Court Opinion

ID: 5081914
Source: CourtListenerOpinion
Date Created: 2021-10-01 12:44:19.063894+00
Date Added: 2024-06-11T08:20:15.224085
License: Public Domain

SEARS, Justice,
dissenting.
I respectfully dissent. Under Texas law, a party may not recover lost profits (1) where the enterprise is new or unestablished, or (2) where the profits claimed are too uncertain or speculative. Southwest Battery Corp. v. Owen, 131 Tex. 423, 427, 115 S.W.2d 1097, 1098-99 (1938). For both of these reasons, I would hold that the trial court correctly entered judgment notwithstanding the jury’s award of $500,000 for *313lost profits. In all other respects, I agree with the majority that the case should be affirmed.
First, Teletron may not recover damages for lost profits because it was a new and unestablished enterprise that lacked any track record of profitability. Norris v. Bo-vina Feeders, Inc., 492 F.2d 502 (5th Cir. 1974) (hoped-for profits of new business leave too much to speculation and conjecture); Davis v. Small Business Invest. Co., 535 S.W.2d 740 (Tex.Civ.App. — Texar-kana 1976, writ ref’d n.r.e.) (no evidence that company could ever have made a profit); Ganda, Inc. v. All Plastics Molding, Inc., 521 S.W.2d 940 (Tex.Civ.App. — Waco 1975, writ ref’d n.r.e.) (profits of new and unestablished business not susceptible of being established by proof with requisite degree of certainty). Teletron never produced a marketable product, and it never made a profit in any year of operation. At most, it sold between seven hundred and 1,000 thermostats, yet by its own admission, it would have had to sell 7,320 units a year just to break even. Teletron’s sales never approached that figure.
Second, the “lost profits” claimed by Tel-etron are too uncertain or speculative to measure. “[T]o award as damages the hoped-for profits of a new and unestablished business is to leave too much to conjecture and speculation.” Bell Helicopter Co. v. Bradshaw, 594 S.W.2d 519, 536 (Tex.App. — Corpus Christi 1979, writ ref’d n.r.e.) (citations omitted). Teletron’s profit and loss statements derived from pro for-ma “projections” developed in 1983, and the testimony supporting Teletron’s claim of damages for lost profits stemmed solely from the ambitious speculations of its founder, Samir Solimán. “[T]o recover lost profits, damages must be shown with ‘reasonable certainty;’ net profits must be shown by objective, rather than subjective, facts, figures, and data.” Turner v. PV Int’l Corp., 765 S.W.2d 455, 466 (Tex.App. — Dallas 1988, writ denied per cu-riam, 778 S.W.2d 865 (Tex.1989) (emphasis in original). Teletron’s expert, Dr. Edward Williams, admitted that Soliman’s unsubstantiated “projections” formed the basis of his analysis; that he did not interview any consumers, manufacturers, or independent distributors or dealers; and that he neither questioned nor altered Soliman’s speculations. Dr. Williams relied on information given to him by Solimán and other Teletron employees or shareholders to arrive at his faulty conclusions. He never solicited or obtained any outside or non-biased opinions or records. Even when declared reasonable by Dr. Williams, Tele-tron’s subjective hopes and speculations are insufficient to support the jury’s award of lost profits. See Frank B. Hall & Co. v. Beach, Inc., 733 S.W.2d 251, 258-59 (Tex.App. — Corpus Christi 1987, writ ref’d n.r.e.); Fenwal, Inc. v. Mencio Sec., Inc., 686 S.W.2d 660, 665 (Tex.App. — San Antonio 1985, writ ref’d n.r.e.). Such “speculation stacked upon speculation” is no evidence. Lovelace v. Sabine Consol., Inc., 733 S.W.2d 648, 656 (Tex.App. — Houston [14th Dist.] 1987, writ denied).
Teletron has failed to show a reasonable basis for determining any lost profits. For example, Teletron did not have contractual commitments from buyers. Solimán merely assumed in his projections that Teletron would sell at least 200 units per month to each of its distributors, and he speculated that Teletron could interest thirty distributors in Texas to sell 32,400 thermostats in its first year. Based on Soliman’s “projections,” Teletron hoped to add forty-two distributors in its second year by expanding into other major Texas cities. Further, Tel-etron dreamed of adding forty-eight additional distributors in the third year by extending into other regions. However, the record shows that Teletron lined up only nine distributors to take on the T-2000 — as a sideline product — and, at trial, Solimán could identify only two of them as still being in business. Further, the agreement that allegedly committed each distributor to purchase 200 units per month placed no contractual or legal obligation on a distributor to buy or sell any minimum number of thermostats on any regular basis. The agreement merely stated, “Distributor acknowledges that units purchased by said Distributor are expected by Company to average not less than fifty (50) ‘TELE-*314TRON 2000 during each thirty (30) day period” (emphasis added). In contrast, the agreement’s true commitments imposed actual obligations on the distributor through affirmative language.
In addition, because of the so-called “uniqueness” of Teletron’s product, it did not have a similar business to which a comparison could be made for determining lost profits. Cf. Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340, 347-50 (1955); Pena v. Ludwig, 766 S.W.2d 298, 301-04 (Tex.App. — Waco 1989, no writ). Teletron also failed to provide sufficient factual proof of anticipated sales had Texas Instruments not breached its contract with Teletron. E.g., Fleming Mfg. Co. v. Capitol Brick, Inc., 734 S.W.2d 405, 407-08 (Tex.App. — Austin 1987, writ ref'd n.r.e.); Mesa Agro v. R.C. Dove & Sons, 584 S.W.2d 506, 512 (Tex.Civ.App. — El Paso 1979, writ ref’d n.r.e.).
For the foregoing reasons, I agree with the trial court that there is no evidence to support the jury’s award of $500,000 in lost profits, and I would affirm the judgment in its entirety.