Rich v. Eastman Kodak Co., 78-1195
| Decision Date | 06 December 1978 |
| Docket Number | No. 78-1195,78-1195 |
| Citation | 583 F.2d 435 |
| Parties | Hershel RICH, Linda Rich and Color Unlimited, Inc., Appellants, v. EASTMAN KODAK COMPANY, a corporation, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
P. Terence Crebs of Gallop, Johnson, Godiner, Morganstern & Crebs, St. Louis, Mo., for appellant; Stephen H. Rovak, St. Louis, Mo., on brief.
John R. McFarland of Coburn, Croft, Shepherd, Herzog & Putzell, St. Louis, Mo., for appellee; Steven P. Sanders, St. Louis, Mo., on brief.
Before GIBSON, Chief Judge, and ROSS and HENLEY, Circuit Judges.
This action was brought by Color Unlimited, Inc. to recover damages it allegedly suffered due to the failure of certain photography equipment to perform as advertised or warranted. Liability of Eastman Kodak, Inc. (Kodak) was premised on negligent misrepresentations claimed to have been made by Kodak concerning the nature and capabilities of the equipment as well as the quality of Kodak's repair service. In addition, the complaint alleged that Kodak failed to exercise due care in providing repair service for the equipment. Some of the equipment was purchased directly from Kodak and the remainder was purchased from third parties after inspection by Kodak. While the suit was pending below, Color Unlimited, Inc. was dissolved and its sole shareholder, Hershel Rich, was substituted as plaintiff. All parties agree that the substantive law of Missouri governs this diversity case.
In a letter dated November 8, 1976, Rich's attorney, in order to be relieved from answering certain interrogatories, conceded to Kodak's counsel that Rich would attempt to prove only two items of damage. These were lost profits and diminution in the value of the business. The District Court 1 then considered Kodak's motion for summary judgment. On April 26, 1977, summary judgment in favor of Kodak was granted in part and denied in part. 2 The court concluded that under applicable Missouri law some of Kodak's representations could not form the basis of a cause of action.
The court also held that lost profits could not be recovered in this case under Missouri law because the evidence relied on by Rich was too speculative. In the April 26, 1977, memorandum and order, the District Court ruled that summary judgment would be inappropriate insofar as damages were to be based on diminution in the value of the business. Thereafter Rich was again deposed and Kodak again moved for summary judgment. By memorandum and order dated December 20, 1977, the District Court granted complete summary judgment in favor of Kodak. 3 The court concluded that Rich had presented no factual basis in support of his testimony as to the valuation of the business. This appeal by Rich followed. We affirm.
We do not find it necessary to examine Missouri law regarding liability for negligent misrepresentation. Summary judgment in favor of Kodak is fully supported by the absence of any genuine issue of material fact concerning damages. Missouri law is clear that anticipated profits are recoverable only where there is proof of income and expenses prior to the interruption or stoppage of the business. Coonis v. Rogers, 429 S.W.2d 709, 714 (Mo.1968); 4 Morrow v. Missouri Pacific Railway Co., 140 Mo.App. 200, 213-14, 123 S.W. 1034, 1039 (1909). In this case the available evidence, including tax returns of Color Unlimited, Inc., establish that it was not making a profit before problems developed with the Kodak equipment. Rich's attempts to discredit the District Court's analysis of this evidence are not convincing. Contrary to the implied contention of Rich, it is necessary to include all salaries as expenses in determining the net profit of the company. Even though Rich owned all of the stock in Color Unlimited, Inc., the worth of his services was an expense item. The salary figures found in corporate documents and income tax returns establish that worth. In this situation, anticipated profits are not recoverable under Missouri law because of their speculative nature.
Rich is not suing for alleged damages suffered because of the diminution in value of the equipment as represented over its actual worth in the market, but rather...
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...the trial court's award for lost anticipated profits, occasionally the matter is dismissed at summary judgment. In Rich v. Eastman Kodak, 583 F.2d 435, 437 (8th Cir.1978), the Eighth Circuit upheld the Eastern District of Missouri's grant of summary judgment in a case where lost profits cou......
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