Title: Intergraph Corporation et al. v. Bentley Systems Incorporated and Bentley Systems Europe B.V.
Citation: N/A
Docket Number: 1080300
State: Alabama
Issuer: Alabama Supreme Court
Date: September 10, 2010

REL: 03/12/2010
REL: 09/10/2010 As modified on denial of rehearing
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2009-2010
____________________
1080300
____________________
Intergraph Corporation et al.
v.
Bentley Systems Incorporated and Bentley Systems Europe B.V.
____________________
1080405
____________________
Bentley Systems Incorporated and Bentley Systems Europe B.V.
v.
Intergraph Corporation et al.
Appeals from Madison Circuit Court
(CV-02-2850.80)
1080300 and 1080405
2
MURDOCK, Justice.
Intergraph 
Corporation 
and 
its 
subsidiaries
("Intergraph") appeal from a judgment of the Madison Circuit
Court in its declaratory-judgment action against Bentley
Systems Incorporated and Bentley Systems Europe 
B.V.
("Bentley").  Bentley cross-appeals from the Madison Circuit
Court's disposition of its breach-of-contract counterclaim
against Intergraph.  In both the appeal and the cross-appeal,
we affirm in part and reverse in part.
I.  Facts and Procedural History
This is the second time this complex case has come before
this Court for disposition.  In the first appeal, Bentley
Systems, Inc. v. Intergraph Corp., 922 So. 2d 61 (Ala. 2005)
("Bentley I"), we reversed the trial court's judgment and
remanded the case, ordering that live testimony was required
to resolve several disputed issues and suggesting that the
trial court appoint a special master to preside over the new
proceeding.  Because a detailed summary of the background to
this dispute was provided in Bentley I, we quote extensively
from that opinion at the outset, and we use the terms defined
therein as defined terms in this opinion:
1080300 and 1080405
3
"Bentley and Intergraph entered into an asset
purchase agreement ('the APA') whereby Bentley
purchased 
three 
software 
product 
lines 
from
Intergraph.  The product lines, known as the Civil,
Raster, and Plotting (hereinafter referred to as
'CRP') products, are software applications used by
architects and engineers to prepare documents such
as diagrams and blueprints.  In conjunction with the
sale, Bentley executed a promissory note in favor of
Intergraph that was subject to future adjustments
based upon the amount of certain revenues generated
from the CRP products.
"In addition to the CRP products, Intergraph
transferred to Bentley a portfolio of maintenance
agreements with its CRP customers and the exclusive
right to convert those Intergraph agreements to
maintenance agreements with Bentley.  Maintenance
agreements entitle users to product support and free
upgrades.  For products like the CRP products, which
are geared to professionals, maintenance agreements
represent an important recurring stream of revenue
for software companies like Bentley and Intergraph."
"B.  The Partners
"Bentley Systems is a Delaware corporation; its
principal 
place 
of 
business 
is 
in 
Exton,
Pennsylvania.  It is the parent corporation of
Bentley Systems Europe, a Netherlands corporation
and the principal subsidiary through which Bentley
does business in foreign countries.  According to
the facts stipulated to by the parties, 'Bentley is
a developer of professional software products that
it licenses to architects and engineers to design
buildings and other public projects.'  Bentley's
principal product is MicroStation, a computer-aided
design software program.  Many of Bentley's other
software products, including most of the CRP
products 
acquired 
from 
Intergraph, 
require
MicroStation in order to operate.
1080300 and 1080405
4
"Intergraph 
Corporation 
is 
a 
Delaware
corporation; its principal place of business is in
Huntsville, Alabama.  Intergraph Corporation is the
parent 
corporation 
of 
[several 
foreign
subsidiaries].  According to the parties' stipulated
facts, 'Intergraph's business includes providing
technical software products for process and power,
utilities, communications, mapping and geographical
information systems, photogrammetry, and public
safety.'  In essence, Intergraph provides software
for various technology-intensive industries. 
"C.  The APA
"In November 1999, Intergraph and Bentley first
discussed the sale of Intergraph's CRP products to
Bentley.  Because most of Intergraph's CRP products
run on Bentley's MicroStation, the majority of
Intergraph's CRP users were also existing Bentley
customers, and the parties were confident that
Bentley would be able to acquire substantially all
of the CRP maintenance income stream within the year
following the closing on the sale.
"After signing a letter of intent on April 20,
2000, negotiating the terms of the contract for
several months, and postponing the closing several
times, the parties closed Bentley's purchase of the
CRP 
products 
and 
maintenance 
agreements 
from
Intergraph with the execution of the APA on December
26, 2000.  Intergraph represented in the APA that of
the $34 million in total revenue from its CRP
products in 1999, $20 million was derived from
maintenance on the products.  The purchase price for
the CRP products consisted of (1) a cash payment by
Bentley in the amount of $13,462,728; and (2) a
promissory note executed by Bentley dated as of
December 1, 2000.  The amount of the cash payment is
not at issue in this case.  The note was given a
preliminary value of $11,087,112 at the time of the
closing and was to be adjusted based upon Bentley's
success in transitioning the Intergraph maintenance
1080300 and 1080405
5
agreements to Bentley's maintenance program called
SELECT.
"At the closing, Intergraph transferred all of
its property rights in the CRP products to Bentley.
All authority to sell new licenses for CRP products
and to enter into new maintenance agreements on CRP
products belonged solely to Bentley.  Bentley hired
88 Intergraph employees, who were principally
dedicated to the CRP products.  Under the APA,
Bentley actually provided the services under the
maintenance agreements Intergraph had with the
customer until each agreement expired or was due to
be renewed.  The APA was structured to provide for
an orderly transition of the maintenance agreements
on the CRP products from Intergraph to Bentley as
the agreements expired or came up for renewal during
the one-year period following December 1, 2000 ('the
APA year').  The maintenance agreements for the CRP
products were scheduled to expire in increments
during each month of the APA year.  After the
closing, the APA required the parties to act jointly
to solicit and encourage customers to renew their
maintenance agreements solely with Bentley.   The
APA also required Intergraph to provide Bentley with
detailed data regarding the maintenance agreements
and to update that data at certain specific
intervals. 
"Almost immediately after the closing, however,
difficulties in complying with the provisions of the
APA became apparent. Intergraph had difficulty
compiling the data it had committed to provide to
Bentley. Bentley discovered that much of the data
Intergraph 
provided 
it 
was 
incomplete 
and/or
inaccurate, a problem compounded when the data in
the various updates furnished by Intergraph changed
from submission to submission.  In fact, the changes
were so extensive that Intergraph never complied
with a requirement in the APA that all changes in
the updated data submissions be clearly marked.
Furthermore, after the closing date, Intergraph, for
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6
its own account, continued to renew maintenance
agreements on CRP products in the United States and
in Europe.  During 2001, Intergraph provided Bentley
with lists of contracts Intergraph had renewed in
the United States during the year, and paid Bentley
100% of the revenues it had collected on certain of
those contracts that renewed during 2001.  In April
2001, Bentley organized a CRP task force to address
some of the foregoing problems.  The goal of the CRP
task force was to significantly increase the amount
of new and renewed SELECT subscriptions for CRP
products.
"D.  The Promissory Note
"The 
gravamen 
of 
this 
dispute 
is 
the 
calculation
of the amount due under the promissory note.  The
value of the note as adjusted depended upon the
calculation of what the APA refers to as transferred
maintenance 
revenues 
('TMR') and 
renewed maintenance
revenues ('RMR').  Both TMR and RMR are defined
terms under the APA, together with the corresponding
note adjustments called for by the APA. TMR
represented the revenues accruing [during the APA
year] from the maintenance agreements while those
agreements were still in Intergraph's name. RMR
represented 
the 
revenues 
accruing 
from 
the
maintenance agreements [during the APA year] after
those agreements were renewed by Bentley.
"The calculation of TMR, according to section
7.1 of the APA, was based upon a schedule of
transferred CRP maintenance agreements ('the TM
schedule') furnished by Intergraph at the time of
closing.  The TM schedule Intergraph furnished when
the APA was executed purported to provide Bentley
with a list of all CRP maintenance agreements in
effect in the United States as of October 31, 2000,
and outside the United States as of July 31, 2000,
'specifying 
without limitation, the 
products 
covered
thereunder, the remaining terms thereof and the
Maintenance Agreements that are scheduled to expire
1080300 and 1080405
7
on or before the MCO Date.'  The TM schedule
contained a projection of anticipated revenue for
the 12 months following the closing. Multiplying
this amount times 1.5 established the preliminary
value of the note at closing at $11,087,112. Bentley
began making monthly payments to Intergraph based
upon that preliminary value.
"After the closing, the APA required Intergraph
to update the TM schedule to list all maintenance
agreements in effect as of December 1, 2000, the
maintenance cutoff date ('the MCO date').  This
update was to occur in two steps, the first within
50 days of closing and the second within 150 days of
closing.  The APA required Bentley to adjust the
note, retroactively to December 1, 2000, to reflect
the total revenues listed on the 50- and 150-day
updated TM schedules. Bentley was required to adjust
the note on the 3-, 6-, and 14-month anniversaries
of the MCO date.  The first adjustment to the note
was to occur on March 1, 2001, two weeks following
the scheduled date for Intergraph's submission of
the 50-day updated TM schedule, at which time the
note was to be increased to 1.5 times the TMR shown
on the 50-day update.  The second adjustment to the
note was to occur on June 1, 2001, one week
following the scheduled date for Intergraph's
submission of the 150-day updated TM schedule, at
which time the value of the note was to be increased
to 1.5 times the TMR shown on the 150-day update.
The final adjustment to the note was to occur on
February 1, 2002, at which time the value of the
note was to be increased to 1.5 times the RMR.
"Intergraph's 
50-day 
updated 
TM 
schedule 
was 
due
on February 14, 2001. On that date, Intergraph
provided 
maintenance 
data 
for 
the 
Intergraph
European subsidiaries directly to Bentley Systems
Europe. Intergraph did not deliver the 50-day
updated TM schedule to Bentley's corporate office in
Pennsylvania until March 23, 2001.  Based upon this
data, Bentley increased the principal value of the
1080300 and 1080405
8
note to $14,863,218 and also increased the amount of
its monthly payments to Intergraph.
"Intergraph's 150-day updated TM schedule was
due on May 25, 2001.  On that date, Intergraph again
provided 
maintenance 
data 
for 
the 
Intergraph
European subsidiaries directly to Bentley Systems
Europe. Intergraph did not deliver the 150-day
updated TM schedule to Bentley's corporate office in
Pennsylvania on May 25, 2001, but instead, provided
various files to Bentley throughout June and July.
On July 26, 2001, Intergraph e-mailed maintenance
data for the Asia-Pacific region to Bentley's
corporate office.  The updated schedules provided by
Intergraph changed information about some of the
maintenance agreements already on the schedule,
including the ending dates of some of those
agreements.
"....
"Various negotiations ensued.  As a result of
those negotiations, Intergraph submitted additional
data to Bentley through October 2001.  Bentley
increased the principal value of the note in October
2001.  On or about January 24, 2002, Bentley
proposed a final note value of $21,214,808,
calculated 
by 
multiplying 
1.5 
times 
TMR 
of
$9,465,076 and 1.5 times RMR of $4,678,129 and
adding the results.  According to Intergraph,
Bentley based its computation on a set of rules it
had unilaterally constructed, which Intergraph says
do not comply with the APA.  According to Bentley,
it was necessary to construct such rules to address
situations not contemplated by the APA.  Although
Intergraph objected to the proposed note value of
$21,214,808, contending that Bentley had suppressed
the value of the note by approximately $3.05
million, Bentley began making monthly payments based
upon its proposed final note adjustment.  Bentley
stopped making payments on the note in March 2003.
1080300 and 1080405
9
"E.  Procedural History
"Intergraph Corporation sued Bentley Systems in
December 2002, seeking (1) a declaration of the
principal value of the note, (2) a declaration of
the amount owed by Bentley on the note, and (3)
indemnification for litigation costs as provided
under the APA. Bentley then filed a counterclaim
against Intergraph alleging breaches of the APA.
Bentley contended (1) that Intergraph failed to
submit data updates required by the APA in a timely
fashion, (2) that the data when submitted was
incomplete and inaccurate, and (3) that Intergraph
renewed CRP maintenance agreements for its own
account. Bentley also sought indemnification for
litigation costs as provided under the APA.
"At the trial court's suggestion, the parties
agreed to submit the case to the trial court on
stipulations, depositions, and exhibits.  The trial
court heard oral argument from counsel on May 11,
2004, and announced its decision upon the conclusion
of the argument.  The trial court entered a judgment
declaring that Bentley's calculation of the note
principal, interest, and amount owed was correct.
The trial court established the value of the note at
$21,152,378 
and 
concluded 
that 
Bentley 
owed
Intergraph a balance of $7,539,944 on the note,
allocating $6,769,934 to unpaid principal and
$770,010 to accrued and unpaid interest.  The trial
court found in favor of Intergraph on Bentley's
counterclaim.  The trial court also awarded
Intergraph and Bentley their respective litigation
costs.  Because Intergraph's legal expenses exceeded
Bentley's legal expenses by $409,282.72, the trial
court awarded the amount of the difference to
Intergraph.  The trial court entered a final
judgment in favor of Intergraph on May 12, 2004."
Bentley I, 922 So. 2d at 65-68 (footnote omitted).
1080300 and 1080405
The amount included interest on the judgment.
1
As we explained in Bentley I, the record included no live
2
testimony; therefore, our review was de novo. Bentley I, 922
So. 2d at 70-71.
10
Both parties appealed the trial court's original
judgment.  During the pendency of the appeal, Bentley paid
Intergraph $7,970.203.72.1
In Bentley I, this Court examined the parties' claims and
the trial court's conclusions in detail.  It settled some
issues, but determined that other issues could not be disposed
of without live testimony and further exploration at the trial
court level.   Concerning Intergraph's claims regarding the
2
principal value of the promissory note, this Court concluded:
"After reading the reports and depositions of
both experts, [Lester] Alexander [Intergraph's
expert] and [Dana] Northcut [Bentley's expert], we
conclude that we cannot accept either calculation in
its entirety.  Neither expert adequately explained
his 
theories 
and 
methodology 
in 
the 
case;
therefore, we find neither's conclusions reliable.
The APA provides significant guidance that allows us
to make certain conclusions, but after reviewing all
of the evidence before us, we find ourselves unable
to resolve all of the competing arguments in this
case." 
922 So. 2d at 81.  Consequently, this Court "reverse[d] the
judgment insofar as it held that Bentley's calculations of the
1080300 and 1080405
11
value of the promissory note were correct" and "remand[ed] the
case with directions to the trial court to take steps
necessary to resolve the disputed issues and then to calculate
the note 
principal in accordance 
with 
the 
guidelines" 
provided
in Bentley I.  922 So. 2d at 84.  The Court noted that "[t]he
trial court's use of a special master experienced in such
calculations and transactions and capable of navigating the
extensive databases used in this case would certainly be
warranted."  Id.  
Regarding 
Bentley's 
counterclaim 
against 
Intergraph, 
this
Court concluded that Intergraph had breached the APA by
providing Bentley with bad and late CRP-maintenance-agreement
data, and by "renew[ing] CRP maintenance agreements in
violation of what this Court considers to be a plain and
unambiguous provision in the APA that flatly prohibits such
renewals on Intergraph's part."  922 So. 2d at 91.  These
breaches of the APA by Intergraph resulted in lost profits for
Bentley because of delays in the renewal of, or nonrenewal of,
maintenance contracts.  The Court then explained:
"The difficulty in this case comes not from
determining 
whether 
Intergraph 
breached 
the
contract, but from determining questions such as to
what extent did the breach occur, to what extent was
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12
Bentley damaged thereby, to what extent did
Bentley's own actions contribute to the harm it
suffered, and to what extent was Bentley able to
mitigate its damages.  As to those questions, the
record reflects sharp factual disputes that we
cannot resolve on a cold record consistent with our
obligation to render a 'just' judgment.  §
12-2-7(1), Ala. Code 1975."
922 So. 2d at 92.  Accordingly, the Court "reverse[d] the
judgment insofar as the trial court held in Intergraph's favor
on Bentley's counterclaim," but it again remanded with
directions for the trial court to "take steps necessary to
resolve the disputed issues and then to calculate the damages
Bentley sustained as a result of Intergraph's breach of
contract in accordance with the guidelines set out above,
using a special master in this aspect of the case, if
necessary ...."  922 So. 2d at 93.  
Because of the nature of its disposition of the case, the
Bentley I Court set aside the attorney-fee award for
reconsideration by the trial court at the close of the
proceedings on remand.
On remand, the trial court referred all disputed issues
to a special master.  The special master conducted proceedings
in three separate phases and heard live testimony from a
1080300 and 1080405
Rule 53(e)(1), Ala. R. Civ. P., requires a special master
3
to "prepare a report upon the matters submitted to the master
... and, if required to make findings of fact and conclusions
of law, the master shall set them forth in the report."
13
number of witnesses.  The special master submitted a report3
in which he concluded that the principal value of the
promissory 
note 
("the 
note") 
should 
be 
adjusted 
to
$22,295,456; 
counting 
payments already 
made 
and 
cash
adjustments awarded to Intergraph, the special master
determined that Bentley owed Intergraph an additional
$1,539,744, 
including 
$500,000 
in 
retroactive 
interest, 
on 
the
note.  The special master awarded Bentley $2,226,486 on its
breach-of-contract counterclaim for lost profits.  He
concluded 
that 
Intergraph 
was 
entitled 
to 
indemnification 
from
Bentley for legal expenses totaling $6,636,144.20; he
concluded that Bentley was entitled to indemnification from
Intergraph 
for 
legal 
expenses 
totaling 
$5,731,077.98. 
 The 
net
result of all the special master's rulings was that, on
balance, Bentley must pay Intergraph $279,733.
After the special master submitted his findings to the
trial court, the trial court held a hearing pursuant to Rule
1080300 and 1080405
Rule 53(e)(2), Ala. R. Civ. P., provides, in pertinent
4
part, that in a nonjury action, the trial court
"shall accept the master's findings of fact unless
clearly erroneous.  Within ten (10) days after being
served with notice of the filing of the report any
party shall serve any written objections thereto
upon the other parties.  ...  The court after
hearing may adopt the report or may modify it or may
reject it in whole or in part or may receive further
evidence or may recommit it with instructions."
On 
December 
16, 
2008, 
Bentley 
paid 
Intergraph
5
$281,204.52, which included interest on the judgment.  
14
53(e)(2), Ala. R. Civ. P.   Thereafter, the trial court issued
4
an order providing an explanation for overruling the parties'
objections to the special master's report and adopting the
special master's findings of fact and conclusions of law.
Intergraph appealed the judgment to this Court, and Bentley
cross-appealed.   
5
II.  Standard of Review
"[A] court accepts a master's findings of fact in
non-jury actions unless clearly erroneous; and to
the extent the trial court has adopted the findings
of a master, this same standard applies to an
appellate review of these findings.  Rule 53(e)(2),
Ala. R. Civ. P., and committee comments to Rule 53,
Rule 52, Ala. R. Civ. P., and committee comments to
Rule 52.  In essence, a master's report is accorded
the same weight as a jury verdict and, therefore, is
not to be disturbed unless it is palpably and
plainly wrong.  Patterson v. Lovelady, 233 Ala. 554,
556, 172 So. 646, 648 (1937)."
1080300 and 1080405
15
Burgess Mining & Constr. Corp. v. Lees, 440 So. 2d 321, 327
(Ala. 1983) (emphasis omitted).
III.  Analysis
A.
Intergraph's Assignments of Error
(1)
Intergraph's Arguments Concerning the Award of
Damages to Bentley
Intergraph contends that the trial court committed
several errors by adopting the special master's findings of
fact and conclusions of law.  The majority of its arguments
pertains to the award of damages to Bentley on its
counterclaim for lost profits resulting from Intergraph's
breaches of the APA. 
Intergraph first contends that the special master was
precluded from awarding damages on Bentley's counterclaim
because, it says, Bentley failed to follow this Court's
command in Bentley I that it provide additional testimony
explaining the basis and methodology of its expert's damages
calculation.  Intergraph argues that this Court specifically
found the explanation of the damages calculation of Bentley's
accounting expert, Dana Northcut, to be unreliable and
insufficient to support an award of lost profits.  Because,
Intergraph says, Bentley provided no new explanation of
1080300 and 1080405
16
Northcut's damages model or methodology on remand, Northcut's
calculation remains unreliable and insufficient to support a
damages 
award. 
 
Consequently, 
Intergraph 
contends, 
the 
special
master erred in relying upon Northcut's calculation of the
damages 
Bentley 
sustained 
as 
a result 
of 
Intergraph's 
breaches
of the APA.
In Bentley I, this Court stated that "[n]either expert
adequately explained his theories and methodology in the case;
therefore, we find neither's conclusions reliable."  922
So. 2d at 81.  It added that "Northcut ... did not
sufficiently explain the basis for his damages calculation in
his deposition to allow us to accept his report without
additional explanatory live testimony.  [Lester] Alexander's
[Intergraph's 
expert] 
criticism 
of 
Bentley's 
damages
calculation is likewise insufficient without additional
explanatory live testimony."  Id. at 93.  On remand, Bentley
was unable to present live testimony from Northcut because he
died of cancer in February 2007 before additional testimony
was heard in this case.  Instead, Bentley presented 3.5 hours
of Northcut's videotaped deposition testimony to the special
1080300 and 1080405
17
master, and Intergraph presented 1.5 hours of his videotaped
testimony in rebuttal.  
The special master stated that Northcut's videotaped
deposition permitted him to evaluate Northcut's credibility,
something not possible with the previous deposition testimony
submitted in the form of a transcript.  He also noted that he
heard live testimony from Bentley executives Greg Bentley,
Malcolm Walter, and David Nation, who offered explanatory
testimony concerning "certain factual elements of the damages
theory." For example, they testified that, based on their
previous experience with maintenance contracts on similar
products, they expected to be able within the APA year to
enter into contracts retaining all Intergraph's maintenance
customers.  Robert Hewitt, the data analyst responsible for
calculating the value of the note, testified that, as to
maintenance contracts eventually obtained by Bentley, it was
able to retain 98% of them during the ensuing two years, thus
providing concrete evidence for Bentley's expectations.  
In addition, Hewitt testified about the data Bentley used
to calculate the note.  The special master permitted Hewitt to
testify "with respect to lower level data and calculations
1080300 and 1080405
Intergraph objects to the special master's use of
6
Hewitt's testimony to elaborate on any portion of Northcut's
damages calculation.  It contends that Hewitt lacked personal
knowledge, in violation of Rule 602, Ala. R. Evid., because
Northcut had testified that no one assisted him with his
calculation, and that Hewitt's testimony violated Rules 701,
702, and 703, Fed. R. Evid., pertaining to the requirements of
expert-witness testimony.  We conclude that the special master
properly limited Hewitt's testimony to avoid the errors
Intergraph alleges.  Furthermore, the Court finds that
Intergraph failed to provide adequate arguments in its brief
in this regard.  See Rule 28(a), Ala. R. App. P.
18
used in Prof.  Northcut's model" but concluded that Hewitt did
not qualify as an expert with respect to "the underlying 'but
for' damage theory."  The special master found that Hewitt
properly updated Northcut's damages model within his area of
expertise.   The special master concluded that Northcut's
6
videotaped deposition testimony together with the testimony of
these 
other 
Bentley 
witnesses 
fulfilled 
this 
Court's
requirement in Bentley I for "additional explanatory live
testimony" to explain the theory and methodology behind
Northcut's damages calculation.  
It is true that this Court was not so much concerned with
Northcut's credibility as a witness as it was that Bentley's
lost-profits damages theory and methodology be adequately
explained.  In this regard, as noted, a substantial amount of
1080300 and 1080405
19
videotaped deposition testimony by Northcut was introduced,
and testimony from Bentley executives provided further
explanation with regard to the damages theory.  Hewitt's
testimony 
provided 
some 
updating 
and 
elaboration 
on 
Northcut's
methodology.  
Moreover, it is notable that the special master also
spent 
considerable 
time 
examining 
Northcut's 
report 
in 
detail,
and concluded that, within certain strictures, Northcut's
methodology was sound.  This Court observed in Bentley I that
assigning a special master in this case would be helpful
because a special master would be "experienced in such
calculations and transactions and capable of navigating the
extensive databases used in this case ...."  922 So. 2d at 84.
Both parties agreed that the special master was well qualified
to hear the financial issues that are central to the parties'
dispute in this case.  
In sum, we conclude that the further testimony provided
by 
Bentley's 
other 
witnesses and the 
special master's in-depth
examination of Northcut's report met the requirement set out
by this Court in Bentley I that Bentley adequately explain its
damages calculation.  
1080300 and 1080405
20
Intergraph next argues that neither Bentley's expert nor
its executives established the fact of damages.  With respect
to Northcut, Intergraph asserts that `certainty in the fact of
damages is essential," Palmer v. Connecticut Ry. & Lightning
Co., 311 U.S. 544, 561 (1941), and it contends that Northcut
assumed damages because he insisted that customer data was
"fundamental" to the transaction at issue.  Northcut used a
"but for" theory in calculating Bentley's damages, meaning
that he assumed Bentley would be able to renew the vast
majority of the CRP maintenance agreements "but for"
Intergraph's breaches of the APA relating to the provision of
customer data and the renewal of customer contracts.  He
calculated Bentley's losses during the APA year and the
ensuing four years based on Bentley's inability to renew those
agreements during the APA year.  Intergraph essentially
complains that Northcut's methodology assumed damages without
any specific customer-by-customer evidence to support such
damages.
We find Intergraph's argument unpersuasive.  The fact
that Northcut testified that data was "fundamental" and that
damages could be established "by simple inference" does not
1080300 and 1080405
21
mean that damages were assumed.  It simply means that damages
were an obvious result of Intergraph's behavior because
customer data was vital to retaining the CRP maintenance
agreements.  As Northcut testified, there is "a direct link
between the information provided through this transaction and
Bentley's ability to transition these CRP seats to Bentley
maintenance."  Moreover, it is not surprising that Bentley did
not base its calculation on actual customer responses because
customers were not likely to know the reason behind Bentley's
failure to contact them.  Furthermore, Intergraph fails to
provide any authority stating that customer-by-customer, or
transaction-by-transaction, evidence is required to establish
damages in a situation involving lost profits, especially on
such a large scale.  In fact, several cases have held that it
is not. 
In 
Lindy 
Manufacturing 
Co. 
v. 
Twentieth 
Century
Marketing, Inc., 706 So. 2d 1169 (Ala. 1997), for example,
this Court concluded that a jury's award of lost profits to an
independent manufacturer's representative was not speculative
because 
the 
independent 
manufacturer 
established 
that 
securing
a particular client for the company would mean "a steady
1080300 and 1080405
22
volume of business" from the client in the future.  706 So. 2d
at 1177.  Because it was a foregone conclusion that the
company would reap future profits from the client secured by
the independent manufacturer's representative, the inability
to determine the exact amount of damages did not preclude the
award of such damages.  See 706 So. 2d at 1178.  Likewise, in
Mason & Dixon Lines, Inc. v. Byrd, 601 So. 2d 68 (Ala. 1992),
this Court determined that a trucking company's agent had
sufficiently established the fact of damages through evidence
of the agent's past profits earned working with a similar
company and his potential earning power.  See also General
Auto Parts Co. v. Genuine Parts Co., 979 P.2d 1207, 1217-18
(Idaho 1999) (stating that the testimony of the plaintiff's
economic expert that "actual sales from 1992 through 1996 were
significantly lower than what sales should have been for that
time period" was an "acceptable approach" to establishing
damages).  
Greg  Bentley, Bentley's president and chief executive
officer, specifically testified that Bentley had every
confidence that it would "renew virtually all of the
Intergraph maintenance book of business for CRP under our
1080300 and 1080405
23
Bentley Select program" in a seamless fashion but that this
did not happen because of the bad and late data provided by
Intergraph, as well as Intergraph's improper renewal of some
maintenance contracts.  He also testified that the delay in
renewals was a "natural consequence" of bad or late data
because one "can only sell a maintenance contract for CRP
software to someone who is a due licensee when I know who he
is and where he is, and if I don't know that I can't begin the
process of rolling over a maintenance contract."  He stated
that there was no other cause for the delay because Bentley
"did not suffer any such problems with renewing and continuing
our maintenance coverage on our other products, including
those for which the characteristics of the products and the
characteristics of the users are as comparable as can be to
the CRP products."  
Bentley's 
chief 
operating officer, Malcolm
Walter, testified that Bentley expected to convert all the CRP
maintenance contracts because all the customers for the CRP
products were already Bentley customers.  He also testified
that renewal rates for maintenance contracts drop after the
expiration date of the contract, so it is vital to begin the
renewal process before the contract expires.  He further
1080300 and 1080405
24
testified that Intergraph's breaches had a "significant
impact" on Bentley's ability to timely renew the CRP
maintenance 
contracts.  
Even 
one 
of 
Intergraph's own witnesses
testified that "it's very important that you not have any
interruption in the maintenance renewal process."  
Through this and other testimony, Bentley established
that its MicroStation product was required to run most of the
CRP products acquired from Intergraph, that it renewed a high
percentage of its own software-maintenance agreements that are
similar to the CRP maintenance agreements, and that, as to the
CRP maintenance agreements Bentley was able to renew in its
name, it thereafter retained them at about a 98% annual
renewal rate.  Bentley also established that Intergraph's
errors in providing Bentley with information on the CRP
maintenance agreements were the most likely cause of its
initial lost profits because it demonstrated that renewal
delays were an unexpected occurrence, given the products
involved and the history of renewals on such maintenance
contracts.  As with the cases mentioned above, these facts
concerning past performance and the likelihood of similar
future results established with sufficient certainty that CRP
1080300 and 1080405
25
maintenance agreements would have been renewed but for
Intergraph's breaches of the APA, which in turn established
the fact of lost profits for Bentley.
Intergraph 
also 
contends 
that 
even 
if 
Bentley
demonstrated the fact of damages, it did not prove the award
of $2,226,486 in lost profits with reasonable certainty.  This
Court has observed:
"'[T]he loss of profits must be the natural
and proximate, or direct result of the
breach complained of and they must also be
capable of ascertainment with reasonable,
or sufficient, certainty, or there must be
some basis on which a reasonable estimate
of the amount of the profit can be made;
absolute certainty is not called for or
required.'"
Mason & Dixon Lines, 601 So. 2d at 70 (quoting Paris v.
Buckner Feed Mill, Inc., 279 Ala. 148, 149-50, 182 So. 2d 880,
881 (1966)).  Intergraph argues that Bentley failed to prove
its damages with reasonable certainty for several reasons.
First and foremost, Intergraph contends that Bentley did
not account for other causes for its failed renewals.  Echoing
its first argument regarding the fact of damages, Intergraph
says that Northcut assumed that the sole cause of Bentley's
lost profits was Bentley's failure to renew some of
1080300 and 1080405
26
Intergraph's maintenance contracts.  According to Northcut,
this failure was attributable to bad data, late data, or
improper renewals by Intergraph.  Intergraph argues that
Northcut failed to account for other potential causes of lost
profits. 
 
Specifically, 
Intergraph 
lists 
eight 
other 
potential
causes for Bentley's lost profits: (1) some customers stopped
using the CRP products/software; (2) some customers went out
of business; (3) some customers simply were not interested;
(4) some customers refused to pay the higher prices Bentley
was charging; (5) some customers did not like Bentley's "cover
all" policy, which required customers to buy maintenance for
all of their Bentley products; (6) some customers believed
Bentley's maintenance support was inferior; (7) the timing of
the transaction (Christmas holidays) was problematic for some
customers; and (8) Bentley lacked the security clearance
required to service some customers.
Bentley insists that these causes were accounted for by
Northcut's benchmarks in his damages calculation.  For
example, Northcut assumed that some customers would go out of
business 
or 
otherwise decide not 
to 
continue 
their 
maintenance
contracts by allowing for some erosion in the subscription
1080300 and 1080405
On the other hand, the special master concluded that
7
Northcut's "but for" damages model failed to account for
changed facts and circumstances after the APA year.  The
"changing 
facts 
and 
circumstances" the special master
explicitly highlighted for the period after December 1, 2001,
did not include any of the eight "other causes" listed by
Intergraph as possibly affecting Bentley's profits from the
CRP maintenance agreements.  
We discuss in Part III.B.(2) of this opinion the special
master's conclusion that Northcut's damages model failed to
account for "changed facts and circumstances" after December
1, 2001, and, therefore, that Bentley failed to prove any loss
of profits in years two through five.
27
base 
over 
time. 
 
Regarding 
difference 
in 
pricing, 
Intergraph's
own accounting expert, Denise Dauphin, admitted that on
average the difference was negligible and that she had not
performed a price analysis.  
The special master concluded that Northcut's "but for"
damages model was accurate with regard to the facts and
circumstances as they existed during the APA year.   In
7
essence, the special master concluded that Bentley proved its
lost-profits damages with reasonable certainty for the first
year of the APA.
"[A] plaintiff attempting to establish damages in a
breach of contract action need only '"lay a foundation which
will enable the trier of the facts to make a fair and
1080300 and 1080405
28
reasonable estimate of the amount of damage."'" Mason & Dixon
Lines, 601 So. 2d at 70-71 (quoting United Bonding Ins. Co. v.
W.S. Newell, Inc., 285 Ala. 371, 380, 232 So.2d 616, 624
(1969), quoting in turn 22 Am. Jur.2d Damages § 25).  As
noted, our law requires that proof of lost profits be shown
with "'reasonable, or sufficient, certainty ...; absolute
certainty is not called for or required.'"  Mason & Dixon
Lines, 601 So. 2d at 70.  As a corollary, cases applying the
"reasonable certainty" standard have rejected imposing a
burden on the plaintiff in the first instance to prove
negatives, i.e., to exclude every conceivable cause for its
lost profits.  As the court explained in Fontana Aviation,
Inc. v. Beech Aircraft Corp., 432 F.2d 1080 (7th Cir. 1970),
"[i]f 
there 
were 
other 
possible 
causes 
of
plaintiff's inability to sell new Beech airplanes to
the apparently sound prospects, it would appear that
the defendants were under obligation to go forward
with evidence to that effect and Fontana 'was not
required in the first instance to prove the absence
of all other conceivable causes.'"   
 
432 F.2d at 1087 (quoting American Cooperative Serum Ass'n v.
Anchor Serum Co., 153 F.2d 907, 912 (7th Cir. 1946) (emphasis
added)).
1080300 and 1080405
In other words, the ultimate burden of proof on issues
8
of causation and damages would remain with the plaintiff in
relation to any "other cause" as to which the defendant meets
its "obligation to go forward with evidence" as explained in
Fontana and Corson.
[substituted p. 29]
Similarly, in Corson v. Universal Door System, Inc., 596
So. 2d 565 (Ala. 1991), this Court discussed the burden of
proof concerning lost profits and other possible causes for
the loss, stating:
"Universal would be entitled to nominal damages for
breach of the nonsolicitation covenant upon mere
proof that Corson successfully solicited a Universal
customer.  However, in order to collect more than
nominal damages, Universal must also prove that it
actually lost money because of Corson's breach, that
is, that it would have gotten the business that went
to Alabama Door.  It follows that if Corson could
demonstrate other reasons that might have accounted
for Universal's alleged loss of business since
Corson's termination, Universal's burden of proof on
the issues of causation and damages would become
more substantial."  
596 So. 2d at 570 (citation omitted).8
As the special master found and as we have concluded,
Bentley presented reliable proof of its lost profits for the
APA year.  As we indicated in Corson, Intergraph then had the
burden of introducing, or going forward with, evidence
indicating that "other causes" accounted for Bentley's lost
profits.  Yet Intergraph's accounting expert, Dauphin,
1080300 and 1080405
[substituted p. 30]
repeatedly stated that she did not analyze the possible
effects of Intergraph's suggested "other causes" for Bentley's
lost profits.  On the record before us, we cannot conclude
that Intergraph introduced sufficient evidence to impose on
Bentley the "more substantial" burden of negating each of the
alternative causes suggested by Intergraph.
Intergraph also contends that the special master's lost-
profits award to Bentley failed to account for the claim that
Bentley abandoned.  Specifically, Intergraph observes that
Northcut based his damages calculation on four breaches: bad
data, late data, improper renewals, and lack of cooperation by
Intergraph.  Intergraph contends that Bentley abandoned its
claim of lack of cooperation in the first appeal to this
Court.  This Court in Bentley I noted:
"To the extent that Bentley attempts to incorporate
its arguments as to a fourth breach of the APA by
Intergraph by reference to its trial brief, we
reject any such incorporation.  Incorporation into
an appellate brief of arguments made in a trial
brief is not proper procedure under Rule 28, Ala. R.
App. P.  We therefore do not consider Bentley's
claim that Intergraph breached the APA by its
alleged failure to cooperate."  
922 So. 2d 61, 85 n.8 (citations omitted).  Because Bentley
waived 
its 
argument 
concerning 
Intergraph's 
lack 
of
1080300 and 1080405
[substituted p. 31]
cooperation, Intergraph argues that Northcut's "lump sum"
damages calculation must be rejected because it takes into
account Intergraph's alleged lack of cooperation.
Bentley responds by stating that this Court in Bentley I
remanded the case for consideration of "all disputed issues,"
which, Bentley says, included the lack-of-cooperation claim.
That is not exactly what this Court said.  The Court found
that "Intergraph breached the APA," and accordingly it
"reverse[d] the judgment insofar as the trial court held in
Intergraph's favor on Bentley's counterclaim" and "remand[ed]
the case with directions to the trial court to take steps
necessary to resolve the disputed issues and then to calculate
the damages Bentley sustained as a result of Intergraph's
breach of contract in accordance with the guidelines set out
above ...."  Bentley I, 922 So. 2d at 93 (emphasis added).
The emphasized language indicates that because the Court did
not consider Bentley's lack-of-cooperation claim, the trial
court was not supposed to calculate damages based on that
claim.
The special master performed his duties in conformity
with our mandate; his findings pertaining to the cause of
1080300 and 1080405
[substituted p. 32]
Bentley's lost profits focused on "the incompleteness of the
data 
[provided 
by 
Intergraph], 
the 
inaccuracies 
and
inconsistencies in the data [provided by Intergraph], and
Intergraph's improper renewals," which he concluded "turned
Bentley's conversion effort into a chaotic process."  The
special master concluded that Northcut's damages model
captured the lost profits in the first year of the agreement
that resulted from these breaches by Intergraph.  No mention
is made by the special master of Bentley's claim of lack of
cooperation.  Even if he had mentioned it, however, lack of
cooperation is implicit in Intergraph's failure to provide
accurate data and to provide it in a timely manner, as well as
in its improper renewal of maintenance contracts after the APA
had been executed, and there is no reason to believe that
Northcut would have altered his damages calculation if he had
eliminated Bentley's general claim of lack of cooperation on
Intergraph's part. 
Intergraph's final argument concerning the award of lost
profits to Bentley is that the special master failed to
include necessary "costs" in his lost-profits calculation.
Intergraph notes that any lost-profits calculation must
1080300 and 1080405
[substituted p. 33]
consider the costs associated with the lost revenue to arrive
at a proper estimate of lost profits.  As this Court has
observed, in a lost-profits action the 
"'"plaintiff has the burden of alleging and proving
not only (a) what he would have received from the
performance so prevented, but also (b) what such
performance would have cost him (or the value to him
of relief therefrom).  Unless he proves both of
those facts, he cannot recover as damages the
profits he would have earned from full performance
of the contract."'"  
Ex parte Woodard Constr. & Design, Inc., 627 So. 2d 393, 394
(Ala. 1993) (quoting  Allen, Heaton & McDonald, Inc. v. Castle
Farm Amusement Co., 151 Ohio St. 522, 86 N.E.2d 782, 784
(1949) (emphasis omitted)).  
Intergraph observes that the APA required Bentley to
increase the principal value of the note to account for CRP
maintenance 
agreements 
Bentley 
successfully 
renewed 
during 
the
APA year.  Intergraph contends that Northcut included in his
lost-profits calculation an offset for the increase in the
principal value of the note Bentley would have had to make if
Bentley had been able within the APA year to renew the CRP
maintenance agreements upon which its lost-profits claim was
based.  The special master adopted Northcut's method of
calculating lost profits during the APA year, but he did not
1080300 and 1080405
[substituted p. 34]
include Northcut's increased note cost adjustment in his
calculation of lost profits.  According to Intergraph, the
result is that the special master awarded Bentley lost
revenues, not lost profits.  We agree.
As Woodward Construction makes clear, a lost-profits
calculation must include both the revenue lost as a result of
a party's breach of the contract and what it would have cost
the injured party if the contract had been performed without
the breach.  If Bentley had renewed the CRP maintenance
contracts in question within the APA year, it would have had
to increase the principal value of the note by a corresponding
amount.  This is a definite cost to be subtracted from lost
revenues.  The special master's calculation did not include
that cost, thus making the award one for lost revenues, as
Intergraph contends.  Accordingly, we must reverse this
portion of the trial court's decision, and remand the case for
a determination of the proper amount of the cost that should
be subtracted from Bentley's damages award.
(2)
Intergraph's Arguments Concerning the Amount Bentley
Owes Intergraph on the Promissory Note
The special master concluded that Bentley owed Intergraph
an additional $1,539,744 on the note.  Intergraph argues that
1080300 and 1080405
[substituted p. 35]
it is entitled to a higher amount for two reasons.  First, it
contends that the special master's calculation erroneously
excluded revenues associated with "evergreen" agreements in
the United Kingdom ("U.K.").  Second, it contends that Bentley
did not meet its burden of establishing that it was entitled
to a cash adjustment of $297,837 for "other invoices."
Concerning the revenue exclusion related to U.K. CRP
maintenance agreements, the special master concluded that
Intergraph did not "sustain[] its burden of proof of
establishing 
that 
the 
U.K. 
contracts 
are 
'evergreen 
contracts'
within the definition established by the Supreme Court."
Intergraph contends that this was an erroneous conclusion for
two reasons.  First, it contends that the plain language of
those contracts demonstrates that they were evergreen
agreements.  Specifically, it quotes the following language
from those agreements: 
"This contract will continue in full force until
terminated in one of the following ways:
"Either Party provides to the other written notice
of intent of termination.  This Contract shall
terminate three months after receipt of the notice,
or at such times as is mutually agreed in writing."
1080300 and 1080405
[substituted p. 36]
Second, 
Intergraph 
notes 
that 
its 
business-operations 
manager,
Ian 
Buswell, 
testified 
that 
every 
single 
maintenance 
agreement
in the U.K. was an evergreen agreement.  
This Court in Bentley I defined an "evergreen" contract
as
"one that has no definite term.  Instead of lasting
a finite period ... an evergreen maintenance
agreement does not renew, but continues until such
time as one party takes affirmative action to
terminate it.  A typical evergreen contract can be
terminated by either party's complying with a
contractual notice provision, normally three months'
notice."
Bentley I, 922 So. 2d at 75-76.  
A review of the testimony and documents presented to the
special master on this issue shows conflicting evidence.  The
agreement Intergraph used as the example for all of its U.K.
CRP agreements, and from which the above-quoted contract
language was taken, was an agreement with Alstom Energy.  It
contained a "Contract Period" from April 1, 2001, to March 31,
2002.  It also stated that it was a contract "Quotation,"
indicating that the contract did not take effect until the
quotation of terms was accepted.  The U.K. agreements also
were assigned new contract numbers each year by Intergraph.
These are not characteristics of an evergreen contract.
1080300 and 1080405
[substituted p. 37]
Intergraph's 
database 
documentation 
on 
the 
U.K. 
CRP 
agreements
seemed to confirm this, because it stated that the U.K.
agreements were not evergreen 
contracts. 
 Moreover, though 
the
language Intergraph quotes to demonstrate that the U.K. CRP
maintenance agreements are evergreen contracts is allegedly
from the standard terms-and-conditions contract, Intergraph
did not present evidence indicating that those terms were in
effect at the time the quotation was signed or that those
terms were intended to be incorporated into the Alstom Energy
agreement.  
On the other hand, Dauphin, Intergraph's accounting
expert, concluded that the Alstom Energy agreement was an
evergreen contract because it states that it is a "standard
service" 
contract, 
and 
Buswell 
had 
testified 
that 
Intergraph's
standard U.K. contract was an evergreen contract.  Also,
Dauphin understood the "Contract Period" to mean the period
during which modifications in the price could not be made, not
that the contract itself expired at the end of the "Contract
Period."  She also testified that she understood the yearly
assignment of contract numbers to be for billing purposes and
that the assignment of a new number did not signify the start
1080300 and 1080405
[substituted p. 38]
of a new contract.  Buswell testified that the field in its
database documentation differentiating between evergreen and
non-evergreen contracts was not used by Intergraph for the
U.K. contracts because they were all evergreen contracts, and
the reason the documentation stated that they were not
evergreen contracts was that that was the default entry in
Intergraph's system.  
Indicative of the back-and-forth evidence on this subject
was the fact that Buswell testified that when a new price
quote for a U.K. CRP maintenance agreement was generated, the
customer had to accept the quote or the contract would fall
into a "lapsed closed" status.  He stated that the contract
was not actually canceled, however, until the customer
affirmatively told Intergraph it was not renewing the
maintenance contract.  If new quotes were generated on a
yearly basis, as the example submitted by Intergraph seemed to
indicate they were, then the fact that the contract lapsed
without acceptance from the customer evinces the character of
a regular agreement.  But the fact that a customer
affirmatively had to tell Intergraph it was canceling the
agreement is a characteristic of an evergreen agreement.  
1080300 and 1080405
[substituted p. 39]
Because it is apparent that the evidence presented to the
special master concerning whether the U.K. maintenance
agreements were "evergreen" contracts was conflicting, we
cannot say that the trial court erred in accepting the special
master's conclusion that the U.K. agreements were not
"evergreen" contracts.  Therefore, there was no reversible
error by the trial court in calculating the amount owed by
Bentley to Intergraph on the note in this regard.  
The special master made a "cash adjustment" to the note
in Bentley's favor in the amount of $297,837 is a result of
two invoices Bentley alleged that Intergraph refused to pay.
It did so based upon the testimony of one of Bentley's
witnesses, Hewitt, who testified that Intergraph owed this
amount 
for 
CRP maintenance agreements 
Intergraph 
had
improperly renewed.  
Intergraph contends that the special master erred in
making the cash adjustment because its expert testified that
the note 
calculation 
included 
an 
adjustment in Bentley's 
favor
for all improperly renewed maintenance agreements, including
the two "other invoices."  It also notes that this Court in
Bentley I directed that the note be calculated in accordance
1080300 and 1080405
[substituted p. 40]
with the "clear contract language," 922 So. 2d at 82, but that
nothing in the note authorized the submission of invoices to
Intergraph for payment.  Intergraph further alleges that
Bentley failed to present any evidence concerning the amount
of the invoices. 
This argument is without merit.  The reason the note did
not address how Intergraph was to pay for improper renewals is
that under the agreement Intergraph was not supposed to renew
any of the CRP maintenance agreements after the MCO date.
According to the APA, following the closing, Bentley owned the
products, it was obligated 
to 
provide maintenance services for
them, and it was entitled to receive payments for maintenance
on them.  Put simply, the APA did not contemplate Intergraph's
renewing maintenance agreements.  Moreover, contrary to
Intergraph's 
claim, 
Bentley 
established 
through 
testimony 
that
it sent Intergraph two invoices in the amount noted in the
adjustment the special master made for maintenance contracts
Intergraph improperly renewed and for which it failed to
reimburse Bentley.  Consequently, the evidence supported the
special master's cash adjustment in favor of Bentley based on
the unpaid invoices. 
1080300 and 1080405
41
(3)
Summary 
of 
Conclusions 
Concerning 
Intergraph's
Assignments of Error
The trial court erred in accepting the special master's
calculation of Bentley's damages without accounting for
Bentley's costs in executing the agreement, namely an increase
in payment on the note to Intergraph.  On all other issues
raised by Intergraph, the trial court's judgment is due to be
affirmed.
B.
Bentley's Assignments of Error
Like Intergraph, Bentley also contends that the trial
court committed several errors by adopting the special
master's findings of fact and conclusions of law.  Bentley's
arguments take issue with three aspects of the special
master's conclusions: (1) his award of legal expense to
Intergraph; (2) his limitation of Bentley's damages to one
year instead of five years; and (3) his calculation of the
amount Bentley owed Intergraph on the note.  
(1)
Bentley's Arguments Concerning the Special Master's
Award of $6,636,144 in Legal Expenses to Intergraph
The special master concluded that Intergraph was entitled
to indemnification from Bentley for legal expenses totaling
$6,636,144.20; he concluded that Bentley was entitled to
1080300 and 1080405
42
indemnification from Intergraph for legal expenses totaling
$5,731,077.98.  Bentley contends that the special master erred
in reaching this conclusion.
The APA specifically provides for the recovery of
"losses," which are defined to included reasonable legal fees,
arising from a breach of the APA by the other party.  In the
case of Intergraph, specifically, § 10.2 of the APA states:
"Bentley agrees to indemnify and hold harmless
[Intergraph] from and against any and all Losses
arising out of, based upon or resulting from:
"(a) any error, inaccuracy or misrepresentation
in any of the representations and warranties made by
Bentley herein or in any certificate or other
document or instrument furnished or to be furnished
by Bentley to any of the Selling Entities in
connection with this Agreement; 
"(b) any violation or breach of any covenant or
obligation by Bentley of, or default by Bentley
under, this Agreement or any certificate or other
document or instrument furnished or to be furnished
by Bentley to [Intergraph] in connection with this
Agreement, or the consummation of the transactions
contemplated thereby ...."  
A similar, reciprocal provision is included in the APA
providing that Intergraph would indemnify Bentley for losses
suffered by Bentley as a result of breaches of the APA by
Intergraph. 
1080300 and 1080405
It appears that the legal expenses awarded to Intergraph
9
included substantial amounts of fees incurred not only in an
effort by Intergraph to recover indemnifiable "losses"
suffered by it, but also amounts incurred in defending
(sometimes successfully and sometimes not) against claims made
by Bentley that Intergraph had breached the APA and caused
Bentley to suffer losses.  The same appears to be true of some
of the legal fees awarded to Bentley.  Neither party argues
that the award of fees to the opposing party should be
adjusted based on such a distinction, and we therefore do not
address it further.  See Smith v. Mark Dodge, Inc., 934 So. 2d
375, 380 (Ala. 2006) (noting "the well-settled rule that we do
not reverse a trial court's judgment on a ground not raised on
appeal").
[substituted p. 43]
Among other things, Bentley argues that Intergraph has
not established an indemnifiable event.  We disagree.  As
noted, the APA entitles Intergraph to recover for losses,
including reasonable attorney fees, arising out of any
violation of the terms of the APA by Bentley.  Among other
things, Intergraph sued Bentley alleging that Bentley failed
to correctly adjust the amount of the note in the manner
required by the APA.  Intergraph succeeded in obtaining
thereby a substantial adjustment in the amount of the note, in
the process establishing that Bentley had not complied with
applicable provisions of the APA.  Bentley's argument that
Intergraph 
did 
not 
establish 
an 
indemnifiable 
event,
therefore, is without merit.9
1080300 and 1080405
44
Bentley also argues that there was no default by it under
the APA because section 10.5 of the APA permitted Bentley to
set off its damages against any unpaid consideration due
Intergraph under the note.  Thus, as long as Bentley's damages
exceeded any improper shortfall in the amount of the note,
Bentley contends it did not breach the APA.  Section 10.5 of
the APA states:
"Notwithstanding anything to the contrary in
this Agreement (a) Bentley shall have the right to
set-off against the remaining unpaid Consideration
(including for such purposes, a reduction in the
principal and interest due on the Note which shall
be applied first to accrued and unpaid interest and
then to unpaid principal) (i) any amounts then due
but not paid by Intergraph as a result of any
Bentley Losses which any Bentley Indemnitee has
incurred and for which such Bentley Indemnitee is
entitled to indemnification under this Article X or
(ii) any payments due but not paid to Bentley under
Section 7.2 in connection with the Maintenance
Agreements, and (b) Intergraph shall have the right
to set-off against the amounts due to Bentley under
Section 7.2 (i) any amounts then due but not paid by
Bentley as a result of any Intergraph Losses which
any Intergraph Indemnitee has incurred and for which
such 
Intergraph 
Indemnitee 
is 
entitled 
to
indemnification under this Article X or (ii) at any
time while there shall be any past due payment of
principal or interest under the Note; any amount of
principal or interest then or thereafter to become
due under the Note, in whatever order Intergraph may
in its discretion elect; provided, however, that
Intergraph and Bentley agree and acknowledge that
any amounts that the other sets off pursuant to its
right under this Section 10.5 shall not be
1080300 and 1080405
45
considered past due. The parties agree that no other
offsets shall be permitted against the amounts
payable by each to the other hereunder or under the
Note." 
Bentley argues that Intergraph has no "losses" on which legal
expenses may be awarded because the damages awarded to Bentley
for lost profits exceed the increase in the amount of the note
awarded to Intergraph.
We find no merit in this argument.  Section 10.5 of the
APA does not state that it affects the indemnification
provision in section 10.2.  The trial court's judgment awarded
Intergraph an additional $1,539,744 on the note because
Bentley failed to properly adjust the value of the note.  This
was in fact a violation of the APA.  Again, "losses" are
defined in sections 10.1 and 10.2 of the APA to include legal
expenses arising from any violation of the APA by Bentley.
Intergraph initiated this action because it contended -- and
the special master and the trial court found -- that Bentley
had not properly adjusted the amount of the note to pay
Intergraph the amount it was due in the transaction.  This is
not a case in which Bentley conceded that it had improperly
failed to adjust the note by a given amount and simply sought
to offset its own losses against the resulting shortfall in
1080300 and 1080405
46
the amount of the note.  Rather, it is a case in which it was
necessary for Intergraph to file a legal action in order to
establish the amount of, and its entitlement to, the shortfall
in the adjustments that Bentley had made to the note.  Under
the plain language of the APA, Intergraph was entitled to
indemnification of legal expenses reasonably necessary to
accomplish this end.
Bentley argues that an interpretation of the APA that
permits both parties to recover all of their legal expenses
simply "reward[s] the party that spent the most on legal
expenses and penalize[s] the party that conducted its case
with greater cost efficiency."  We are not unsympathetic to
this concern; however, as noted, the plain language of the APA
provides for each party's legal fees arising out of losses it
has suffered as a result of breaches by the other party to the
agreement.  As noted, neither party argues that a recovery of
legal fees under the APA should be exclusive of any fees
expended in defending against claims for losses suffered by
the opposing party.  Similarly, except as hereinafter
discussed, neither party argues that amounts billed by the
1080300 and 1080405
Section 6-8-86, Ala. Code 1975, provides, in pertinent
10
part:
"On a compulsory counterclaim, if the claim or
demand of the defendant equals the claim or demand
of the plaintiff, judgment must be entered for the
defendant; if the claim or demand of the defendant
exceeds the claim or demand of the plaintiff and the
plaintiff is the party liable to its satisfaction,
judgment must be entered against him in favor of the
defendant for such excess and all costs."
Rule 54(d), Ala. R. Civ. P., provides, in pertinent
11
part, that "[e]xcept when express provision therefor is made
in a statute, costs shall be allowed as of course to the
prevailing party unless the court otherwise directs ...."
[substituted p. 47]
other party's attorneys for given tasks were excessive or
otherwise unreasonable.
Bentley further argues that § 6-8-86, Ala. Code 1975,10
together with Rule 54(d), Ala. R. Civ. P.,  dictate that
11
Intergraph is not entitled to attorney fees because Bentley,
not Intergraph, was the "net prevailing party" in this case.
Section 6-8-86 and Rule 54(d), Ala. R. Civ. P., concern
"costs," however, not legal expenses.  "There is no authority
in this state to include attorneys' fees in the term 'costs.'"
Mass Appraisal Servs., Inc. v. Carmichael, 372 So. 2d 850, 852
(Ala. 1979) (citing Cincinnati Ins. Co. v. City of Talladega,
1080300 and 1080405
48
342 So. 2d 331 (Ala.1977)).  These provisions of Alabama law
do not apply to the award of legal expenses at issue.
Bentley also complains that the award of legal expenses
to Intergraph is excessive because it includes expenses for an
expert whose analysis Intergraph abandoned upon remand of the
case to the trial court following Bentley I.  The award of
Intergraph's legal fees included $1,651,983 in fees and costs
for expert work done for the first trial by the accounting
group AEA Group, LLC.  This work was performed by two of AEA
Group's principals, Denise Dauphin and Lester Alexander.
Following our remand in Bentley I, Intergraph used only Denise
Dauphin as an expert.  Bentley contends that Intergraph
"abandoned" 
Alexander's 
work 
and, 
therefore, 
that 
the 
expenses
for that work represent "unreasonable" expenses.
Both Alexander and Dauphin worked for the same accounting
firm.  Dauphin submitted an affidavit related to her expenses
in which she explicitly and in detail explained that both she
and Alexander performed work for the calculation on the note
for the initial trial.  According to Dauphin's testimony, the
work performed for the 2004 trial proceedings "was necessary
and reasonable to perform the Note calculation required for
1080300 and 1080405
Testimony indicated that AEA Group work relating to the
12
2004 trial proceedings that also was used on remand included
the following:
"1. Gaining an understanding of relevant issues,
including the APA;
"2. Reading and reviewing virtually all of the
documents produced by the parties;
"3. Assisting in discovery;
"4. Interviewing at least fourteen (14) Intergraph
employees;
"5. Meeting with and having follow-up discussions
with 
at 
least 
thirteen 
(13) 
of 
Intergraph's
worldwide Business Operations Managers;
"6. Translating and consolidating the Transferred
Maintenance Schedules;
"7. Translating Intergraph's maintenance contracts;
"8. Reviewing Bentley's maintenance contract;
"9. Gaining an understanding of six (6) separate
billing systems used by the parties worldwide;
"10. Verifying the accuracy and completeness of the
TM Schedules;
"11. Investigating differences in the TM Schedules;
"12. Analyzing various Bentley databases;
"13. Verifying and comparing payments made by
Bentley and Intergraph;
[substituted p. 49]
the proceedings on remand that were before the Special
Master."   Intergraph also submitted an affidavit from
12
1080300 and 1080405
"14. Verifying renewals by Bentley;
"15. Calculating required cash adjustments to the
Note;
"16. 
Calculating 
required 
foreign 
currency
adjustments;
"17. Calculating interest;
"18. 
Reading 
all 
deposition 
testimony 
and
categorizing by issue;
"19. Reviewing and analyzing Northcut's report and
related production; and
"20. Attending Northcut's deposition."
[substituted p. 50]
accountant 
Don 
Nalley 
who 
helped 
Dauphin 
calculate 
the 
billing
rates and hours for her firm's work on the case.  Nalley
testified that in his opinion "all work performed by AEA Group
both in the first trial and the remand after appeal ... was
reasonable and necessary to analyze and resolve the issues in
the original trial, the appeal and the remand."  Bentley did
not submit any evidence to the contrary.  On the basis of the
record before us, we cannot conclude that the special master
erred in awarding Intergraph the costs of the AEA Group's
accounting services relating to the first trial as part of
"reasonable legal expenses."
1080300 and 1080405
51
Lastly in relation to the trial court's award of legal
expenses to Intergraph, Bentley briefly argues that the award
of legal expenses to Intergraph should not include work
relating to Intergraph's argument in Bentley I that it had a
right to renew certain maintenance contracts after the closing
of the transaction.  Intergraph argued in the initial trial of
this matter and in Bentley I, that, for the sake of
continuity, it was necessary for it to renew certain
maintenance agreements when customers responded to quotes that
had been made by to them by Intergraph before the closing.
This Court concluded in Bentley I, however, that Intergraph's
argument in this regard was "disingenuous at best." 922 So. 2d
at 83.  Bentley cites no legal authority and provides little
argument as to the issue, however, and we decline to recognize
any error based upon it.  See Rule 28(a)(10, Ala. R. App. P.
(2)
Bentley's Arguments Concerning the Special Master's
Limitation of Bentley's Lost Profits to One Year
Rather Than Five Years
Bentley contends that the special master erred in
limiting its damages to one year, as opposed to five years as
Northcut calculated.  Northcut calculated that Intergraph's
breaches caused Bentley to lose $9.4 million in lost profits
1080300 and 1080405
52
over five years.  The special master and the trial court
accepted Northcut's calculations as to year one but rejected
Northcut's extension of Bentley's lost profits beyond that
year and, as a result, limited Bentley's lost profits to an
award of $2,226,486.
Bentley argues that the special master erroneously
resolved doubts concerning its damages against Bentley when
the law requires otherwise.  Bentley again observes that lost
profits need not be calculated "with mathematical certainty."
Morgan v. South Central Bell Tel. Co., 466 So. 2d 107, 116
(Ala. 1985).  Bentley argues that the special master's
limitation of Bentley's damages to the APA year contradicts
the standard set out in Story Parchment Co. v. Paterson
Parchment Paper Co., 282 U.S. 555, 563 (1931), in which the
United States Supreme Court stated:
"Where the tort itself is of such a nature as to
preclude the ascertainment of the amount of damages
with certainty, it would be a perversion of
fundamental principles of justice to deny all relief
to the injured person, and thereby relieve the
wrongdoer from making any amend for his acts.  In
such case, while the damages may not be determined
by mere speculation or guess, it will be enough if
the evidence show the extent of the damages as a
matter of just and reasonable inference, although
the result be only approximate.  The wrongdoer is
not entitled to complain that they cannot be
1080300 and 1080405
53
measured with the exactness and precision that would
be possible if the case, which he alone is
responsible for making, were otherwise."
Bentley claims that the special master violated this standard
by resolving doubts against Bentley.  
Bentley again contends that, by concluding that other
factors could have played a role in Bentley's damages after
the APA year, the special master failed to shift the burden to
Intergraph and require it to provide evidence that other
factors caused those damages for years two through five.  It
argues that the record demonstrates that Intergraph did not
show that there were "other causes" for its lost profits
during the five-year period calculated by Northcut, and that,
therefore, the special master erred in limiting its damages on
that basis.
As noted, the special master concluded that Northcut's
"but for" damages model was accurate with respect to the facts
and circumstances as they existed during year one of the APA.
The model recognized that Intergraph's late data submissions,
bad data submissions, and improper contract renewals prevented
Bentley from converting all the CRP contracts as they expired,
1080300 and 1080405
54
thereby resulting in lost profits that extended for a period
of five years.
As previously discussed, the importance of continuity
with 
regard 
to 
maintenance 
contracts 
was 
undisputed.
Bentley's president and chief executive officer testified that
"real damage" would occur if the "maintenance rollover" did
not occur in the "sweet spot," i.e., before the contract
expired.  Bentley's vice president of sales testified about
the 
"perishable" 
nature 
of 
maintenance 
contracts.
Intergraph's own chief executive officer agreed.
The special master specifically found that Intergraph's
breaches prevented such continuity.  He concluded that the
"incompleteness 
of 
the 
data, 
the 
inaccuracies 
and
inconsistencies in the data, and Intergraph's improper
renewals turned Bentley's conversion effort in to a chaotic
process." 
Despite accepting the aforesaid fundamental tenets, the
special master concluded that Bentley could not recover lost
profits beyond a one-year "damage window."  In a draft report,
the special master stated that the effects of Intergraph's
breaches were eliminated by December 1, 2001.  After Bentley
1080300 and 1080405
55
filed "suggestions of error" asserting that this conclusion
was not supported by any evidence, the special master struck
this finding and announced that the problem was that Bentley's
request for damages did not address certain "changing facts
and circumstances."  Bentley argues that this latter
conclusion is inconsistent with the special master's findings
regarding damages during the APA year, is without support in
the record, and is due to be reversed. 
Based on our review of the record, we cannot conclude
that it provides sufficient support for the conclusion that
there were changes of "facts and circumstances" at or near the
end of year one that made it appropriate to cut off Bentley's
lost-profit damages at the end of that year.  The "changing
facts and circumstances" that the special master identified --
-- including the efforts of Bentley's CRP task force,
improvement in the data provided by Intergraph, and Bentley's
progress in implementing a transition plan -- occurred during
the APA year.  As noted previously, and despite any such
changes, Bentley did not renew the expected number of
maintenance contracts during year one because of Intergraph's
breaches of the APA.  Such changes therefore cannot justify
1080300 and 1080405
56
the special master's decision to cut off damages at the end of
year one at a time when Bentley had not yet successfully
overcome the effects of Intergraph's breaches and converted
the expected percentage of CRP contracts.  
Similarly, there was no evidence at trial or cited in the
special master's report to show that "changing facts and
circumstances" invalidated Northcut's model -- a model that
took into consideration the fact that the shortfall of profits
would diminish in later years as a result of a variety of
factors. 
 
To 
the 
contrary, 
the 
evidence 
shows 
that
Intergraph's actions prevented Bentley from converting all the
maintenance contracts during the APA year.  As the special
master found, a chaotic situation was created by Intergraph's
renewal of many of these contracts and by its provision to
Bentley of late data and bad data.
The only way a cutoff of lost-profit damages at the end
of year one would be appropriate is if the effects of
Intergraph's breaches ended at the end of year.  Most telling,
however, as to the different approach reflected in the special
master's findings is his finding that by December 1, 2001,
Bentley "had received access to data and information from
1080300 and 1080405
57
Intergraph that placed it in a position to make contract
renewals."  Intergraph returns to this theme in its reply
brief, in which it asserts as follows:
"[A]ssigning blame to Intergraph was contrary to
Northcut's testimony that Intergraph's breaches (bad
data, late data and improper renewals) lasted
approximately 
ten 
months. 
Stated 
differently,
Northcut recognized that Intergraph had provided
Bentley the data required by the APA (and stopped
improperly 
renewing 
maintenance 
agreements) 
by
October of 2001." 
This argument ignores the fact that although Intergraph's
breaches did last only about 10 months, the effect of those
breaches lasted much longer.  The finding of the special
master to the contrary is in conflict with the findings made
by the special master as to lost profits during the APA year
based on the Northcut model and is not supported by the
evidence.  Insofar as the judgment is based on that finding,
it is due to be reversed and the cause remanded for the trial
court to enter an award of damages to Bentley reflecting lost
profits suffered by it during the years following the APA year
as a result of breaches by Intergraph during the APA year. 
1080300 and 1080405
58
(3)
Bentley's Arguments Concerning the Special Master's
Award to Intergraph on the Note
The remainder of Bentley's arguments concern the special
master's award of $1,539,744 to Intergraph on the note.
Bentley contends for various reasons that the amount of the
award 
was erroneous because it 
was 
based 
on 
misinterpretations
of the APA and on clearly erroneous findings of fact.  We
address each of these arguments in turn.  
First, Bentley contends that the special master's award
of $500,000 in retroactive interest to Intergraph was based on
a misreading of the note and the APA.  This argument concerns
the effective date for interest on the adjusted note balance.
Obviously, an earlier date means a larger interest payment.
The special master determined the effective date to be
December 1, 2000, the date the note was executed.  Bentley
contends that the effective date should be September 1, 2001,
because that was the first date Bentley was able to update the
note principal in light of the late TM data provided by
Intergraph.  Bentley argues that the special master failed to
take into account that the December 1, 2000, effective date
was predicated on Intergraph's providing timely TM schedules
to Bentley, which it failed to do.  Thus, awarding Intergraph
1080300 and 1080405
59
interest on the note based on an effective date of December 1,
2000, rewards Intergraph as if it provided the TM schedules in
a timely fashion.  
The note provides, in pertinent part:
"On March 1, 2001, the principal balance owing under
this Note shall, as applicable, be increased or
decreased so as to equal one and one-half (1.5)
times the Transferred Maintenance Revenues, such
adjustment to be effective as of the date of this
Note (any increase in such principal amount being
referred to as the 'Additional Principal').  If an
adjustment to the principal balance of this Note
occurs pursuant to the terms of the Asset Purchase
Agreement on June 1, 2001, the principal balance
owed under this Note shall, as applicable, be
increased or decreased so as to equal one and one
half 
(1.5 
times) 
the 
Transferred 
Maintenance
Revenues, such adjustment to be effective as of the
date of this Note."
(Emphasis added.)
The APA provides in § 7.1:
"Upon delivery of the Initial Updated Schedule of
Transferred Maintenance, the Note shall be adjusted
as provided in Section 2.2(c)(ii) and the Intergraph
payments described in Section 7.2 below shall be
appropriately adjusted with retroactive effect to
the MCO Date [December 1, 2000].  If, despite
[Intergraph's] good faith efforts, the Initial
Updated Schedule of Transferred Maintenance does not
reflect all Maintenance Agreements in effect as of
the MCO Date, then [Intergraph] shall, within 150
days following the Closing, provide Bentley with a
further updated Schedule of Transferred Maintenance
('Second 
Updated 
Schedule 
of 
Transferred
Maintenance') 
setting 
forth 
all 
Maintenance
1080300 and 1080405
60
Agreements as of the MCO Date. ...  Upon delivery of
the 
Second 
Updated 
Schedule 
of 
Transferred
Maintenance, the Note shall be further adjusted as
provided in Section 2.2(c)(ii) hereof and the
Intergraph payments described in Section 7.2 below
shall be appropriately adjusted with retroactive
effect to the MCO Date."
(Emphasis added.)
In Section 2.2(c)ii, the APA provides:
"On the three-month anniversary of the MCO Date, the
principal balance of the Note shall be adjusted up
or down, effective as of the date of the Note ....
If [Intergraph] deliver[s] the Second Updated
Schedule of Transferred Maintenance pursuant to
Section 7.1, then on the six-month anniversary of
the MCO Date, the principal balance of the Note
shall be adjusted up or down, effective as of the
date of the Note ...."  
(Emphasis added.)
Intergraph observes that the language of both the note
and the APA states that the effective date for the adjusted
value of the note is December 1, 2000, and that this Court
emphasized that where the parties' agreement is clear, the
language of the agreement should control.  Indeed, Bentley
made a similar argument to this Court in Bentley I concerning
whether  
the note 
adjustment 
for renewed 
maintenance 
contracts
was to be made on an "agreement" basis or a "part" basis.
Bentley acknowledged that the APA stated that the note
1080300 and 1080405
61
adjustment should be made on an agreement basis, but it
contended that it had to calculate its note adjustment on a
"part" basis because of Intergraph's failure to deliver
Bentley timely and accurate customer-renewal information.
This Court rejected Bentley's rationale, finding that
Intergraph's breaches did "not excuse Bentley from clear
contract language."  Bentley I, 922 So. 2d at 82.  
We similarly conclude that Bentley cannot escape the
clear contract language regarding the effective date for the
adjusted note value.  The language of the APA indicates that
whether the value of the note was to be adjusted at all was
predicated on Intergraph's delivering data to Bentley.  If the
note value was to be adjusted, however, then the date for
calculating the value of the note was to be the date of the
note, December 1, 2000.  The date for calculating the adjusted
note value was not predicated on Intergraph's timely
delivering data to Bentley.  We see no reason to read the APA
as setting a date for the calculation of interest on the note
different from the date for calculating the principal on the
note. Moreover, inserting a different date for calculating
interest not provided by the APA or the note would permit
1080300 and 1080405
62
Bentley to benefit from Intergraph's breaches of the contract
beyond its recovery of lost profits when lost profits are
intended to fully compensate Bentley for those breaches.  
Second, Bentley complains that the award of $680,973 to
Intergraph on the "Part v. Agreement" issue relieved
Intergraph of its burden of proof and was clearly erroneous.
As noted above, this Court concluded in Bentley I that § 7.3
of the APA required the RMR component of the note to be
calculated by "agreement" and not by the "part."  In other
words, if Bentley renewed any part of an Intergraph CRP
maintenance agreement, RMR was to be calculated for all parts
of that agreement.  Bentley contends that on remand following
Bentley I Intergraph failed to provide any evidence of what
the RMR would be on an agreement basis.  It contends that
Dauphin's testimony did not suffice because she based her
calculation on the contract information used by Bentley's
Hewitt to calculate the RMR on a "part" basis.  Bentley argues
that if Hewitt's calculation was not done on an "agreement"
basis, then neither was Dauphin's calculation.  Therefore,
according to Bentley, Intergraph 
presented no 
evidence 
of 
what
the RMR would be on an agreement basis.  
1080300 and 1080405
63
We find no merit to this argument.  Dauphin used the only
information available on this subject, a Bentley database, to
calculate the RMR on an agreement basis.  Dauphin testified
that there was a contract number provided in nearly all
Bentley's schedules so that it was possible to match the parts
of agreements that Bentley renewed with the whole agreements
that Intergraph had maintained with its customers.  Dauphin
explained how she performed the calculation this way:
"I matched the Intergraph agreement to what
Bentley renewed on that agreement.  And if Bentley
renewed one line or two lines or parts, I associated
and I obtained the contract that Bentley renewed
those lines as.  And then I basically said if
Bentley renewed one line and the contract on
Intergraph had four parts or four products, they
were to renew all of that, that contract, that
Intergraph contract."  
In short, as the special master concluded, "Intergraph's Note
calculation is based upon the tracking of Renewed Maintenance
on an agreement basis."  
Finally, Bentley contends that the special master's award
to Intergraph for Bentley's early renewals of CRP maintenance
agreements and his refusal to compensate Bentley for late
renewals were contrary to the terms of the APA and clearly
erroneous.  The APA contemplated that Bentley would pay
1080300 and 1080405
64
Intergraph 1.5 times the TMR for the period between the MCO
date and a CRP maintenance contract's expiration date during
the APA year, regardless of whether Bentley had renewed the
contract during that period.  Because Bentley serviced these
contracts between the MCO date and the expiration dates of the
contracts, but Intergraph was responsible for collecting
subscription fees from customers during this period, the APA
required that Intergraph pay Bentley 95 percent of the
contracted-for revenue during this period.  If Bentley
succeeded in renewing one of these maintenance agreements
during the APA year, then the APA required it to adjust the
note so as to pay Intergraph 1.5 times the revenues from the
date of the expiration of the original agreement to the end of
the APA year.
It is undisputed that in some cases Bentley renewed CRP
maintenance agreements before the expiration of an Intergraph
customer's contract during the APA year.  As to these
agreements, customers would begin making fee payments directly
to Bentley before what would have been the expiration date of
the 
customer's 
original 
maintenance 
agreement 
with 
Intergraph.
Despite this fact, because the APA contemplated that Bentley's
1080300 and 1080405
65
renewal of maintenance contracts would not occur until the
expiration date of the original maintenance agreement between
the customer and Intergraph, the language of the APA required
Intergraph to pay to Bentley 95% of the revenues called for by
the original maintenance through the original expiration
dates. 
Conversely, some maintenance contracts renewed by Bentley
within the APA year were not renewed until some time after
their expiration date.  As a result, the note was adjusted to
effectively provide for the payment by Bentley to Intergraph
of 1.5 times the RMR beginning on the expiration of CRP
customer contracts even when Bentley did begin receiving fees
under the renewed contracts until some time after the
expiration date of the original maintenance agreements.
The special master awarded Intergraph a cash adjustment
for Bentley's early renewals of CRP maintenance agreements
because he found that such an adjustment was "consistent with
the APA."  He refused to award a cash adjustment to Bentley
for late renewals because he concluded that this was "an
equitable concept developed by Bentley's expert Hewitt to
address 
circumstances alleged to have been caused by
1080300 and 1080405
66
Intergraph's breaches" and because it was "not consistent with
the terms of the APA as to the calculation of the note value."
Bentley contends that neither the early-renewal nor the
late-renewal adjustments were contemplated by the APA because
the APA "was structured to provide an orderly transition ...
from Intergraph to Bentley as the agreements expired or came
up for renewal."  Bentley I, 922 So. 2d at 66.  Therefore,
according to Bentley, both adjustments are an equitable method
of reimbursing the parties for events not contemplated by the
APA.  In other words, Bentley contends that, if an early-
renewal adjustment is to be made, it is only equitable to make
a late-renewal adjustment.
We agree with the special master that the APA requires an
early-renewal adjustment.  The APA required Intergraph to make
payments to Bentley of 95% of revenues under TMR agreements,
but only because the APA contemplated that those revenues
would be paid by customers to Intergraph.  When Bentley
renewed contracts early, Intergraph did not continue to
invoice and collect TMR from the subscriber through the
contract expiration date as was contemplated by the APA.  The
early-renewal 
adjustment 
corrected 
for 
the 
unanticipated 
early
1080300 and 1080405
67
receipt of revenues by Bentley directly from customers.  The
special master's award in this regard was not clearly
erroneous.  
As for Bentley's claim for a reciprocal late-renewal
credit, we note that, through its counterclaim, Bentley was
awarded credit for lost profits on contracts it was unable to
renew at the time they expired.  Awarding Bentley a late-
renewal credit would give Bentley a double recovery for
profits lost during the period between the expiration of a
maintenance agreement and its eventual renewal by Bentley.
Bentley also disputes the amount of early-renewal credit
the special master awarded to Intergraph.  The special master
awarded Intergraph an early-renewal credit of $1,247,834 based
on a calculation performed by Dauphin.  Bentley calculated
Intergraph's early renewal amount to be $805,999.  The
difference exists, according to Bentley, because Dauphin's
method made no effort to identify actual parts of agreements
renewed by Bentley and, instead, treated any agreement as to
which Bentley had renewed any part as if Bentley had renewed
the entire agreement.  Because the special master accepted
Dauphin's methodology, Bentley contends that Intergraph
1080300 and 1080405
This approach is consistent with our conclusion in
13
Bentley I that "Bentley must track its renewals on an
'agreement' rather than 'part' basis for purposes of the
valuation of the note."  922 So. 2d at 82.
[substituted p. 68]
received credit for parts of maintenance agreements that
Bentley did not renew early and, therefore, for which
Intergraph may have continued to collect maintenance fees
prior to the expiration of the customer's contract.
As to contracts renewed early by Bentley, whether in
whole or in part, the record contains no evidence that the
customer, as it began making payments to Bentley under the new
maintenance agreement, continued to observe all or any part of
its payment obligations to Intergraph under the original
maintenance agreement.  Based on the record before us, we
cannot conclude that the trial court was clearly erroneous in
adopting the methodology proposed by Dauphin of providing
Intergraph an early-renewal credit for the entirety of the
contracted-for fees under a maintenance agreement renewed only
in part by Bentley.13
1080300 and 1080405
69
(4)
Summary 
of 
Conclusions 
Concerning 
Bentley's
Assignments of Error
For the reasons herein stated, the trial court erred in
limiting Bentley's lost-profits award to damages sustained
during the APA year.  The trial court is directed to enter an
award of damages for Bentley reflecting lost profits suffered
by it during the years following the APA year as a result of
breaches by Intergraph during the APA year.  On all other
issues raised by Bentley, the trial court's judgment is due to
be affirmed.
IV.  Conclusion
We find that the trial court erred in accepting the
special master's calculation of damages regarding Bentley's
counterclaim because that calculation failed to include the
cost of the increased value of the note in establishing
Bentley's lost-profits damages, and 
we 
reverse 
the 
judgment 
in
that respect.  We also reverse the trial court's judgment
insofar as it fails to award Bentley lost-profits damages for
years two through five.  In all other respects, the judgment
of the trial court is due to be affirmed.  We remand the case
to the trial court for it, either with or without the
1080300 and 1080405
70
assistance of the special master, to hear argument from the
parties and to enter a judgment consistent with this opinion.
1080300 -- AFFIRMED IN PART; REVERSED IN PART; AND
REMANDED.
1080405 -- AFFIRMED IN PART; REVERSED IN PART; AND
REMANDED.
Lyons, Stuart, and Bolin, JJ., concur.
Cobb, C.J., concurs in the result.