Opinion ID: 2266073
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Heading: Long's Appeal

Text: Long contends on appeal that he was entitled to a directed verdict on the breach-offiduciary-duty charge for all damage claims in excess of $1,096.62. The standard under which we review the denial of Long's directed-verdict motion is a familiar one. [4] The proof and the inferences reasonably to be drawn therefrom must be assayed in the light most favorable to the nonmovants, free from any questions of credibility, e.g., Lutz Engineering Co. v. Industrial Louvers, Inc., 585 A.2d 631, 635 (R.I.1991), but without the benefit of any inferences based on conjecture, speculation, or surmise. See Souza v. Narragansett Council, Boy Scouts of America, 488 A.2d 713, 715 (R.I.1985). A verdict should be directed when the evidence permits only one legitimate conclusion in regard to the outcome. E.g., Kenney Manufacturing Co. v. Starkweather & Shepley, 643 A.2d 203, 206 (R.I.1994). Because there was no evidence introduced to support any damages award to Atlantic above $4,767.75, we believe Long cleared this hurdle. The basic precondition for the recovery of lost profits is that such a loss be established with reasonable certainty. Troutbrook Farm, Inc. v. DeWitt, 611 A.2d 820, 824 (R.I.1992). Although mathematical precision is not required, the jury should be provided with some rational model of how the lost profits occurred and on what basis they have been computed. Abbey Medical/Abbey Rents, Inc. v. Mignacca, 471 A.2d 189, 195 (R.I.1984). And the bottom line should be the injured party's net lost profits after expenses are deducted and before taxes are calculated. See id.; Troutbrook Farm, Inc., 611 A.2d at 824. Although Atlantic prepared a gallimaufry of theories in support of its damage claims for breach of fiduciary duty, this concoction boils down to charges involving three types of alleged misconduct by Long: (1) contracts that Long diverted to R.J. before Long left Atlantic, (2) business obtained by R.J. after Long left Atlantic, and (3) Long's attempts to entice three Atlantic employees to join his new company. In fine, we believe the court below should have directed a verdict in Long's favor regarding the damage claims attributable to the predeparture contracts for any damages sought over $4,767.75, to the postdeparture contracts, and to Long's solicitation of Atlantic's employees.
The amount of lost-profit damages Atlantic can recover on the contracts Long procured for R.J. before leaving Atlantic is a function of two variables: (1) the dollar value of the contracts diverted from Atlantic to R.J. and (2) Atlantic's profit margins if it had obtained these contracts. Thus, pursuant to one of the contracts Long purloined from Atlantic, R.J. painted a school in 1987 for about $17,000. Because Atlantic's profit margin for that year was no greater than 15 percent, [5] Atlantic could have realized no more than $2,550 if it had obtained and performed the painting contract instead of R.J. Applying this same maximum net-profit margin to the $14,785 inspection contract that Long obtained for R.J. produces a best-case lost-net-profit figure of $2,217.75 for Atlantic. Thus, Atlantic's total lost profits on these two predeparture contracts is $4,767.75. Long argues that whatever lost-profit amounts are involved should be reduced by 50 percent because that was the extent of Long's interest in R.J. But the measure of damages is the loss to Atlantic, Psaty & Fuhrman, Inc. v. The Housing Authority of Providence, 76 R.I. 87, 98, 68 A.2d 32, 38 (1949), not the gain to Long. On the basis of the foregoing, Atlantic's damage claims for Long's predeparture breaches of loyalty should have been capped at $4,767.75. There was no basis in the record for a reasonable juror to award greater damages. Thus, the trial justice should have directed a verdict in Long's favor for any predeparture lost-contract damages above this figure.
Regarding Atlantic's attempt to recover lost profits on the postdeparture contracts that Long obtained for R.J. through his contacts at Morton, Sobolewski's position hinges on the premise that while he was still employed by Atlantic, Long steered Morton to R.J., causing Atlantic to lose not only predeparture contracts but also substantial future opportunities of doing business with or through Morton even after Long had departed. But Brunson, Morton's office manager, poured cold water on this theory at trial. Other than Long's predeparture activity, there was no other evidence to support such a claim for lost future business. Morton, it seems, had previously worked on two or three projects wherein Atlantic had been hired to insulate some buildings. Brunson, however, quickly came to dislike both Sobolewski and the product he sold and decided to look elsewhere. He heard through the grapevine at Morton that Long had left Atlantic to form R.J. [6] Morton eventually contracted with R.J. in December 1987, but Brunson flatly rejected the notion that Long had anything to do with his decision not to use Atlantic at that time. Other than Long's predeparture misconduct in obtaining contracts for R.J., there was no other evidence to support any claims for lost profits arising out of R.J.'s postdeparture contracts with third parties. On these facts no reasonable factfinder could conclude that Long breached any duty to Atlantic concerning the postdeparture contracts he had obtained for R.J. Atlantic had no legal right to keep Morton from doing business with or directing business to R.J. after Long's departure. Moreover, absent any enforceable noncompetition agreement, former employees like Long can solicit their previous employer's customers for business, as long as, in doing so, they are not acting tortiously, for example, by interfering unjustifiably with their former employer's contracts, by misappropriating the employer's trade secrets, or by converting other confidential business information belonging to their former employer. See, e.g., Callahan v. Rhode Island Oil Co., 103 R.I. 656, 660-61, 240 A.2d 411, 413-14 (1968); 3 Beth A. Buday and Gail A. O'Gradney, Fletcher Cyclopedia of the Law of Private Corporations, § 860 at 275-76 (1994). Here, Morton's identity as a prospective customer for R.J. was not a trade secret, as it was readily ascertainable from nonconfidential sources. Cf. Durapin, Inc. v. American Products, Inc., 559 A.2d 1051, 1057 (R.I. 1989) (no protectable interest where customer's identity was common knowledge and there was no evidence that plaintiff-corporation had developed a special relationship through its appreciation of the customer's special needs). Moreover, Morton and Atlantic did not have any sort of business or contractual relationship that would entitle a jury to conclude that but for Long's actions, Morton would have caused the future business it directed to R.J. to go instead to Atlantic. Similarly, there was no evidence that the postdeparture business that evolved between Morton and R.J. was pending or in the works prior to Long's leaving. [7] To clinch matters, Brunson testified without contradiction that from Morton's viewpoint Sobolewski's gruff personality and Atlantic's shoddy work product were to blame for the demise of the Morton/Atlantic relationship. In sum, on this record, we believe that no reasonable juror could have awarded lost-profit damages to Atlantic on the basis of Long's role in securing business for R.J. through his Morton contacts after he had left Atlantic. Thus, the trial justice should have directed a verdict in Long's favor for so much of Atlantic's lost-profit claims that were based on the postdeparture business Long had obtained for R.J.
Atlantic presented no damage evidence to support its claims concerning Long's alleged wrongful solicitation or hiring of its employees. Two of the three workers targeted by Long never left Atlantic. The third, Joyce Stiles, Long's secretary, did join R.J., but the record is silent about whether her departure damaged Atlantic. Absent any damage evidence on this claim, there was nothing here to support or enhance any damage award. In short, the only breach-of-fiduciary-duty claims that should have gone to the jury were those relating to Long's diversion of business to R.J. while he was still working for Atlantic. And in regard to those, all claims for lost profits above the most that Atlantic could have realized on these contracts should have been directed out of the case by the trial justice.