RANDOLPH, Justice, for the Court:
¶ 1. Parham Pointe North, LLC ("Parham") and K. Wayne Rice & Associates ("Rice") together appeal ("the Parham appeal"), and Ballard Realty Company ("Ballard") separately appeals, (collectively "Defendants") a decision from the Hinds County Circuit Court awarding damages of $3,603,712 to apartment-complex tenants for loss of intellectual property and personal injuries arising from claims that the Defendants were negligent in maintaining and/or repairing a leaking pipe in their apartment. We find that the trial court abused its discretion by admitting unreliable expert testimony, allowing a lay witness to give opinion testimony, and not excluding evidence of the cost of restoration where the fair market value of the property before it was damaged was not established. We further find that the trial court abused its discretion by failing to grant a new trial on damages, as an award of lost profits without proof of past profits was not only contrary to the established law of this state, it was also contrary to the weight of evidence. Accordingly, we reverse the judgment and remand to the Hinds County Circuit Court for a new trial on damages.
¶ 2. Sometime before May 2007, Ohazurike notified the manager of the apartment
¶ 3. Ohazurike testified that he had designed more than 150 board, card, and video games over a period exceeding two decades. Of these games, Ohazurike had marketed only two board games — Insight Bible Game ("Insight") and Challenge Word Game ("Challenge") — although fifty-three additional games were in a "production ready" state. A corporation that Ohazurike organized, Upstart Games and Amusements ("Upstart"), sold 5,000 units each of Insight and Challenge over seven to eight years (1996-2003/2004). According to tax returns, Upstart never made a profit. The company reported net losses of $34,000 over a ten-year period. Ohazurike had created and copyrighted at least four of the nineteen "production-ready" games that were damaged in the event, more than twenty years prior to the event. Four other games were created approximately ten years before the event. Ohazurike offered that the reason he had not manufactured and sold any games was that he had been unsuccessful in obtaining financing, up to and including 2007. Ohazurike created an uber optimistic business plan, totally ignoring past losses and meager sales (actual facts and data), and then engaged Kevin Lightheart in 2006 to prepare a business valuation based on the unsupported projections of Ohazurike, to assist Ohazurike in obtaining financing to manufacture and sell games. Ohazurike's business plan and Lightheart's valuation were unsuccessful in obtaining financing from a single banker, lender, investor, or venture capitalist.
¶ 4. On December 11, 2007, the Ohazurikes first filed a complaint in the Hinds County Circuit Court, naming as defendants: Parham; Arlington Properties, Inc.; Ballard; Rice; and "agents and/or employees of the corporate defendants...."
¶ 5. In January 2008, Defendants removed the case to federal court. In July 2009, the United States District Court for the Southern District of Mississippi remanded
¶ 6. The original 2007 complaint included numerous causes of action, including allegations of racial discrimination, fraud and misrepresentation, assault, malicious prosecution, and defamation and slander. However, in excising claims to garner a remand from federal court, the Ohazurikes abandoned all claims except their claims of negligent maintenance and repair of the leak. The Ohazurikes' second amended complaint in federal court, which prompted the remand, alleged that, due to the Defendants' negligence, a pipe had burst in the Ohazurikes' apartment in the Parham Pointe complex, damaging intellectual property in the form of blueprints and plans for nineteen games that Ohazurike had designed. The Ohazurikes further alleged that the Defendants' failure to remove water from their apartment caused all three Ohazurikes to incur medical bills for respiratory problems and caused Darlington to contract contact dermatitis that resulted in permanent scarring. Thus, the basis of liability was the Defendants' negligence, vel non, in maintaining and/or repairing the leaky pipe.
¶ 7. After the case was remanded, the parties filed numerous pretrial motions. The pretrial motions that are relevant to this appeal are as follows:
¶ 8. A jury trial began on July 12, 2010. Among the Ohazurikes' witnesses were Glover, Chance, Lightheart, and Johnson. Glover — who was tendered in the field of economics, not business valuation — offered two lost-future-profits estimates: $15.6 million and $2.85 million. Her opinions were based on a review of Ohazurike's
¶ 9. The jury found the Defendants 100 percent at fault, and awarded the Ohazurikes total damages of $3,603,712, consisting of the following damages for each plaintiff:
Benny — $2,000,000 for future lost profits of intellectual property $2,208 for medical bills $500,000 for pain and suffering Esther — $253 for medical bills $500,000 for pain and suffering Darlington — $1,251 for medical bills $500,000 for pain and suffering $100,000 for permanent disfigurement.3
¶ 10. Ballard filed a "Motion for Judgment Notwithstanding the Verdict, or in the Alternative, Motion for New Trial, or in the Alternative, Motion for Remittitur[,]" arguing that reasonable persons could not have rendered the verdict against Defendants; that, if allowed to stand, the verdict would be a miscarriage of justice; and that the damages awarded were contrary to the overwhelming weight of evidence. Parham and Rice filed a separate "Motion for Judgment Notwithstanding the Verdict, or, in the Alternative, Motion for a New Trial, or in the Alternative, Motion for Remittitur/ Motion to Amend the Judgment[,]" arguing that the verdict was against the manifest weight of evidence; the award of $1,603,712 for noneconomic damages was excessive as a matter of law; the jury verdict was inflamed by bias, passion, and prejudice; expert and lay testimony should have been struck at trial; and the trial court failed to give two jury instructions. The trial court denied all motions. Ballard, Parham, and Rice appealed.
¶ 11. The parties framed the issues as follows:
¶ 12. Issues one, two, and five are dispositive and require a new trial. Thus, we decline to address issues three and four.
¶ 13. This Court applies an abuse-of-discretion standard when reviewing the grant or denial of a motion for a new trial, the admission or exclusion of evidence, and discovery matters. United Servs. Auto. Ass'n v. Lisanby, 47 So.3d 1172, 1176 (Miss.2010) ("The standard of review for the grant or denial of a motion for a new trial is abuse of discretion.") (citations omitted); Rebelwood Apartments RP v. English, 48 So.3d 483, 490 (Miss.2010) ("[t]his Court reviews the admission or exclusion of evidence under an abuse-of-discretion standard of review."); Palmer v. Volkswagen of America, Inc., 904 So.2d 1077, 1090 (Miss.2005) ("[o]nly in cases of abuse of discretion will we reverse a trial court's ruling on discovery matters.").
¶ 14. We find that the trial court abused its discretion by allowing Glover to testify despite numerous discovery violations, including failure to timely disclose the substance of Glover's expected testimony and to seasonably supplement discovery responses, and allowing the witness to give previously undisclosed testimony at trial. Mississippi Rule of Civil Procedure 26(b)(4) provides that "[a] party may through interrogatories require any other party to [1] identify each person whom the other party expects to call as an expert witness at trial, [2] to state the subject matter on which the expert is expected to testify, and [3] to state the substance of the facts and opinions to which the expert is expected to testify and [4] a summary of the grounds for each opinion." Miss. R. Civ. Proc. 26(b)(4)(A)(i). Additionally, Rule 26(f) provides that "a party who has responded to a request for discovery with a response that was complete when made... is under a duty seasonably to supplement that party's response with respect to any question addressed to ... the subject matter on which [a person expected to be called as an expert witness] is expected to testify, and the substance of the testimony." Miss. R. Civ. Proc. 26(f). We have provided that "[t]he failure seasonably to supplement or amend a response is a discovery violation that may warrant sanctions, including exclusion of evidence." Hyundai Motor Am. v. Applewhite, 53 So.3d 749 (Miss.2011) (citation omitted).
¶ 15. The Ohazurikes failed to comply with Rule 26. In their original designation of experts, they named Glover as an expert witness and identified the subject matter of her opinions, but failed to state the substance of the facts and opinions to
¶ 16. We find that the trial court abused its discretion by admitting opinion testimony of Glover, Johnson, and Lightheart
Miss. R. Evid. 702. We have explained that:
Miss. Transp. Comm'n v. McLemore, 863 So.2d 31, 38 (Miss.2003) (citations omitted).
¶ 17. We find that, even if the discovery violations discussed supra had not occurred, the trial court abused its discretion by admitting Glover's testimony, because her testimony wholly and completely failed to satisfy the requirements of Rule 702. Glover was tendered as an expert in the field of economics. We find that Glover based her lost-profit estimates on unsupportable facts and data, and they were not the product of reliable principles and methods, properly applied. Thus, her testimony failed to satisfy the requirements of Rule 702.
¶ 18. At trial, Glover testified that she had prepared two calculations of Ohazurike's future lost profits. For her $15.6 million estimate, Glover reduced Ohazurike's business-plan estimate that he would sell up to 400,000 units in the first year to 350,000 units (150,000 units of the Awareness game and 200,000 of the Stock Market game at per-unit prices ranging from $16 to $21). Ignoring actual business losses suffered and a history of meager sales over roughly fourteen years, she opined that Ohazurike would sell increasing quantities of the games after the first year, and even applied a growth rate for the failing enterprise. Glover discounted her projected forecasts to present value to arrive at $15.6 million in lost profits.
¶ 19. We find that both of Glover's ipse dixit estimates failed to satisfy the requirements of Rule 702 that expert opinions must be based on sufficient facts and data — not illusions — and must apply reliable principles and methods. We have provided that "we will not allow the only basis for an award of damages to be the injured party's estimate of the extent to which he was injured." Frierson v. Delta Outdoor, Inc., 794 So.2d 220, 226 (Miss. 2001). Glover's estimate of $15.6 million
¶ 20. For the first time at trial, Glover offered another estimate of $2.85 million lost profits. Glover employed the following simple arithmetic formula:
She derived the price of $30 per unit by finding a single unit of Insight for sale as a "collectible" on Amazon.com. She based her 5,000 unit figure for each of the nineteen damaged games based on Ohazurike's pre-event sales of 5,000 units each of Insight and Challenge, over nearly a decade.
¶ 21. Once again, Glover failed to base her $2.85 million estimate on actual historical facts and data and failed to apply reliable principles and methods. The estimate was not based on accurate facts and data, but rather was an amalgamation of sporadic past unit sales, a current price for an out-of-print game for sale as a "collectible," and an assumption, undocumented by historical performance, that Ohazurike would have sold 5,000 units each of all nineteen of the damaged games in the first year alone. Glover's use of past unit sales to establish lost profits was not reliable. A business's ability to generate sales is not the same as its ability to generate profits. The record reveals that Ohazurike never generated a profit from selling games. The "collectible" price of thirty dollars likewise was based on improper data, for there was no evidence that Ohazurike had ever sold a game at that price. The thirty-dollar figure was contradicted by other testimony that Ohazurike had sold Insight and Challenge in the $5-$10 per unit range. There was no basis in fact or available data for the unfounded assumption that Ohazurike would
¶ 22. We likewise find that Glover did not use reliable principles and methods to reach her $2.85 million estimate, as the use of sporadic past unit sales combined with a current "collectible" price, absent deductions for costs and expenses, absent financing, and not reduced to present value, was a wholly unreliable method to calculate future profits.
¶ 23. Further, Glover failed to discount the ill-conceived future value to present value, as required for an award of damages for lost profits. See Turpentine & Rosin, 188 So.2d at 258 (providing that "future profits should always be discounted at an appropriate rate to arrive at present value."). Glover's failure to discount to present value was equivalent to assuming that all sales would occur in the first day — i.e., that Ohazurike would sell 5,000 units of each of the nineteen games — a total of 95,000 units — in the first day, and zero units thereafter, even though his past game sales consisted of 10,000 units over approximately eight years. Glover assumed
¶ 24. While we find that Johnson's testimony regarding board games was relevant to a fact in issue, we find that the cost to convert Ohazurike's video-game concepts into board games strayed from recoverable damages. The cost of converting video-game concepts into board games is not a restoration of the games to their pre-damage condition, but is a fundamental change in the nature of the games. Any damages award based on the cost of converting video-game concepts into board games would constitute unjust enrichment rather than compensate Ohazurike for the fair market value of his claimed loss. See Miss. Power Co. v. Harrison, 247 Miss. 400, 424, 152 So.2d 892, 903 (1963) ("in computation of damages a person is to be made whole, or complete satisfaction is to be made, or he is to recover the value of the property destroyed; it is never contemplated that the injured party should realize a profit from the damages sustained."). Thus, Johnson's testimony regarding video games was not permissible in measuring restoration costs. The trial court abused its discretion by allowing his testimony as to the four video games.
¶ 25. We further find that the trial court abused its discretion by finding that Johnson used reliable principles and methods to determine the restoration cost of the board games. Johnson assumed the same time and cost to restore every game, regardless of the stage of creation of each game before the event (i.e., how close it was to being production ready) and the type of each game (card, board, or video). Johnson's blanket restoration-cost estimate could not have accurately estimated restoration damages.
¶ 26. More importantly, the fact-finder was never furnished the fair market value at time of loss of any game. If restoration costs were less than the fair market value as of the date of the loss, then the jury could award restoration damages; however, if restoration costs exceed fair market value at the time of loss, the injured party is entitled only to the fair market value. Additionally, the plaintiff cannot recover both lost profits and the expense of restoration. See R.K. v. J.K., 946 So.2d 764, 777 (Miss.2007) ("It is well known that this state does not endorse double recovery."); Ciba-Geigy Corp. v. Murphree, 653 So.2d 857, 873 (Miss.1994) ("the awarding of profits and expenses is a `double recovery.'"); Miss. Power Co. v. Harrison, 247 Miss. 400, 424, 152 So.2d 892, 903 (1963) ("in computation of damages a person is to be made whole, or complete satisfaction is to be made, or he is to recover the value of the property destroyed; it is never contemplated that the injured party should realize a profit from the damages sustained.") (citation omitted). Without testimony establishing the fair market value of each game pre-event, Johnson's testimony alone was insufficient to determine whether the estimate of restoration costs exceeded Ohazurike's actual loss. Thus, we find that the trial court abused its discretion in admitting
¶ 27. The Defendants argue that Lightheart's testimony was neither relevant nor reliable. Lightheart was qualified as an expert in accounting and valuation analysis, but his testimony regarding a 2006 valuation of Upstart, prepared to assist Ohazurike in obtaining financing to manufacture and produce games, was based on Ohazurike's flawed business plan rather than available historical facts and data, which Lightheart acknowledged he relied upon ninety percent of the time, except in valuing new enterprises. Ohazurike's enterprise was formed nearly twenty years before the report was prepared.
¶ 28. Lightheart testified that he was not attempting to prove lost profits. Lightheart's pre-event valuation was based on Ohazurike's business plan for six games, including Insight and three other games that were not among the nineteen damaged games. Lightheart testified that his valuation did not calculate the fair market value of any particular game.
¶ 29. We further find that Lightheart's opinion was not reliable under Rule 702, because, according to his own testimony, he did not use reliable principles and methods or base his opinion on sufficient facts and data for his opinion to constitute an accurate portrayal of lost profits. We have provided that "lost profits will be allowed only if their loss is proved with a reasonable degree of certainty." Cont'l Turpentine & Rosin Corp. v. Gulf Naval Stores Co., 188 So.2d 257, 258 (Miss.1966) (citation omitted). On cross-examination, Lightheart testified that his valuation was based on projections from Ohazurike's business plan. Thus, like Glover's $15.6 million estimate, Lightheart's valuation was based on unreliable, lofty estimates and unfounded assumptions provided by Ohazurike. Lightheart acknowledged that historical data is a better basis for a valuation. He provided that his valuation would have been much lower if he had used historical data, and that he did not know how much lower. We conclude that the trial court abused its discretion by admitting such unreliable testimony.
¶ 30. We find that the trial court abused its discretion by allowing Chance to
¶ 31. We find that Chance's testimony that he could have brokered 60,000 units of the "Stock Market" game constituted an inadmissible opinion, not lay-witness fact testimony.
Roberts v. Grafe Auto Co., 701 So.2d 1093, 1098 (Miss.1997). Chance, a friend of Ohazurike and a mortgage broker, offered no background information to qualify as an expert witness under Rule 702.
¶ 32. Thus, we return to Rule 701, which addresses the admissibility of a lay opinion as follows, in relevant part:
Miss. R. Evid. 701.
¶ 33. After careful examination of the evidence presented for the personal injury claims, the Court finds the evidence insufficient to support the damages awarded and, thus, the trial court abused its discretion by denying the Defendants a new trial on damages. We will reverse a trial court's denial of a motion for a new trial when, "upon review of the entire record, we are left with a firm and definite conviction that the verdict, if allowed to stand, would work a miscarriage of justice." White v. Yellow Freight System, Inc., 905 So.2d 506, 511 (Miss.2004) (citation omitted). We conclude that a verdict based on personal injury damages would work a miscarriage of justice.
¶ 34. We likewise find that lost profits were not proven with a reasonable degree of certainty, and that no rational trier of fact could have found lost profits beyond a reasonable doubt. Accordingly, we conclude that a verdict based on lost-profits damages also would work a miscarriage of justice. Cont'l Turpentine & Rosin Corp. v. Gulf Naval Stores Co., 188 So.2d 257, 258 (Miss.1966) ("[i]n both tort and contract actions, lost profits will be allowed only if their loss is proved with a reasonable degree of certainty.") (citation omitted).
¶ 35. For the same reasons that we find Glover's testimony unreliable under Rule 702, we find that no testimony was offered to prove with a reasonable degree of certainty that Ohazurike lost profits. See supra ¶¶ 16-22. Furthermore, Glover's use of past unit sales for her $2.85 million estimate was not only insufficient and unreliable — it was also misleading. We have found that a misleading use of past profits to project future profits is "legally insufficient to undergird a damages award...."
Miss. Power Co. v. Harrison, 247 Miss. 400, 433, 152 So.2d 892, 908 (1963) (citation omitted). Even more clearly, then, Glover's use of past unit sales combined with an invalid price (resulting in an overly optimistic estimate of anticipated future gross receipts) was within the realm of
¶ 36. Based on the foregoing analysis, we reverse the judgment of the trial court and remand the case to the Hinds County Circuit Court for a new trial solely on damages.
¶ 37.
CARLSON AND DICKINSON, P.JJ., LAMAR, CHANDLER, PIERCE AND KING, JJ., CONCUR. KITCHENS, J., CONCURS IN RESULT ONLY WITH SEPARATE WRITTEN OPINION. WALLER, C.J., NOT PARTICIPATING.
KITCHENS, Justice, concurring in result only:
¶ 38. While I am unable to endorse much of the majority's reasoning, I do agree that this case should be reversed and remanded for a new trial on damages. With utmost respect to my colleagues in the majority, I view its protracted opinion as taking us too far down the heretofore-forbidden path of evidence weighing and improperly undertaking the fact finder's role of determining the weight and worth of testimony, and even opining about the credibility of certain witnesses, so much so that it brings us to the brink — if not beyond — of morphing ourselves into a supreme jury instead of a supreme court. I believe that a better course would have been to reverse and remand the case on the basis of the plaintiffs' having neglected to disclose the substance of Dr. Glenda Glover's expected expert testimony in a timely manner, or, having failed in that, of seasonably supplementing their discovery responses. Beyond that, the majority's lengthy analysis is, in my opinion, unnecessary and inappropriate. Accordingly, I concur in result only.
The Ohazurikes attached a copy of Glover's curriculum vitae (CV) as an exhibit to their designation of experts and provided that "[a] copy of Dr. Glover's report will be forwarded once it is received."
On July 8, 2010, Ballard filed a supplemental motion to exclude Glover's testimony, arguing that (1) Glover was not properly designated as an expert, because no information was provided regarding the substance of the facts and opinions to which she was expected to testify within the discovery deadlines set by the trial court and (2) Glover's testimony did not meet the reliability requirements for expert testimony. The record does not include any written response to the July 8 supplemental motion. Motions to exclude experts were argued on the morning of trial.