Opinion ID: 1776247
Heading Depth: 1
Heading Rank: 1

Heading: Breach of Contract/Lost Profits

Text: Mason and Dixon raises three issues with respect to Byrd's claims for lost profits. The only evidence of damages Byrd presented at trial related to lost profits. In Paris v. Buckner Feed Mill, Inc., 279 Ala. 148, 182 So.2d 880 (1966), this Court stated the general rule regarding recovery of lost profits as an element of damages: [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. Paris, 279 Ala. at 149-50, 182 So.2d at 881 (quoting 25 C.J.S. Damages § 43); see also Kirkland & Co. of Anniston, P.C. v. A & M Food Service, Inc., 579 So.2d 1278, 1285 (Ala.1991); Super Valu Stores, Inc. v. Peterson, 506 So.2d 317, 327 (Ala.1987); Morgan v. South Central Bell Telephone Co., 466 So.2d 107, 115 (Ala.1985); Brendle Fire Equipment, Inc. v. Electronic Eng'rs, Inc., 454 So.2d 1032, 1034 (Ala.Civ. App.1984). [T]he rule dictates [that] recovery will ensue despite the fact damages cannot be calculated with mathematical certainty. Morgan, 466 So.2d at 116. Mason and Dixon first contends that Byrd did not establish a claim for breach of contract because his lost profits were not the natural and proximate result of Mason and Dixon's alleged breach. Byrd's breach of contract claim is based on Mason and Dixon's alleged failure to follow the termination procedure specified in the parties' written contract. Byrd asserts that any profits lost by Byrd resulted from Mason and Dixon's alleged failure to supply him with transport equipment. Because the promises to provide equipment were outside the written agreement, Mason and Dixon argue that all evidence respecting lost profits supported only Byrd's fraud claim, not his breach of contract claim; therefore, it says, the jury should not have considered any evidence of lost profits in connection with Byrd's claim of breach. This Court has determined that 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 reasonable estimate of the amount of damage.' United Bonding Insurance Co. v. W.S. Newell, Inc., 285 Ala. 371, 380, 232 So.2d 616, 624 (1969) (quoting 22 Am.Jur.2d Damages § 25). Mason and Dixon's argument fails to recognize that Byrd's testimony revealed essentially two varieties of lost profits. First, Byrd testified that he lost approximately $95,000 in profits during the term of the contract because Mason and Dixon failed to provide equipment as promised. Second, his testimony indicated that he had earned approximately $5,000 annually from his Mason and Dixon business and that he was capable of earning up to $70,000 annually. Jones testified that Byrd could have generated at least $1,000,000 in gross revenue per year for Mason and Dixon had the transport equipment been made available to Byrd. Byrd testified to the following concerning past profits and potential earning power: Q. You heard Mr. Jones talk about some plaques on your walls. Do you know what he was talking about? A. Yes, sir. Q. What are they? A. Well, they're plaques they give us for moving a million dollars worth of revenue in a year. Q. And when was the first year you got that plaque? A. I believe it was '79 or '80. Q. And who awards them? A. Ranger out of Jacksonville. Q. When you got one for '79, was that the last year you got it? A. No, sir. I believe it was in '80 was the first one. I'm not sure. But I got one every year since. Q. The last 9, 10, 11 years? A. Yes, sir. Q. And are you able to dodo you have an opinion as to whether or not you could do that kind of job for Mason and Dixon had they properly supported you? A. Well, I felt it was twice as much business. Yes, I do feel like I could have done the same job for them without interfering with each other. Q. Mr. Jones said that he approximated you being able to do a minimum million dollars a year for Mason and Dixon? A. Yes, sir. Q. And your compensation was at least seven percent? A. Yes, sir. Q. And that's $70,000 a year? A. Yes, sir. Q. And you had that contract for 20 months, didn't you? A. Yes, sir. Byrd's evidence of past profits earned and his potential earning power provided a reasonable basis for the jury to estimate the damages flowing from the breach of contract. The second issue Mason and Dixon raises is whether the evidence at trial provided the jury with a basis for estimating lost profits with reasonable certainty. See Paris, 279 Ala. at 149-50, 182 So.2d at 881. In Morgan, supra, this Court determined that testimony comparing the plaintiff's profits with those of his partner, both of whom were dentists, provided a reasonable basis for the jury to approximate' the plaintiff's lost profits. Morgan, 466 So.2d at 116. The Court stated that a horizontal comparison of two businesses was a commonly accepted method for measuring losses. Id. To demonstrate lost profits, both Byrd and Jones testified that Byrd had earned gross income in excess of $1,000,000 for Ranger for each of the past 10 years. Further, both witnesses testified that Byrd could reasonably expect to generate a comparable amount of income for Mason and Dixon. [1] Byrd's comparison of his earnings for Ranger with his potential earnings for Mason and Dixon constituted a horizontal comparison of businesses and provided a basis for the jury to estimate with reasonable certainty the profits Byrd lost. Third, Mason and Dixon claims that the trial court committed reversible error in excluding evidence offered to refute Byrd's claim for lost profits. The decision to allow testimony is a matter within the discretion of the trial court, and this discretion is not reversible in the absence of abuse. Raines v. Williams, 397 So.2d 86, 88 (Ala.1981) (citing Costarides v. Miller, 374 So.2d 1335 (Ala.1979); Moon v. Nolan, 294 Ala. 454, 318 So.2d 690 (1975)). In deciding whether to allow particular testimony, the court should focus on whether the testimony tends to shed light on the main inquiry or draws attention from it. Ryan v. Acuff, 435 So.2d 1244, 1247 (Ala. 1983). Mason and Dixon offered the testimony of Gene Cellauro, the Mason and Dixon agent who succeeded Byrd, to establish that Byrd was not capable of producing a profit from Mason and Dixon's business that was comparable to his profits from Ranger's business. Byrd's attorney objected to Cellauro's testimony, arguing that the location of his agency and the terms of his contract indicated that he was not sufficiently similarly situated with Byrd to shed light on issues involving Byrd's claims of breach of contract and fraud. [2] Based on the evidence before it, the trial court determined that Cellauro's testimony could have drawn the jury's attention away from the main issues and caused it to focus on collateral issues involving the differences between Byrd's contract with Mason and Dixon and Cellauro's. The trial court's decision to exclude Cellauro's testimony was not an abuse of discretion.