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Law School Case Brief

Chung v. Kaonohi Ctr. Co. - 62 Haw. 594, 618 P.2d 283 (1980)

Rule:

The general rule with regard to damages in a breach of contract action is that when one sustains loss by breach of a contract, he is entitled to have just compensation commensurate with his loss. Future profits may be an appropriate element of contract damages, but must be established with reasonable certainty. A distinction is made in the law between the amount of proof required to establish the fact that the injured party has sustained some damage and the measure of proof necessary to enable the jury to determine the amount of damage. The uncertainty which prevents a recovery is uncertainty as to the fact of damage and not as to its amount. However, the rule that uncertainty as to the amount does not necessarily prevent recovery is not to be interpreted as requiring no proof of the amount of damage. The extent of a plaintiff's loss must be shown with reasonable certainty and that excludes any showing or conclusion founded upon mere speculation or guess.

Facts:

This case arose out of a contract to lease concession space for a fast-food Chinese kitchen in a mall. Plaintiffs lessees, individuals and a partnership, brought a successful breach of contract action in the circuit court of the first circuit against defendant landlords, a company, a partnership, and several general and individual partners. At trial, plaintiffs had proven that they had engaged in negotiations to lease an international kitchen to be constructed by defendants; that they executed a contract to lease the Chinese kitchen and tendered a $ 1,666 deposit on the lease;  that they had arranged for financing, ordered equipment and furnishings, hired chefs and workers, advertised in the yellow pages of the telephone book for the to-be-built kitchen, and incurred other expenses. Furthermore, despite being in frequent contact with defendants during which the plaintiffs were told to be patient about an opening date, defendants were engaged in several other negotiations with other parties about leasing the Chinese kitchen, of which the plaintiffs were never informed. Subsequently, a letter was sent to plaintiffs informing them that the landlords had decided not to pursue plaintiffs' lease of the Chinese kitchen and returned a check for $ 1,666, the amount of plaintiffs' deposit.

In the trial court, plaintiffs sought specific performance of the lease agreement, contract damages including damages for emotional distress and loss of future profits, and punitive damages for fraudulent, malicious and intentional misrepresentation and acts. The trial judge denied plaintiffs' request for an instruction on punitive damages, but allowed instructions on damages for emotional distress and lost profits. The jury returned a special verdict awarding $50,000 for emotional distress and $175,000 for lost profits. Defendants then moved for judgment notwithstanding the verdict or, in the alternative, for a new trial. The motion was denied and this appeal followed. On appeal, defendants did not challenge the jury's finding with respect to liability. With one exception, this appeal is premised entirely upon the jury's award of $225,000 in contract damages.

Issue:

1. Did the trial court err in denying defendants' motion for a mistrial, which was based upon testimony by plaintiff that his wife had suffered miscarriages as a result of the contract breach?

2. Did the trial court err in giving a jury instruction allowing damages for emotional distress for breach of a commercial contract?

3. Did the trial court err in giving a jury instruction allowing damages for loss of anticipated profits in an unestablished business?

4. Did the trial court err in submitting to the jury a special verdict form, which contained spaces for damages for emotional distress and lost profits

Answer:

1. No; the prompt admonition dispelled any prejudicial effect that may have been created; 2. No; record supported the conclusion that the landlords' actions were wanton and/or reckless; 3. No; jury had sufficient data on which to base its award; 4. No.

Conclusion:

The court held that the trial court had not erred in giving a jury instruction allowing damages for emotional distress for breach of a commercial contract because the lessors failed to state the proper grounds for objection at trial and failed to properly raise the issue on appeal. The trial court had not erred as well,  in giving a jury instruction allowing damages for loss of anticipated profits in an unestablished business because where a plaintiff could show future profits in a new or unestablished business with reasonable certainty, damages for loss of such profits could be awarded, and the jury had sufficient data from which to make a rational judgment as to the loss of future profits and on which to base its award.

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