Opinion ID: 2428959
Heading Depth: 2
Heading Rank: 2

Heading: lost profitsdirect appeal

Text: We conclude that reversible error occurred on the issue of lost profits. On the day before trial, WBF moved in limine to exclude, among other things, any reference to Smith's lost income or lost profits. WBF made two arguments in support of its motion. First, WBF argued that Smith was proceeding under the Federal Odometer Fraud Act which allows recovery of actual damages sustained and that actual damages does not include lost profits. Second, WBF argued Smith's proof of lost profits was too speculative and based on conjectural evidence. At a hearing on the motion in limine, the trial court relied on Fenton Ford, 427 F.Supp. 1328 (footnote 8), and ruled that the lost profits in this case were similar to the lost wages at issue in Fenton Ford . The Fenton Ford court held the lost profits were too remote to be recoverable under the [Federal Odometer Fraud] Act. Fenton Ford, 427 F.Supp. at 1332. For reversal, Smith argues the trial court erred in holding Fenton Ford precludes recovery of lost profits under the Act as a matter of law. Smith reasons that lost profits are part of the actual damages contemplated by the Act. We agree with Smith's contention and reasoning. From our review of Fenton Ford , we conclude its holding on lost profits as stated in footnote 8 was limited to that particular case and that the facts of the current case are distinguishable. Moreover, we conclude that lost profits are recoverable under the Act, provided they are proved to be the proximate result of the fraud and in a reasonably certain amount. In Fenton Ford , the issue was lost wages, not lost profits. The only evidence of lost wages was the plaintiff's testimony. She stated that she was forced to quit her part-time job because she could not get there due to the lost use of her vehicle. In the current case, Smith did not have a job if he did not have use of his truck; it would make no difference if Smith found another means of transportation to his job sitehe would still not have a dump truck with which to work. In short, Smith's vehicle was his job, not merely a means of transportation to and from work. In addition, had the trial court not excluded it, there could have been testimony of Smith's lost profits from witnesses other than Smith. Under Arkansas law, lost profits are recoverable in an action for fraud, see Jim Halsey Co. v. Bonar, 284 Ark. 461, 683 S.W.2d 898 (1985), provided, of course, they are proved to be proximately caused by the fraud and in a reasonably certain amount. This is consistent with our previous analysis that consequential damages are recoverable under the Act. Consequential damages are defined as [s]uch damage, loss or injury as does not flow directly and immediately from the act of the party, but only from some of the consequences or results of such act. First Service Corp. v. Schumacher, 16 Ark. App. 282, 702 S.W.2d 412 (1985), (citing Black's Law Dictionary, 5th ed., and Richmond Redevelopment and Housing Auth. v. Laburnum Constr. Corp., 195 Va. 827, 80 S.E.2d 574 (1954)). Lost profits are well recognized as a type of consequential damages. Tremco, Inc. v. Valley Aluminum Prod. Corp., 38 Ark.App. 143, 831 S.W.2d 156 (1992); AM/PM Franchise Ass'n v. Atlantic Richfield Co., Pa. 110, 584 A.2d 915 (1990); John D. Hollingsworth on Wheels v. Arkon Corp., 279 S.C. 183, 305 S.E.2d 71 (1983). Thus, we reach our conclusion that lost profits are recoverable under the Act as actual damages provided they are proved to the requisite levels of certainty and causation. We read Fenton Ford as holding simply that the proof in that case did not rise to the requisite levels. WBF attached as exhibits to its brief in support of the motion in limine excerpts from the discovery depositions of two of Smith's potential witnesses, Jimmy Carter, Smith's former employer, and Dr. Charles Venus, an economist. Smith was working for Carter when the head gasket broke and he relinquished possession of the truck to WBF. In his deposition, Carter stated that Smith could have had a job working for him for the next six months (the six months after Smith relinquished his truck to WBF on August 4, 1988), making $35.00 per hour, ten hours per day, six days a week. Dr. Venus, stated he made two sets of calculations based on a 50% gross profit margin and a 75% gross profit margin, both of which he thought were reasonable based on his knowledge of studying other companies. His calculations were based on the figures in Carter's testimony. All of Dr. Venus' deposition is not in the transcript, thus his final calculations are unknown. However, if the jury were allowed to hear the foregoing testimonies they could have reasonably concluded that Smith lost profits of approximately $27,300.00 (50% profit margin) or $40,950.00 (75% profit margin). This court has stated that proof of lost profits must be sufficient to remove the question of profits from the realm of speculation and conjecture; the evidence must establish the alleged anticipated profits with reasonable certainty, and the jury must be provided a reasonably complete set of figures from which to determine the amount of profits lost. See e.g., Robertson v. Ceola, 255 Ark. 703, 501 S.W.2d 764 (1973). We conclude the foregoing evidence meets the requisite level of certainty. Having concluded that a reasonably certain amount of lost profits could have been established, the issue now becomes whether there was evidence from which the jury could have determined the loss of profits to be the proximate result of the fraud. The jury found WBF liable for either actually rolling back the odometer or for failing to disclose the truck's actual mileage; either of those actions is therefore the fraud in this case. Smith testified he questioned the low mileage figure and the heavy truck sales manager at WBF assured him the truck had low mileage but had simply been abused from heavy hauling at a construction site. Smith stated he would not have purchased the truck at all if the mileage was unknown because of his prior experience with a higher mileage International truck. In addition, there was evidence the truck broke down while Smith was on the job and that the truck had previously been repaired for the very same problem. We conclude this evidence was at the very least sufficient to create a jury question as to the proximate result of the fraud. Therefore, we hold the trial court erred in granting WBF's motion in limine to exclude Smith's proof of lost profits. Accordingly, we reverse the judgment on direct appeal.