Opinion ID: 2979856
Heading Depth: 2
Heading Rank: 3

Heading: Baseline for Damages Calculation

Text: As their final claim of error, defendants assert that the district court selected an improper baseline in calculating damages. During his direct examination, Eggert testified that the base revenue amount represented the parties’ agreement as to the revenue E-V “would have expected on an annual basis from the existing business, E-V Benefits going on as a going concern, with no new 3 CenBen and E-V, both headquartered in Columbus, Ohio, were direct competitors in the central Ohio TPA market. 4 Defendants also assert that the district court “misconstrued” McLellan’s testimony regarding the underlying basis for his lost-profits calculations. This assertion is baseless. The district court held that an average TPA had 70-75 opportunities per year, and that each opportunity averaged 375 covered employees. While these statistics stem from CenBen’s experience during the revenue period, McLellan testified that they were a reasonable basis upon which to extrapolate what E-V could have achieved in the central Ohio market during the revenue period. Accordingly, the district court did not misconstrue the opinions of McLellan. - 15 - Nos. 10-3223/10-3282 Eggert, et al. v. Meritain Health, Inc., et al. business, no loss of clients” as a “straight line going forward[.]”5 Crediting this testimony, the district court used the base revenue amount as a starting point in calculating the revenues that likely would have been obtained by E-V in the absence of defendants’ breach. Defendants contend that the district court erred as a matter of law in ascribing this meaning to the base revenue amount, asserting that the clear and unambiguous language of the SPA indicates that the base revenue amount is nothing but a “fixed standard for calculation purposes only.” However, while defendants are correct that “clear and unambiguous [contracts] require no real interpretation or construction,” Fouty v. Ohio Dep’t of Youth Servs., 855 N.E.2d 909, 925 (Ohio Ct. App. 2006), defendants are incorrect in asserting that the SPA unambiguously supports their interpretation of the base revenue amount. Indeed, the SPA simply does not speak to the underlying meaning of the base revenue amount or how it was calculated. Rather, the SPA merely defines the term as “Four Million Two Hundred Ninety Eight Thousand Dollars ($4,298,000).” Because the SPA does not answer the question, the district court did not err in considering the testimony of Eggert regarding the significance of the base revenue amount. See Allason v. Gailey, 939 N.E.2d 206, 212 (Ohio Ct. App. 2010) (“If a contract, or term in a contract is reasonably susceptible to more than one meaning, then it is ambiguous and extrinsic evidence of reasonableness or intent can be employed.”). 5 At the time the SPA was signed, four of E-V’s existing clients were listed as “runout,” indicating that these clients had a contract with E-V that was not going to be renewed. However, the base revenue amount did not include projected revenue from these four clients. Accordingly, defendants’ assertion that the district court did not account for runout clients is incorrect. - 16 - Nos. 10-3223/10-3282 Eggert, et al. v. Meritain Health, Inc., et al. In addition, defendants contend that the district court’s use of the base revenue amount impermissibly shifted the burden of proof to defendants. This argument is unfounded. The district court correctly noted that the burden of proving the existence and amount of damages was on plaintiffs. Using the base revenue amount as a baseline did not alter this legal landscape. Nevertheless, defendants contend that using the base revenue amount as a baseline, rather than E-V’s actual revenues, created a presumption that the entire difference between these numbers was attributable to defendants’ breach. The district court, however, did not presume anything. The district court’s chosen calculation reflects its finding that the difference between E-V’s actual revenues and the base revenue amount represented losses caused by defendants’ breach, with certain listed exceptions. Accordingly, the district court did not err in using the base revenue amount as its baseline.