DARDEN, Judge.
Belle City Amusements, Inc. ("Belle City") appeals the trial court's judgment in favor of Doorway Promotions, Inc. ("Doorway") on Doorway's breach of contract claim.
We affirm in part, reverse in part, and remand.
Belle City provides and operates carnival rides and concessions at fairs and festivals in several states. Doorway is an event promoter and has been in business for approximately thirty-five years. James Amstutz is the president of Doorway.
As a promoter, Doorway "promote[s] or coordinate[s] special events for a wide variety of non-profit organizations," including the Three Rivers Festival (the "Festival") in Fort Wayne. (Tr. 10). Doorway's "contract with the [Festival] makes [Doorway] the official midway" provider for the Festival. (Tr. 90).
On or about January 31, 2007, Doorway entered into a lease with the Board of Trustees for the Allen County War Memorial Coliseum (the "Coliseum"). Doorway agreed to lease a portion of the Coliseum's parking lot from July 9, 2009, through, and including, July 18, 2009, for a total of ten days, for the purposes of erecting a midway during the Festival. Doorway agreed to pay the Board of Trustees $2,400.00 "for each event day or 15% of the gross Box Office receipts, whichever is greater ...." (App.39) (emphasis omitted). Thus, Doorway was obligated to pay rent in the amount of at least $24,000.00 for use of the Coliseum during the Festival in 2009.
The Agreement further provided as follows:
(App.35). Finally, the Agreement provided as follows: "This contract is non-assignable by [Belle City] unless agreed to in writing by Doorway." (App.34) (emphasis added).
Following the 2008 Festival, a representative from Belle City informed Amstutz that Belle City wished to be released from the Agreement for the 2009 Festival. Shortly thereafter, in July of 2008, Belle City entered into a contract to operate a fair in Lexington, Kentucky. In September of 2008, Belle City's counsel sent a letter to Doorway advising that Belle City "hereby gives [Doorway] notice of its termination of the [Agreement] relating to the [Festival] scheduled next July, 2009." (Ex. 5). On or about October 13, 2008, Doorway's counsel sent a letter to Belle City's counsel, indicating Doorway's refusal to release Belle City from the Agreement.
On February 23, 2009, Doorway filed a complaint against Belle City for breach of contract. Doorway filed an amended complaint on March 2, 2009. Doorway alleged as follows:
(App.28-29). Accordingly, Doorway sought damages "in an amount not less than $50,000.00" for "lease payments, promotional and media and related expenses, clean-up costs, lost opportunities and lost profits ...." (App.29). Subsequently, "around the first of April" of 2009, Doorway cancelled the Festival's midway for 2009. (Tr. 92).
Belle City filed its answer and affirmative defense on April 27, 2009. Belle City admitted that it notified Doorway that it was terminating the Agreement; denied that the Agreement was not assignable; and asserted that Doorway failed to mitigate damages by "disregard[ing]" Belle City's offer "to find another entity that could provide services for the July 9-18, 2009, `midway event' ...." (App.26).
On November 12, 2009, the parties filed a pre-trial stipulation, stipulating to the following:
(App.16).
The trial court conducted a bench trial on the issue of damages on November 12, 2009. Doorway introduced into evidence its records of profits derived from the Festival from the year 2000 through 2008. Its profits were as follows:
Year Profit 2000 $61,486.26 2001 $56,603.14 2002 $56,869.39 2003 $49,860.61 2004 $36,881.62 2005 $23,901.54 2006 $20,457.97 2007 $ 7,570.83 2008 $11,917.15
According to Amstutz, Doorway calculated these profits by subtracting its expenses from "the portion of the ride ticket sales that [Doorway] was paid by ... [Belle City]"; the flat rate amount received by Doorway from Belle City for concessions; and the amount paid by Belle City "to supplement [Doorway's] advertising
The average profit for the last four years of the Festival amounted to $15,961.87. Amstutz, however, testified that this amount was "very conservative" because Doorway had increased its advertising budget for those years but had planned to "at least cut back" on advertising in future years. (Tr. 66). Thus, Doorway calculated its expected profit for 2009 to be approximately $20,000.00. Amstutz testified that he estimated Doorway's total lost profits from 2009 through 2013, due to Belle City's breach of contract, to be from $75,293.72 to $94,341.97.
Amstutz testified that Doorway had not paid 2009 rent to the Coliseum pursuant to its lease. According to Amstutz, the Board of Trustees of the Coliseum had agreed that Doorway could satisfy, or "flip," its rental obligation for 2009 by organizing "a similar event in 2010 but that one way or another [Doorway] w[as] contractually bound whether [it] did an event or not for the [$24,000.00]." (Tr. 70-71).
Amstutz further testified that in 2005, the Festival began installing rides in a downtown park during the Festival, which drew some people away from the midway promoted by Doorway. This resulted in a decrease in attendance at Doorway's midway, and therefore, a decrease in profits. Nonetheless, Amstutz opined that Doorway could "wait out" the downtown event and "eventually that one would go away," resulting in increased profits for future Festivals. (Tr. 90).
As to continuing the Festival beyond 2009, Amstutz testified that Doorway did not believe it could continue promoting the Festival after 2009 because of the loss of "continuity ... when there's a disruption of ... dates" due to the cancellation in 2009. (Tr. 54). He further testified that due to cancelling the 2009 Festival, it would be "difficult if not impossible" to find another midway provider" because providers would no longer consider the Festival "an established bonafide event...." (Tr. 55). Once Doorway cancelled the Festival for 2009, it believed that it was "out of the ... Festival forever." (Tr. 56).
The trial court entered its order on November 18, 2009, awarding damages to Doorway as follows:
(App.3).
Belle City asserts that the trial court improperly awarded damages to Doorway. Specifically, Belle City argues that the trial court abused its discretion in awarding future damages for the years 2010 through 2013;
Belle City asserts that the trial court improperly awarded Doorway future damages. Regarding damages for breach of contract in general, this court has held:
Indiana Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 359, 368 (Ind.Ct.App. 2008) (internal citations omitted). It is the plaintiff's burden to prove damages, and a damage award must be supported by probative evidence. Id.
Belle City argues that the damages for 2010 through 2013 were not a foreseeable consequence of the breach of the Agreement. We agree.
The measure of damages for breach of contract is limited by what is reasonably foreseeable at the time the parties entered into the contract. Rogier v. Am. Testing & Eng'g Corp., 734 N.E.2d 606, 614 (Ind.Ct.App.2000), trans. denied. "The test for measuring damages is foreseeability at the time of entry into the contract, not facts existing and known to the parties at the time of the breach[.]" Indiana & Mich. Elec. Co. v. Terre Haute Indus., Inc., 507 N.E.2d 588, 601 (Ind.Ct. App.1987), trans. denied; Rogier, 734 N.E.2d at 614.
"Foreseeability means that which it is objectively reasonable to expect, not merely what might conceivably occur." Greives v. Greenwood, 550 N.E.2d 334, 338 (Ind.Ct.App. 1990). In order to be "objective," an expectation must "relat[e] to, or [be] based on externally verifiable phenomena, as opposed to an individual's perceptions, feelings, or intentions ...." BLACK'S LAW DICTIONARY 1103 (8th ed.2004).
Here, Amstutz testified that Doorway cancelled subsequent Festivals because, in his "judgment," (tr. 54), people would no longer attend the Festival due to the cancellation in 2009, and it would be "difficult if not impossible" to hire another midway provider of the same quality as Belle City. (Tr. 55). Clearly, Doorway based its decision to cancel the Festival beyond 2009 on a subjective belief that the Festival would no longer be economically viable.
Moreover, Doorway presented no evidence that, at the time the parties entered into the Agreement in 2007, Belle City had any reason to believe that Doorway would require more than a year's notice that Belle City would not be providing the Festival's midway beyond 2009. This is
In addition, as provided below, even if we were to find the cancellation of the Festival to be a foreseeable result of the breach, we still would find that the projected lost profits are not reasonably certain. It is wholly improper for the trier of fact to project past profits indefinitely into the future without evidence that the projection was at least reasonably certain. Clary v. Lite Machines Corp., 850 N.E.2d 423, 439 (Ind.Ct.App.2006).
Again, the trial court awarded Doorway, as the Festival's promoter, lost profits for 2010 through 2013. Doorway, however, presented no evidence that it had entered into a contract or agreement to promote the Festival beyond 2009. Given such lack of evidence, the trial court improperly awarded damages for the years 2010 through 2013. See Jerry Alderman Ford Sales, Inc. v. Bailey, 154 Ind.App. 632, 291 N.E.2d 92, 107 (1972) (finding an award for the loss of hauling profits improper where the "plaintiff did not introduce evidence of executed hauling contracts calling for ascertainable future profit nor evidence concerning the certainty, duration or consideration payable with respect to any existing or contemplated hauling contracts").
Finally, a party may not recover future profits for loss of face in the industry or loss of goodwill in an action for breach of contract. Indiana & Mich. Elec. Co., 507 N.E.2d at 606-07. Although Doorway denies that it is seeking damages due to loss of goodwill or reputation, we find otherwise.
Rice v. Hulsey, 829 N.E.2d 87, 90 (Ind.Ct. App.2005) (quoting Berger v. Berger, 648 N.E.2d 378, 383 (Ind.Ct.App.1995)). In discussing goodwill in dissolution cases, we have defined goodwill further as the "existence in a business of established relations with employees, customers and suppliers...." DeSalle v. Gentry, 818 N.E.2d 40, 47 (Ind.Ct.App.2004) (emphasis added).
Here, Amstutz testified that it would be "difficult if not impossible" to attract midway providers in the future because the cancellation of the Festival in 2009 would result in Doorway "basically starting from scratch," and midway providers would no longer consider the Festival "an established bonafide event...." (Tr. 55). He further testified that cancelling the 2009 Festival "established a new pattern" of prior Festival attendees attending a competing event. (Tr. 55).
It is clear that Doorway's purported lost profits arise from its perceived loss of reputation or goodwill, which it claims to be a consequence of its failure to present the 2009 Festival due to Belle City's
Belle City also asserts that the trial court abused its discretion in awarding Doorway $24,000.00 for the 2009 rent of the Coliseum. We disagree.
Belle City argues that due to a lack of evidence, the trial court improperly awarded damages for 2009 rent. Specifically, Belle City contends that "[i]t is not clear from the record" that the Board of Trustees for the Coliseum requested payment from Doorway for the 2009 rent or that Doorway had "actually paid the [Board of Trustees] any of the amount it owed." Belle City's Br. at 10.
Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 67 (Ind.Ct.App.2009) (internal citations omitted), trans. denied.
The undisputed evidence shows that Doorway had entered into a lease with the Coliseum's Board of Trustees in January of 2007. Pursuant to the terms of the lease, Doorway agreed to pay the Board of Trustees rent in the amount of at least $24,000.00 for the use of the Coliseum during the 2009 Festival. Subsequently, in July of 2007, Doorway and Belle City entered into the Agreement. The Agreement stated that Doorway would provide the Coliseum as the midway site. Amstutz testified that Doorway remains "contractually bound" to pay the 2009 rent. (Tr. 70).
We find that the rent payment for which Doorway was obligated is a consequential damage arising from Belle City's breach of the Agreement. Accordingly, we find that the trial court properly awarded damages for 2009 rent.
Belle City also maintains that, by awarding rent damages, the trial court essentially awarded Doorway its projected gross profit for 2009. "[A] proper award of lost profits must be confined to the loss of net profits." Indianapolis City Mkt. Corp. v. MAV, Inc., 915 N.E.2d 1013, 1025 (Ind.Ct.App.2009). The rationale for this rule is that a party injured by a breach of contract shall "not be placed in a better position than the party would have enjoyed had the breach not occurred." Crider & Crider, Inc. v. Downen, 873 N.E.2d 1115, 1118 (Ind.Ct.App.2007). Otherwise, the party would "receive a windfall in the form of that portion of lost gross income representing expenses of operation saved by defendant's breach." Alderman Ford, 291 N.E.2d at 105 n. 6 (emphasis added); see also INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 577 (Ind.Ct.App.2003) (stating that the "law disfavors a windfall"), trans. denied.
In this case, the trial court awarded Doorway its projected net profit for 2009 in the amount of $17,500.00. Amstutz testified
The rent is not an expense of operation saved by Belle City's breach of the Agreement. Rather, Doorway is obligated under a written contract to pay at least $24,000.00 to the Coliseum's Board of Trustees, despite Belle City's breach. Thus, Doorway does not realize any savings related to the lease of the Coliseum as a result of the breach of the Agreement. Accordingly, the rationale for confining an award to net profits does not apply to this case.
In conclusion, we affirm the trial court's award of $24,000.00 for 2009 rent that Doorway is obligated to pay the Board of Trustees. We, however, find the trial court's award of lost profits for the years 2010, 2011, 2012, and 2013 to be improper and remand for proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded.
BAKER, C.J., and CRONE, J., concur.
