Summary of a Recent
Judicial Development in
Commercial Transactions

Lost Profits Instruction to Determine Damages for Ruined Cherry Orchard

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Waymon Howze Farms v. Jazer Enterprises, Inc., No. F053466, 2008 WL 4717039 (Cal. Ct. App. Oct. 28, 2008), the California Court of Appeals held that past profits were not necessary to establish prospective profits in a lost profits analysis, and found that the appellant's challenge of a lost profits jury instruction was barred by the doctrine of invited error as the appellant itself proposed the instruction.

Background

Jazer Enterprises (Jazer) was hired to girdle Waymon Howze Farms' (Howze) cherry orchard, and in doing so negligently caused the loss of the entire 29-acre orchard. Id. at *2. At trial, Jazer submitted its proposed jury instruction including a special lost profits instruction, which stated that "[e]vidence of lost profits must be unspeculative, and in order to support a lost profits award the evidence must show with reasonable certainty both their occurrence and the extent thereof." Id. at *6. The instructions were agreed upon by the parties and submitted to the jury, which then awarded Howze $1,732,592 in damages, the exact amount of lost profits calculated by Howze's expert witness, and Jazer appealed the amount of damages. Id. at *4-5

Arguments

Jazer argued that the trial court erred by submitting a lost profits measure of damages to the jury, because that measure did not limit the award to an amount that would have made Howze whole, and claimed that the amount awarded would actually pay for two or more orchards similar to the one injured. Id. at *5.

Howze argued that the doctrines of invited error and waiver barred Jazer's argument because Jazer itself had agreed to a lost profits instruction, gambling that it could convince the jury that lost profits had not been sufficiently proven; therefore, Jazer had forfeited its right to challenge the award on that basis. Id.

Analysis and Holdings

The court found that Jazer had forfeited its right to challenge the lost profits instruction pursuant to the doctrine of invited error because it had submitted the instruction itself before the court ruled on its motions in limine, rather than as a defensive response to a prior adverse ruling. Id. at *7. The court also rejected Jazer's alternative argument that the trial court should have given the jury the correct instructions for damages sua sponte instead of relying on the parties, citing a Supreme Court opinion that held that "the court has no duty to instruct on its own motion," nor is it "obligated to seek out theories plaintiff might have advanced, or to articulate for him that which he has left unspoken." Id. at *8. The court further concluded that Howze had established its lost profits with sufficient certainty, holding that a showing of past profits was not required to establish prospective profits with reasonable certainty and that the "best-evidence-available" principle was not applicable in this situation. Id. at *9-11. The court therefore affirmed the lower court's judgment and upheld the damage award. Id. at *12.

The case was decided on October 28, 2008.