Summary of Drews Co. v. Ledwith-Wolfe Associates
S. Ct. S. Carolina 1988
Facts: Ledwith hired and contracted with Drews, for Drews to renovate a building into a restaurant. Drew pulled its workers off the job and filed a suit to foreclose, and a mechanics lien for labor and materials. Ledwith countered for breach and specific performance and lost profits resulting from delay.
Issue: Does the new business rule operate to automatically preclude the recovery of lost profits by a new business?
Holding: The new business rule does not operate automatically in barring recovery of lost profits by a new business. $14,000 award of lost profits reversed. Trial ct. refusal to grant new trial affirmed.
Procedure: Appeal from trial court jury decision: $18,000 verdict for Drews, $22,895 verdict for Ledwith for completion of work, $14,000 for lost profits.
1) Profits must have been prevented or lost “as a natural consequence of," breach of contract.
2) a breaching party is liable for those damages, “which may reasonably be supposed to have been within the contemplation of the parties at the time the contract was made as a probable result of the breach of it."
3) The lost profits must be “established with reasonable certainty, for recovery cannot be had for profits that are conjectural or speculative."
Ct. Rationale: Ledwith-Wolfe Associates failed to clear the “reasonable certainty," hurdle. Owner neither relied upon 1) comparison with profit performance of business similar in size, nature, and location 2) comparison with profit hx of Plaintiff’s successor, 3) comparison of similar businesses owned by plaintiff, 4) use of economic and financial data and expert testimony. Owner submitted a sheet of paper with earning from the same business’s gross profits earned in the subsequent 11 months. Owner’s proof was insufficient to merit submission to the jury.