Opinion ID: 420996
Heading Depth: 2
Heading Rank: 3

Heading: Damages for Breach of the Franchise Agreements

Text: 40 As pointed out earlier, the district court concluded that Mason breached the provisions of the franchise agreements which prohibited the post-termination use of the Burger King trademarks. Although BKC also argued that Mason was guilty of common law trademark infringement and unfair competition through the continued use of the trademark, the district court made no findings on those claims. Then, after ruling that BKC had not shown certain consequential damages from the post-termination use of the trademarks, the court awarded BKC the profits that Mason earned at the properly terminated franchises as compensatory damages for the breach. BKC complains that the trial court should have allowed consequential damages; Mason, on the other hand, alleges that the trial court erred in ordering it to disgorge the profits. 41 BKC's assertions need not detain us long. It sought damages based on its contention that Mason's continued operation damaged its reputation and thwarted its plans to expand in the areas in which Mason franchises were located. After considering BKC's evidence in support of those damages, the district court determined that (1) BKC had not established that Mason had tarnished its image, and (2) BKC did not prove that Mason's failure to close its stores prevented BKC from carrying out its marketing or development plans. Contrary to BKC's suggestion, the district court did not deny damages because the amounts were uncertain--the court found that BKC did not prove that Mason's actions caused the claimed harm. 42 This factual finding was not clearly erroneous. A reading of the record confirms that BKC did not prove with sufficient certainty that Mason's continued operation caused the purported injury. While it is clear that a wrongdoer cannot escape liability simply because the harm he caused is difficult to value, see, e.g., ABC-Paramount Records, Inc. v. Topps Record Distributing Co., 374 F.2d 455 (5th Cir.1967), it is equally well established that a plaintiff must make a positive showing that the defendant was in fact responsible for the alleged damages. See, e.g., Asgrow-Kilgore Co. v. Mulford Hickerson Corp., 301 So.2d 441, 445 (Fla.1974). BKC simply failed to meet its burden of proof. 43 The award of profits is more troublesome. Mason and BKC focus their arguments on the propriety of ordering an accounting of profits for trademark infringement. As the parties recognize, a trademark infringer can be required to turn over the profits he earns during the period of the infringement subject to the discretion of the district judge and in light of the equities of the case. 15 U.S.C. Sec. 1117. See, e.g., Maltina Corp. v. Cawy Bottling Co., Inc., 613 F.2d 582 (5th Cir.1980); Mead Johnson & Co. v. Baby's Formula Service, Inc., 402 F.2d 19 (5th Cir.1968). However, the district court did not find that Mason infringed upon a trademark. Rather, faced with BKC's claims for trademark infringement, unfair competition and breach of the franchise agreements, the trial judge found only that Mason violated the franchise agreements. For that infraction, the court awarded Mason's profits as compensatory damages. 9 44 Although an award of the infringer's profits can be an appropriate measure for damages for federal or state trademark infringement, e.g. Maltina Corp., 613 F.2d at 584-585; 15 U.S.C. Sec. 1117; Fla.Stat.Ann. Secs. 495.131, 495.141 (West 1972), disgorgement of profits earned is not the remedy for breach of contract. Under Florida law, a contract plaintiff may recover damages in an amount which will place him in the position that he would have obtained but for the breach or the damages that are the natural and proximate result of the default, subject to the rules of foreseeability and certainty. 17 Fla.Jur.2d Damages Sec. 26 (1980); Juvenile Diabetes Research Foundation v. Rievman, 370 So.2d 33 (Fla.Dist.Ct.App.1979); Popwell v. Abel, 226 So.2d 418 (Fla.Dist.Ct.App.1969); Olin's Inc. v. Avis Rental Car System of Florida, Inc., 172 So.2d 250 (Fla.Dist.Ct.App.), cert. denied, 177 So.2d 482 (Fla.1965). In some cases, if the offending conduct causes the non-breaching party to lose profits, the defendant can be required to compensate the plaintiff for the lost profits. Sampley Enterprises, Inc. v. Laurilla, 404 So.2d 841 (Fla.Dist.Ct.App.1981). Consequently, if BKC had demonstrated that Mason's refusal to cease operation after the terminations, as required by the franchise agreements, caused the injury to its reputation or the delay in development as it claimed, those damages could have been recovered as the natural and proximate result of the breach. But the district court found that Mason's breach did not cause that harm. 45 There is no support in the record that the profits earned by Mason equalled BKC's damages from the breach. That would be correct only if BKC proved that it would have taken over the operation of the franchises after termination and BKC reasonably could have earned the profits that were generated by Mason from such operation. Because BKC failed to show that it was entitled to Mason's profits as compensation for the breach, the award of such profits as compensatory damages for breach of contract was error and must be vacated. 10 46