Opinion ID: 2297621
Heading Depth: 1
Heading Rank: 2

Heading: Lost Volume Seller

Text: The hospital first claims that the trial court improperly found that the plaintiff was a lost volume seller. The hospital specifically claims that the plaintiff failed to prove by a preponderance of the evidence that, in the years following the termination of his privileges in 1983, (1) he had the capacity to continue working at Norwalk Hospital while also handling the increased workload at the Bridgeport hospitals, (2) it would have been profitable for him to take on the additional workload at the Bridgeport hospitals, and (3) he probably would have assumed the additional workload at the Bridgeport hospitals even if his privileges at Norwalk Hospital had not been terminated. The plaintiff responds that he had the capacity to perform work at all of the hospitals simultaneously in 1984, that this court conclusively established that it would have been profitable for him to assume the increased workload at the Bridgeport hospitals and that his own testimony demonstrates that he would have handled the increased workload even if his privileges at Norwalk Hospital had not been terminated. We agree with the plaintiff. The following additional facts are relevant to our resolution of this issue. In its memorandum of decision, the trial court made several factual findings. Among these findings were that (1) the plaintiff covered the plastic surgery needs of the emergency rooms [at Norwalk Hospital and the Bridgeport hospitals] for the years 1974 to 1983 on a rotation basis with two other plastic surgeons, (2) the plaintiff covered the plastic surgery needs of the emergency rooms [at two of the Bridgeport hospitals] for the years 1984 to 2001 on a rotation basis with other plastic surgeons and emergency room doctors, (3) [t]he need for plastic surgeons in all the emergency rooms diminished over time because emergency room doctors, employees of the hospital, called upon plastic surgeons, less and less, and (4) [p]lastic surgeons who covered the emergency rooms on rotation were not employees of the hospital and were required to bill and collect their fees independently for any procedure that they were called upon to perform. On the basis of these findings, the trial court concluded that all three prongs of the lost volume seller test had been satisfied. See generally Gianetti v. Norwalk Hospital, supra, 266 Conn. at 554, 833 A.2d 891 (setting forth three prongs of lost volume seller test). The trial court explained that the first prong of the test was satisfied because [t]he services performed in 1974 through 1983 demonstrate the capability of [the plaintiff] to perform services simultaneously at Norwalk Hospital and the Bridgeport hospitals. The second prong of the test also was satisfied because this court had determined in Gianetti II that the record supports the Appellate Court's conclusion that it would have been profitable for the plaintiff to perform under the contract with the hospital while assuming an increased workload at the [Bridgeport] hospitals. Gianetti v. Norwalk Hospital, supra, 266 Conn. at 563-64 n. 10, 833 A.2d 891. Finally, the third prong of the test was satisfied because the plaintiff was furnishing services to the [Bridgeport] hospitals prior to the termination and continued to furnish those services after his termination. We begin our analysis by setting forth the standard of review. The determination of whether a party qualifies as a lost volume seller involves questions of fact to be resolved according to the circumstances of each case. (Internal quotation marks omitted.) Id., at 560, 833 A.2d 891. We thus review the trial court's findings to determine whether they are clearly erroneous. A finding of fact is clearly erroneous when there is no evidence in the record to support it ... or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.... Because it is the trial court's function to weigh the evidence and determine credibility, we give great deference to its findings.... In reviewing factual findings, [w]e do not examine the record to determine whether the [court] could have reached a conclusion other than the one reached.... Instead, we make every reasonable presumption... in favor of the trial court's ruling. (Internal quotation marks omitted.) Ackerman v. Sobol Family Partnership, LLP, 298 Conn. 495, 507-508, 4 A.3d 288 (2010). With respect to the applicable legal principles, [c]omment (f) to § 347 of the Restatement (Second) of Contracts provides that, in cases in which a contract has been breached, if there is a factual finding that an `injured party could and would have entered into the subsequent contract, even if the [underlying] contract had not been broken, and could have had the benefit of both, he can be said to have lost volume and the subsequent transaction is not a substitute for the broken contract.' 3 Restatement (Second), Contracts § 347, comment (f), p. 117 (1981). Thus, `[t]he lost volume seller theory allows [for the] recovery of lost profits despite resale of the services that were the subject of the terminated contract if the seller ... can prove that he would have entered into both transactions but for the breach.' ... Although the lost volume seller theory is commonly understood to apply to contracts involving the sale of goods, it applies with equal force to contracts involving the performance of personal services such as employment contracts. 22 Am.Jur.2d 592, Damages § 509 (1988). To qualify as a lost volume seller, a party must prove that the subsequent contract is not a substitute for the opportunity that has been lost as a result of the breach. See 3 Restatement (Second), supra, at § 350, comment (d), p. 129. `A substitute is a contract which a volume seller who has suffered the loss of one contract through the breach of another party has entered into in place of the broken contract and which the volume seller would not have been able, with his existing personnel and overhead costs, to perform had there been no breach.' ... Therefore, `a party claiming to be a lost volume seller must establish that it would have had the benefit of both the original contract and the subsequent contracts had there not been a breach.... This test has both objective and subjective components.' . . . Specifically, `to recover lost profits under [the lost volume seller] theory, a [nonbreaching] party must prove three things: [1] that the seller of services had the capability to perform both contracts simultaneously; [2] that the second contract would have been profitable; and [3] that the seller of services probably would have entered into the second contract even if the first contract had not terminated.' (Citations omitted.) Gianetti v. Norwalk Hospital, supra, 266 Conn. at 552-54, 833 A.2d 891. The party claiming to be a lost volume seller has the burden of proving lost volume seller status by a preponderance of the evidence. See Gianetti v. Norwalk Hospital, supra, 64 Conn.App. at 228, 779 A.2d 847. Mindful of these principles, we conclude, with respect to the first prong of the test, that the trial court's determination that the plaintiff had the capacity to continue working at Norwalk Hospital in 1984, in addition to taking on the increased workload at the Bridgeport hospitals, was not clearly erroneous. Although the number of cases that the plaintiff handled at the Bridgeport hospitals increased dramatically from approximately 130 in 1983 to 263 in 1984, [7] there is no evidence in the record that the plaintiff would have had difficulty handling the increased workload or that he would not have had sufficient time to satisfy his emergency room obligations at all of the hospitals during that year. The plaintiff testified that he shared on-call duties at Norwalk Hospital with two other plastic surgeons from 1978 through 1981, and with three other plastic surgeons in 1982 and 1983, and that the number of days each was scheduled for on-call duty was divided equally among them. In other words, the plaintiff was scheduled for on-call duty at Norwalk Hospital approximately 120 days each year from 1978 through 1981, and approximately 90 days in 1982 and 1983. The plaintiff further testified that 60 to 70 percent of the procedures that he performed were only one and one-half to two and one-half hours in length and that the remaining 30 to 40 percent were from two and one-half to three hours in length, thus leaving ample time for him to perform more procedures each day that he was scheduled for on-call duty at the hospitals. Indeed, the record shows that, on many days prior to 1984, the plaintiff not only performed multiple procedures but performed them at different hospitals, including Norwalk Hospital, [8] and that, on some days, he performed multiple procedures at more than one hospital. [9] Thus, on one particularly busy day in 1982, the plaintiff handled one case at each of four hospitals, and, on another day in 1980, he handled one case at each of two Bridgeport hospitals and three cases at Norwalk Hospital. Accordingly, the statistical evidence alone supports the trial court's conclusion that the plaintiff had the capacity in 1984 to handle the increased workload at the Bridgeport hospitals while continuing to work at Norwalk Hospital because, even if he had on-call duty only ninety days at Norwalk Hospital in 1984, and even if some of those days overlapped with his on-call days at the Bridgeport hospitals, he conceivably could have handled a combined total of more than 300 cases annually in all locations if he had three or four cases on each of those ninety days. [10] Furthermore, the trial court was entitled to credit the plaintiff's testimony that he would have been able to perform his duties at all of the hospitals simultaneously in 1984, and there is no contrary evidence that he could not have done so because of the commuting distance between his office and the hospitals [11] or because of other constraints. The plaintiff also testified that he was never unable to attend to an emergency room call at any of the Bridgeport hospitals while he was in Norwalk or, conversely, that he was unable to attend to an emergency room call at Norwalk Hospital while he was in Bridgeport. The plaintiff explained that, if he received a call from more than one hospital on any given day, he would respond first to the initial call and then proceed to the second or third hospital in sequential order. The plaintiff further testified that, to his knowledge, two other physicians with whom he had shared on-call rotation at the hospitals were able to cover their on-call work in Bridgeport without any difficulty from 1984 through the mid-1990s while continuing to work on rotation at Norwalk Hospital. Relying on Penncro Associates, Inc. v. Sprint Spectrum, L.P., 499 F.3d 1151 (10th Cir.2007), the hospital contends that the reason why the plaintiff was able to handle more than double the number of cases at the Bridgeport hospitals in 1984 than he had handled in prior years was because his privileges at Norwalk Hospital had been terminated, thus making more time available for him to work at the Bridgeport hospitals. See id., at 1161-62 (concluding that plaintiff was not lost volume seller because it had capacity to assume additional work only by virtue of fact that defendant had terminated parties' contract). In support of this claim, the hospital points to evidence that the plaintiff had no large yearly swings of income earned or lost at any one hospital prior to 1984 without a corresponding loss or gain of income at another hospital. We disagree for at least two reasons. First, the plaintiff and other witnesses testified that the number of on-call emergency room cases arising on any particular day was due to the purely random number of accidents that happened to occur, a fact that the hospital also acknowledged in its brief to this court. In other words, the plaintiff would have been required to handle the same number of cases at the Bridgeport hospitals even if his privileges at Norwalk Hospital had not been terminated. Second, the increase in workload [12] far exceeded the average number of cases that the plaintiff had handled at Norwalk Hospital during any previous year. [13] Accordingly, the fact that the plaintiff may have had more time available because he no longer worked at Norwalk Hospital had nothing to do with his increased workload at the Bridgeport hospitals. As for his annual swings in income, the plaintiff testified that his fee for each case varied with its complexity and that the amount of income that he derived each year from any of the hospitals was not only a function of the number of cases at that hospital but of the type of procedures that he performed. Thus, because the average fee for his 263 Bridgeport cases in 1984 was only $535, his income of $140,705 from those cases was substantially lower than his income of $208,000 in 1986 from only 106 cases, for which the average fee was $1300. We thus conclude that the evidence does not support the hospital's contention that the plaintiff was able to handle the increased workload in the Bridgeport hospitals only by virtue of the termination of his privileges at Norwalk Hospital and that he did not have the requisite capacity to handle cases at all of the hospitals simultaneously in 1984. The hospital argues that a lost volume seller is one that has unlimited resources or production capacity, and that the plaintiff in this case had a limited ability to conduct business in the manner that he did over the six year period prior to the termination of his privileges because he was physically capable of performing only a limited number of procedures each year. We disagree. The concept of capacity in this context is not absolute, and is not intended to focus on a theoretical ability to supply unlimited services but on a practical ability to continue providing the services lost as well as those added after the contract was terminated. See J. Holisky, comment, Finding the `Lost Volume Seller': Two Independent Sales Deserve Two Profits Under Illinois Law, 22 J. Marshall L.Rev. 363, 379-80 (1988). Consequently, there being no evidence in the record that counters the plaintiff's testimony that he had sufficient capacity in 1984 to handle cases at all of the hospitals simultaneously, we conclude that the trial court's finding that the plaintiff had sufficient capacity to qualify as a lost volume seller under the first prong of the test was not clearly erroneous. The hospital further argues that the only evidence in the record that the plaintiff could handle all of his on-call work at the hospitals and that he never missed a call was in the form of his own testimony but that there was other testimony that the plaintiff could not always be located to service emergency room calls or respond to on-call needs. The hospital thus claims that the trial court could not have concluded that the plaintiff's testimony alone constituted the required overwhelming and uncontroverted evidence of his capacity to handle cases at Norwalk Hospital while also assuming an increased workload at the Bridgeport hospitals. This claim has no merit. Insofar as the hospital argues that there was testimony from other plastic surgeons that the plaintiff could not always be located to handle an emergency room call, [i]t is well established that [i]t is within the province of the trial court, when sitting as the fact finder, to weigh the evidence presented and determine the credibility and effect to be given the evidence.... Credibility must be assessed... not by reading the cold printed record, but by observing firsthand the witness' conduct, demeanor and attitude.... An appellate court must defer to the trier of fact's assessment of credibility because [i]t is the [fact finder] ... [who has] an opportunity to observe the demeanor of the witnesses and the parties; thus [the fact finder] is best able to judge the credibility of the witnesses and to draw necessary inferences therefrom. (Internal quotation marks omitted.) State v. Lawrence, 282 Conn. 141, 155, 920 A.2d 236 (2007). Thus, the trial court was entitled to credit the plaintiff's testimony that he would have been able to handle cases at all of the hospitals simultaneously in 1984, that he never missed a call at any of the hospitals and that, if he was working at one hospital when he received a call from another, he would complete his work at the first hospital and then go to the second. Moreover, even if the plaintiff missed occasional calls, that fact alone would have little or no significance in light of the large number of cases that he handled in 1984. Finally, the trial court was not required to rely on uncontroverted and overwhelming evidence to conclude that the plaintiff had the required capacity, as the hospital contends. The hospital refers to our conclusion in Gianetti II that the limited evidence in the record concerning the plaintiff's capacity and intent to perform under the contract with the hospital while simultaneously assuming an increased workload at the other hospitals [was] neither uncontroverted nor sufficiently clear as to warrant the conclusion that the plaintiff [was] a lost volume seller as a matter of law.  (Emphasis added.) Gianetti v. Norwalk Hospital, supra, 266 Conn. at 561, 833 A.2d 891. In Gianetti II, however, we applied the higher standard and reversed the Appellate Court's judgment because the trial court had made no factual finding as to whether the plaintiff was a lost volume seller, and a reviewing court cannot make a factual determination unless the record contains such uncontroverted and overwhelming evidence that the factual determination would be inevitable as a matter of law, a principle that the Appellate Court overlooked. See id., at 562-63, 571, 833 A.2d 891. We thus remanded the case to the trial court to determine whether the plaintiff was a lost volume seller. Id., at 563, 571, 833 A.2d 891. The trial court now having made that determination, this court cannot apply the standard of uncontroverted and overwhelming evidence in the present appeal; id., at 562, 833 A.2d 891; but must decide whether the trial court's finding was clearly erroneous. In other words, we must determine whether there is no evidence in the record to support [the trial court's finding] ... or when although there is evidence to support it, [on the entire evidence we are] left with the definite and firm conviction that a mistake has been committed.... [W]e [thus] do not examine the record to determine whether the [trial court] could have reached a conclusion other than the one reached.... Instead, we make every reasonable presumption ... in favor of the trial court's ruling. (Internal quotation marks omitted.) Ackerman v. Sobol Family Partnership, LLP, supra, 298 Conn. at 507-508, 4 A.3d 288. Accordingly, we conclude that the trial court's finding that the plaintiff had the capacity in 1984 to handle cases at all of the hospitals simultaneously was not clearly erroneous. We next consider, under the second prong of the lost volume seller test, whether it would have been profitable for the plaintiff to have continued working at Norwalk Hospital in 1984 while also assuming the increased workload at the Bridgeport hospitals. The hospital argues that the cost effectiveness of handling cases in both Norwalk and Bridgeport would have resulted in lost income when the Norwalk cases took the plaintiff away from his Bridgeport practice. We disagree. In Gianetti II, this court affirmed the Appellate Court's determination in Gianetti v. Norwalk Hospital, supra, 64 Conn.App. at 229, 779 A.2d 847, that it would have been profitable for the plaintiff to continue working at Norwalk Hospital in 1984 while also assuming the increased workload at the Bridgeport hospitals. [14] See Gianetti v. Norwalk Hospital, supra, 266 Conn. at 563-64 n. 10, 833 A.2d 891. Accordingly, this court conclusively established in Gianetti II that the profitability prong of the test had been satisfied. Turning to the third prong of the test, we conclude that the trial court properly determined that the plaintiff would have performed the additional work at the Bridgeport hospitals even if his privileges at Norwalk Hospital had not been terminated. The plaintiff testified that he had maintained privileges at all of the hospitals, subject to annual renewal at each hospital, for six years before his privileges at Norwalk Hospital were terminated without knowing exactly how many on-call cases he would be asked to handle at each hospital, and that he fully intended to, and did, continue maintaining his privileges at the Bridgeport hospitals after 1983. In addition, the plaintiff testified that he never was unable to respond to an on-call case at any of the hospitals. The evidence thus established that the plaintiff would have continued his affiliations with the Bridgeport hospitals and handled the increased workload at those hospitals in 1984 even if his privileges at Norwalk Hospital had not been terminated. The hospital reiterates that the only reason that the plaintiff handled more cases at the Bridgeport hospitals in 1984 was because the termination of his privileges at Norwalk Hospital made more time available for him to work in Bridgeport. Although the hospital concedes that the plaintiff's ability to handle the increased workload in Bridgeport indicates that the plaintiff did not reach his capacity before 1984, it argues that, given the dramatic increase in the number of Bridgeport cases in 1984, the plaintiff would have been constrained by the commuting distance between Norwalk and Bridgeport from handling the increased workload in Bridgeport if his privileges had not been terminated. The hospital also contends that the fact that the plaintiff never sought additional employment opportunities with any other hospital following the termination of his privileges suggests that his capacity had been reached by virtue of the increased workload at the Bridgeport hospitals. We disagree. To the extent the hospital repeats its argument that termination of the plaintiff's privileges at Norwalk Hospital gave him more time in 1984 to assume an increased workload in Bridgeport, we reject that argument for all of the same reasons discussed in our prior analysis. We also reject the hospital's argument that the plaintiff's failure to seek work at other hospitals suggests that he recognized that he had no further capacity to handle cases in Norwalk. As previously stated, it is within the province of the trial court to determine credibility; see, e.g., State v. Lawrence, supra, 282 Conn. at 155, 920 A.2d 236; and, accordingly, the trial court was entitled to credit testimony by the plaintiff that he did not apply for privileges at Griffin Hospital in the town of Derby, another local hospital, because it was too far away geographically, he had been advised not to apply for privileges at Griffin Hospital because of the prior termination of his privileges at Norwalk Hospital, and he did not want his record to reflect a possible rejection. We therefore conclude that the trial court's finding that the plaintiff was a lost volume seller was not clearly erroneous.