Opinion ID: 1612232
Heading Depth: 1
Heading Rank: 34

Heading: If Completed, Would Sutherland Plant Have Operated at Profit?

Text: Roles argues that Raasch's projections regarding the profitability of the Sutherland plant were speculative and lacked foundation, and therefore should have been excluded. He relies upon World Radio Labs. v. Coopers & Lybrand, 251 Neb. 261, 557 N.W.2d 1 (1996), a professional negligence action brought by a retailer against its former accountants alleging that because of negligently performed audits, the retailer lost profits and market value. The retailer sought to prove its loss of profits through an expert witness who compared the company's profits during the time period in question to a subsequent period when the effects of the alleged malpractice had been corrected. This court concluded that because the expert failed to take into consideration substantial differences in the operations of the company during the two periods, including number of stores and differences in markets, products, and management, the profit projections were speculative and conjectural as a matter of law and that the issues of lost profits and decreased value of the business therefore should not have been submitted to the jury. World Radio Labs. v. Coopers & Lybrand, supra , involved an attempt to quantify the damage to an existing business caused by a third-party tort-feasor. The relationship of the parties and the nature of the claim in the present case is substantially different. Roles, Shepherd, and Corbet entered into a new business venture with the obvious objective of making a profit. They began with certain shared plans and expectations which did not come to fruition, allegedly because of a breach of their agreement by Roles. As noted above, the measure of damages in an action for breach of contract includes the gains prevented as well as the losses sustained by the breach. Therefore, a logical starting point in this analysis is the reasonable expectation of the parties prior to the breach. In arriving at his projections regarding the profitability of the plant if it had been completed, Raasch utilized the pro forma financial and product yield projections for the plant developed by Shepherd and Dodd. He supplemented these by determining and using actual historical price data, where available, for corn to be purchased by the plant and for the ethanol and byproducts which it would have produced. Although Roles testified at trial that he did not claim that Shepherd did anything wrong in developing the pro forma projections, in his brief, Roles challenges them as the product of a `by guess and by golly' methodology. Brief for appellant in case No. S-98-782 at 30. This argument ignores the fact that the pro forma projections were included in the application for funding which Nebraska Nutrients submitted to the Ethanol Authority with the knowledge and approval of Shepherd, Corbet, and Roles. In the final report of its due diligence review, the Ethanol Authority's evaluation team reported that [t]he pro formas submitted by the applicant and reviewed by the Evaluation Team (with the assistance of the accounting consultant) indicate the project meets the profitability test. The report also notes that Nebraska Nutrients had identified markets for the production and made realistic price assumptions. It concluded that Nebraska Nutrients had demonstrated a reasonable possibility that the Ethanol Authority would be able to recoup its anticipated investment in the Sutherland plant. Given these facts, it was reasonable and permissible for Raasch to utilize the pro forma projections in arriving at his opinion of the anticipated profitability of the Sutherland plant if it had been funded to completion. Roles also contends that Raasch's opinion with respect to anticipated operating expenses of the plant was speculative and flawed. In this portion of Raasch's analysis, he utilized his knowledge of the operating expenses incurred by other Nebraska ethanol plants for which he had done appraisals, as well as information he obtained from other ethanol plant owners. Based upon a 10-year average of operating expenses as a percentage of gross sales, he arrived at a range of 76 to 82 percent. Using a worse case approach, he calculated projected profits at both an 80-percent and an 85-percent expense factor and based his opinion of value on the lower resulting profit projection. Roles argues that Raasch's expense assumptions used in arriving at his profit projections were flawed because he failed to consider items such as payment of debt, taxes, sales commissions, and management inexperience or startup problems. While recognizing the principle that an expert's opinion must have a sound and reasonable basis such that an expert is able to express a reasonably accurate conclusion as distinguished from a mere guess or conjecture, we have stated that an appellate court is not a superexpert and will not lay down categorically which factors and principles an expert may or may not consider. Such matters go to the weight and credibility of the opinion itself and not to its admissibility. Lange v. Crouse Cartage Co., 253 Neb. 718, 572 N.W.2d 351 (1998); Holman v. Papio-Missouri River Nat. Resources Dist., 246 Neb. 787, 523 N.W.2d 510 (1994). Based upon our review of this record, we conclude that there was an adequate factual basis upon which Raasch could opine, based upon his experience and training, that if completed in 1993, the Sutherland plant would have operated at a profit for the next 4 years. Accordingly, the district court did not abuse its discretion in overruling Roles' foundational objection and permitting Raasch to express his opinion with respect to lost profits and value. The weaknesses in the factual underpinnings of Raasch's opinion go to its weight and credibility, not its admissibility. Uncertainty as to the fact of whether damages were sustained at all is fatal to recovery, but uncertainty as to amount is not if the evidence furnishes a reasonably certain factual basis for computation of the probable loss. Sack Bros. v. Tri-Valley Co-op., 260 Neb. 312, 616 N.W.2d 786 (2000); Lone Cedar Ranches v.. Jandebeur, 246 Neb. 769, 523 N.W.2d 364 (1994). The testimony of Raasch and other evidence in this record, if believed by the trier of fact, would support a reasonable inference that if it had been funded to completion, the Sutherland plant would have had market value and operated at a profit as Roles, Shepherd, and Corbet originally intended. It is undisputed that Shepherd and Corbet have not realized any share in such profits or value pursuant to the operative November 1, 1990, agreement. Therefore, it is clear that Shepherd and Corbet sustained damage as a result of what they alleged to be Roles' breach of the agreement in discontinuing funding for construction, in that they were deprived of the gain which would have inured to them from the successful completion and operation of the plant. For the reasons discussed, we conclude that the record contains a reasonably certain factual basis for computing the amount of damages, and the district court therefore did not err in submitting the issue to the jury.