Rancho Pescado, Inc. v. Northwestern Mutual Life Insurance Co.

Brief Fact Summary.

Rancho Pescado sued Northwestern Mutual Life Insurance Co. for terminating a five-year licensing agreement after four months.

Synopsis of Rule of Law.

A loss of future profits may be rewarded if evidence can establish a factual basis to compute losses.

Facts.

Rancho Pescado (RP) contracted with Northwestern Mutual Life Insurance Co. (Northwestern) to license a portion of a waterway to raise catfish for five years. Northwestern terminated the licensing agreement after four months because the catfishing-program interfered with Northwestern’s downstream ranch. RP sued Northwestern for breach of contract and the jury granted RP $2.5 million in damages. The trial court reduced the damages award to $101,510.

Issue.

Whether loss of future profits may be rewarded if evidence can establish a factual basis to compute losses?

Held.

Yes. The judgment of the trial court is affirmed. RP failed to prove lost profits with a reasonable certainty because RP’s pilot program produced mixed results. Similarly, Frosty Fish is unable to distribute the catfish that is projected to be produced by RP. Because RP has not established that it would be able to market the catfish in order to profit from the operation, RP has not established that the operation would be profitable or succeed.

Discussion.

The award of loss of future profits for new businesses is available as long as the future profits are established with reasonable certainty.