Opinion ID: 2378365
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Heading Rank: 2

Heading: Goudie's Counterclaims for Loss of Business Income

Text: The counterclaims originally asserted by Goudie sought her loss of business income and financial loss resulting from business interruption. Because the contracts in question were executed by Goudie in her name for work to be done to the building she owned, the question of her being a real party in interest in this litigation is easily resolved in her favor. Moreover, Sears and Climate have both selected Goudie as the appropriate party to be sued for nonpayment under the contracts. Any defense of, or counterclaim for, breach of contract affecting Goudie could be asserted by her. The real question remaining is whether the particular business loss in this case was suffered by Goudie and was the natural consequence of the contractual breaches. The law in this jurisdiction regarding the extent of damages allowable in a breach of contract has been recently articulated and is in conformity with the law of other jurisdictions. Fowler v. A & A Company, D.C.App., 262 A.2d 344 (1970). In Fowler this court, quoting the following excerpt from Hadley v. Baxendale, 9 Exch. 341 (1854), in setting forth the appropriate standards to be applied in situations where possible collateral damages may have also resulted, said: `When two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i. e., according to the usual course of things from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.' [Fowler v. A & A Co., supra, 262 A.2d at 349.] Such damages may also extend to loss of business income or profits suffered through collateral contracts or from collateral sources if such damages were otherwise foreseeable and proved with certainty. 22 Am.Jur.2d Damages §§ 61-62 (1965). The record herein reveals that Sears knew there was a business entity to be operated for profit as a coffeehouse in the two lower floors of the building. [6] Sears was aware that Goudie was in fact the person who operated the coffeehouse. She also allowed complete inspection of the premises and made available to Sears the architectural plans for remodeling which showed specifically that the lower floors were to be utilized for the business operations of a coffeehouse. Climate was similarly on notice as to the reasons Goudie desired air conditioning prior to making its separate contracts with Goudie inasmuch as Climate's agents had previously worked as installation subcontractors for Sears and were familiar with the project and Goudie's purposes. Both Sears and Climate should have reasonably contemplated that a breach of contract in providing adequate air conditioning would result in loss of business income or profits in the operation of the coffeehouse. [7] This being true, liability would extend to all such consequences whether they are actually foreseen or not . . . . A. P. Woodson Company v. Sakran, D.C.Mun.App., 129 A.2d 175, 177 (1957). See also 11 Williston on Contracts, § 1344 at 228 (3d ed. 1968). In any event, the record reveals that both Sears and Climate were aware of the intentions of Goudie to continue her previous coffeehouse operations in the new facility. The law also requires that any damages claimed must be proved with reasonable certainty. [8] The record reveals that Goudie provided extensive testimony regarding the loss of business suffered by Cafe during the warm months when the air conditioning proved to be inadequate to cool the coffeehouse. Her evidence included calculations as to the average dollar amounts spent by customers over the various years for which damages were claimed, an estimation based on Goudie's personal observations (and corroborated by a former waiter) relating to the number of customers who left the coffeehouse because of the heat, as well as weather statistics showing the number of hot days during the periods in question. These facts were utilized in calculating the overall loss of business suffered by Cafe. The result was then adjusted to reflect the amount of net profit lost which would have been paid entirely to Goudie as her income from the business. [9] Upon this showing of loss of business income, the trial court tentatively found Goudie's method of computing loss of business [was] sufficiently precise to prove damages. We agree. Although Goudie's proof of the actual amount of goodwill may have lacked mathematical precision, she adequately proved that some loss of goodwill had been suffered. The trial court's tentative finding in respect to goodwill is supported on the evidence submitted as to the actual amount of goodwill lost. See 38 Am.Jur.2d Goodwill § 24 (1968). See also Barrett Co. v. Panther Rubber Manufacturing Co., 24 F. 2d 329 (1st Cir. 1928); Stott v. Johnston, 36 Cal.2d 864, 229 P.2d 348 (1951). The trial court in making tentative findings relating to Goudie's loss of business income found that Climate and Sears had both breached their respective contracts with Goudie so that the loss claimed for 1964 was to be divided equally between them. The trial court found that Goudie's duty to mitigate damages after unsuccessfully negotiating for repairs or adjustment with Sears and Climate prevented further loss of business income as to Climate [10] and limited the recovery as to Sears to the years 1964 and 1965. We conclude that these tentative findings of fact are supported by sufficient relevant and probative evidence and do not erroneously apportion the damages as found. Because Sears' claim of waiver is based on either Goudie's 1968 acts of remodeling or her signing of a maintenance agreement in late 1966, the merits of this claim need not be reached where the counterclaim successfully asserting damages for 1964 and 1965 was filed in July, 1966 prior to the alleged acts of waiver. Sears also claims that Goudie's use of her own air-conditioning motor in the system waived any rights she may have had under an implied warranty. However, the assurances made by Sears' agents that Goudie's motor was compatible with the cooling system negate this claim. We have examined the record in light of other claims made by the parties and we find them without merit. We therefore set aside the holding of the trial court allowing Goudie's counterclaim for personal loss ($14,120) asserted after the running of the statute of limitations and limit Goudie's recovery to recoupment (negating Sears' award of $933.39 against Goudie). We also reverse the trial court's finding that Goudie should not have been allowed her loss of business income and remand with directions to enter judgment for Goudie under the tentative findings of the trial court, and in conformity with this opinion ($8,272 plus interest and costs against Sears and $1,958 plus interest and costs against Climate). So ordered.