Brundige v. Sherwin-Williams Co., SHERWIN-WILLIAMS

• Decision Date: 13 May 1977
• Docket Number: SHERWIN-WILLIAMS
• Citation: 551 S.W.2d 268
• Parties: Woody BRUNDIGE, Appellant, v. TheCOMPANY and the Continental Insurance Company, Appellees.
• Court: Kentucky Court of Appeals

Page 268

551 S.W.2d 268

Woody BRUNDIGE, Appellant, v. The SHERWIN-WILLIAMS COMPANY and the Continental Insurance

Company, Appellees.

Court of Appeals of Kentucky.

May 13, 1977.

Hal Warren, Warren & Warren, Fulton, for appellant.

Thomas A. Nanney, Miller & Nanney, Fulton, for appellee.

Before HOGGE, WINTERSHEIMER and VANCE, JJ.

HOGGE, Judge.

This appeal arises from an action for damages allegedly resulting when appellee wrongfully enjoined appellant from operating his retail paint business. Upon motion, the Circuit Court granted summary judgment and entered an order dismissing the action.

Appellant was employed by appellee for approximately 10 years and was party to an agreement whereby he agreed not to open a competing business within 30 miles of Fulton, Kentucky for a period of one year following the termination of his employment with appellee. In June or July of 1975 Sherwin-Williams relocated their place of business to another site in Fulton. Soon thereafter appellant rented the old place of business of Sherwin-Williams and, in August, quit his employment with that company to open a business selling paint and related items at the old location. On October 16 Sherwin-Williams obtained a temporary restraining order preventing appellant from opening his paint store. On October 30 a hearing was held and the Circuit Court denied appellee's motion for a temporary injunction and ordered that the temporary restraining order be dissolved.

At that time, the Circuit Court found that appellee had failed to demonstrate that it would suffer such immediate and irreparable injury as would justify extraordinary relief, and suggested that the appropriate remedy would be an action on the contract. Appellant thereafter brought this action to recover on the injunction bond, posted by appellees, for damages suffered as a result of his being wrongfully prohibited from opening his business while the temporary restraining order was in effect, including lost profits and attorney's fees. Upon appellees' motion, a summary judgment was granted upon the grounds that lost profits are, as a matter of law, too speculative to properly be the subject of damages where a new business is involved.

Appellant claims that, if there was any uncertainty involved, it related to the amount of loss, not whether any loss was sustained. Appellees rely on the case of Holliday v. Sphar, 274 Ky. 556, 119 S.W.2d 656 (1938); wherein the court repeated the general rule that, if the business is not an established one, the anticipated profits are too remote and speculative to properly be the subject of damages.

However, the business involved in the Holliday case, supra, was a gasoline station in a time and place when the profits to be anticipated from such a business were truly speculative. The rule set forth in the Holliday, supra, case was quoted from an early Virginia case, Whitehead v. Cape Henry Syndicate, 111 Va. 193, 68 S.E. 263 (1910), involving a fishing operation which, by its very nature, is speculative. Furthermore, the court in Holliday found that the plaintiff in that case never had any previous experience in the business he proposed to conduct, and that he did not have any reasonable hope of making a profit.

A more detailed explanation of the rule is set forth in 22 Am.Jur.2d Damages § 173, at 245, n. 16, wherein it is stated Profits are denied in the case of a new business, because they fail to meet the test of certainty. If, in the particular case, it is possible to show, by competent evidence and with reasonable certainty, that profits would have been made and the amount of those profits, they can be recovered.

It may be significant that our research does not disclose that the Holliday opinion has ever been followed or even cited by our Court during the 29 years since it was written.

In the cases where the issue of lost profits has arisen, our Court has followed a more flexible standard. In two post Holliday decisions the Court has held that lost profits may, not must, be determined on the basis of past experience. Time Finance Company, Inc., v. Beckman, Ky., 295 S.W.2d 346 (1956); Eastern Kentucky Lumber & Development Company v. Waddell, Ky., 239 S.W.2d 68 (1951).

Prior to the Holliday decision, the rule in Kentucky was that recovery for lost profits was governed by the same standards as other damages; if there was any evidence, the question was for the jury. Caudill v. John P. Gorman Coal Company, 242 Ky. 294, 46 S.W.2d 93 (1932); Union Cotton Company v. Bondurant, 188 Ky. 319, 222 S.W. 66 (1920).

In the Union Cotton Company case, supra, as well as Avondale Heights Company v. Proctor, 224 Ky. 188, 5 S.W.2d 1054 (1928), the court allowed awards for lost profits despite the fact that the enterprises injured were in no way established businesses.

In the much more recent case of Kellerman v. Dedman, Ky., 411 S.W.2d 315 (1967), the Kentucky Court of Appeals once again allowed an award of lost profits to an enterprise that was in no way an established business. In that case the "business" was an auction of farm property. The plaintiffs were not auctioneers, but were engaged in the business of farming rather than in the business of selling farm machinery. The Court, nevertheless, upheld an award for lost profits where one partner in the farm had discouraged bidding. In that case, the Court, quoting from Essock v. Mawhinney, 3 Wis.2d 258, 88 N.W.2d 659 (1958), stated at page 317:

' * * * it is now generally held that the uncertainty which prevents a recovery is uncertainty as to the fact of damage and not as to its amount and that where it is certain that damage has resulted, mere uncertainty as to the amount will not preclude the right of recovery * * *'. 'The requirement of certainty...