Opinion ID: 2139960
Heading Depth: 1
Heading Rank: 17

Heading: Calculation of Damage Award

Text: Both Pearson and Aon assign error to the district court's determination that Aon sustained damages in the amount of $123,063. Additional portions of the record bear on our review of this issue. To rebut Hein's testimony, Pearson offered the expert testimony of David C. Riley, also a certified public accountant. Riley disagreed with Hein's methodology and opined that the proper method of calculating damages was to consider Aon's percentage increase in expenses during the years 2000 to 2002. According to Riley, Hein did not follow generally accepted principles of accounting and failed to properly calculate Aon's lost profits. Riley calculated that in the years 2001 to 2003, Aon had an average net profit percent of 6.57 percent. When he applied that percentage to the revenues lost by Aon, he determined that Aon's lost profits attributable to Pearson were $28,457. Pearson testified at trial that no more than 80 percent of the revenue he generated for Midlands in 2002 and 2003 came from former Aon customers. He had earlier testified in his deposition that approximately 75 percent of the revenue came from Aon customers. Evidence was received, without objection, detailing the amount of compensation Pearson received from Midlands in the years 2001 to 2003. An exhibit was received without objection which purported to show the revenue generated by Pearson for Midlands with respect to the customers Pearson had formerly serviced at Aon. In its order of judgment, the district court found that the best evidence of revenues actually lost to Aon due to Pearson's actions was Pearson's testimony relative to his commissions while at Midlands. The court therefore reject[ed] opinions of the experts of the parties as to projected lost revenues and/or profits. However, the court expressly accepted Hein's opinion that Aon would have incurred additional expenses servicing the customers and that those expenses would equal 6 percent of the gross revenues generated by Pearson. The court also specifically found that as of January 1, 2002, Aon had sufficient personnel to service the customers that Pearson took to Midlands. The district court then calculated lost profits in a manner that differed from either method used by the parties' experts. The court first determined the actual revenues lost to Aon. It reached this sum by multiplying Pearson's actual compensation for the years 2002 and 2003 by 2, based on the undisputed evidence that Pearson was paid 50 percent of all revenues he generated. Then, the court multiplied this sum by 80 percent, based on Pearson's testimony that approximately 80 percent of the revenue he generated at Midlands came from former Aon customers. The court then multiplied the revenues lost by 6 percent to determine what additional expenses would have been incurred in generating those revenues. Once these numbers were determined, the court (1) added the additional revenues into the actual operating revenues for Aon for the year in question, (2) added the additional expenses into the actual expenses incurred by Aon for the year in question, and (3) determined what the profit/expense ratio was for the year in question. After determining this ratio, the court applied it to the additional revenues generated by Pearson and arrived at a lost profit figure of $53,958 for 2002 and a figure of $92,141 for 2003. Because the nonsolicitation agreement would have expired in September 2003, the court reduced the 2003 amount by 25 percent and concluded that Aon's total lost profits were $123,063. Both Aon and Pearson assert that the trial court erred in its calculations. Pearson argues that Hein's 6-percent variable expense estimate was not based on the evidence, and Aon contends that the court erred in accessing the 6-percent variable twice. We conclude that neither is correct. There is evidence in the record to support Hein's conclusion that Aon would only have incurred an additional 6 percent in variable expenses in generating the additional revenue. Hein gave a reasoned basis for his calculations, and the district court explicitly found that Aon had personnel in place to service the additional revenue so that no allocation needed to be made for items such as salary and benefits. Based upon our review of the record, we find no merit in Pearson's argument that the district court improperly calculated expenses in arriving at its finding of lost net profits. There is no precise formula for determining lost profits, and the only requirement in Nebraska is that the calculation be supported by some financial data which would permit an estimate of the actual loss to be made with reasonable certitude and exactness. [32] We conclude that the record is sufficient to support the method of calculating damages utilized by the district court.