Northwestern Mutual Life
Jones, the president of Rancho Rescado, wanted to get into the catfish
Northwestern used the Gila Bend Canal to deliver underground water to a
large ranch operated by Painted Rock Development Co.
Jones decided that Gila Bend Canal would be the ideal place to raise
The Canal was owned by Northwestern.
Several of Jones proposals were rejected and on December 1973, it was
A license agreement, granting Rancho Pescado the exclusive right to
raise fish in a five mile portion of the canal for a period of
five years, was entered into between
Northwestern and Rancho Pescado.
Water flow was shut off over the holiday because it was not needed for
Painted Rocks cattle operation.
Rancho demanded the water be turned back on.
Northwestern concluded that this demand constituted a serious
interference with the ranch operation.
Notified by letter that it was terminating the license agreement
because Ranchos demand for continuous water flow which interfered with
the ranching operations.
Violation of paragraph two of the license agreement.
Ranchos Complaint for
Loss of future profits.
Verdict against Northwestern for $2,500,000.
Motion for Summary Judgment Notwithstanding the verdict.
Reduced amount to $101,510
This amount reflected the loss of future profits.
the court erred by eliminating the jury's award of damages
Contends the jury's award of damages for anticipated future profits was
soundly supported by the evidence.
has adopted a per se rule which prohibits
an award of damages for loss of future profits to a new
Northwestern further contends that even if a per se rule is not used,
Rancho Pescado failed to sustain its burden of proving loss of future profits
with reasonable certainty.
Recovering Damages Rule
Damages are NOT
recoverable UNLESS they are
Lost Profits Rule (Modern Trend)
Allows recovery for lost profits IF they can be proven with
We approve, where evidence is available to furnish a
reasonably certain factual basis
for computation of problem losses even
where a new business is involved.
Courts Belief for New Businesses
We believe it would be patently unfair to deny damages to a
business where they have been proved with
reasonable certainty merely
because the business venture was newly established.
Lost Profits Rule
Once the fact of damages has been shown, the amount of damages
may be established with proof of
a lesser degree of certainty
than required to establish the fact of
Damages Requires reasonable certainty.
Amount of Damages Requires a lesser degree of certainty. Absolute
certainty is not required.
Methods to Calculate
Profit history from a similar business operated by the Pl at a
Profit history from the business in question if it was successfully
operated by someone else before the Pl took over.
Or, reasonably certainty may be provided when the Pl devices some
reasonable method of computing his net loss.
Courts Response to Pl - Burden
Rancho had the burden of proving with reasonable certainty the fact
that it could raise catfish in the canal and that it could thereafter
market them at a profit as well as proving with reasonable certainty how
much profit it would have realized.
The Court does not agree that Ranchos evidence was proven with
95% of catfish farmers fail.
Rancho would be raising fish with waste products.
Ranchos production and projection number of 8 million pounds was
The most successful rancher produced 400,000 pounds.
Frost Fishy had trouble selling catfish.
Rancho had never canned fish or heard of anybody that has canned fish.
Courts Reasoning (Conjecture and Speculation)
We view the evidence as a whole as amounting to nothing more than
conjecture and speculation.
The evidence is insufficient to prove that he would have succeeded in
this highly risky industry, despite his vast research.
Ranchos experiments were woefully inadequate.
The Jury did not have sufficient evidence to make a rational judgment.