Opinion ID: 1910081
Heading Depth: 1
Heading Rank: 6

Heading: Was it a mistake to award damages for lost profits to a new business?

Text: Perini argues that the renovation project amounted to a new business. In Weiss v. Revenue Building and Loan Ass'n, 116 N.J.L. 208, 182 A. 891 (E. & A. 1936), the Court stated that lost profits for a new business are too remote, contingent and speculative to meet the legal standard of reasonable certainty. Id. at 212, 182 A. 891. Sands questions that argument. It points out that the casino had a proven track record; the location and nature of the business never changed; and the management team never changed. However, even were we to consider profits from the 1984 season as those of a new business, the trend in recent cases has been to award lost profits for a new business when they can be proved with reasonable certainty. Robert L. Dunn, Recovery of Damages for Lost Profits, § 4.2 (3d ed. 1987); see also Seaman, supra, 166 N.J. Super. at 474-75, 400 A. 2d 90 (evidence of lost rental value from new operation incorrectly admitted at trial because, among other things, defendant failed to show that a profit would have been made). In In re Merritt Logan, Inc., 901 F. 2d 349 (3d Cir.1990), the court predicted that this Court would follow that trend and allow lost profits for a new business if damages were proved with reasonable certainty. Id. at 358. That court also relied on comment 2 to N.J.S.A. 12A:2-708(2) (UCC), which states that [i]t is not necessary to a recovery of `profit' to show a history of earnings, especially if a new venture is involved. Ibid. Given that recent trend, the arbitrators cannot be said to have acted in manifest disregard of the law. Thus, because the arbitrators were presented with enough evidence to decide that Sands had proved its lost profit damages with reasonable certainty, the damage award does not fall.