HDAV Outdoor, LLC v. Red Square Holdings, LLC

• Decision Date: 18 December 2019
• Docket Number: No. 77183-COA,77183-COA
• Parties: HDAV OUTDOOR, LLC, Appellant, v. RED SQUARE HOLDINGS, LLC, Respondent.
• Court: Nevada Court of Appeals

HDAV OUTDOOR, LLC, Appellant, v. RED SQUARE HOLDINGS, LLC, Respondent.

No. 77183-COA

COURT OF APPEALS OF THE STATE OF NEVADA

December 18, 2019

ORDER OF AFFIRMANCE

HDAV Outdoor, LLC appeals from a final judgment entered following a bench trial in a breach of contract action. Eighth Judicial District Court, Clark County; Elizabeth Goff Gonzalez, Judge.

In December 2013, Red Square Holdings, LLC (Red Square) and HDAV Outdoor, LLC (HDAV Outdoor) entered into a contract whereby HDAV Outdoor, in exchange for $86,480, agreed to customize an Isuzu Diesel Eco Max box truck with LED light displays that would allow Red Square to use the box truck for mobile advertising.¹ The contract provided that HDAV Outdoor would complete the customization no later than eight weeks after Red Square delivered the box truck to HDAV Outdoor. Red Square delivered the truck to HDAV Outdoor on January 7, 2014; therefore, HDAV Outdoor should have completed the customization by March 4, 2014. However, Red Square did not receive the customized truck from HDAV Outdoor to use for advertising until July 15, 2014.

As a result, Red Square filed suit against HDAV Outdoor alleging, amongst other claims, breach of contract, and requesting various damages, including lost-profit damages. The case proceeded to a one-day bench trial, during which the district court awarded Red Square $60,000 forits lost profits, which it later reduced to $45,000 after a subsequent hearing on HDAV Outdoor's motion for reconsideration.²

The sole issue presented on appeal is whether the district court abused its discretion by awarding Red Square $45,000 in lost profits. HDAV contends that the lost-profit damages should be reversed for lack of evidence and inconsistencies in the court's findings. However, the only objection HDAV's counsel made at trial was that Red Square's liaison, Mohamood Razack, lacked the requisite foundation to testify in support of these damages.³ We, therefore, decline to address any of HDAV's other arguments on appeal.⁴

During trial, Razack testified that, in his "liaison" position, he sought vendors on Red Square's behalf as a "salesperson," and assisted in establishing Red Square's price schedule for advertisement contracts withvendors. Razack further testified that Red Square had four types of advertising contracts at various rates.⁵

Under these pricing conditions, Razack testified that he had negotiated advertising contracts with various vendors, ranging from large-scale vendors to local businesses. Razack stated that, because HDAV Outdoor had not completed the customization on the truck by March 4, 2014, Red Square suffered lost profits from the advertising contracts it was not able to execute. More specifically, Razack stated that he conservatively estimated Red Square lost $12,000 per month in profits. We recognize that Razack did not clearly explain how he calculated this estimate, nevertheless, he testified that he was "reasonably certain" that Red Square suffered these lost profits based on HDAV's "untimely and defective work." The district court ultimately awarded $10,000 per month for the period of time that HDAV Outdoor delayed completing the customized truck.

Specifically, the district court awarded Red Square consequential damages in the amount of $45,000 in lost profits for the several month delay in completing the customized truck, which resulted in lost advertising opportunities and reduced profits to Red Square. The district court in making its decision recognized that Red Square failed to provide any evidence of its operating costs or written advertisingagreements in order to evaluate its lost-profit damages. Nevertheless, we affirm the judgment of the district court.

We review a district court's factual findings for an abuse of discretion and will not disturb them unless they are clearly erroneous or not supported by substantial evidence. Ogawa v. Ogawa, 125 Nev. 660, 668, 221 P.3d 699, 704 (2009). "Substantial evidence is evidence that a reasonable mind might accept as adequate to support a conclusion." Witemaine v. Aniskovich, 124 Nev. 302, 308, 183 P.3d 137, 141 (2008).

Damages resulting from a breach of contract must be "reasonably foreseeable at the time of the contract." Daniel, Mann, Johnson & Mendenhall v. Hilton Hotels Corp., 98 Nev. 113, 115-16, 642 P.2d 1086, 1087 (1982). "The party seeking damages has the burden of proving both the fact of damages and the amount thereof." Mort Wallin of Lake Tahoe, Inc. v. Commercial Cabinet Co., 105 Nev. 855, 857, 784 P.2d 954, 955 (1989). "[L]ost profits are generally an appropriate measure of damages so long as the evidence provides a basis for determining, with reasonable certainty, what the profits would have been had the contract not been breached." Eaton v. J.H., Inc., 94 Nev. 446, 450, 581 P.2d 14, 17 (1978). Though "damages need not be proven with mathematical exactitude, . . . the mere fact that some uncertainty exists as to the actual amount of damages sustained will not preclude recovery." Frantz v. Johnson, 116 Nev. 455, 469, 999 P.2d 351, 360 (2000).

Nevada has adopted the Restatement (Second) of Contracts § 347 (1981) as the proper method for determining lost profits. Road & Highway Builders, LLC v. N. Nev. Rebar, Inc., 128 Nev. 384, 392, 284 P.3d 377, 382 (2012). In Road & Highway Builders, the Nevada Supreme Court affirmed that compensatory damages in breach of contract cases may include an award of lost profits or expectancy damages, after taking into accountcosts or other losses avoided by not having to perform. Id. Although "the amount of . . . saving (must be) deducted from the damages that otherwise would be recoverable. . . . This rule is applicable only if the evidence indicates that plaintiff would actually save expense by the discharge of his performance; any fixed expenditures . . . are not to be taken into account." Eaton, 94 Nev. at 451, 581 P.2d at 17 (internal quotation marks omitted). Further, a trial court is entitled to consider past profits "for determining such future profits with reasonable certainty." Id. at 450, 581 P.2d at 17.

Alternatively, a court may award "standby" or "delay" damages for lost profits resulting from an inability to timely use equipment as long as the delay is attributable to the breaching party and caused the non-breaching party's lost opportunity to be extended. See, e.g., Colo. Env'ts, Inc. v. Valley Grading Corp., 105 Nev. 464, 471, 779 P.2d 80, 84 (1989) ("These losses, when foreseeable, are a natural consequence of the [breaching party's] delay, and, thus, are compensable ").

Finally, the modern trend permits lay witness testimony in support of a company's lost profits if the witness's position in the company was such that he or she possessed personal knowledge of the company's business. See, e.g., Servicious Comerciales Lamosa, S.A. de C.V. v. De La Rosa, 328 F. Supp. 3d 598, 618-19 (N.D. Tex. 2018) (permitting lay witness officer to testify on lost profits); see also Gramanz v. T-Shirts and Souvenirs, Inc., 111 Nev. 478, 485, 894 P.2d 342, 347 (1995) (permitting the corporation's shareholder and manager of corporate retail to testify regarding lost profits as long as his testimony was supported by substantial evidence and arose to more than mere speculation); Rhine v. Miller, 94 Nev. 647, 650, 853 P.2d 458, 460 (1978) ("In order to establish an adequate basis for determining the quantum of lost profits, appellant need only provide thebest evidence available to him under the facts and circumstances of the case." (internal citations omitted)).

Here, in addition to objecting to Razack's testimony, HDAV Outdoor challenges the accuracy of a number of factual findings made by the district court in awarding lost profits. For example, HDAV Outdoor notes in its opening brief that the district court found, on the one hand, that "[n]o evidence of operating costs were provided nor were any written agreements or confirmations of advertising services provided," but on the other hand awarded $45,000 in lost profits. However, HDAV Outdoor provided an incomplete record on appeal by failing to submit and properly label any of the nontestimonial evidence submitted at trial. Therefore, it is unclear from a review of the record what nontestimonial evidence the district court considered, and which evidence HDAV Outdoor disputes.

We take this opportunity to remind parties that appellants are responsible for producing an adequate appellate record, and when an "appellant fails to include necessary documentation in the record, we necessarily presume that the missing portion supports the district court's decision." Cuzze v. Univ. & Cmty. Coll. Sys. of Nev., 123 Nev. 598, 603, 172 P.3d 131, 135 (2007). When appealing a bench trial finding, the appellant must submit a trial record, which "consists of the papers and exhibits filed in the district court, the...