Hardwick v. Dravo Equipment Co.

• Decision Date: 27 September 1977
• Parties: , 22 UCC Rep.Serv. 968 Donald E. HARDWICK, dba Hardwick Logging, Respondent/Cross-appellant, v. DRAVO EQUIPMENT COMPANY, a Delaware Corporation doing business as Cal-Ore Machinery Co., Appellant/Cross-respondent. . *
• Court: Oregon Supreme Court

Page 588

569 P.2d 588

279 Or. 619, 22 UCC Rep.Serv. 968

Donald E. HARDWICK, dba Hardwick Logging, Respondent/Cross-appellant, v. DRAVO EQUIPMENT COMPANY, a Delaware Corporation doing

business as Cal-Ore Machinery Co.,

Appellant/Cross-respondent.

Supreme Court of Oregon, In Banc. ^*

Argued and Submitted July 12, 1977.

Decided Sept. 27, 1977.

John R. Bakkensen, Portland, argued the cause for appellant/cross-respondent. With him on the briefs were Miller, Anderson, Nash, Yerke & Wiener, Portland.

Richard O. Thomas, Portland, argued the cause for respondent/cross-appellant. With him on the brief were Gaylord & Thomas, Portland.

BRYSON, Justice.

Plaintiff is a contract logger for Kinzua Corporation. He purchased a new Barko diesel log loader from defendant Dravo Equipment Company on September 17, 1974. Plaintiff subsequently discovered the loader had certain defects and revoked his acceptance of it on May 19, 1975. He then brought this action for breach of contract.

The jury made a special finding "that Plaintiff righfully (sic) revoked his acceptance of the Barko 350 Loader" and awarded him the following damages: return of the purchase price ($58,000); lost profits ($37,500); personal property taxes ($622.01); and insurance premiums ($877.50). The jury also awarded defendant a $6,000 setoff against plaintiff for the reasonable rental value of the loader. The trial court entered judgment on the verdict. Defendant appeals and plaintiff cross-appeals.

Defendant only appeals from that part of the judgment awarding lost profits. Also, defendant does not contest the jury's findings that plaintiff properly revoked acceptance under ORS 72.6080, ¹ nor does it contest the availability of the remedies plaintiff sought under ORS 72.7150. ²

Defendant first contends that "(t)he trial court erred in denying defendant's motions to strike plaintiff's claim for lost profits." The defendant has combined under this single assignment of error the trial court's denial of three of defendant's motions to strike plaintiff's claim for lost profits.

Defendant's first motion contended that plaintiff had not introduced sufficient evidence to justify submitting plaintiff's claim for lost profits to the jury.

We are concerned here with plaintiff's evidence relating to lost profits. This part of plaintiff's case was based largely on the testimony of his expert witness, Dr. Dennis Dykstra, whose expertise is not questioned by defendant. Generally, plaintiff chose to prove his alleged lost profits by showing how many additional logs he could have loaded during the claim period ³ if he had had the use of the Barko log loader. After determining the number of additional logs, this was multiplied by the price of the additional logs from which was subtracted the expenses in connection therewith.

Dr. Dykstra prepared for trial by examining plaintiff's records and inspecting the site of plaintiff's logging operation. As to the quantity of logs plaintiff could have loaded, Dr. Dykstra testified that the Barko loader, together with plaintiff's original loader, would have been able to load all the logs that plaintiff's existing equipment could "skid" from where the trees were felled to the loading area. With two log loaders plaintiff could have "loaded" as much as he could "skid." Thus, plaintiff's lost production would be equivalent to the difference between his total skidding capacity and his actual production with only one loader.

Dr. Dykstra determined plaintiff's skidding capacity as follows. From his inspection of the site, he determined that the average skidding distance was 700 feet. From his inspection of plaintiff's scale tickets, he determined that the average log volume was 200 board feet. From his inspection of plaintiff's seven skidding machines, and by use of a recognized formula, he determined that each machine could skid 1,000 board feet of timber in 19.25 minutes. He further testified that each machine could operate eight hours per day. On this basis he testified that each skidding machine could skid 24,960 board feet per day.

From plaintiff's records, Dr. Dykstra next testified that there were 65 1/2 working days during the claim period which, multiplied by plaintiff's seven machines, gave 458 1/2 machine days. Multiplying that figure by 24,960 board feet per machine-day, he calculated a potential total production of 9,946,560 board feet. Subtracting plaintiff's actual production of 5,897,280 board feet, he determined that plaintiff's total net lost production for the claim period was 4,049,280 board feet.

There was evidence that during the claim period plaintiff was not under a quota with the Kinzua mill and so could have sold as many logs as he could produce. He received a net payment for the logs of $22 per thousand board feet for 30 days during the claim period and $24 per thousand board feet for 35 1/2 days during the remainder of the claim period. Applying these prices to the lost production yields, he testified there was a lost gross income of $93,473.35.

On the expense element of the proof of lost profits, Dr. Dykstra testified that plaintiff would have needed four additional employees, working 13 hours per day. He assumed that plaintiff would pay these employees time and one-half for overtime and that he would have to pay 24 percent above wages for payroll taxes and insurance. At plaintiff's wage scales, the additional labor costs would have amounted to $27,040.30.

Dr. Dykstra next calculated plaintiff's equipment costs by using a formula accepted in the forest industry that such costs are no more than 90 percent of the depreciation of the equipment. These costs, for the loaders and the skidding machines, would have been $9,759.24. Finally, Dr. Dykstra made an additional adjustment to lost profits of $937, reflecting the depreciation of a new loader plaintiff bought and an income tax credit for purchasing the machine.

Based on this data, Dr. Dykstra testified, over defendant's objection, that plaintiff's net lost profits were $57,610.81. In order to verify this estimate he also testified that he had examined plaintiff's actual production with two loaders. The comparison periods were from December 1, 1975, through February 15, 1976, and in June, 1976. Both periods were after the claim period. Dr. Dykstra chose these periods because, as in the claim period, plaintiff was not under a quota. In Dr. Dykstra's opinion plaintiff's production during these two periods supported his estimate of plaintiff's lost production during the claim period.

With one exception, pertaining to average log volume as hereinafter discussed, defendant made no objection to the admissibility of any of Dr. Dykstra's testimony. Instead, defendant moved to strike plaintiff's claim for lost profits on three grounds.

Defendant first argues that the evidence failed to support plaintiff's claim for lost profits. In Kwipco, Inc. v. General Trailer Co., 267 Or. 184, 188, 515 P.2d 1317, 1318 (1973), we stated the test for evidence needed to support a claim for lost profits:

"This court has adopted the rule that damages are recoverable for loss of future profits only to the extent that the evidence affords a sufficient basis for estimating the amount of such profits with reasonable certainty. (Douglas Const. v. Mazama Timber, 256 Or. 107, 115, 471 P.2d 768 (1970).) As stated more recently, ' * * * the essential ingredient of proof of lost profits to a reasonable certainty is supporting data.' (Verret v. Leagjeld, 263 Or. 112, 115, 501 P.2d 780 (1972).)" (Footnotes omitted.)

Plaintiff's evidence met this test. The "supporting data" supplied by Dr. Dykstra was from his personal inspection of the site, from his inspection of plaintiff's records, and from his expert knowledge. With the one exception, hereinafter discussed, all of plaintiff's testimony was admitted without objection and therefore its admissibility cannot be challenged on appeal. Shields v. Campbell, 277 Or. 71, 77, 559 P.2d 1275 (1977). This testimony, outlined above, was sufficiently detailed to prove lost profits to a reasonable certainty.

Defendant's second reason for striking plaintiff's claim for lost profits was that the comparison testimony by the plaintiff's expert was irrelevant because the comparison periods were after the claim period. Even without the comparison testimony, plaintiff's expert had provided sufficient supporting data, as heretofore related, to support the claim for lost profits. Assuming, arguendo, the comparison testimony to be irrelevant, plaintiff still had sufficient evidence to support his claim, and the trial court did not err in refusing to strike the claim.

Defendant's final argument for its motion to strike was that the expert failed to consider plaintiff's actual production under other circumstances as bearing on the accuracy of the expert's estimate of plaintiff's lost profits. For example, during the claim period plaintiff hired a second loader for eight or nine days, and during that time plaintiff's total production was not as high as Dr. Dykstra testified it would have been if plaintiff had two loaders. However, this and defendant's other examples of factors that Dr. Dykstra did not consider were matters going only to the weight of his testimony. "The general rule is that the reasoning and facts upon which an expert expresses his opinion goes only to its weight." Chance v. Alexander, 255 Or. 136, 139, 465 P.2d 226, 227 (1970). Defendant's cross-examination of Dr. Dykstra brought out these possible flaws in his analysis, thus presenting a question for the jury. The testimony elicited on cross-examination did not, however, require striking plaintiff's claim. Thus, the trial court did not err in allowing this issue to go to the jury.

Defendant also argues that plaintiff failed to mitigate his damages, as required by the avoidable consequences rule of ORS 72.7150(2)(a), by failing to "cover" or obtain another loading machine. However, ...