Section 15 Rule for Unproven Businesses

• Library: Damages 2012

In both contract and tort cases, the injured plaintiff is often a business. Sometimes it is an established business, but sometimes it is a new or an unproven business that has not earned any profit. Because businesses are such common plaintiffs, the courts have developed a rule for unproven businesses, which is a corollary to the rule in Coonis v. Rogers, 429 S.W.2d 709 (Mo. 1968), discussed in §14.4 above. The corollary is that a business must show that it has a record of consistent earnings before the loss and, without such a record, no recovery is allowed. See, e.g., Brown v. McIBS, Inc., 722 S.W.2d 337 (Mo. App. E.D. 1986).

Because the holding in Coonis, 429 S.W.2d 709, requires proof of income and expenses before the interruption or stoppage of the business, the absence of sales because the business is new or the absence of profits because the business is unproven means that the test cannot be met and that future profits are prohibited damages. The courts explain the corollary on the basis that there cannot be reasonable certainty without the facts to support it, and obviously, without sales or without profit, there is no factual basis. The cases discussed in the following paragraphs are examples of the application of this unproven-business rule.

This rule is sufficiently strong that the inability of a business to prove profits before the breach or a tort has been fatal to plaintiffs’ claims. Thus, in Rich v. Eastman Kodak Co., 583 F.2d 435 (8^th Cir. 1978), a tort case, the plaintiff lost because it could not establish any profits before the...