Opinion ID: 4557822
Heading Depth: 3
Heading Rank: 1

Heading: Bell’s Compensation

Text: Henkel argues that Bell’s compensation—his salary and bonus—can be recovered as consequential damages because Bell would have been fired (and thus received no pay from 10 Case No. 19-1351, Henkel of America, Inc. v. Craig Bell and Knight Capital Partners Corp. Henkel) had he disclosed that he was simultaneously working as a high-level KCP executive. We find this argument unconvincing because Bell’s compensation was not a “loss[] caused by the breach.” Ambrogio, 836 A.2d at 1187 (quoting Restatement (Second) Contracts § 347(b)); see also W. Haven Sound Dev. Corp., 514 A.2d at 742 (explaining lost profits are available when the “loss arises directly from and as a natural consequence of the breach”). Henkel of course did not pay Bell to play both sides of the Henkel-KCP deal and possibly undermine its interests for personal gain; it paid him because of its contractual obligation to remunerate him in exchange for services (most of which he rendered). That Henkel would have terminated Bell does not change the analysis because there is no evidence that Henkel would not have needed to pay the same ~$300,000, or some similar amount, to someone else to perform Bell’s employment duties. Restoring to the nonbreaching party part of the consideration paid under the contract is simply not a measure of the party’s expectation interest, of which consequential damages are a constituent part. Because the payment occurred as a result of a contractual obligation and not the breach, returning the compensation to Henkel would not restore it to the position it would have been in had Bell performed his contractual obligations; it would put Henkel in the position it would have been in had it terminated the contract and managed to complete the same tasks without hiring someone else. Henkel all but acknowledges that the return of Bell’s compensation is not an appropriate measure of contract damages because the Connecticut cases upon which it relies for this proposition involve breach of fiduciary duty, not breach of contract.5 See Appellant’s Br. at 21– 5 To be sure, parties may in some circumstances recover a restitution interest for contract damages, which resembles an equitable claim and might permit a party to recover some or all of the consideration it had already paid pursuant to the contract. See, e.g., Bernstein v. Nemeyer, 570 A.2d 164, 168–69 (Conn. 1990); see also Restatement (Second) Contracts §§ 371, 373. Under this approach, “[t]he objective is . . . to put the party in breach back in the position he would have been in if the contract had not been made.” Bernstein, 570 A.2d at 18–69 (citation omitted). However, Henkel does not pursue its breach of contract claim on a theory of restitution interest, and it has not attempted to satisfy the requirements that it return to the breaching party any benefit received (here, Bell’s provision of employment 11 Case No. 19-1351, Henkel of America, Inc. v. Craig Bell and Knight Capital Partners Corp. 22 (citing, e.g., Wall Sys., Inc. v. Pompa, 154 A.3d 989 (Conn. 2017)). Seeing no difference between Bell’s salary and his performance-based bonuses for purposes of Henkel’s expectation interest, we find both insufficient to establish the element of damages. 2. Time and Expense on Project King and Henkel-KCP Deal Henkel also contends that it has established concrete damages in the form of (1) the time and expense incurred in rehabilitating its relationship with “King” after it was discovered that Bell had disclosed confidential information about the project to KCP and (2) the time and expense spent pursuing the Henkel-KCP deal longer than it would have had it not been for Bell’s conflict of interest. Regardless of whether these costs were caused by the breach, they also do not establish damages on the part of Henkel. First, Henkel never raised these arguments in the summary judgment briefing for the breach of contract claim, see R. 40 at PageID 934–38, and they are therefore forfeited, see United States v. Archibald, 589 F.3d 289, 295–96 (6th Cir. 2009). Further, to prevail on a breach of contract claim under Connecticut law, “[p]roof of damages should be established with reasonable certainty and not speculatively and problematically.” Meadowbrook Ctr., Inc., 90 A.3d at 228 (quoting Leisure Resort Tech., Inc. v. Trading Cove Assocs., 889 A.2d 785, 794 (Conn. 2006)). Thus, otherwise-proper consequential damages may not be awarded if they are too “speculative and remote.” Ambrogio, 836 A.2d at 1187. The specificity of the evidence required should be determined based on the nature of the case. See Meadowbrook Ctr., services), see Metcalfe v. Talarski, 567 A.2d 1148, 1152–53 (Conn. 1989) (“The very idea of rescinding a contract implies that what has been parted with shall be restored on both sides, and hence the general rule, which is to be reasonably applied . . . is that a party who wishes to rescind a contract must place the opposite party in status quo.” (quoting 17 Am.Jur.2d, Contracts § 512 p. 994)), or that the breach be a “material” or “total” breach, see John T. Brady and Co. v. City of Stamford, 599 A.2d 370, 377 (Conn. 1991) (“[T]he remedy in restitution is designed to prevent unjust enrichment of the party responsible for a material breach of an enforceable contract[.]”); see also Bernstein, 570 A.2d at 168–69 (similar); Restatement (Second) Contracts § 373(1) (explaining that restitution interest is available for “non-performance that gives rise to a claim for damages for total breach”). 12 Case No. 19-1351, Henkel of America, Inc. v. Craig Bell and Knight Capital Partners Corp. Inc., 90 A.3d at 228 (“[E]vidence of such certainty as the nature of the case permits should be produced.” (quoting Doeltz v. Longshore, Inc., 13 A.2d 505, 507 (Conn. 1940)). As it essentially acknowledged at oral argument, Henkel failed to introduce any evidence from which a factfinder could calculate these other categories of losses. The only specific evidence of losses arising out of the Project King disclosure is a declaration from Henkel’s president that Henkel incurred “several thousand dollars” in fees. R. 49-2 at PageID 1383 ¶ 9. But legal fees usually are calculated with a great degree of specificity, closely catalogued, and generally correlated to very specific activities. So too with the additional time and expense spent pursuing the Henkel-KCP deal even after Bell became aware that KCP did not possess the relevant licensing rights. Other than describing these damages as “a substantial amount of time and resources,” R. 40-19 at PageID 1175 ¶¶ 15:17–24, and that the damages consist of time spent “exploring the deal, due diligence that was conducted, including voice [sic] of the customer, activities, flights, hotel rooms, [and] travel expenses for certain meetings,” R. 31-4 at PageID 692 ¶¶ 16:1–4, Henkel provides no way to calculate its alleged losses. 3. Nominal Damages Henkel argues that even if it cannot establish actual damages, it is entitled to pursue its claim on the basis of nominal damages. It seeks to take the case to trial on that basis alone. Henkel never raised this argument in the district court, and it is therefore forfeited on appeal. See Archibald, 589 F.3d at 296. Accordingly, we AFFIRM as to the breach of contract claim (Count IV). 13 Case No. 19-1351, Henkel of America, Inc. v. Craig Bell and Knight Capital Partners Corp.