Court Opinion

ID: 9493214
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:01:18.940221+00
Date Added: 2024-06-11T17:51:57.512837
License: Public Domain

FAIRCHILD, Circuit Judge,
dissenting in part.
I agree that (1) MindGames’ claim for a renewal fee for the year following the initial term of the Licensing Agreement was properly dismissed, and (2) we are not bound by Marvell Light & Ice Co. v. General Electric Co., 162 Ark. 467, 259 S.W. 741 (1924) to affirm the dismissal of Mind-Games’ claim for loss of royalties caused by breach of contract. I do, however, respectfully disagree with the conclusion that, as a matter of law, that claim is too speculative to support an award of damages.
This was never a claim in which Mind-Games sought to recover lost profits from the operation of a business. The damages sought would be measured by the royalties which Western would have been obliged to pay on sales which did not occur because of Western’s alleged failure to perform its contract. Western’s obligation to pay royalties arose from the sales of games manufactured, promoted and sold by it, and whether MindGames showed a profit, as well as MindGames’ lack of history, was wholly irrelevant. The ultimate questions would be whether there was a breach by Western and-whether the breach caused a loss of sales.
Sales did not meet expectations. In the period from March 30, 1990 to January 31,1991, 165,000 games were sold; in the year ending January 31, 1992, 58,113; in *660the year ending January 31, 1993, 26,394; and in the year after the initial term, 7,438. The sales in the initial term totaled approximately $4,000,000 and royalties $600,000. Soon after January 31, 1993, Western was sufficiently interested in continuing as licensee to agree to pay a minimum royalty of $27,500 for the coming year. MindGames’ complaint alleged that a substantial number of games produced by Western failed to meet quality standards; Western failed to promote and make reasonable efforts to sell; and its efforts did not meet standards under the agreement or those recognized in the industry. It is MindGames’ position that these failures caused loss of sales.
Western’s motion for partial summary judgment was premised on the new business rule which Western perceived as announced in Marvell, and the district court granted the motion on that basis. If, as we all agree, Marvell does not control this case, then the applicable Arkansas doctrine is that MindGames is entitled to recover any royalties on sales which Mind-Games can prove to a reasonable certainty would have been made had Western carried out the contract. The rule that damages which are uncertain cannot be recovered does not apply to uncertainty as to the value of the benefits to be derived, but to uncertainty as to whether any benefit would be derived at all. Jim Halsey Co., Inc. v. Bonar, 284 Ark. 461, 467-68, 683 S.W.2d 898 (1985); Crow v. Russell, 226 Ark. 121, 123, 289 S.W.2d 195 (Ark.1956).
In my opinion we cannot say on this record, as a matter of law, that Mind-Games can not prove to a reasonable certainty that Western’s failures to perform, if proved, caused a loss of sales.
I would not hold that MindGames has waived or forfeited its opportunity to produce evidence of damages. It is true that in responding to Western’s motion for partial summary judgment .MindGames did not provide evidentiary material tending to show the breaches by Western nor that such breaches caused a loss of sales. This should not be deemed a waiver or forfeiture of an opportunity to do so because of Western’s complete reliance in its motion on the new business rule and Marvell, which, if applied, would prevent proof of breach and causation of loss. Western’s motion did not reach the issue of breach, and establishing damages would require MindGames to prove that the breach occurred and caused loss of sales. Although Western, in its memorandum in support of its motion did include a section making the point that the success of a new product in the entertainment industry is especially difficult to predict, it used that point to support an argument that the new business rule was particularly appropriate in this case, and that the Arkansas Supreme Court would be unlikely to retreat from the new business rule under circumstances like these. Western did not squarely assert, as an alternative ground, that Mind-Games could not prove to a reasonable certainty that any breach by Western caused loss of sales. Rather, Western urged that the district court should strictly apply the new business rule.
In this court, Western again relied on Marvell and the new business rule, also arguing, as it had in the district court, that this type of case, involving a new product in the entertainment industry, is not one where the Arkansas Supreme Court would retreat from its application of the new business rule. Although at pages 30-32 of its brief it asserted the inherently speculative nature of a claim for lost profits in the entertainment industry, and cited cases, it failed squarely to assert, as an alternative ground, that its alleged failures to perform, if proved, could not have been proved to a reasonable certainty to have caused lost sales. On page 5 of its reply brief, MindGames referred to pages 29-32 of Western’s brief, and challenged as contrary to Arkansas law “non-Arkansas cases [cited by Western] in arguing that businesses in the entertainment industry are barred per se from claiming lost profits.” *661Again I do not think it is appropriate to rely on waiver or forfeiture.
I would remand for further proceedings on this part of MindGames’ complaint.