Collins Entm't Corp. v. Coats & Coats Rental Amusement - 368 S.C. 410, 629 S.E.2d 635 (2006)

Rule:

If the injured party could and would have entered into the subsequent contract, even if the contract had not been broken, and could have had the benefit of both, he can be said to have lost volume and the subsequent transaction is not a substitute for the broken contract. This theory of damages has come to be known as the "lost volume seller" doctrine. A lost volume seller is one whose willingness and ability to supply is, as a practical matter, unlimited in comparison to the demand for the product. Thus, the lost volume seller theory allows for the recovery of lost profits despite resale of the services that were the subject of the terminated contract if the seller can prove that he would have entered into both transactions but for the breach.

Facts:

Plaintiff video poker machine provider had contracted to lease video poker machines to two bingo hall operations. The six-year lease required that any purchaser of the premises assume the lease. In 1997, the buyer purchased the assets of the bingo parlors. However, the buyer failed to assume the lease and removed plaintiff’s machines from the premises. Consequently, the plaintiff brought the present action against defendant buyer alleging unfair trade practices, civil conspiracy, and intentional interference with contract. The matter was referred to a master in equity for trial. The master found defendant liable for intentional interference with contract and awarded plaintiff actual damages of $ 157,449.66 and punitive damages of $ 1,569,013.00. The Court of Appeals, utilizing the “lost volume seller” doctrine, affirmed. 

Issue:

Did the Court of Appeals err in utilizing the "lost volume seller" doctrine to hold that plaintiff did not have a duty to mitigate its damages?

Answer:

No.

Conclusion:

The instant court concluded that the legislature, by adopting S.C. Code Ann. § 36-2A-528(2), tacitly approved of the lost volume seller doctrine. It also concluded that there was sufficient evidence in the record to demonstrate that the provider was a lost volume seller. There was testimony in the record indicating that the provider had surplus machines on hand and that, had another location been available, it could and would have supplied those locations with video machines. Further, the provider did place 19 of the 20 machines which were removed into other premises. It was patent that the provider had excess inventory with which to supply and rotate machines through all of its customers. The provider was not required to demonstrate excess capacity as to a specific type of machine. Accordingly, the appellate court's judgment was affirmed.