Opinion ID: 2207277
Heading Depth: 1
Heading Rank: 3

Heading: Rulings by the Court Restricting Proof of Lost Profits.

Text: We next consider plaintiffs' contention that the trial court erred in refusing to permit the jury to award damages for lost profits and in excluding the testimony of witnesses with respect to their lost-profit claims. The only elements of damage which the trial court submitted to the jury were the destruction of personal property (including the value of the animals) and the destruction of the farrowing building. In ruling on defendant's motion in limine seeking to exclude evidence of lost profits, the trial court sustained those motions in their entirety and continued to adhere to that ruling in the face of offers of proof submitted by plaintiffs. In making up the jury instructions, the trial court refused to submit any issue on lost profits as an element of damage. Defendant seeks to uphold the court's rulings precluding proof of lost profits on the basis that such losses, if any, did not represent a proper element of damage for the loss which plaintiffs sustained from the fire. Specifically, defendant relies on the following language in Miller v. Economy Hog & Cattle Powder Co., 228 Iowa 626, 293 N.W. 4 (1940): The measure of damages for the destruction of animals is the difference between their value before the occurrence which caused the deaths and the value of the remains. However, the remains of destroyed animals, other than those intentionally slaughtered, frequently have no value or none over and above the trouble and expense entailed in disposing of the same. In such cases the value before death correctly measures the damage resulting from the death. Id. at 639, 293 N.W. at 10-11. Defendant notes that, in the Miller decision, this court reversed the district court on the ground that it had permitted the jury to award damages for future lost profits. Although we agree that ordinarily damages for the total destruction of tangible property by fire is the reasonable market value of that property before destruction, see, e.g., Walters v. Iowa Elec. Co., 203 Iowa 467, 470, 212 N.W. 884, 886 (1927), there may be an additional compensable loss when this results in a business interruption. In such cases, a plaintiff is also entitled to recover the usable value of the destroyed property during the time reasonably required to replace it. Nizze v. Laverty Sprayers, Inc., 259 Iowa 112, 120, 143 N.W.2d 312, 317 (1966). In some cases, this usable value is best measured by the rental value of the property. Knaus Truck Lines v. Commercial Freight Lines, 238 Iowa 1356, 1367, 29 N.W.2d 204, 210 (1947); Kohl v. Arp, 236 Iowa 31, 39-40, 17 N.W.2d 824, 828-29 (1945). In cases where it is unlikely that similar property is available on a rental basis, it is necessary to measure loss of use by other means. In certain limited instances involving income generating property, lost profits is an acceptable measure of loss of use. Stahl v. Farmers Union Oil Co., 145 Mont. 106, 113, 399 P.2d 763, 766-67 (1965); D. Dobbs, Remedies § 5.11, at 387 (1973). The Miller case merely applied the principle that, in an action to recover for loss of livestock, a plaintiff cannot recover for the market value of the animals at the time they were destroyed and also recover for profits which would have been sustained in the sale of those same animals. That is not plaintiffs' theory of recovery in the present case. They are seeking damages for business interruption in a farrow to finish hog operation. While recovery of the market value of the hogs that were destroyed precludes plaintiffs from also recovering profits based on their inability to sell those hogs, this circumstance should not preclude additional damages based on interruption in the production of additional litters during the period of time reasonably required to replace the destroyed farrowing facility. Plaintiffs made an offer of proof that plaintiff Laureen Mills had many years experience in hog production and, if permitted, would testify as to the potential profit from future pig litters during the period of interruption. In addition, plaintiffs made another offer of proof that Eldon J. Hans, who holds an MS Degree in livestock production from Iowa State University and had been a county extension director and consultant with Doane Agricultural Service, could testify as to lost profits from the farrow to finish operation during the period of interruption. The elements of damage outlined in these offers of proof may have been overbroad in the sense that they extended the period of business interruption from the time of the fire until the time of trial and beyond. That circumstance, however, does not justify the trial court's ruling denying recovery of lost profits for any period of business interruption. We have recognized that a party is not required to prove more than is necessary to entitle that party to the relief requested, or any lower degree of relief included therein. Wolfe v. Graether, 389 N.W.2d 643, 658 (Iowa 1986); Iowa Code § 619.9 (1987). Rather than precluding any proof of lost profits as a measure of loss of use, the district court should have pared either the claim, the evidence, or both in order that the jury would receive only those elements of loss which were properly recoverable. The offer of proof with respect to the evidence to be offered by Eldon J. Hans indicates a minimal six-month period of interruption from the time of the fire until plaintiffs' farrowing facility could again be made fully operative. Based on all of the evidence presented, it would have ultimately been up to the jury to fix the length of that period. It might have been longer or shorter than six months. It would have been possible, we believe, to interpolate the lost profit figures attributable to the more elongated period of time referred to in the offers of proof and come up with some loss of profits attributable to the loss of use of plaintiffs' farrowing facility during the reasonable period of time required to restore it to its prior state. The court of appeals affirmed an award of damages for lost profits experienced by a hog producer as a result of negligent construction of a hog confinement building in Bushman v. Cuckler Building Systems, 421 N.W.2d 145 (Iowa App.1988). This court approved the recovery of consequential damages, including lost profits, flowing from disruption of a hog-producing operation in Nachazel v. Miraco Manufacturing, 432 N.W.2d 158, 161 (Iowa 1988). In rejecting a claim that the proof of lost profits was speculative, the court of appeals in Bushman stated: While plaintiffs are required to establish the amount of claimed damages with some reasonable degree of certainty, mathematical precision is not required.... In the present case, [plaintiff] testified to the amount of profits lost based upon his estimates of hogs lost, market prices in the geographically relevant area during the pertinent years, and the average weight of a market hog. These elements were based upon certain records kept in conjunction with [plaintiff's] operation and [plaintiff's] experience in the hog markets and with his particular operation. [This] evidence [was] sufficient to remove the issue of damages from the realm of speculation. 421 N.W.2d at 148 (citations omitted). Although Nachazel and Bushman are cases involving damages caused by defective farrowing facilities rather than totally destroyed farrowing facilities, situations involving the total destruction of chattels do not preclude an award of consequential damages. See Long, 319 N.W.2d at 260-61.