Court Opinion

ID: 9648350
Source: CourtListenerOpinion
Date Created: 2023-08-23 14:15:26.370723+00
Date Added: 2024-06-11T17:24:57.338287
License: Public Domain

TURNAGE, Judge,
dissenting.
I cannot agree that the evidence in this case supported either the award of actual damages for loss of profits or the award for attorney fees.
The majority discusses a number of legal theories on which the damage award might be sustained but does not make any application of the facts to those theories except for the conclusion that “the fact of the breach and damage therefrom is definitely shown.”
I agree that actual damages in this case are properly assessable for a violation of the agreement contained in ¶ 10.05, by which B & G agreed not to engage in the car rental business for a period of 180 days after the termination of the agreement. The assessment of damages for a violation of this agreement is provided in ¶ 10.06 and not in ¶ 10.05. The damages in ¶ 10.05 are limited to “an amount equal to the aggregate of licensee’s [Budget] costs of obtaining any such temporary and permanent in-junctive relief, including all costs of investigation and proof of facts, court costs and attorney fees.” The only other remedy specified in ¶ 10.05 is by way of injunction. The provision for injunction followed the agreement that there is an impossibility of accurately determining tangible or intangible damages which Budget suffered if B & G violated the non-compete agreement “and [B & G] accordingly agrees to entry without prior notice, to the extent that applicable notice requirements may be waived of temporary and permanent injunctions against SUBLICENSEE’S [B & G] breach of this provision.... ”
Paragraph 10.05 provided that a breach of the agreement not. to compete would *839constitute unfair competition. The majority correctly states that the measure of damages for a violation of the non-compete agreement of ¶ 10.05 is the loss of profits and the diminution in the value of Budget’s business. This rule is set out in Vendo Company v. Stoner (Stoner 1), 58 I11.2d 289, 245 N.E.2d 263, 277-8[14] (1969):
“In addition to the recovery of the salary paid Stoner during the breach, Vendo would be entitled to recover any damages to its business occasioned thereby. This would be the measure of lost profits to Vendo during the period of the breach, plus the diminution of its business at the end of the period covered by the covenants.”
The difficulty in this case is occasioned by the failure of Budget to identify the measure of damages, or, what damages it was seeking to recover following the termination of the temporary injunction. Budget actually was seeking to recover damages for the breach of the injunction and not for unfair competition. This is shown by the examination of Harold Steinberg, the managing officer of Budget and the only witness who testified concerning damages. The following will illustrate the theory of Budget’s claim for damages:
“Q. To get right to the point here, Mr. Steinberg, you were present when the court entered its order in this case for the temporary injunction.
“A. Yes.
“Q. Thereafter, did you call and advise me of certain circumstances relating to whether that order was being observed or not?
“A. Yes, I did.
“Q. Would you just relate very briefly what those circumstances were?
“A. After we got the injunction, we, I checked periodically, calling myself the various offices and found that there was no change between the operation before the injunction or after the injunction; and, at that time, I called your office very strongly trying to find out what happened and why the injunction wasn’t being enforced.
“Q. Okay. Just tell the Court what observations you made about the circumstances of whether or not the injunction was being observed and what steps did you thereafter take.
“A. Well, there was no changes between the time before and after,

“Q. Okay. Based on your observations, including the fact that Jimmy George was continuing to be in the office at the airport location, your phone calls, did you instruct the law firm that I worked for at that time to continue its efforts in enforcing your rights under the agreement that was a subject of the injunction? “A. Yes, sir; I sure did.
“Q. You, at that time, were concerned with obtaining and getting enforcement of the relief that had already been granted?
“A. That’s correct.
“Q. Did we discuss with you that there were essentially two things we could do during the dependency of the injunction: namely, get a citation for contempt or to have the injunction made permanent?
“A. Yes.
“Q. Did you authorize me to investigate and do legal work towards those ends?
“A. I did.”
Pursuing the theory that it was seeking damages for a violation of the injunction, Budget then inquired of Steinberg if he had examined a group exhibit of approximately 1,000 contracts showing cars rented by B & G during the time the injunction was in force which coincided with the 180-day period following the termination of the agreement. Steinberg testified that he could have netted close to 30% from the rental of those 1,000 cars with a minimum of 10%. The 10% was less all expenses. That was the sum total of the evidence regarding loss of profits suffered by Budget.
*840I agree that the so-called rule of certainty proving damages for loss of profits was relaxed years ago. However, I do not agree that the law has eliminated the requirement of any proof upon which a finding of loss of profits may be based. The majority quotes from Barnett v. Caldwell Furniture Co., 277 Ill. 286, 287, 115 N.E. 389, 390 (1917): “ ‘All the law requires in cases of this character is that the evidence shall, with a fair degree of probability, tend to establish a basis for the assessment of damages.’ ”
The rule regarding the sufficiency of the proof of loss of damages was stated in Tri-County Grain Terminal Co. v. Swift & Company, 118 Ill.App.2d 313, 254 N.E.2d 311, 315[3, 4] (1969):
“Whenever the fact of injury or damages has been proved with reasonable certainty, some uncertainty as to the amount of damages sustained is not sufficient ground to set aside a jury verdict awarding damages. A party cannot be permitted to escape liability for his wrongful acts simply because the plaintiff’s damages are difficult to prove. The ‘best evidence’ which the nature of the subject will permit in such cases is sufficient to sustain a jury award.”
Thus, the Illinois cases have characterized the proof of loss of profits as evidence which shall “with a fair degree of probability tend to establish a basis” and “the best evidence which the nature of the subject will permit.” In this case Budget did nothing more than show that B & G rented 1,000 cars during the time it was prohibited from competing. There was no effort to show the source of these rentals, i. e., whether by telephone or walk-in business, nor was there any effort to show that Budget’s business decreased during this time. While Budget did not have to show with a high degree of certainty that it would have rented the 1,000 cars if B & G had adhered to its obligation, nonetheless it is common knowledge there are many rental car businesses. To simply say that B & G rented 1,000 cars and Budget would have made 10% of the gross had it rented those cars does not begin to satisfy the proof required by Illinois courts to show a loss of profits to Budget. This evidence does not show a fair degree of probability that Budget would have rented all or any part of these cars. Neither does it show this was the best evidence which the nature of the subject would permit. Possible forms of proof which readily come to mind would be a comparison with the volume of business done by Budget during the time involved as compared with a comparable period. Another would be the possibility of expert testimony concerning the operation of the rent-a-car business and the effect on Budget of B & G violating its agreement. That might well present evidence which would permit the drawing of reasonable inferences as to what would have happened to the business had B & G actually withdrawn from the market.
In addition, many possibilities are raised by the sparse record but left undeveloped. For instance, the testimony that Jimmy George was continuing to be in the office at the airport leaves unanswered the question of what name was displayed at that office. It would be one thing if the office were continued under the name of Budget; it would be another if the name used were Dollar-A-Day or some other car rental name. There is no indication of what information is available on the 1,000 car rental forms, i. e., whether they were rented as result of a telephone call or the location at which the rental was made. It would seem that the form would at the very least indicate the location at which the rental was made. In that case if the rental were made at the airport with an office identified as being Budget, it would be relatively simple to infer that such rental would have been made by Budget if it had not been made by B & G, but if the office were identified as a Dollar-A-Day office, it would be difficult, to say the least, to infer that Budget would have made that rental. Further evidence would be available as to what action, if any, Budget took to intercept calls placed to a Budget number but actually under the control of B & G. In short, there are numerous questions which arise and which would have *841a significant bearing on the question of how many of the 1,000 rentals Budget would have made if B & G had not remained in business, but unfortunately such questions are all unanswered because of the failure of Budget to identify and properly develop its measure of damages.
The difficulty previously mentioned involved in the failure of Budget to recognize that it was seeking damages for the violation of the agreement not to compete rather than damages for a violation of the injunction accounts for the failure of Budget to properly prove its loss of profits and diminution in the value of its business. Having failed to develop its correct theory of recovery for damages, Budget did not intentionally prove its damages, nor did it accidentally do so. In an effort to sustain this judgment despite Budget’s failings, the majority is forced to develop a number of theories, but no amount of theoretical gymnastics on the part of this court can substitute for the proper proof which Budget failed to present in the trial court.
The majority next seems to sustain the damage for loss of profits on the wrongful conduct of B & G. I agree the evidence fully supports a finding of this wrongful conduct, but I cannot agree that this alters the measure of damages or the proof which should be required of Budget in this case. The cases cited by the majority, including Garrett v. American Family Mutual Insurance Co., 520 S.W.2d 102 (Mo.App.1975) discussing this theory are pitched on the ground that the wrongful conduct has made it more difficult or even impossible for the complaining party to prove its loss of profits. In this ease there is no attempt to show that the wrongful conduct interfered in the slightest with the ability of Budget to prove its losses. In fact, no such showing could be made because the wrongful conduct was directed solely at trying to prevent Budget from learning that those in control of B & G were the actual owners of the entity which was actually renting cars in violation of the agreement with Budget. The proof of loss of profits and the diminution in Budget’s business was just as available without the wrongful conduct as it was with it. Thus, these cases have no application in trying to sustain the loss of profits damages in this case. This again is a theory developed by this court. It was not urged in the trial court or here by Budget.
The majority also seeks to sustain the loss of profits on the provisions of ¶ 10.05 that there was an impossibility of accurately determining the tangible and intangible damages. However, ¶ 10.05 makes it clear that this impossibility resulted only in the ability of Budget to obtain an injunction. Nowhere does this refer to any proof of loss of profits. In fact, following the statement concerning the impossibility of accurately determining damages, ¶ 10.05 provides that B & G agrees to entry without prior notice of a temporary and permanent injunction. Thus, the impossibility of ascertaining damages is strictly limited to forming a foundation for the obtaining of injunctive relief and not as any waiver of the proper proof to support an award of damages for loss of profits.
The majority further states the agreement provided for the method of computing the compensation due Budget during the continuation of the agreement as 10% of the gross revenue received by B & G. The opinion further states that if the agreement had not been terminated Budget would have been entitled to 10% of the 1,000 rentals. This is true, but, of course, the whole point of the lawsuit is that the agreement was terminated and Budget was not entitled to receive 10% after the termination. The agreement limits Budget’s damages after termination to those attributable to unfair competition if B & G violated its agreement not to compete. This, of course, is the loss of profits and diminution of value to Budget’s business. It is completely immaterial as to what might have been if the agreement had not been terminated. The statement made by Mr. Mauer during his objection is far from clear but certainly cannot alter the measure of damages or the proof required.
I would hold in this case that the evidence is insufficient to support the award *842for damages for loss of profits. I believe the proof of damages in this case is as infirm as that found to be insufficient in Stoner, supra. There, the court stated that the measure of damages is the provable loss sustained by the party seeking damages and not the gain realized by the other party. Vendo, 245 N.E.2d at 278. Here all Budget proved was the gain received by B & G. Under Vendo and the cases there cited, such evidence is insufficient to prove Budget’s loss of profits.
The majority pays scant attention to the attorney fee question by simply stating that Budget proved their expenses for attorney fees as allowed under the agreement. Paragraph 10.05 is the only provision for the payment of attorney fees and, as set out above, such fees are limited to those expended in the obtaining of an injunction. The only proof concerning the amount of attorney fees came in the redirect examination of Mr. Steinberg in the following:
“Q. Through March 23, 1978 you had incurred three thousand, three hundred eighty-nine dollars and ninety-seven cents of legal fees and expenses; is that correct?
“A. Yes sir.

“Q. And through this past Friday, [November 17, 1978] with that same lawfirm in connection with this case, the total legal fees and expenses incurred was eleven thousand, eighty-nine dollars and ninety-seven cents.
“A. Yes, sir.
“Q. Okay. You’ve had occasion to examine the time sheets and the expenses and I believe they’re in order?
“A. Yes.”
The temporary injunction was issued on March 23, 1977, and was dissolved on September 1, 1977. The amount of fees paid through March 23, 1978, obviously includes services performed after the temporary injunction had been dissolved. No permanent injunction was requested or issued and the record does not reflect any legal services performed in connection with the injunction after the temporary injunction was dissolved. The fees incurred between March 23, 1978, and November 17, 1978, were unconnected with the obtaining of the injunction. The only evidence bearing on attorney fees shows the bulk of such fees were incurred long after the temporary injunction was dissolved and therefore not connected with the obtaining of an injunction. While the evidence does show some fees were in connection with the obtaining of the temporary injunction, the amount is not segregated so that under the evidence it is impossible to determine what fees were incurred in connection with the injunction. In Illinois “there is no common law or equitable principle that allows attorneys’ fees either as costs or as damages” and assessing such fees rests wholly on statutory or contractual authority. Trustees of Schools of Township 42 North v. Schroeder, 8 Ill. App.3d 122, 289 N.E.2d 247, 250 (1972).
The trial court in this case did state that it was allowing attorney fees as damages and not as attorney fees. However, such award was clearly improper under Schroeder. Since the evidence on attorney fees did not relate to the only purpose for which such fees might be recovered there is no evidence on which to base an award of attorney fees. This is aside from any question of the lack of proof of reasonableness.
The issue of punitive damages must abide the determination of actual damages. Cirese v. Spiteaufsky, 265 S.W.2d 753, 760[12] (Mo.App.1954). The entire issue of damages should be retried.
I would reverse and remand this cause for a retrial on the issue of actual damages sustained by Budget for loss of profits and diminution in the value of its business because of the violation of B & G of its covenant not to compete during the 180 days following termination of the agreement. I would reverse the judgment for attorney fees and remand for further proceedings to properly prove the allowable amount. I would reverse the judgment for punitive damages and remand for consideration after the fixing of the other damages.