California Civil Jury Instructions (CACI) (2017)

352. Loss of Profits - No Profits Earned

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352.Loss of Profits—No Profits Earned
To recover damages for lost profits, [name of plaintiff] must prove that it
is reasonably certain [he/she/it] would have earned profits but for [name
of defendant]’s breach of the contract.
To decide the amount of damages for lost profits, you must determine
the gross, or total, amount [name of plaintiff] would have received if the
contract had been performed and then subtract from that amount the
costs [including the value of the [labor/materials/rents/expenses/interest
on loans invested in the business]] [name of plaintiff] would have had if
the contract had been performed.
You do not have to calculate the amount of the lost profits with
mathematical precision, but there must be a reasonable basis for
computing the loss.
New September 2003
Directions for Use
This instruction applies to both past and future lost profit claims. Read this
instruction in conjunction with CACI No. 350, Introduction to Contract Damages,
or CACI No. 351, Special Damages.
Insertion of specified types of costs to be deducted from gross earnings is optional,
depending on the facts of the case. Other types of costs may be inserted as
appropriate.
Sources and Authority
• Damages Must Be Clearly Ascertainable. Civil Code section 3301.
“Lost profits may be recoverable as damages for breach of a contract. ‘[T]he
general principle [is] that damages for the loss of prospective profits are
recoverable where the evidence makes reasonably certain their occurrence and
extent.’ Such damages must ‘be proven to be certain both as to their occurrence
and their extent, albeit not with ‘mathematical precision.’ ” (Sargon Enterprises,
Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773−774 [149
Cal.Rptr.3d 614, 288 P.3d 1237].)
• “Where the fact of damages is certain, the amount of damages need not be
calculated with absolute certainty. The law requires only that some reasonable
basis of computation of damages be used, and the damages may be computed
even if the result reached is an approximation. This is especially true where, as
here, it is the wrongful acts of the defendant that have created the difficulty in
proving the amount of loss of profits or where it is the wrongful acts of the
defendant that have caused the other party to not realize a profit to which that
party is entitled.” (GHK Associates v. Mayer Group (1990) 224 Cal.App.3d 856,
161
0087
873–874 [274 Cal.Rptr. 168], internal citations omitted.)
• “Historical data, such as past business volume, supply an acceptable basis for
ascertaining lost future profits. [Citations.] In some instances, lost profits may
be recovered where plaintiff introduces evidence of the profits lost by similar
businesses operating under similar conditions. [Citations.]” (Sargon Enterprises,
Inc.,supra, 55 Cal.4th at p. 774.)
• “Regarding lost business profits, the cases have generally distinguished between
established and unestablished businesses. ‘[W]here the operation of an
established business is prevented or interrupted, as by a . . . breach of
contract . . . , damages for the loss of prospective profits that otherwise might
have been made from its operation are generally recoverable for the reason that
their occurrence and extent may be ascertained with reasonable certainty from
the past volume of business and other provable data relevant to the probable
future sales.’ ” (Sargon Enterprises, Inc.,supra, 55 Cal.4th at p. 774.)
• “ ‘On the other hand, where the operation of an unestablished business is
prevented or interrupted, damages for prospective profits that might otherwise
have been made from its operation are not recoverable for the reason that their
occurrence is uncertain, contingent and speculative. [Citations.] . . . But
although generally objectionable for the reason that their estimation is
conjectural and speculative, anticipated profits dependent upon future events are
allowed where their nature and occurrence can be shown by evidence of
reasonable reliability.” (Sargon Enterprises, Inc.,supra, 55 Cal.4th at p. 774.)
• “Unestablished businesses have been permitted to claim lost profit damages in
situations where owners have experience in the business they are seeking to
establish, and where the business is in an established market.” (Resort Video,
Ltd. v. Laser Video, Inc. (1995) 35 Cal.App.4th 1679, 1698–1699 [42
Cal.Rptr.2d 136], internal citations omitted.)
• “Even if [plaintiff] was able to provide credible evidence of lost profits, it must
be remembered that ‘[w]hen loss of anticipated profits is an element of
damages, it means net and not gross profits. Net profits are the gains made from
sales ‘after deducting the value of the labor, materials, rents, and all expenses,
together with the interest of the capital employed.’ ” (Resort Video, Ltd., supra,
35 Cal.App.4th at p. 1700, internal citations omitted.)
• “It is the generally accepted rule, in order to recover damages projected into the
future, that a plaintiff must show with reasonable certainty that detriment from
the breach of contract will accrue to him in the future. Damages which are
remote, contingent, or merely possible cannot serve as a legal basis for
recovery.” (California Shoppers, Inc. v. Royal Globe Insurance Co. (1985) 175
Cal.App.3d 1, 62 [221 Cal.Rptr. 171], internal citations omitted.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 879–882
California Breach of Contract Remedies (Cont.Ed.Bar 1980; 2001 supp.) Recovery
CACI No. 352 CONTRACTS
162
0088
of Money Damages, §§ 4.11–4.17
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.79
(Matthew Bender)
6 California Points and Authorities, Ch. 65, Damages, § 65.21 (Matthew Bender)
1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or
Opposing Damages in Contract Actions, 7.12
CONTRACTS CACI No. 352
163
0089