“He who lives by the crystal ball soon learns to eat ground glass.” – Edgar R. Fiedler. In this case, the Court held that recovering damages for the bad advice of a transactional real estate broker requires proof of what would have happened but-for the bad advice. Analogizing to legal malpractice claims, the Court noted that a plaintiff must show either that he: 1) would have been able to obtain a “better deal” or 2) would have been better off with “no deal.” Both require proof that the professional’s negligent acts or omissions caused the client damages. Here, Plaintiff claimed lost profits as damages, requiring proof of either the amount of the profits that would have been earned or the fact that profits would have been earned. Plaintiff had an appraisal. The appraisal wasn’t proof a future sale of the property would have been better or different than the actual sale. Dismissal affirmed.
Tag Archives: Lost Profits
Lynda S. Gibbons, Brent Wilson, and Gibbons-White, Inc., v. Gregory T. Ludlow, S. Reid Ludlow, and Jean E. Cowles, 2013CO49 (July 1, 2013)
“I hit a deer.” Many people have a story that starts with those words. This one ends with a Supreme Court decision. A car rental company, whose car was damaged when the renter struck a deer, sought to recover from the renter its lost profits while the car was being repaired. It calculated that loss by using the “reasonable rental value” of the car. Under contract law, lost profits arising from the loss of use of personal property have to be proven by showing that actual profits were lost. But in this case, the Court applied tort principles. It held that the damage being remedied is the lost opportunity to derive a profit, not whether any profit was actually lost. In short, the opportunity cost is part of lost profit damages. So, lost profits can be measured with the “reasonable rental value” lost during repairs. The dissent would have applied contract law to the rental contract, not tort law.