Fera v. Village Plaza, Inc
Fera v. Village Plaza, Inc (1976)
Supreme Court of Michigan, Chief Justice Kavanagh
FACTS: Plaintiffs had a 10 year lease for a “book and bottle” store. Plaintiffs gave up approximately 600 square feet of their leased space so that it could be leased to another tenant. In exchange, it was agreed that liquor sales would be excluded from the percentage rent owed.
When the space was finally ready for occupancy, plaintiffs were refused the space for which they had contracted b/c the lease had been misplaced and the space rented to other tenants. Alternative space was offered but refused as unsuitable.
ISSUE: Can plaintiffs of a new business get damages for lost profits?
RULES: Although damages for lost profits are normally not allowed, they can be given where a plaintiff has evidence for the jury to deliberate on of the reasonable certainty of the lost future profits.
If a business is one that has already established a reasonable prediction can often be made as to its future on the basis of profit.
If the business has not had such a history as to make it possible to prove lost profits w/ reasonable accuracy, the profits are often to uncertain for recovery.
HOLDING/RULING: Lost future profit damages allowed here.
RATIONALE: Expert testimony from Michigan Liquor Control Commission, Cunningham Drug Stores, and plaintiff himself. The jury weighed the conflicting testimony and determined that the plaintiffs were entitled to damages of $200,000.
DISSENTING: Obtaining liquor license was not for sure.
CLASS NOTES: In this case it is difficult to ascertain lost profits, b/c it was a new business. Thus, it did not have a history to reasonably calculate lost profits. The court said that even though it was a new business the profits would be reasonably ascertainable based on other, similar businesses in the area. So it doesn’t necessarily preclude damages.