Fera v. Village Plaza, Inc

Citation. 396 Mich. 639, 242 N.W.2d 372, 1976 Mich. 276, 92 A.L.R.3d 1278

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Citation396 Mich. 639, 242 N.W.2d 372, 1976 Mich. 276, 92 A.L.R.3d 1278

Brief Fact Summary. Plaintiffs entered into a lease with Defendants to open a “book and bottle” shop in Defendants’ shopping center. When the leased space was ready for occupancy, Plaintiffs were refused their space because the lease had been misplaced, and the space had been rented to other tenants. Plaintiffs sued to recover anticipated lost profits.

Synopsis of Rule of Law. Where the evidence leads to a finding of anticipated profits within a reasonable degree of certainty, an award of damages may include lost profits.

Points of Law - Legal Principles in this Case for Law Students.

If the business has not had such a history as to make it possible to prove with reasonable accuracy what its profits have been in fact, the profits prevented are often but not necessarily too uncertain for recovery.

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Facts. Plaintiffs and Defendants executed a ten-year lease for a “book and bottle” shop in Defendants’ proposed shopping center. During construction, numerous complications arose, including work stoppages. Defendants’ mortgagee received the deed in lieu of foreclosure after Defendants defaulted, and Schostak Brothers took over the management of the property. When the space finally became available, Plaintiffs were refused the space because the lease had been misplaced. Plaintiffs were offered alternative space, but they refused. Plaintiffs then initiated this action to recover their anticipated lost profits.

Issue. Can lost profits be permitted as a measure of damages for breach of a lease?

Held. Yes. Profits have generally been disallowed as an element of damages not because they are profits but because they are speculative and uncertain. If the profits can be established with reasonable certainty, they may be considered an element of damages. In the case of a new business, precedent states that profits are often too uncertain for recovery. In the present case, however, the issue of profits was thoroughly tried, and the jury, being properly instructed concerning speculative damages, found that the evidence showed that Plaintiffs were entitled to damages of $200,000. The Appellate courts must not disturb such a finding.

Dissent. Even though, as the majority holds, anticipated profits from a new business may be established with a reasonable degree of certainty, the evidence does not support a finding regarding lost profits from liquor sales.
Concurrence. Anticipated profits from a new business may be established with a reasonable degree of certainty.

Discussion. Lost profits from a new business may be permitted as an element of damages provided they can be proved with certainty.

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