Section 16 Proving the Extent of Loss

• Library: Damages 2012

Most plaintiffs lose their claim for lost profits because their proof is insufficient in detail and scope. If the rules cited above are observed and time is taken to carefully develop reliable testimony, a plaintiff should have little problem establishing a claim. If reasonable attention is observed in supporting the claim, the full amount of profit lost can be established.

If the loss of profits has been shown to be the result of the defendant’s wrong, whether in tort or in breach of contractual obligations, the amount of loss can be proven with substantially less proof than reasonable certainty. Ohlendorf v. Feinstein, 670 S.W.2d 930 (Mo. App. E.D. 1984). In Whitman’s Candies, Inc. v. Pet Inc., 974 S.W.2d 519 (Mo. App. W.D. 1998), abrogated on other grounds by State Bd. of Registration for Healing Arts v. McDonagh, 123 S.W.3d 146 (Mo. banc 2003), the Court noted that the amount of damage requires less certainty than the fact of damage and that the amount of damage “defies exact proof.” Id. at 526.

It is also important to keep in mind that the most persuasive evidence is to show to the court by competent evidence what position the plaintiff would have been in if the promised performance had occurred or if the tort had not occurred. Ohlendorf,670 S.W.2d at 933. While the plaintiff is entitled to be in the same position, it is not entitled to be in a better position. Scullin Steel Co. v. PACCAR, Inc., 708 S.W.2d 756, 765 (Mo. App. E.D. 1986); § 400.2‑708, RSMo 2000.

On the expense side, it is essential or “indispensable” to show all expenses, Coonis v. Rogers, 429 S.W.2d 709, 714 (Mo. 1968), and, if expenses that would have occurred from performance are saved by the nonperformance, they must be deducted, Sides v. Contemporary Homes, Inc., 311 S.W.2d 117 (Mo. App. E.D. 1958), just as increased expenses over earlier periods that would have been required in completing performance must be deducted, Scullin Steel, 708 S.W.2d at 765.

There are numerous examples of how claims are defeated by inadequate proof of revenues, expenses, or both.

The failure to develop facts that show both the revenues and expenses that give rise to the profit will defeat the claim. In Ameristar Jet Charter, Inc. v. Dodson Int’l Parts, Inc., 155 S.W.3d 50, 56–57 (Mo. banc 2005), the Supreme Court of Missouri, abrogating Meridian Enters. Corp. v. KCBS, Inc., 910 S.W.2d 329 (Mo. App. E.D. 1995), and Skinnerv. Thomas, 982 S.W.2d 698 (Mo. App. E.D. 1998), held that the plaintiff’s evidence to support its lost-profits claim was insufficient because in tort actions, variable expenses, not fixed expenses, should be deducted from estimated lost revenues in the calculation of lost-profits damages. These variable expenses are expenses that are tied directly to the unit of business or property damaged as a result of the defendant’s actions. These variable expenses may include expenses for fuel, maintenance, depreciation, interest, insurance, salaries, and benefits for particular employees and rental of storage space as long as the party claiming lost-profits damages can produce evidence of the estimated lost revenue of the unit of business or property damaged and all ascertainable variable expenses directly tied to it. Ameristar, 155 S.W.3d at 56.

This case should be reviewed carefully to determine what expenses are variable. The case also acknowledges that the same expenses may be considered variable or fixed depending on the factual scenario at issue. Id. at 57.

In Coonis, 429 S.W.2d 709, the injured party did establish the gross revenues. But it did not establish operating expenses and, not surprisingly, the Supreme Court said, “The cost and expense of operation, including depreciation (wear and tear), is a considerable item and in a suit for loss of profits is an essential item in proof of damages.” The injured party lost because of this failure to prove expenses.

In Seymour v. House, 305 S.W.2d 1 (Mo. 1957), the plaintiff showed one item of expenses, i.e., the cost to hire a supposed replacement...