume, to borrow Judge Staley's example, that the seller 
has a fixed overhead of $10,000 and five sales 
contracts.  Each contract then bears $2,000 of the 
overhead expense. If one of the contracts is breached and 
the seller is not allowed to recover the $2,000 
overhead, each of the remaining contracts will be forced 
to bear $2,500 of the overhead, and the 
seller's profitability on these remaining contracts will 
be reduced accordingly.

    At trial, 
the most effective way to prove profit plus reasonable overhead under 
Section 2-708(2) is to establish the unpaid price of the 
breached contract and to deduct only the variable 
expenses attributable to it. The resulting figure would 
then include both profit and fixed overhead expenses. 
The courts have uniformly approved this 
procedure. This technique will avoid the near impossibility of proving 
every item of a seller's overhead and the tedium of 
having opposing counsel object time and again as to 
the unreasonableness of each and every item.

This formula has been approved in the decided cases. Teradyne, Inc. v. Teledyne Industries, Inc., 676 F.2d 865 (1st Cir. 1982); Vitex Mfg. Corp., Ltd. v. Caribtex Corp., 377 F.2d 795 (3d Cir. 1967); Jericho Sash & Door Co., 
Inc. v. Bldg. Erectors, Inc., 362 Mass. 871, 286 N.E.2d 343 (1972). But see Rogerson Aircraft Corp. v. Fairchild Indus., Inc., 632 F. Supp. 1494 (C.D.Cal. 1986) (calculating damages by adding overhead back into 
recovery of "net" profit under § 2-708(2)). See also Universal Power Sys., Inc. v. Godfather's Pizza, Inc., 818 F.2d 667 (8th Cir. 1987); Scullin Steel Co. v. Paccar, 
Inc., 708 S.W.2d 756 (Mo. Ct. App. 1986) (dealing with "variable overhead expense"). 
We hold that, except for the pool table, the trial court 
correctly applied the provisions of WYO. STAT. § 34.1-2.A-528(b) in 
calculating the damages awarded to Pinnacle, and those 
calculations are supported by the evidence.

[¶24]         A final contention 
of The Corner is that the Agreement requires Pinnacle to use records of income from its machines to 
calculate income from the cigarette machines and dartboards. Pinnacle 
did not have any record of income from machines it had placed 
at The Corner and, therefore, The Corner contends Pinnacle is 
unable to demonstrate its damages. The Corner also contends the 
U.C.C. does not apply in calculating damages because the Agreement 
provides for no rent concerning the cigarette machines and the 
dartboard.  We hold that the U.C.C. does apply to the calculation of 
the damages on the dartboard and the cigarette machines.

[¶25]         WYO. STAT. § 
34.1-1-106 sets forth the policy of the U.C.C. concerning the application of its provisions:

    (a) The 
remedies provided by this act [§§ 34.1-1-101 through 34.1-10-104] 
shall be liberally administered to the end that the 
aggrieved party may be put in as good a position as if 
the other party had fully performed but neither 
consequential or special nor penal damages may be had except 
as   
specifically provided in this act or by other rule of law. (Emphasis added.)

Official Comment 1 with respect to this section states, in 
pertinent part:

  
The third purpose of subsection (1) [Wyo. Stat. § 34.1-1-106(a)] is to reject any doctrine that 
damages must be calculable with mathematical 
accuracy.    
Compensatory damages are often at best 
approximate:  they have to be proved with 
whatever definiteness and accuracy the facts permit, but no 
more. (Emphasis added.)

The language of WYO. STAT. § 34.1-2.A-528(b) (emphasis 
added) includes the statement that "the 
measure of damages is the present value of the profit * * *." We have addressed uncertainty and indefiniteness with respect to contract 
damages and adopted the rule that calculation of lost future 
profits must be made with the "best proof available as to amount of 
loss."  Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 548 (Wyo. 1993) (quoting Wyoming 
Bancorporation v. Bonham, 563 P.2d 1382, 1385, reh'g denied, 566 P.2d 219 (Wyo. 1977). That profit may be the result of commissions, rents, shared revenues, or 
whatever form the lease provides for the derivation of profits.

[¶26]         The revenue figures 
for a dartboard and cigarette machines were provided to Pinnacle by The Corner for the year immediately 
preceding the lease between Pinnacle and The Corner. These 
figures accounted for seasonal variations; were from the 
same location and clientele to be served by Pinnacle's machines; 
and they do appear to be the best proof available. The Corner 
made no effort to demonstrate these figures were not the best proof 
available. In light of the provision for liberal 
administration of the U.C.C. so the aggrieved party may be put in as good 
a position as if the other party had fully performed, we 
approve the method of proving damages used by Pinnacle, which the 
trial court relied upon. The evidence was sufficient to ascertain 
the damages, and the trial court did not abuse its discretion 
in using those figures.

[¶27]         We hold that the 
damages were correctly established under the U.C.C., and the trial court did not invoke the liquidated 
damages clause of the Agreement. The Corner was not penalized by 
the calculation of damages by the trial court, which correctly 
applied WYO. STAT. § 34.1-2.A-528(b) providing for lost 
profits as the measure of damages. The damages for the lease of the 
pool table must be adjusted by deducting the cost of the pool 
table and adding the amount allowed for depreciation. That has 
the effect of reducing the total damages by $1,572.50. We 
affirm the judgment entered by the trial court, but we remand the case 
for the entry of a corrected judgment in favor of Pinnacle.

FOOTNOTES

1 Paragraph 2 of the 
Agreement reads, in pertinent part:

    2. The 
proceeds derived from the machines placed at   the business 
establishment shall be divided hereto as follows:

    Jukebox: Lease with option to renew. Payment 
of $75.00 $65.00 per week to 
Operator. Location shall receive all cash proceeds 
from the jukebox. Lease to take effect __/__/93. 
Operator shall maintain, subject to normal wear 
and tear. Maintenance shall include license fees, 
parts, labor, travel. Operator shall also provide all 
CD's. Operator will install 2 additional CD's monthly 
for rotation. Location shall have option of getting 
new jukebox after 36 monthly   payments, providing 
all payments are current, and at the prevailing rate of 
lease at that time for new equiment [sic]. * * 
*.

    Pool Tables (1): Lease with option to 
purchase.  Down payment of $400.00 
required per table. Payment of $250.00 per month to 
Operator for 12 months.  Location shall receive 
all cash proceeds from the pool tables. Lease begins 
on day of installation (__/__/93). Lease shall 
include all maintenance and supplies necessary to 
keep the tables in good repair.  * * * Location will have 
the option of purchasing the table/s at the completion 
of first twelve (12) months lease for $1.00 per 
table, provided the Location also agrees to an additional 
two year Maintenance, League Service agreement with 
Games Plus. This agreement shall cost $75.00 per 
month for the 24 months of the agreement. This agreement 
shall include all supplies,   labor, parts 
necessary to conduct pool leagues at Location. * * *.

    Amusement: This classification shall 
include pinballs, videos, 
electronic darts, and any other games or machines that 
provide amusement only.  Location _50_%; Operator 
_50_%. * * *.

        *      
*      *      
*      *      
*

    Vending Machines: Commission to Location in 
the sum of _10%_ of gross 
income; balance to Operator. * * *.

     

2 Wyoming identifies its 
subsections with uncapitalized letters within 
parentheses. The uniform act from which Wyoming took its act identifies 
its subsections with numerals within parentheses.