Quad-States, Inc. v. Vande Mheen

• Decision Date: 07 June 1985
• Docket Number: INC,No. 84-165,QUAD-STATE,84-165
• Parties: , a Nebraska corporation, Appellee, v. Gilbert VANDE MHEEN, Appellant.
• Court: Nebraska Supreme Court

Page 795

368 N.W.2d 795

220 Neb. 161

QUAD-STATES, INC., a Nebraska corporation, Appellee, v. Gilbert VANDE MHEEN, Appellant.

No. 84-165.

Supreme Court of Nebraska.

June 7, 1985.

Syllabus by the Court

1. Directed Verdict. On a motion for a directed verdict, the moving party is deemed to have admitted as true all the material and relevant evidence admitted which is favorable to the party against whom the motion is directed, and the party against whom the motion is directed is entitled to the benefit of all proper inferences which can reasonably be deduced therefrom.

2. Motions to Dismiss: Evidence: Trial. Where the evidence is sufficient to sustain a verdict in favor of the plaintiff, it is the duty of the trial court, on the motion of the defendant, to dismiss the action.

3. Breach of Contract: Damages. As a general rule, one injured by a breach of contract is entitled to recover all of his damages, including the gains prevented as well as losses sustained, provided they are reasonably certain and such as might naturally be expected to follow the breach.

4. Breach of Contract: Restrictive Covenants: Damages. Broadly speaking, the amount recoverable for the breach of a covenant not to compete is the loss sustained by the covenantee as a natural result of the breach.

5. Breach of Contract: Restrictive Covenants: Damages: Proof. The fact that the damages flowing from the breach of a covenant not to compete are not susceptible of exact computation will not preclude recovery; however, in order to recover substantial damages, a plaintiff must furnish sufficient data to enable the trier of fact to estimate the actual damages with a reasonable degree of certainty and exactness; if a plaintiff fails to so do, he can nevertheless, if there is evidence of a specific monetary loss, recover a nominal sum.

6. Damages: Trial: Evidence. It is the duty of a trial court to refrain from submitting to a jury the issue of damages when the evidence is such that it cannot determine such issue except by indulging in speculation and conjecture.

David L. Updegraff of Qualley & Larson, Omaha, for appellant.

Sam S. Killinger and Michael W. Ellwanger of Kindig, Beebe, Rawlings, Nieland & Killinger, Sioux City, Iowa, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

CAPORALE, Justice.

Appellee, Quad-States, Inc., sued appellant, Gilbert Vande Mheen, for damages resulting from Vande Mheen's breach of a covenant not to compete executed in connection with the sale of Vande Mheen's business to Quad-States. Judgment was entered on the verdict of $615,833.51 in favor of Quad-States. Among Vande Mheen's assignments of error in this appeal is the trial court's failure to sustain his motion for a directed verdict, made at the close of all the evidence, on the basis that Quad-States failed to prove its damages with the requisite degree of certainty. We reverse and remand with the direction that the cause be dismissed.

We observe that on a motion for a directed verdict, the moving party is deemed to have admitted as true all the material and relevant evidence admitted which is favorable to the party against whom the motion is directed, and the party against whom the motion is directed is entitled to the benefit of all proper inferences which can reasonably be deduced therefrom. Maloney v. Kaminski, 220 Neb. 55, 368 N.W.2d 447 (1985). However, where the evidence is insufficient to sustain a verdict in favor of the plaintiff, it is the duty of the trial court, on the motion of the defendant, to dismiss the action. Sinnett v. Dial Constr. Co., 187 Neb. 190, 188 N.W.2d 681 (1971).

As a general rule, one injured by a breach of contract is entitled to recover all of his damages, including the gains prevented as well as losses sustained, provided they are reasonably certain and such as might naturally be expected to follow the breach. Broadly speaking, the amount recoverable for the breach of a covenant not to compete is the loss sustained by the covenantee as a natural result of the breach. It must also be borne in mind that the measure of damages in an action for the breach of a covenant not to compete is usually difficult of exact computation and in the final analysis is an estimate or approximation. The fact that the damages are not susceptible of exact computation will not preclude recovery, but in order to recover substantial damages, a plaintiff is called upon to furnish sufficient data to enable the trier of fact to estimate the actual damages with a reasonable degree of certainty and exactness. If a plaintiff fails to so do, he can recover only a nominal sum. Even to recover a nominal sum, there must be evidence of a specific monetary loss. Dana F. Cole & Co. v. Byerly, 211 Neb. 903, 320 N.W.2d 916 (1982); D.W. Trowbridge Ford, Inc. v. Galyen, 200 Neb. 103, 262 N.W.2d 442 (1978); Midlands Transp. Co. v. Apple Lines, Inc., 188 Neb. 435, 197 N.W.2d 646 (1972); Gallagher v. Vogel, 157 Neb. 670, 61 N.W.2d 245 (1953).

Vande Mheen had done business at South Sioux City, Nebraska, through Van's Used Trucks & Parts, Inc., for a number of years. The venture consisted of the buying and selling at a profit used trucks, parts, and scrap. On October 1, 1979, Vande Mheen sold the business to Quad-States. As a part of that transaction, Vande Mheen agreed personally, in relevant part, that for a period of 5 years he would not compete with Quad-States for business "falling within a 100 mile radius of South Sioux City, Nebraska."

The evidence is such that the jury could find that Vande Mheen breached the covenant, at least until the last few months of the relevant period, when he moved to O'Neill, Nebraska, a town more than 100 miles from South Sioux City.

In order to prove its damages, Quad-States adduced evidence as to all the purchases of trucks, parts, and scrap made by Vande Mheen during the prohibited period. It then declared through one of its officers that Quad-States would have made 90 percent of those purchases had Vande Mheen not done so. However, no records were introduced to show how much Quad-States had purchased from any source after it first acquired the business. Neither was there any evidence adduced as to the percentage of the trucks, parts, or scrap available in the restricted area actually purchased by Quad-States. There is, however, uncontradicted evidence from a Quad-States employee, who had also worked for Vande Mheen, that Quad-States was not making many purchases from any source. The evidence is that Quad-States did very little traveling in search of available items and that few sellers of scrap called on Quad-States because of the reduced-level buying. Quad-States' accountant nonetheless cast a formula which in essence applied Quad-States' profit margin to the purchases made by Vande Mheen, adjusted for the additional costs it could be assumed Quad-States would have incurred in doing the additional business, and extrapolated therefrom Quad-States' lost profits or damages. The accountant's reckoning converted Quad-States' actual loss of $141,062 for the period in question into a projected profit of $2,436,111.

In order to determine whether that evidence is sufficient to support an award of damages, we must analyze factual situations in which the damage rules cited above have been applied.

In D.W. Trowbridge Ford, Inc. v. Galyen, supra, the plaintiff purchased the defendant's automobile dealership in O'Neill in 1967. The contract provided, among other things, that the defendant would stop selling new vehicles after a certain date. The evidence with respect to that breach established that the defendant sold 291 new automobiles. Taking into account the newness of plaintiff's venture and the existence of other competition, the trial court concluded that the plaintiff would have sold half of the units that the defendant sold during the prohibited period. The court then awarded damages for that breach on a per automobile basis, using the plaintiff's financial records to compute an average net profit per automobile. This court found the method of computing plaintiff's loss reasonable and the evidence sufficient, on a de novo review as the action was one for injunction, to support an award of damages.

Midlands Transp. Co. v. Apple Lines, Inc., supra, presented an issue as to whether sufficient evidence existed to allow the jury to consider the question of damages. The seller had agreed not to...