JOHN JAY ESTHETIC SALON, INC. v. WOODS No. 5-117.
435 So.2d 1051 (1983)
JOHN JAY ESTHETIC SALON, INC. v. Frances WOODS and Neubie Culver.
Court of Appeal of Louisiana, Fifth Circuit.
Writ Denied September 30, 1983.
Anthony J. Russo, New Orleans, for plaintiff-appellee.
Richard J. Boutall, Metairie, for defendants-appellants.
Before CHEHARDY, BOWES and GRISBAUM, JJ.
This case was remanded to us by the Supreme Court, on writs taken by plaintiff, "to consider judgment of the trial court on the merits." It was the original opinion of this Court considering the transcript and the entire record, including correspondence from the trial judge, copies of the minute entries, and dialogue between the court and plaintiff's counsel on the morning of November 26, 1980, that the defendant justifiably relied on a written stay order; and that such could not, and had not, been "impliedly rescinded."
The matter was originally tried and appealed to the Fourth Circuit, on a claim
The court, considering the measure of damages, concluded:
(The Court here found that the portion of the contracts of both defendants Culver and Woods relating to solicitation of Jay's customers was valid and enforceable. Woods and Culver had violated this agreement, as proven in the first trial. However, the measure of damages was limited to the loss of profits occasioned by Woods' departure since Culver had legally terminated his actual employment contract.)
In view of the clear language of the Fourth Circuit quoted hereinabove (in the first appeal), we are puzzled at the amount of damages awarded in the present case. After a careful examination of the entire record, we are obliged to find that the trial judge was manifestly erroneous in granting damages based on the evidence presented at trial. We reverse that portion of the judgment awarding damages for loss of income, but affirm the $3,600.00 award for training costs.
Our original opinion in this case (at 422 So.2d 456 (La.App. 4th Cir.1982)) set out details of the chain of events culminating in the trial court having rendered judgment in favor of plaintiff for $91,872.00, plus $3,600 in "training" costs. Essentially, the trial was conducted only partially with benefit of the presence of defendant's counsel and that being during the early stages of the trial. Very little defense was presented to plaintiff's evidence concerning damages, loss of income or training expense because, after defense counsel had only partially completed his cross-examination of Mr. LeBlanc, the trial was recessed because the trial judge, understandably, had to keep an appointment with his doctor. When the trial resumed several months later, on November 26, the great misunderstanding occurred concerning the stay order. At that time, defense counsel left the courtroom to seek supervisory writs while the court chose to continue with the trial (after refusing to stay the proceedings or grant a continuance).
Plaintiff's chief witness at the trial was Rodney LeBlanc, an accountant whose firm handled the books for John Jay Esthetic Salons, Inc.
Testimony of Mr. LeBlanc, brought out during the limited cross-examination that
Initially, he computed the gross revenue of the salon where the defendants were assigned, for the years 1975-1977, a period during which both were employed. He concluded that for that period revenue increased by roughly 33.5% each year. Then, for the fiscal year beginning in July 1977 (when defendant Woods was no longer employed by Jay) through 1980, Mr. LeBlanc computed a decrease in income of 15%. The gross figures for those three years (1978-80) was then "projected" by the witness at a steady 33.5% to claim a loss of $990,500 (the amount the witness claimed the salon would have earned at the steady 33.5% increase). That figure was set off against the actual amount of sales, and further against a 52% actual costs amount, to total $235,200 in lost gross profits for 1978-80.
Then, Mr. LeBlanc assigned 36% of that loss to the absence of defendant Woods. He based that percentage on a comparison of the relative earnings of Woods and Culver, the other defendant. Essentially, he arbitrarily decided that Culver, more experienced and with a greater following of clientele, would have earned almost twice as much income as Woods. Therefore, 64% of the entire loss of profits was assessed against Culver; and the remaining 36% assessed against Woods. 100% of the total lost profits from the Clearview Salon for the three-year period was attributable, in Mr. LeBlanc's unverified testimony, to Woods and Culver. The judgment of $91,872.00 represented Woods' "assigned" portion (36%) of that loss. We note here that no earnings records of Mrs. Woods or Mr. Culver were ever introduced to support this method of allotted percentages. LeBlanc testified, partially, as follows:
To say that the figure designated by plaintiff, and the method by which it was computed, is speculative would be an
Despite the admissions by Mr. LeBlanc that he did not know any other employees at the salon, or their positions; that he had no idea who was actually making what amount of money; that he had no idea what anyone employed by John Jay earned, and that the figures were based on two people (Transcript p. 50), he staunchly clung to his estimates. An additional problem inherent in the accounting method used is that the (so-called) loss of profits was a figure "projected" by Mr. LeBlanc and based not on actual losses but on an "expected" increase in business. We cannot accept such speculative numbers when considering damages for breach of contract. Damages in breach of contract cases must be proven with reasonable certainty. A claim for loss of profits will not be supported by mere estimates of loss. See F & F Transfer, Inc. v. Tardo, 425 So.2d 874 (La.App. 4th Cir.1983). Loss of profit awards may not rest on speculation or conjecture unless direct evidence is not available to establish this element of damage. Al Smith's Plumbing v. River Crest, Inc., 365 So.2d 1122 (La.App. 4th Cir.1978). The latter case discussed damages for lost profits in a contract situation, where records which should have shown actual losses were available but not produced by the plaintiff.
This Court feels that more detailed records could and should have been produced to show a reasonable foundation for damages in the present case, i.e., actual pecuniary loss caused by the departure of Mrs. Woods. Documents verifying such elements as the actual monetary loss at the Clearview Salon, operating without the services of Mrs. Woods, the number of hairdressers at the salon and their sales for the periods before and after Mrs. Woods left; and Mrs. Woods' income tax records for the years in question, are some of the indicators which were certainly available to plaintiff by subpoena, or in his own records. That counsel chose not to introduce any such evidence does not allow us to ignore the rule requiring a plaintiff to establish proof of his demand with at least sufficient evidence of the particular loss he claims.
Mr. LeBlanc testified from his charts, and from Mr. Jay's income tax records, which reflected plaintiff's entire income and did not specify it salon by salon. We are unable to believe that such information was not available. The witness did give a figure of a 15% decrease in overall sales; however, the basis of his figure for lost profits was a projected increase based on the prior three years. Actual losses could have been established with much more reasonable certainty. There was absolutely no proof that defendants were answerable for any substantial portion of any loss, if indeed, there was any at all suffered by the plaintiff. It is beyond credulity that defendants were responsible for the entire loss. There is nothing in the record which would permit this Court to assess a percentage of loss against the defendants.
Therefore, we are obliged to annul that portion of the trial court's judgment awarding damages for loss of profits in the amount of $91,872.00.
However, we find that plaintiff's income tax records for the years in question did verify to a reasonable degree the amounts required to train an employee. While we question the necessity of the three-year time period used (since there was
AFFIRMED IN PART, ANNULLED IN PART, AND RENDERED.
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