Opinion ID: 1140801
Heading Depth: 1
Heading Rank: 6

Heading: Requirement of Proof of Damages

Text: To sustain its remaining claims of breach of fiduciary duty and breach of contract against Brooks and tortious interference with contract against Systrends, Group 8760 was required to prove, among other things, the damages resulting from those civil wrongs. A claim alleging breach of fiduciary duty sounds in tort, Brooks v. Hill, 717 So.2d 759, 764 (Ala.1998), and `[a] necessary element to be proven in an action alleging breach of duty is damages.' Williams v. Citizens Nat'l Bank of Shawmut, 570 So.2d 635, 638 (Ala.1990). Also, an essential element of a claim of tortious interference is damages. Parsons v. Aaron, 849 So.2d 932, 946 (Ala. 2002). Hensley v. Poole, 910 So.2d 96, 106 (Ala. 2005). See also Serra Chevrolet, Inc. v. Edwards Chevrolet, Inc., 850 So.2d 259, 265 (Ala.2002) (damages as element of tortious interference claim); Utah Foam Prods., Inc. v. Polytec, Inc., 584 So.2d 1345, 1352-53 (Ala.1991) (same). Damages for breach of contract ``should return the injured party to the position he would have been in had the contract been fully performed.'' Parsons v. Aaron, 849 So.2d 932, 949 (Ala.2002)(quoting other cases). Although they need not be proved to a mathematical certainty, damages [for breach of contract] may not be awarded where they are remote or speculative. A jury must have some reasonable basis for the amount of its award. Parsons, 849 So.2d at 949. See also Ricwil, Inc. v. S.L. Pappas & Co., 599 So.2d 1126, 1132 (Ala.1992). It is true that damages may be awarded only where they are reasonably certain. Damages may not be based upon speculation. Industrial Chemical & Fiberglass Corp. v. Chandler, 547 So.2d 812 (Ala.1988); see also Alabama Power Co. v. Alabama Public Service Commission, 267 Ala. 474, 103 So.2d 14 (1958). . . . [The plaintiff] `must produce evidence tending to show the extent of damages as a matter of just and reasonable inference.' C. Gamble, Alabama Law of Damages § 7-1 (2d ed.1988), as cited in Industrial Chemical, supra, at 820. The rule that one cannot recover uncertain damages relates to the nature of the damages, and not to their extent. If the damage or loss or harm suffered is certain, the fact that the extent is uncertain does not prevent a recovery. Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 51 S.Ct. 248, 75 L.Ed. 544 (1931); see also Shook v. Vertagreen Credit Union, 460 So.2d 1343 (Ala.Civ.App.1984). Jamison, Money, Farmer & Co. v. Standeffer, 678 So.2d 1061, 1067 (Ala.1996). See also Birmingham News Co. v. Horn, 901 So.2d 27, 65 (Ala.2004) (damages for lost profits based upon tort claim are recoverable if proved with reasonable certainty). When a plaintiff fails to demonstrate damage or injury attributable to the defendant's breach of contract or tortious act, a judgment awarding damages should not stand. See, e.g., Hensley v. Poole, supra, Parsons v. Aaron, supra. Group 8760's evidence concerning the extent of its damages came solely from Williams and Group 8760's expert witness, Steven Dauphin. Williams's testimony was essentially that as of a July 16, 2001, consulting agreement with Dauphin, Williams had valued Group 8760 at $3,000,000, whereas in a March 26, 2004, proposal to an interested company on how it could earn options for ownership in Group 8760, he had valued Group 8760 at only $1,100,000. Williams confirmed that those figures represented his judgments as to the value of Group 8760 as of those times. He considered its value at the time of trial to be basically zero. Williams attributed the decrease in Group 8760's value from $3,000,000 in July 2001 to $1,100,000 in March 2004 to Systrends activities in the market place, causing Group 8760 to lose one or two contract bids and impairing its ability to raise money, and to what went on with Mr. Brooks and Systrends, with the primary, by far the biggest damage coming from the fact that Brooks left and [took] our trade secrets and competed with us. Williams admitted, however, that Group 8760 had lost none of its existing customers. Asked if he had ruled out the various other causative factors that might have caused a decline in the value of Group 8760, Williams responded: Well, I'm not talking about the methodology. I'm talking about the establishment of the valuation based on specific tangible transactions at points in time. Mr. Dauphin will talk to you about the methodology that he used for showing the damages based on those two numbers, and the extrapolation and formulas that we used. Dauphin, in turn, agreed with Williams's estimate of a $3,000,000 value for Group 8760 just before Brooks's departure, having been involved in the negotiations with Williams that gave rise to the July 2001 consulting agreement. (Using that as a base figure, and projecting an annualized growth rate of 41.2% as the growth Group 8760 could have expected to experience but for the actions of Brooks and Systrends, Dauphin estimated that Group 8760 could have achieved a value of $10,100,000 as of the time of trial. He also adopted the $1,100,000 value figure Williams derived from the March 2004 proposal, but used it as representing the best estimate of the company's value as of trial. Comparing his projected value of $10.1 million to the $1.1 million value at trial, he arrived at this damages estimate: I believe it's reasonable to assign the difference between $10.1 and $1.1 of nine million as damages in this case. Brooks and Systrends assail Dauphin's assumptions and methodology on a number of fronts, particularly with respect to his utilization of a growth rate he based solely on an index published by a third party for totally different uses and the components of which Dauphin did not know. We need not resolve those issues, however, because even if we accept Dauphin's damages estimate without reservation, it does not supply the evidence Group 8760 was required to present to establish its damages associated with its separate claims. In that regard, we find the following testimony by Dauphin determinative in our subsequent discussions: Q [Counsel for Brooks]. So, are you saying that Dick Brooks and Systrends did in fact, cause 8760's financial problems? A. They were a huge part of their financial problems. Q. Okay. Can you say they were the single biggest impact? A. I would say they were the biggest single impact. . . . . Q. Can you say that they're 50 percent of the cause? A. I would think and again I think the best estimate is that the nine million dollars in loss is attributable to the actions of Systrends and Mr. Brooks, because I believe other than that, the company conducted itself very well through that period of time which in this industry was not a period of calamitous events. Q [Counsel for Brooks]. The different components of the actions that Dick Brooks and Systrends are accused of  some of them you just mentioned, PEPCO, ERCOT, the noncompete, the nonsolicitation, the trade secrets, you can't break up your nine million dollar figure into which action caused which portion of those damages, can you? A. No. Q. So, if the jury in this case were to decide in favor of 8760 on some of those claims, and in favor of Dick and Systrends on some of those claims, you can't give them any guidance about how that affects the damages, can you? A. I can't specify a particular dollar amount for a particular action. Group 8760 argued to the trial judge during postjudgment hearings that if all of the compensatory damages awards were added up, this jury almost hit nine million dollars exactly, awarding almost nine million dollars worth of compensatory damages, but they split it up based upon what they thought Brooks did and what they thought Systrends did. We need not consider whether the total damages figure supplied by Dauphin would support the aggregate of the separate verdicts if we were to uphold all of the verdicts. What we must address is whether, under the principles discussed above and given our invalidation of the amounts awarded for alleged ATSA violations by Brooks and Systrends, the separate amounts the jury awarded for Brooks's alleged breach of fiduciary duty and breach of contract and Systrends' alleged tortious interference with contract are sustainable under the evidence presented. Brooks and Systrends properly raised and preserved this issue in their respective motions for a new trial, and they have each properly argued it in their appellate briefs. (Brooks's principal brief, pp. 75-77; Systrends' principal brief, pp. 62-64.)