The Vogue v. Shopping Centers, Inc.

• Decision Date: 11 February 1975
• Docket Number: No. 2,Docket No. 18449,2
• Citation: 228 N.W.2d 403,58 Mich.App. 421
• Parties: The VOGUE, a Michigan Corporation, Plaintiff-Appellee, v. SHOPPING CENTERS, INC., a Michigan Corporation, Defendant-Appellant
• Court: Court of Appeal of Michigan — District of US

Page 403

228 N.W.2d 403

58 Mich.App. 421

The VOGUE, a Michigan Corporation, Plaintiff-Appellee, v. SHOPPING CENTERS, INC., a Michigan Corporation, Defendant-Appellant.

Docket No. 18449.

Court of Appeals of Michigan, Division No. 2.

Feb. 11, 1975.

Released for Publication May 7, 1975.

Avern Cohn and Edward F. Kickham, Honigman Miller Schwartz & Cohn, Detroit, for defendant-appellant.

Gilbert Y. Rubenstein, Hoffman & Rubenstein, Flint (Thomas E. Chittle, Flint, of counsel), for plaintiff-appellee.

Before DANHOF, P.J., and BASHARA and ALLEN, JJ.

BASHARA, Judge.

This appeal arises out of a suit for damages by plaintiff tenant against its defendant landlord for the loss of profits sustained during a 17-day delay in the opening of plaintiff's new store in the Genesee Valley Shopping Center. The jury awarded plaintiff damages of $27,000.

Plaintiff, a ladies retail store, entered into a lease agreement on January 6, 1969 whereby defendant was to construct a 55-store shopping mall. Each tenant was responsible for the construction of all interior work. Defendant's main activity is to purchase and develop shopping centers, primarily for the J. L. Hudson Company. J. L. Hudson was to be a tenant of Genesee Valley. It was stipulated at trial that defendant in November of 1969 told plaintiff, and the other tenants, they should expect to open in July of 1970. On May 13, 1970 defendant sent a tentative schedule of promotional activities for a July 14--16 grand opening ¹ to plaintiff. Towards the end of May labor problems were experienced in the construction industry. Some of the stores were able to continue construction while others were not. On June 30th, the defendant determined that except for the Hudson's store, it would be necessary to postpone the grand opening. Plaintiff was notified of this on July 1 and was allowed to open on August 3, 1970.

At the close of plaintiff's proofs, defendant moved for a directed verdict and then for a judgment notwithstanding the verdict. Defendant argued that there was no evidence to support a finding that they had promised plaintiff it could open on July 14, 1970. Defendant also contended that plaintiff's proofs showed a promise only of a 'mid-summer opening'.

It is axiomatic that when reviewing a motion for a directed verdict the facts must be viewed in the light most favorable to the non-moving party. Kieft v. Barr, 391 Mich. 77, 214 N.W.2d 838 (1974), Oliver v. St. Clair Metal Products Co., 45 Mich.App. 242, 206 N.W.2d 444 (1973).

Since there was no express contract, plaintiff's claim must rise or fall on the applicability of the promissory estoppel doctrine. In the case of In re Timko Estate, 51 Mich.App. 662, 666, 215 N.W.2d 750 (1974), it was stated that in order for a promise to be enforceable under this doctrine, 'there must be a (1) promise that the promisor should reasonably have expected to induce action of a definite and substantial character on the part of the promisee, (2) which in fact produced reliance or forbearance of that nature, (3) in circumstances such that the promise must be enforced if injustice is to be avoided.' See also Dunnan & Jeffrey, Inc. v. Gross Telecasting, Inc., 7 Mich.App. 113, 151 N.W.2d 194 (1967).

The issue thus becomes whether plaintiff produced evidence sufficient to go to the jury on the question of promissory estoppel. There were a series of letters and communications by various officers of defendant corporation informing plaintiff and other tenants to prepare for a July 14--16 opening. A letter was produced from defendant's vice-president of development to plaintiff which stated in part:

'The Grand Opening at Genesee Valley is July 16, 1970. It is imperative that all of our tenant's cash in, so to speak, on the large amount of customers that we are expecting at the Center during the Grand Opening days. This means that your construction department should get their contractors moving in order to complete your store so that you will be opened and doing business with the public on these days.

'We here at Shopping Centers, Inc. are spending hundreds of thousands of dollars in advertising and promotions to get people to come to our Center. As an example we are sending 60,000 invitations to 60,000 homes inviting these people to the Invitational Community Preview Days which will be on Tuesday, July 14th and Wednesday, July 15th.'

Plaintiff's interior contractor, utilizing a series of photographs taken on July 14--16, testified that construction was completed to the point where plaintiff could have opened on July 14. Officers of plaintiff's corporation testified that key personnel had been hired for a July 14--16 opening. Most of the inventory was on hand for the date in question, and budget sheets had been prepared. Testimony showed that by preparing for an opening in reliance on defendant's promise, injustice could have been avoided only if defendant kept its promise.

After reviewing the lengthy transcript, we hold that plaintiff did satisfy its burden of going forward on its theory of liability. The crucial issue must then be whether the trial court was correct in allowing speculative evidence as to loss of profits to be considered by the jury.

Although plaintiff operated other stores in the Flint area, the store in question was a new one and had no previous operating history.

The authority in Michigan is conflicting on whether a new business can recover lost profits as an aspect of damages. The more frequently stated rule allows no recovery of lost profits for a new business since there is no way to estimate losses. Stimac v. Wissman, 342 Mich. 20, 69 N.W.2d 151 (1955), Stern Co. v. Friedman, 229 Mich. 623, 201 N.W. 961 (1925), Jarrait v. Peters, 145 Mich. 29, 108 N.W. 432 (1906). The rationale given for the rule is that prospective profits are too speculative and uncertain. Other cases have held that if prospective profits are provable with a reasonable degree of certainty, they can be recovered. Kezeli v. River Rouge Lodge IOOF, 195 Mich. 181, 161 N.W. 838 (1917); see also dissenting opinion of Judge O'Hara, in Fera v. Village Plaza, Inc., 52 Mich.App. 532, 218 N.W.2d 155 (1974). In Kezeli, supra, 195 Mich. p. 188, 161 N.W. p. 840, where the Court denied recovery of lost profits, Justice Stone wrote, 'Without holding that loss of profits may not upon proper showing be the basis of recovery, we must hold that no sufficient foundation was here laid for such recovery'.

In Isbell v. Anderson Carriage Co., 170 Mich. 304, 318, 136 N.W. 457 (1912), the Court wrote:

'It has sometimes been stated as a rule of law that prospective profits are so speculative and uncertain that they cannot be recognized in the measure of damages. This is not because they are profits, but because they are so often not susceptible of proof to a reasonable degree of certainty. Where the proof is available, prospective profits may be recovered, when proven, as other damages. 'But the jury cannot be...