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Sabre Industries Inc. v. Module X Solutions, LLC

United States District Court, W.D. Louisiana, Shreveport Division

October 11, 2017

SABRE INDUSTRIES, INC.
v.
MODULE X SOLUTIONS, LLC, ET AL.

          JUDGE HORNSBY JR. MAGISTRATE

          MEMORANDUM ORDER

          S. MAURICE HICKS, UNITED STATES DISTRICT JUDGE.

         Before the Court is Plaintiff/Counter-Defendant Sabre Industries, Inc.'s (“Sabre”) Motion in Limine No. 11 to Exclude Evidence by Defendants' Expert, Benjamin C. Woods, Regarding MXS's Purported Lost Revenues as a Measure of MXS's Claimed Damages. See Record Document 140. Defendants opposed the motion. See Record Document 160. At the September 26, 2017 pretrial conference, the Court asked for additional briefing on the proper measure of damages. See Record Document 171. Sabre and Defendants have now filed supplemental briefs. See Record Documents 176 & 179.

         Sabre argues that lost profit, not lost revenue, is the proper measure of Defendants' claimed damages. See Record Document 140-1 at 4. In its supplemental brief, Sabre argued:

Sabre recognizes that Woods will need to discuss [MXS's] alleged lost revenues in connection with Module X Solutions' claim for lost profits. Rather, the relief that Sabre seeks is much narrower than that characterized by defendants. Indeed, what Sabre seeks is only an Order precluding Woods (and defendants) from testifying that MXS's alleged lost revenues (as opposed to lost profits) is the appropriate measure of damages to apply to the claims of MXS.

         Record Document 179 at 1-2. Sabre further notes that MXS has not cited a single code article or case in support of its position that MXS is entitled to recover both lost profits and lost revenues. See id. at 2.

         Conversely, Defendants argue that lost revenues are among the many factors that a jury can consider in determining the appropriate award of damages under Louisiana contract law. See Record Document 160 at 5. Defendants maintain that Sabre's bad faith breach of the JV Agreement entitles them to “the revenues MXS lost as a result of Sabre's failure to deliver the number of shelter orders required in the JV Agreement.” Id. Defendants rely heavily upon Volentine v. Raeford Farms of Louisiana, LLC, 50, 698 (La.App. 2 Cir. 8/15/16), 201 So.3d 325, writ denied, 2016-1924 (La. 12/16/16), 212 So.3d 1171, and writ denied, 2016-1925 (La. 12/16/16), 212 So.3d 1171, to support their position that lost revenues and expenses beyond lost profits are available to a victim of bad faith breach. See Record Document 176 at 3.

         Louisiana Civil Code Article 1994 provides that “an obligor is liable for the damages caused by his failure to perform a conventional obligation. A failure to perform results from nonperformance, defective performance, or delay in performance.” “Damages are measured by the loss sustained by the obligee and the profit of which he has been deprived.” La. C.C. Art. 1995. “An obligor in good faith is liable only for the damages that were foreseeable at the time the contract was made.” La. C.C. Art. 1996. However, “an obligor in bad faith is liable for all the damages, foreseeable or not, that are a direct consequence of his failure to perform.” La. C.C. Art. 1997.

         The plaintiff in Volentine alleged breach of contract and violation of the Louisiana Unfair Trade Practices Act. See Volentine, 201 So.3d at 332. On appeal from a bench trial, the Louisiana appellate court affirmed the trial court's determination that defendant's abrupt termination of the contract was a bad faith breach. See id. at 348. The appellate court reviewed, among other things, the trial court's award for economic loss related to poultry operations, more specifically past and future “loss of farming income” Volentine, 201 So.3d at 336, 351. The Volentine court discussed the measure of damages for a bad faith breach of contract and stated:

The Contract encompassed the benefit to [plaintiff] of farming income, the loss of which, upon [defendant's] breach of the Contract, would cause the damage expected by the parties.

Id. at 349. It is true that the appellate court discussed “total loss of revenues” and “loss of farming income” in the context of damages; however, a close reading of the case establishes that the court relied upon the experts' profit projections and used lost profits as the measure of damages. Id. at 351-352. The court stated:

Loss of profits must be proved with reasonable certainty and cannot be based on speculation or conjecture. Simpson v. Restructure Petroleum Mktg. Servs., Inc., 36, 508 (La.App.2d Cir.10/23/02), 830 So.2d 480; Clark v. Ark-La-Tex Auction, Inc., 593 So.2d 870 (La.App. 2d Cir.1992), writ denied, 596 So.2d 210 (La.1992). Furthermore, a claim for lost profits cannot rest solely on the testimony of the injured party without being substantiated by other evidence. Simpson, supra.
Here, we find no merit to Raeford's argument regarding Miller's qualifications. Miller was qualified as an expert forensic accountant and set forth his qualifications on the record. It was within the trial court's broad discretion to accept his qualifications as an expert in ...

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