Opinion ID: 1138364
Heading Depth: 1
Heading Rank: 8

Heading: the court erred in overruling defendant's objections to the testimony of marshall jenkins concerning certain damages allegedly suffered by container engineering.

Text: Peoples Bank argues that the trial court committed reversible error in allowing Cermack's accountant Marshall Jenkins (hereinafter Jenkins) to testify that Container's total loss from the forced sale of the land and buildings was $410,000. Peoples Bank argues that Jenkins' testimony was misleading and therefore, its objection to Jenkins' testimony should have been sustained. Expert testimony is admissible only if it helps the finder of fact understand the evidence or determine a fact in issue. Century 21 Deep South Prop. v. Corson, 612 So.2d 359 (Miss. 1992). At trial, Jenkins was qualified as an expert witness in the field of accounting and testified as to the damages that Cermack suffered as a result of Peoples Bank's alleged breach of contract. Assuming arguendo, that Peoples Bank did indeed breach its contract with Container when it accelerated Container's debt, then Container is certainly entitled to demonstrate damages. Eastline Corp. v. Marion Apartments, Ltd., 524 So.2d 582, 585 (Miss. 1988). In Polk v. Sexton, 613 So.2d 841, 844 (Miss. 1993), this Court stated: It is well established that when a person has been injured by a breach of contract, he is entitled to be justly compensated and is to be made whole by the trial court. However, it is never contemplated that the injured party be placed in a better position than he otherwise would have been in if the contract had been performed. In McDaniel Bros. Construction Co. v. Jordy, 195 So.2d 922 (Miss. 1967), this Court stated this principle as follows: The fundamental principle of the law of damages is compensation for injuries sustained. One injured by a breach of contract is entitled to a just and adequate compensation and no more. The law will not put him in a better position than he would be in had the wrong not been done or the contract not been broken. 22 Am.Jur.2d Damages § 13 (1965). In the case sub judice, after Peoples Bank accelerated Cermack's indebtedness (but never followed through with foreclosure), Cermack entered into a lease/buyback agreement with Megginson and Kinsey. Under the terms of the agreement Cermack could pay the lease payments on the property for fifteen years and at the end of the fifteen years, Cermack could buy the property back for one dollar. In fact, Cermack could tender the balance of the debt and one dollar at any time and Kinsey and Megginson would be legally obligated to deed the property back to Cermack. Jenkins testified that Cermack's payments to the bank on the $170,000 indebtedness was $2,517 per month as of December 31, 1987. After selling its facility, Cermack paid $4,096 per month to Megginson and Kinsey to rent the facility. Jenkins testified that Cermack had to pay this sum monthly for 15 years to repay the $300,000 purchase price of the property. Jenkins testified that the difference between Cermack's pre-acceleration note with Peoples Bank and his post-acceleration loan with Megginson and Kinsey ($1,579.00) times 180 months (fifteen years) amounted to a negative cash flow of $284,220 over the fifteen year life of the repayment period. Jenkins also testified that the difference between the appraised value of the property, $426,800, and the actual sale price Cermack received, $300,000, was $126,800. Accordingly, Jenkins added the loss of equity ($126,800) to Cermack's increase in note payments of the Container facilities (284,220) and testified that Cermack's damages totalled approximately $410,000. The problem with Jenkins' testimony is that it allows Cermack to receive a double recovery for his damages. Jenkins' testimony allows the jury to consider as damages Cermack's loss of equity ($126,800) on the sale of the property along with the additional costs ($284,220) Cermack will incur in renting his former facility from Megginson and Kinsey under the buyback agreement. There are several problems with allowing Jenkins' testimony regarding the $284,220 additional cost incurred by Cermack in renting the property. First, the $284,220 figure is speculative and based upon conjecture. This Court has stated that damages for breach of contract must be proven with reasonable certainty and not based merely on speculation and conjecture. Kaiser Investments v. Linn Agriprises, 538 So.2d 409, 415 (Miss. 1989), citing Leard v. Breland, 514 So.2d 778 (Miss. 1987). At trial, Jenkins did not demonstrate that Cermack was required to lease the property for fifteen years. In fact, it appears from the lease that should Cermack decide to go out of business tomorrow, Cermack would have no further financial obligations to Megginson and Kinsey and therefore, he would not be responsible for the lease payments. Another problem with the $284,220 figure is that it is not supported by Cermack's lease with Megginson and Kinsey. In fact, the lease provides that Cermack will pay $4,096 per month for the first year and thereafter, the payments shall be negotiated prior to the start of each new year. Thus, the $284,220 in damages Jenkins testified to is based upon the conjecture and speculation that Cermack will: (1) stay in business and rent the property from Megginson and Kinsey for fifteen years and, (2) not pay off the $300,000 loan early and thus reduce his interests costs. Accordingly, under the terms of Cermack's own lease/buyback agreement, the $284,220 figure is highly speculative and subject to conjecture and should not have been submitted to the jury. The final problem with the $284,220 figure is that it pyramids Cermack's damages and allows for a double recovery. Container received $300,000 from Megginson and Kinsey for the purchase of the Container property. Cermack used $170,000 of this money to satisfy its debt with Peoples Bank and used the remaining $130,000 to fund the operation of his company. Jenkins' testimony allowed the jury to consider as damages the difference between Cermack's monthly note on the $170,000 loan with Peoples Bank and his monthly note on the $300,000 loan with Megginson and Kinsey. The problem with this is that this computation does not take into consideration the fact that the Megginson and Kinsey note is for $300,000 whereas the Peoples Bank note was for $170,000. Cermack got the benefit and use of the additional $130,000 at the time he entered into the lease/buyback agreement on his property and now he seeks to have Peoples Bank compensate him for having spent the $130,000. Cermack used this $130,000 for the operation of his company. He did not lose this money. Cermack could have just as easily paid the $130,000 to Megginson and Kinsey to reduce his rent payments. Instead, Cermack used this money in his business and he now seeks to have Peoples Bank compensate him for his use of the $130,000. Jenkins' testimony as to actual damages was speculative and based on conjecture. The testimony also allowed Cermack to be placed in a better financial position than he would have been in had Peoples Bank not breached the contract. Polk v. Sexton, 613 So.2d 841, 844 (Miss. 1993); McDaniel Bros. Construction Co. v. Jordy, 195 So.2d 922 (Miss. 1967). Jenkins' testimony was misleading and not supported by our case law. Therefore, we cannot say that Jenkins' testimony helped the trier of fact understand the evidence or determine a fact in issue. Century 21 Deep South Prop., supra . Accordingly, Peoples Bank's objection to this testimony should have been sustained.