This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).







Steve Davis, et al.,





Forest River, Inc.,



Filed April 30, 2002

Affirmed in part, reversed in part, and remanded

Lansing, Judge


Becker County District Court

File No. CX001228



John C. Irby, Burgum and Irby, 746 Front Street. P.O. Box 308, Casselton, ND  58012-0308 (for respondents)


Lance R. Heisler, Heisler Law Office, 4071/2 Division Street, P.O. Box 740, Northfield, MN  55057 (for appellant)


            Considered and decided by Randall, Presiding Judge, Lansing, Judge, Klaphake, Judge.


U N P U B L I S H E D   O P I N I O N




            After a boat manufacturer terminated its two-month-old dealership agreement with its retailer, the retailer sued for breach of contract, claiming both lost profits and reliance damages.  A jury found that the boat manufacturer had breached the agreement and that the retailer’s damages amounted to $75,000.  In this appeal, limited to damages, we agree with the manufacturer’s claim that the evidence is insufficient to support lost-profit damages.  We reverse and remand for the district court to consider a conditional remittitur, reducing the award to the amount of proven reliance damages, or, in the alternative, to grant a new trial on damages. 



            Steve and Paulette Davis own the Boat Dock, a boat-repair business in Detroit Lakes.  In early June 1999, the Davises applied for a dealership with Odyssey Pontoons, one of the product lines owned by Forest River, Inc., an Indiana corporation.  The Davises have substantial experience with boat repair but no significant experience with boat sales.  In late June 1999, Forest River approved the application and, according to the Davises, promised them an exclusive 75-mile selling radius around their place of business.  Two months later, in late August, Forest River terminated the dealership agreement with the Davises and transferred the dealership rights to an established boat dealer located about nine miles from the Davises. 

The Davises sued Forest River, and the breach-of-contract claim was tried to a jury.  Steve Davis testified he had incurred reliance damages in setting up his dealership, including out-of-pocket expenses and lost time from his boat-repair business, amounting to about $20,000.  He also claimed about $90,000 in lost profits.  He based the lost profits on his projected sales of pontoon boats and accessories for the model year 2000, running from August 1999 through August 2000.  Both parties agreed that one year was the typical duration for a dealership agreement.

To support his lost-profit claim, Steve Davis testified he would have sold 25 pontoon boats in a one-year period.  He estimated that he would receive $3,000 profit on each pontoon, but provided no costs, retail prices, or profit studies from other dealers to support either the number of estimated sales or the expected profit.  An expert retained by the Davises testified that the pontoon market in Detroit Lakes was “very strong,” but provided no basis for the opinion or any written documentation.  The expert’s assessment was also addressed to the pontoon market in general and not to the specific market for Odyssey pontoons.

The evidence showed that the established dealer that obtained the Odyssey dealership in August 1999 had sold only 11 Odyssey pontoon boats in the year and one half that it served as an Odyssey dealer.  The Davises produced no evidence on the profit margins of the new dealer’s sales and did not identify which of the 11 boats were sold in the one-year period during which the Davises would have had the dealership.  Steve Davis claimed that he had made $5,500 in profit on the sole Odyssey pontoon he sold in 1999 before his dealership was terminated, but, again, he provided no sales slip, receipt, or other written documentation to support this figure.

Davis’s remaining testimony included his opinion that he would have sold trailers and boat lifts with about half of the pontoons and made $400-$500 profit on each accessory (without documentation of the cost, typical retail price, or market for these accessories); that he would net $1,500 profit on any trade-in that was part of the sales transaction, but he acknowledged that he could not predict which transactions would include trade-ins; and that he may have provided winterization ($80) and storage ($175) for the new pontoon boats he sold.  The Davises’ expert testified that a dealer would typically sell accessories with a new pontoon but did not offer an opinion on how often this would happen or the frequency with which it was likely to occur in the Detroit Lakes market.  Forest River objected to the nature and foundation of the damages testimony during the course of the trial.

Following the jury’s verdict, Forest River moved for a new trial on damages or remittitur.  The district court denied the motion without a written memorandum and Forest River appeals.



We review the denial of a motion for a new trial to determine whether it violates a clear legal right or constitutes an abuse of discretion.  LaValle v. Aqualand Pool Co., 257 N.W.2d 324, 328 (Minn. 1977).  We are not free to set aside a verdict merely because we would have ruled differently or believe that the jury should have drawn different inferences and conclusions from the conflicting testimony.  Fireman’s Fund Ins. Co. v. Aalco Wrecking Co., 466 F.2d 179, 186-87 (8th Cir. 1972) (applying Minnesota law).  A new trial may only be ordered to prevent injustice or when the verdict strongly conflicts with the great weight of the evidence.  Id. at 186.

On appeal, Forest River does not challenge that part of the jury verdict that found it liable for breaching the dealership contract, but claims that the evidence was too speculative to support a new-business, lost-profit damage award.  Speculative, remote, or conjectural damages are not recoverable at law.  Cardinal Consulting Co. v. Circo Resorts, Inc., 297 N.W.2d 260, 267 (Minn. 1980).  To recover, a claimant must prove the fact of loss to a reasonable, although not absolute, certainty.  Leoni v. Bemis Co., 255 N.W.2d 824, 826 (Minn. 1977).  At trial, the Davises claimed both lost-profit damages and reliance damages for their time and expense in setting up the terminated dealership.

Lost-profit damages protect the “expectation interest” of the non-breaching party, putting the party in the same position as if the contract had been fully performed.  Restatement (Second) of Contracts § 344 (1981).  Reliance damages, on the other hand, protect the reliance interest of the nonbreaching party, putting one in the same position as if the contract had never been made.  Id.  Reliance damages and expectation damages are alternative, mutually exclusive remedies; recovery under both theories would result in double recovery.  See id. cmt. a, § 349 cmt. a (1981); see, e.g., Nat’l Controls Corp. v. Nat’l Semiconductor Corp., 833 F.2d 491, 499-500 (3rd Cir. 1987) (discussing reliance damages as an alternative remedy to lost profits). 

The Davises claimed both reliance damages and lost-profit expectation damages, and the jury was not requested to separate these two categories of damages.  The claimed reliance damages amounted to approximately $20,000; the claimed lost-profit damages amounted to about $90,000.  Thus, the jury’s finding of $75,000 damages was either wholly lost-profit damages or a combination of lost-profit and reliance damages, but not only reliance damages.  Thus, we first analyze whether the evidence was sufficient to support $75,000 in lost-profit damages.

Lost profits may be recovered if they are the natural and probable consequences of the wrongful act and their amount is shown with a reasonable degree of certainty and exactness.  Cardinal Consulting, 297 N.W.2d at 266.  A new business is not precluded from claiming lost profits; but the evidence presented must remove the claimed profits from the “realm of speculation” and must be certain enough to support such an award.  Id. at 267(citations omitted). 

In Cardinal Consulting, the benchmark case for new-business, lost-profit claims, the supreme court upheld lost-profit damages on evidence that demonstrated the new business owners had extensive prior experience in the same type of business, the owners were subsequently successful in the new business, a proven market existed for the service the new business provided, and comparable businesses that were similarly structured had been successful.  Id.  Generally, the evidence on each of these factors would include detailed information to reinforce its non-speculative nature, such as expert testimony, economic and financial data, market surveys and analyses, and business records of similar enterprises.  Restatement (Second) of Contracts § 352 cmt. b (1981); cf. Rancho Pescado, Inc. v. N.W. Mut. Life Ins. Co., 680 P.2d 1235, 1247 (Ariz. Ct. App. 1984) (despite testimony from several experts and submission of feasibility study, evidence insufficient to support new-business, lost-profit claim when it failed to substantiate speculative damages).

After a careful and thorough review of the record, we are compelled to agree that the evidence presented at trial was insufficient to support an award of lost profits to this new dealership.  The Davises attempted to prove lost profits through comparison to a similar business that obtained the dealership after the Davises.  The Davises produced evidence that the successor dealership was able to sell 11 Odyssey pontoons in a one-and-one-half years, but did not show which of these sales occurred within the year for which the Davises were claiming damages.  In any event, this number is well below the estimated 25 boats Davis claims that he would have sold. 

The Davises also failed to produce evidence that the successor dealership is a comparable business; in fact, the undisputed evidence showed that, unlike the Davises, the successor dealer had an established boat and pontoon sales operation and was located on Highway 10, a major highway leading into Detroit Lakes.  The Davises did not, despite the availability of depositions and subpoenas, produce any evidence on the successor dealership’s profit on the 11 Odyssey pontoons it sold or whether trailers or lifts were sold with them.  The Davises developed no concrete evidence to support their speculative projections of claimed lost profits.

The evidence also fails to support the alternative method for proving new-business, lost-profit damages:  skill and experience of the owner coupled with a proven market.  Cardinal Consulting, 297 N.W.2d at 267.  While Steve Davis had training and solid experience in engine repair, the Davises had no experience selling new boats or operating a boat dealership.  Nor did the Davises show a proven existing market for 25 Odyssey pontoons in Detroit Lakes during the model year 2000.  The Davises’ expert testified that the pontoon market was “very strong” in Detroit Lakes, but this broad characterization did not relate to a specific type or quality of pontoons or accessories and provides little basis for projected sales of 25 pontoons between August 1999 and August 2000.  Furthermore, the actual sales from the established, successor dealership amounted to less than half that number over one-and-one-half years.  The record is also devoid of any evidence of profit from the sales except for Davis’s stated belief that he could net $3,000 or more on each sale.

Davis acknowledged that if he had retained the dealership, he would have had additional expenses for more advertising, would have to have added other salespeople by the following year, and may have had to enlarge and improve his current facilities.  But the Davises provided no numbers or estimates on these additional expenses that would have been incurred had he kept the dealership.  See Cent. Sec. & Alarm Co. v. Mehler, 918 P.2d 1340, 1347 (N.M. Ct. App. 1996) (noting plaintiff holds burden of proving incremental expenses that would have been necessary to produce the claimed lost profits).  Thus, the attempted proof of damages failed to show any projected expenses that must necessarily be subtracted from the projected income to allow the jury to calculate and award a supported, nonspeculative, lost-profit claim. 

Although we conclude the evidence is insufficient to support an award of lost profits, we conclude that it is sufficient to support an award of reliance damages.  Reliance damages include expenditures made in preparation for contract performance, minus any loss the injured party would have suffered had the contract been performed.  Restatement (Second) of Contracts § 349 (1981).  Reliance damages do not generally include expenditures made prior to contract formation.  See Drysdale v. Woerth, 153 F.Supp.2d 678, 683-84 (E.D. Penn. 2001) (renovation expenditures incurred prior to commencement of the lease cannot be claimed as reliance damages).  The Davises’ reliance damages may, however, need further explication with respect to the timing of the dealership agreement and the timing and amounts of the reliance damages

We remand for the district court to consider a conditional remittitur reducing the liability amount to the proven reliance damages.  If the Davises do not agree to the conditional remittitur as determined by the district court, then the district court should order a new trial limited to reliance damages.  See Easton Farmers Elevator Co. v. Chromalloy Am. Corp., 310 Minn. 568, 578, 246 N.W.2d 705, 712 (1976) (directing district court to order conditional remittitur, or a new trial on damages if plaintiff did not agree to conditional remittitur, when jury awarded lump-sum damages and evidence did not support one class of claimed damages). 

Because we reverse and remand on these grounds, we do not address Forest River’s alternative arguments. 

            Affirmed in part, reversed in part, and remanded.