Chung v. Kaonohi Center Co.

Brief Fact Summary.

Farrant Chung, Jordon Y.S. Lum, and J & C Company (Chung) sued Kaonohi Center Co. (Kaonohi) for lost profits and emotional distress after Kaonohi rented commercial space to another consumer in breach of the contract with Chung.

Synopsis of Rule of Law.

A new business that can prove anticipated profits can claim lost profits as damages.

Facts.

Farrant Chung, Jordon Y.S. Lum, and J & C Company (Chung) rented commercial space from Kaonohi Center Co. (Kaonohi) to take over a Chinese Food Restaurant. Chung secured financing, hired employees, and made other significant strides towards the execution of the business. Kaonohi ended up renting the space to another lessee and Chung sued Kaonohi for breach of contract seeking lost profits. Chung’s expert witness at trial issued projected profits based on the current profits of the Chinese Restaurant in business at the commercial space. The trial court awarded Chung damages for emotional distress and lost profits. The appellate court affirmed.

Issue.

Whether a new business that can prove anticipated profits can claim lost profits as damages?

Held.

Yes. Kaonohi signed a lease with Chung notwithstanding Kaonohi giving the right of first refusal to another party. Kaonohi also consistently reassured Chung of their opening. The judgment of the lower courts are affirmed.

Discussion.

The expert witness’ opinion was not in error because the projected profits were the profits of a business that was similar to Chung’s restaurant, this is sufficient to prove with certainty the anticipated profits of a new business. Similarly, damages for emotional distress are awarded when a contract is breached as a result of wanton or reckless conduct. Kaonohi leasing the premises to another party knowing Chung’s reliance on the lease constitutes wanton and reckless conduct, making damages for emotional distress sufficient.