Opinion ID: 772379
Heading Depth: 1
Heading Rank: 2

Heading: ELC's Cross-Appeal.

Text: 8 After the district court granted ELC's motion for default judgment, it referred the question of damages on the defaulted claims to a special master, who held a hearing at which Larson, an ELC account manager, and a purchasing agent for one Minneapolis school testified. The special master ruled that ELC suffered no damages for Larson's breach of the contract and that any damages for her tortious interference with ELC's prospective business opportunity were speculative and not proven by a fair preponderance of the evidence. After de novo review of the hearing record, the district court agreed. ELC cross-appeals the order that it recover no damages on the defaulted claims. 9 ELC argues the district court's finding of no damages was clear error. See Pfanenstiel Architects, Inc. v. Chouteau Petroleum Co., 978 F.2d 430, 432 (8th Cir. 1992) (standard of review). When a default judgment is entered on a claim for an indefinite or uncertain amount of damages, facts alleged in the complaint are taken as true, except facts relating to the amount of damages, which must be proved in a supplemental hearing or proceeding. See Thomas v. Wooster, 114 U.S. 104, 111 (1885); 10A WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 2688 (3d ed. 1998). 10 First, ELC argues the district court erred by reexamining Larson's liability in finding no damages from her breach of the sales representative contract. But ELC introduced no evidence of what additional sales it would have enjoyed had Larson not breached her indefinite best efforts obligation. Indeed, the record reflects that Larson secured the Minneapolis School District contract, the largest in ELC's history, whereupon ELC terminated her. The allegation in ELC's complaint that Larson usurped ELC's contract rights by selling competing manipulatives was not supported by damage evidence establishing that the ambiguous best efforts provision precluded Larson from representing other suppliers of manipulatives (a highly dubious proposition). Indeed, ELC presented no evidence of what competing manipulatives Larson sold to ELC customers before the termination. In other words, regardless of the default judgment, ELC did not begin to prove actual damages for breach of contract. 11 Next, ELC argues the district court erred in finding no damages on its claim of tortious interference because loss is an element of the cause of action. This contention assumes that a default judgment conclusively establishes liability, as opposed to establishing the fact allegations in the complaint. That is a debatable proposition, see 10A WRIGHT & MILLER § 2688, at 58-63, but one we need not resolve. Even if Larson's liability for tortious interference is taken as established, ELC must still prove its actual damages to a reasonable degree of certainty. North Cent. Co. v. Phelps Aero, Inc., 139 N.W.2d 258, 263 (Minn. 1965). ELC introduced evidence that Larson sold competing manipulatives after termination but no evidence the Minneapolis School District or other ELC customers would have purchased manipulatives from ELC but for Larson's tortious interference. Indeed, ELC's damages evidence did not even attempt to describe what post-termination conduct was tortious. The district court's finding that ELC failed to prove its damages on this claim is not clearly erroneous. 4 12 The judgment of the district court is affirmed. Larson's motion to supplement the record is denied.