Court Opinion

ID: 5870743
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:46:32.977944+00
Date Added: 2024-06-11T08:44:42.408762
License: Public Domain

*278OPINION OF THE COURT

Per Curiam.

Under a written agreement, defendant Buffalo Structural Steel Corp. (BSS) leased to plaintiff for a rental of $600 per year a small rectangular parcel of land for the purpose of erecting and maintaining an outdoor advertising sign. In March, 1979, defendant BSS leased two comparable parcels for outdoor advertising to defendant National Advertising Co. (National), each lease providing for rental of $1,500 per year and an eight-year term with an option to renew at the same rental for an additional eight years. In this action for damages and other relief, it has been established as law of the case in an order granting partial summary judgment to plaintiff against defendant BSS that the lease from defendant BSS to defendant National constituted a breach of the first option provision contained in the lease from defendant BSS to plaintiff. The order granting plaintiff partial summary judgment directed that the issue of damages against defendant BSS be tried. A bench trial of this issue as well as the issue of the liability of defendant National has been held. In a written decision, the court ruled that defendant National was not liable to plaintiff. With respect to plaintiff’s appeal contesting defendant National’s liability, we agree with the dissenter that there should be an affirmance and we adopt fully that portion of the dissenting opinion on that issue. At trial, plaintiff adduced proof in support of its contention that it was entitled to damages against BSS for the profits it would have received from the rental of outdoor advertising signs if it had been permitted to exercise the first option provision in its lease with defendant BSS and to enter into the March, 1979 leases between defendants BSS and National on the identical terms in those leases. In its decision, the court held that as a matter of law plaintiff was not entitled to recover lost profits but was limited to recovering the difference between the actual rental value of the lease and the rental reserved in the lease. Because no evidence of the actual rental value of the leases between defendants BSS and National was adduced, it awarded plaintiff nominal damages of $1 and plaintiff has appealed. The court denied plaintiff’s alternative request for equitable relief. There should be an affirmance.
We agree with the view expressed in the dissent that the fact that a tenant has not taken possession of a leasehold should not, as a matter of law, preclude the tenant from recovering lost profits for breach of a lease. Nevertheless, in any action for breach of contract, including a lease, the defendant may only be *279held responsible for such damages “as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it” (Hadley v Baxendale, 156 Eng Rep 145, 151; see Spang Inds. v Aetna Cas. & Sur. Co., 512 F2d 365; Kerr S.S. Co. v Radio Corp. of Amer., 245 NY 284). On the record here we hold that at the time plaintiff and defendant BSS entered into their lease, the parties could not have reasonably contemplated that defendant BSS might be held responsible for loss of profit damages for breach of the first option clause to be computed under a suppositious lease, the terms of which could not, if ever, be known until some future time when plaintiff might negotiate a lease with a third party.
We find no merit in the cross appeal by defendant BSS. The judgment should be affirmed.