IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 95-10009
_____________________
CALCOGEN CORP.; CALCOGEN METROPOLITAN CORP.;
CALCOGEN SAN LUIS OBISPO CORP.,
Plaintiffs-Appellants,
v.
DRESSER INDUSTRIES INC.; DRESSER LEASING
CORP.; DRESSER FINANCE CORP.,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
(3:89-CV-1939-X)
_________________________________________________________________
December 11, 1995
Before KING, SMITH, and STEWART, Circuit Judges.
PER CURIAM:*
This is a breach of contract case arising out of
unsuccessful negotiations for the financing, construction and
operation of two cogeneration plants in California. The case
went to trial in October 1994. Several days after trial
commenced, the district court advised the plaintiffs of the
court's concern about the plaintiffs' ability to prove damages
*
Local Rule 47.5 provides: "The publication of opinions
that have no precedential value and merely decide particular
cases on the basis of well-settled principles of law imposes
needless expense on the public and burdens on the legal
profession." Pursuant to that Rule, the court has determined
that this opinion should not be published.
and requested the plaintiffs to present all their evidence on
damages. Following the presentation of that evidence, the
district court granted the defendants' motion under Fed. R. Civ.
P. 50 and dismissed the plaintiffs' claims. This appeal
followed.
We review a grant of a Rule 50 motion de novo. Enlow v.
Tishomingo County, 45 F.3d 885, 888 (5th Cir. 1995). Judgment as
a matter of law is appropriate if "a party has been fully heard
on an issue and there is no legally sufficient evidentiary basis
for a reasonable jury to find for that party on that issue."
Fed. R. Civ. P. 50(a)(1). In considering whether there was
sufficient evidence for a jury, this court examines the evidence
in the light most favorable to the non-movant and draws all
reasonable inferences in that party's favor. Enlow, 45 F.3d at
888. If the facts and inferences point so strongly and
overwhelmingly in favor of one party, such that reasonable
persons could not arrive at a contrary verdict, the motion should
be granted. Id. A mere scintilla of evidence is insufficient
to present a question for the jury. Id.
The primary issue on appeal is whether there is sufficient
evidence of the fact or amount of damages to justify a jury trial
on the issue. The plaintiffs correctly argue that a plaintiff is
not required to prove the amount of lost profits with perfect
accuracy. The defendants agree. The defendants argue, however,
that the threshold question is whether or not the plaintiffs have
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presented sufficient evidence that the defendants' conduct
actually resulted in a loss of profits.
Both parties agree that California law applies to this
action. Under California law, a party may recover lost profits
only if it is certain that a profit would have been derived from
the proposed undertaking. S.C. Anderson, Inc. v. Bank of
America, 30 Cal. Rptr. 2d 286, 289 (Cal. Ct. App. 1994). In
order to recover lost prospective profits, the plaintiff must
present evidence that shows, "with reasonable certainty, both
their occurrence and extent." S.C. Anderson, 30 Cal. Rptr. 2d at
289. The plaintiff must demonstrate with a reasonable
probability that profits would have been earned but for the
defendant's conduct. Id. California law creates a two step
analysis for evaluating lost profit claims. See GHK Assoc. v.
Mayer Group, Inc., 274 Cal. Rptr. 168, 179 (Cal. Ct. App. 1990)
(analyzing occurrence before discussing extent of lost profits).
First, a plaintiff must establish that the defendant's conduct
actually resulted in a loss of profits. This is proof of
occurrence. The second step entails quantifying the loss. This
is proof of extent. The fact that damages have occurred requires
certainty. Id. The amount of damages need not be calculated
with the same precision. Id.
This case foundered on the first step -- proof of
occurrence. In this case, that translates into proof that the
plants would actually have been profitable if built. The
plaintiffs' evidence on damages consists of the commitment letter
3
dated April 24, 1984 (the "Commitment Letter"), entered into
between Dresser Finance Corporation and Dresser Leasing
Corporation, on the one hand, and Calcogen, Inc., on the other
hand, and the defendants' income projections. According to the
plaintiffs, the income projections are enough to raise a jury
question as to whether the cogeneration plants would have been
profitable. The district court was not persuaded, and nor are
we. We look to California cases to see what kind of evidence has
passed muster. In S.C. Anderson, the plaintiff was able to show
that but for the defendant's actions, its low bid on a
construction project would have been accepted. The plaintiff
also presented evidence that it had made a 5% profit on its
projects in the past. The court nevertheless held that the
evidence was insufficient because the plaintiff presented no
specific evidence that it would have made a profit on the
specific project. S.C. Anderson, 30 Cal. Rptr. 2d at 290. The
fact that the plaintiff failed to present evidence that the bid
was accurate, or that the scope of the project would not increase
costs, or that other factors would not lead to a reduction in its
historical profits was fatal to the plaintiff's claim. Id.
Here, assuming arguendo that the plaintiffs were able to
show that the plants would have been built, the plaintiffs are
otherwise in the same position as the plaintiff in S.C. Anderson.
The plaintiffs presented no evidence that they could in fact
build the projects for the proposed cost, or that they would
receive all the necessary permits. Even the core assumption of
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the income projections had changed at the time of trial -- gas
prices were much lower then than when the income projections were
produced. There was simply no evidence that under the conditions
prevailing at the time of trial, the plaintiffs could make a
profit on the cogeneration plants.
The plaintiffs' fall-back position appears to be that the
evidence raises a jury question on whether they would have
received a $2.5 million payment regardless of construction. For
evidence of that, they point to the Commitment Letter. But the
defendants correctly point out that the Commitment Letter was
only an agreement to provide construction financing (subject to
certain conditions which were never satisfied). The paragraphs
that the plaintiffs point to itemize the components of "the
maximum amount of construction financing available under this
commitment." That is a far cry from an agreement to pay those
amounts.
In summary, reviewed de novo, the evidence failed to raise a
jury issue on the fact of damages, and the Rule 50(a) motion was
correctly granted.
AFFIRMED.
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